Document:

Exhibit 10.3

 

 

	
Award Recipient:
	
  
	
Grant Date: February 25, 2015

 

Dear : 

 

Re: Long-Term Executive Cash Incentive Award 2015 

 

I am pleased to inform you that SpartanNash Company (“SpartanNash” or the “Company”) has awarded to you the opportunity to earn multi-year cash incentive compensation under the Company’s Executive Cash Incentive Plan of 2010 (the “Plan”) as described in this letter. By accepting this award, you agree that the award is subject to the terms and conditions of this letter and the Plan (which are incorporated into this letter by reference). If there is any conflict between the terms of the Plan and this letter, the terms of the Plan will control. Capitalized terms not defined in this letter have the meanings given to them in the Plan. 

 

1.    Target Award Amount. Your threshold, target and maximum Long-Term Cash Incentive Award opportunity will be communicated to you separately. As discussed in more detail below, your Long-Term Cash Incentive Award, if any, will be paid with respect to each of the performance measurements described below if SpartanNash achieves at least the threshold level of performance specified by the Compensation Committee in the Performance Period for that performance measurement, and you satisfy the other requirements discussed in this letter. 

 

2.    Performance Measurements and Performance Period. 

 

	
a)
	
Metrics. The amount of the Long-Term Cash Incentive Award paid to you will be determined by SpartanNash’s performance with respect to three performance measurements: Earnings Per Share (“EPS”), net sales, and consolidated Adjusted EBITDA. Forty percent (40%) of your Long-Term Cash Incentive Award will be based on SpartanNash’s EPS performance, twenty percent (20%) will be based on SpartanNash’s net sales and forty percent (40%) will be based on consolidated Adjusted EBITDA. 

 

	
b)
	
Performance Measurement. For each of the metrics listed in paragraph (a) above, performance will be measured as of the fiscal year ending December 30, 2017 (“FYE 12/30/17”). As used in this letter, “Performance Period” means the period beginning on January 4, 2015 and ending on December 30, 2017.   

 

1

 

 

	
c)
	
Summary. The award is summarized on the following table:

 

	
Performance

Measurement
	
  
	
Percentage of Long-Term Cash
Incentive Award
	
 

	
EPS1
	
  
	
 
	
40
	
% 

	
Net Sales2
	
  
	
 
	
20
	
% 

	
Consolidated Adjusted EBITDA3
	
  
	
 
	
40
	
% 

 

	
1 
	
EPS means Diluted Earnings per Share on a Consolidated Net Earnings (adjusted for items not representative of ongoing operations) basis. 

 

	
2 
	
Net sales will be calculated based on the GAAP financial statements of the Company. In making this calculation, however, fuel sales will be adjusted using a pre-determined sales price per gallon sold. 

 

	
3
	
Consolidated adjusted EBITDA is a non-GAAP operating financial measure that is defined as net earnings from continuing operations plus depreciation and amortization, and other non-cash items including imputed interest, deferred (stock) compensation, the LIFO provision, as well as adjustments for unusual items that do not reflect the ongoing operating activities of SpartanNash and costs associated with the closing of operational locations, interest expense and the provision for income taxes to the extent deducted in the computation of net earnings.  

 

3.    Performance Goals and Payouts. Your Long-Term Cash Incentive Award will be determined according to the matrices presented below. The levels of performance for EPS, net sales and consolidated Adjusted EBITDA have been established by the Compensation Committee and will be communicated to you separately. No Long-Term Cash Incentive Award will be paid with respect to a performance measurement unless SpartanNash achieves the threshold level of performance for that performance measurement. 

EPS 

 

	
 
	
  
	
Performance
	
 
	
 
	
Payout
	
 

	
Level
	
  
	
% of EPS Goal
	
 
	
 
	
% of Target
	
 

	
—  
	
  
	
 
	
<80.0
	
% 
	
 
	
 
	
0.0
	
% 

	
Threshold
	
  
	
 
	
80.0
	
% 
	
 
	
 
	
10.0
	
% 

	
—  
	
  
	
 
	
85.0
	
% 
	
 
	
 
	
32.5
	
% 

	
—  
	
  
	
 
	
90.0
	
% 
	
 
	
 
	
55.0
	
% 

	
—  
	
  
	
 
	
95.0
	
% 
	
 
	
 
	
77.5
	
% 

	
Target
	
  
	
 
	
100.0
	
% 
	
 
	
 
	
100.0
	
% 

	
—  
	
  
	
 
	
104.0
	
% 
	
 
	
 
	
124.5
	
% 

	
—  
	
  
	
 
	
108.0
	
% 
	
 
	
 
	
149.1
	
% 

	
—  
	
  
	
 
	
112.0
	
% 
	
 
	
 
	
173.6
	
% 

	
Maximum
	
  
	
 
	
≥116.3
	
% 
	
 
	
 
	
200.0
	
% 

 

2

 

 

Net Sales 

 

	
 
	
  
	
Performance
	
 
	
 
	
Payout
	
 

	
Level
	
  
	
% of Net Sales Goal
	
 
	
 
	
% of Target
	
 

	
—  
	
  
	
 
	
<90.0
	
% 
	
 
	
 
	
0.0
	
% 

	
Threshold
	
  
	
 
	
90.0
	
% 
	
 
	
 
	
50.0
	
% 

	
—  
	
  
	
 
	
92.5
	
% 
	
 
	
 
	
62.5
	
% 

	
—  
	
  
	
 
	
95.0
	
% 
	
 
	
 
	
75.0
	
% 

	
—  
	
  
	
 
	
97.5
	
% 
	
 
	
 
	
87.5
	
% 

	
Target
	
  
	
 
	
100.0
	
% 
	
 
	
 
	
100.0
	
% 

	
—  
	
  
	
 
	
101.5
	
% 
	
 
	
 
	
125.0
	
% 

	
—  
	
  
	
 
	
103.0
	
% 
	
 
	
 
	
150.0
	
% 

	
 
	
  
	
 
	
104.5
	
% 
	
 
	
 
	
175.0
	
% 

	
Maximum
	
  
	
 
	
≥106.0
	
% 
	
 
	
 
	
200.0
	
% 

Consolidated Adjusted EBITDA

 

	
 
	
  
	
Performance
	
 
	
 
	
 
	
 

	
Level
	
  
	
% of Consolidated Adjusted EBITDA

 Goal
	
 
	
 
	
Payout

% of Target
	
 

	
—  
	
  
	
 
	
<90.0
	
% 
	
 
	
 
	
0.0
	
% 

	
Threshold
	
  
	
 
	
90.0
	
% 
	
 
	
 
	
50.0
	
% 

	
—  
	
  
	
 
	
92.5
	
% 
	
 
	
 
	
62.5
	
% 

	
—  
	
  
	
 
	
95.0
	
% 
	
 
	
 
	
75.0
	
% 

	
—  
	
  
	
 
	
97.5
	
% 
	
 
	
 
	
87.5
	
% 

	
Target
	
  
	
 
	
100.0
	
% 
	
 
	
 
	
100.0
	
% 

	
—  
	
  
	
 
	
101.3
	
% 
	
 
	
 
	
125.0
	
% 

	
—  
	
  
	
 
	
102.5
	
% 
	
 
	
 
	
150.0
	
% 

	
—  
	
  
	
 
	
103.8
	
% 
	
 
	
 
	
175.0
	
% 

	
Maximum
	
  
	
 
	
≥105.0
	
% 
	
 
	
 
	
200.0
	
% 

 

If SpartanNash’s actual performance achieved for EPS, net sales or consolidated Adjusted EBITDA exceeds the threshold level and falls between specified levels, then the percentage of the Target Award that will be paid will be determined by interpolation. The evaluation of EPS, net sales and consolidated Adjusted EBITDA performance will exclude the events or their effects set forth in Section 5.3 (a) through (h) of the Plan. 

 

4.    No Additional Vesting Period. Your Long-Term Cash Incentive Award is earned based on the value of EPS, net sales and consolidated Adjusted EBITDA as measured at FYE 12/30/17. Each component of your Long-Term Cash Incentive Award earned according to the matrices above, if any, will not be subject to any additional vesting period following the Performance Period. 

 

3

 

 

5.    Effect of Termination of Employment. Except as provided in this Section 5 and Section 6 below, if your employment with SpartanNash is terminated for any reason before the end of the Performance Period, you will forfeit any unearned Long-Term Cash Incentive Award. If your employment with SpartanNash terminates for retirement, death or total disability, your eligibility for a Long-Term Cash Incentive Award will be determined in accordance with the following table: 

 

	
 
	
 
	
Timing of Termination

	
Reason for
Termination
	
 
	
More than 12 Months Remaining until the end of
the Performance Period
	
 
	
12 Months or Less Remaining until the end of the
Performance Period
	
 
	
After Performance Period but before payment
date

	
 
	
 
	
 
	
 

	
Death or Total Disability
	
 
	
Your Target Award will be paid on a pro-rata basis based on the number of full weeks you were employed during the Performance Period. The Incentive Award will be paid no later than the 15th day of the third month following the date of your death or total disability.
	
 
	
Following the completion of the Performance Period, any earned Long-Term Cash Incentive Award will be paid based on actual performance results on a pro-rata basis based on the number of full weeks you were employed during the Performance Period. The Incentive Award will be paid no later than the 15th day of the third month following the date of the end of the Performance Period.
	
 
	
Any earned Long-Term Cash Incentive Award will be paid in full no later than the 15th day of the third month following the date of your death or total disability.

	
 
	
 
	
 
	
 

	
Retirement
	
 
	
Your Long-Term Cash Incentive Award, if any, will be the amount you would have earned had you remained employed with SpartanNash until the end of the Performance Period based on actual performance results, paid on a pro-rated basis for the number of full weeks you were employed during the Performance Period. The Incentive Award will be paid no later than the 15th day of the third month following the date of the end of the Performance Period.
	
 
	
Your Long-Term Cash Incentive Award, if any, will be the amount you would have earned had you remained employed with SpartanNash until the end of the Performance Period based on actual performance results, paid on a pro-rated basis for the number of full weeks you were employed during the Performance Period. The Incentive Award will be paid no later than the 15th day of the third month following the date of the end of the Performance Period.
	
 
	
Any earned Long-Term Cash Incentive Award will be paid in full no later than the 15th day of the third month following the date of your retirement.

 

4

 

 

6.    Change in Control. 

 

	
a)
	
Before the end of the Performance Period. Upon a Change in Control of SpartanNash (as defined in the Plan) before the end of the Performance Period, provided that you are employed by SpartanNash on the effective date of the Change in Control, you will earn an Incentive Award equal to the greater of the Target Award or the projected Incentive Award (with the projected Incentive Award to be calculated by estimating the Company’s expected performance with respect to EPS, net sales and consolidated Adjusted EBITDA for the Performance Period based on the Company’s performance in the then-current fiscal year as of the date of the Change in Control projected out through the end of the Performance Period), to be paid on a pro-rata basis for the number of full weeks completed in the Performance Period prior to the Change in Control. The Incentive Award will be paid no later than the 15th day of the third month following the Change in Control. 

 

	
b)
	
After Performance Period. Upon a Change in Control following the Performance Period, any earned Incentive Award will be payable in full upon the earliest to occur of the termination of your employment for any reason, or the date that is the 15th day of the third month following the Change in Control. 

 

7.    Executive Severance Agreement. The Long-Term Cash Incentive Award opportunity described in this letter is not subject to the provisions of your Executive Severance Agreement with the Company. In the event of a Change in Control, your right to receive any portion of the Long-Term Cash Incentive Award described in this letter will be governed exclusively by the terms and conditions of this letter, and you will not receive any additional payment for the Long-Term Cash Incentive Award under your Executive Severance Agreement.

 

8.    Annual Incentive Award. You will be separately notified of your eligibility to earn an annual incentive award for 2015. 

 

9.    Compensation Committee Authority and Discretion. The Plan is administered and interpreted by the Compensation Committee of the Board of Directors. Although the Committee has authority to exercise reasonable discretion to interpret the Plan and the performance goals, it generally may not amend or waive any performance goal after the 90th day of the fiscal year. The Committee has no authority or discretion to increase any Long-Term Cash Incentive Award. 

 

10.  Withholding. SpartanNash is entitled to withhold and deduct from your future wages (or from other amounts that may be due and owing to you from SpartanNash), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state, local and foreign withholding and employment-related tax requirements attributable to a Long-Term Cash Incentive Award. 

 

11.  Clawback. This award is subject to the Company’s “clawback” policy providing for the recovery of incentive compensation.

 

5

 

 

12.    Miscellaneous.

 

	
a)
	
This letter and your rights hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this letter, all of which shall be binding upon you.

 

	
b)
	
The Board may terminate, amend or modify the Plan in accordance with the terms of the Plan.

 

	
c)
	
This letter and the Plan shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, successors and permitted assigns. This letter agreement shall not be modified except in a writing executed by you and SpartanNash.

 

	
d)
	
This letter shall be governed by, and construed in accordance with, the laws of the state of Michigan. 

Very truly yours, 

/s/ Dennis Eidson

 

Dennis Eidson 

President and Chief Executive Officer 

Accepted and Agreed to: 

 

 

	
 
	
 

	
Name
	
 

	
 
	
 

	
 
	
 

	
Date
	
 

 

 

 

6exh_101.htm

EX-10.1 – Employment Agreement Exhibit

 

 

 

May 20, 2015

 

 

Mr. Norman B. Winland

4404 Risinghill Drive

Plano, TX 75024

 

winland@americancaresource.com

 

 

Dear Norman:

 

We are very pleased to extend an offer of employment to you for the position of President and Chief Operating Officer of American CareSource Holdings, Inc., a Delaware corporation (the "Company"). Although your continued employment is subject to certain terms and conditions, your start date is May 20, 2015 ("Start Date").

 

Duties

 

In your capacity as President and Chief Operating Officer, you will perform duties and responsibilities that are commensurate with your position and such other duties as may be assigned to you from time to time. You will report directly to the Chief Executive Officer of the Company. You agree to devote your full business time, attention and best efforts to the performance of your duties and to the furtherance of the Company's interests. Although you will not be required to relocate from your current place of residence in Plano, Texas, your principal place of employment will be at our headquarters in Atlanta, Georgia, subject to business travel as needed to properly fulfill your employment duties and responsibilities.

 

Compensation, Benefits and Expenses

 

In consideration of your services, you will be paid an initial base salary of $225,000 per year, subject to review from time to time for increase, but not decrease, payable in accordance with the standard payroll practices of the Company and subject to all withholdings and deductions as required by law.

 

During your employment, you will be eligible to receive a discretionary annual bonus at such times and in such amounts, as determined by the Board, but in no event less than $25,000.  Actual payments will be determined based on a combination of Company results and individual performance, which will be compared against performance goals established jointly by you and the Board.  Any annual bonus with respect to a particular calendar year will be payable on the earlier of March 15 following the calendar year with respect to which the bonus was earned or on the next regularly-scheduled payroll date immediately following the issuance of the independent auditors report for such year.  You must remain continuously employed through the bonus payment date to be eligible to receive an annual bonus payment for a particular year.

 

In connection with your employment, the Board has awarded you a one-time stock option to purchase 100,000 shares of the Company’s common stock. The award will be subject to the terms and conditions of the Company’s Amended and Restated 2009 Equity Incentive Plan and a Stock Option Award Agreement, which agreement is enclosed with this letter. The option will vest over a five-year period as follows: 20% on the anniversary of the date of this letter, and the remainder in equal, monthly instalments over the 48 months immediately following the anniversary date. The option is intended, to the extent possible, to be an Incentive Stock Option, although the Company makes no representation or guarantee that the option will qualify as such. To the extent a portion of the option is not eligible for treatment as an Incentive Stock Option, due to the fair market value limitation or otherwise, the ineligible portion shall be treated as a Non-Qualified Stock Option.

 

  

  

  

All forms of compensation paid to you as an employee of the Company shall be less all applicable withholdings.

 

You will be eligible to participate in the employee benefit plans and programs generally available to the Company's executives, including group medical, dental, and other benefits subject to the terms and conditions of such plans and programs. Should you elect to participate in the Company’s health, dental and/or vision plans in effect from time to time, the Company will pay the entire premium related to such coverage for you and your spouse. You will be entitled to paid vacation in accordance with the Company's policies in effect from time to time. You will also be entitled to the fringe benefits and perquisites that are made available to other similarly situated executives of the Company, each in accordance with and subject to the eligibility and other provisions of such plans and programs. The Company reserves the right to amend, modify or terminate any of its benefit plans or programs at any time and for any reason.

 

You will be entitled to reimbursement for all reasonable out-of-pocket expenses incurred in performing your duties and responsibilities, including the cost of travel for business and travel between the Company's office and your current place of residence in Plano, Texas. The Company also shall pay directly (or reimburse you) for lease costs, gasoline and other operating expenses and maintenance with respect to a vehicle made available for your use in Atlanta, Georgia. The Company shall also pay directly (or reimburse you) for costs necessary to procure and lease a corporate apartment in Atlanta, Georgia. For all incurred expenses, you will submit expense reports and receipts documenting the expenses incurred in accordance with Company policy.

 

At-Will Employment

 

Your employment with the Company will be for no specific period of time. Rather, your employment will be at-will, meaning that you or the Company may terminate the employment relationship at any time, with or without cause, and with or without notice and for any reason or no particular reason. Although your compensation and benefits may change from time to time, the at-will nature of your employment may only be changed by an express written agreement signed by an authorized officer of the Company.

 

Severance/Change in Control Severance

 

If your employment with the Company is involuntarily terminated for reasons other than Cause or a breach by you of the terms and conditions of this letter (including, but not limited to, a breach of any of the representations contained herein), subject to your execution, and non-revocation, of a release of claims in a form provided by the Company, the Company will pay you an amount equal to three (3) months’ salary, plus applicable benefit premiums, on the dates and in such amounts as if you were still employed.

 

If your employment with the Company terminates due to a Change of Control, subject to your execution, and non-revocation, of a release of claims in a form provided by the Company, the Company will pay you an amount equal to six (6) months’ salary on the dates and in such amounts as if you were still employed, and all of your unvested equity in the Company will immediately become vested in accordance with the terms of the applicable Award Agreement.

 

  

  

  

The term "Change of Control" means any of the following: (i) the acquisition by any individual, entity or affiliated group in one or a series of transactions (including, without limitation, issuance of shares by the Company or through merger of the Company with another entity) of record or beneficial ownership of 50% or more of the voting power of the Company; (ii) a sale of all or substantially all of the assets of the Company; or (iii) the Board, in its sole and absolute discretion, determines that there has been a sufficient change in the stock ownership of the Company to constitute a change in control of the Company. Notwithstanding the foregoing, the raising of any capital by the Company shall not constitute a "Change of Control."

 

Section 409A

 

This offer letter is intended to comply with Section 409A of the Internal Revenue Code ("Section 409A") or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this offer letter, payments provided under this offer letter may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this offer letter that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this offer letter shall be treated as a separate payment. Any payments to be made under this offer letter upon a termination of employment shall only be made upon a "separation from service" under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this offer letter comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by you on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this offer letter, if any payment or benefit provided to you in connection with termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and you are determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of your termination date (the "Specified Employee Payment Date") or, if earlier, on the date of your death. The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to you in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

Conditions and Representations

 

Your continued employment is contingent upon:

 

(a) Verification of your right to work in the United States, as demonstrated by your completion of an I-9 form upon hire and your submission of acceptable documentation (as noted on the I-9 form) verifying your identity and work authorization within three days of your Start Date.

 

(b) Satisfactory completion of a background investigation and drug screen

 

(c) Your execution of the Company's enclosed Negative Covenant Agreement, attached to this letter as Exhibit A, the terms of which are hereby incorporated by reference.

 

  

  

  

Notwithstanding the severance provisions provided above, if any of the above conditions is not satisfied to the Company’s satisfaction within 45 days of the Start Date, your employment may be terminated without further consideration payable to you.

 

By accepting this offer, you represent that you are able to accept this job and carry out the work that it would involve without breaching any legal restrictions on your activities, such as non-competition, non-solicitation or other work-related restrictions imposed by a current or former employer. You also represent that you will inform the Company about any such restrictions and provide the Company with as much information about them as possible, including any agreements between you and your current or former employer describing such restrictions on your activities. You further confirm that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer to the Company without written authorization from your current or former employer, nor will you use or disclose any such confidential information during the course and scope of your employment with the Company. If you have any questions about the ownership of particular documents or other information, you should discuss such questions with your former employer before removing or copying the documents or information.

 

This Agreement shall be governed by, construed and enforced in accordance with, the laws of the State of Delaware, and venue and jurisdiction for any disputes hereunder shall be heard in any court of competent jurisdiction in Delaware for all purposes.

 

We are excited about you joining our team. If you have any questions about the above details, please call me immediately. If you are in agreement with the terms set forth in this letter, please sign below and return this letter to me.

 

Sincerely,

 

/s/ John Pappajohn

 

John Pappajohn, Acting CEO

 

Acceptance of Offer

 

I have read, understood and accept all the terms of the offer of employment as set forth in the foregoing letter. I have not relied on any agreements or representations, express or implied, that are not set forth expressly in the foregoing letter, and this letter supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to the subject matter of this letter.

 

Norman Winland

 

 

Signed /s/ Norman Winland

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