EXHIBIT 10.4
EXECUTIVE SEVERANCE
AGREEMENT
THIS AGREEMENT is entered into as of the 15th day of
October, 2008 (the " Effective Date "), by and between
SPARTAN STORES, INC., a Michigan corporation (" Spartan
Stores "), and CRAIG C. STURKEN (" Executive ").
W I T N E S S E T
H:
WHEREAS, Executive currently serves as a key employee of
Spartan Stores and/or its subsidiaries (the " Company ") and
his services and knowledge are valuable to the Company in
connection with the management of one or more of the Company's
principal operating facilities, divisions, or subsidiaries; and
WHEREAS, Spartan Stores considers the establishment and
maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its
shareholders; and
WHEREAS, the Board has determined that it is in the best
interests of Spartan Stores and its shareholders to secure
Executive's continued services and to ensure Executive's continued
dedication and objectivity in the event of any threat or occurrence
of, or negotiation or other action that could lead to, or create
the possibility of, a Change in Control (as hereafter defined) of
Spartan Stores, without concern as to whether Executive might be
hindered or distracted by personal uncertainties and risks created
by any such possible Change in Control, and to encourage
Executive's full attention and dedication to Spartan Stores and/or
its subsidiaries, the Board has authorized Spartan Stores to enter
into this Agreement.
NOW, THEREFORE, COMPANY AND EXECUTIVE AGREE AS FOLLOWS:
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1.
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Definitions . As used in this Agreement, the following
terms shall have the respective meanings set forth below:
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(a) " Board " means the
Board of Directors of Spartan Stores.
(b) " Cause " means (1)
the willful and continued failure by Executive to substantially
perform his duties with the Company (other than any such failure
resulting from Executive's incapacity due to physical or mental
injury or illness, or any such actual or anticipated failure
resulting from Executive's termination for Good Reason) after a
demand for substantial performance is delivered to Executive by the
Board (which demand shall specifically identify the manner in which
the Board believes that Executive has not substantially performed
Executive's duties); or (2) the willful engaging by Executive in
gross misconduct materially and demonstrably injurious to the
Company. For purposes of this Section, no act or failure to act on
the part of Executive shall be considered "willful" unless done or
omitted to be done by Executive not in good faith and
without reasonable
belief that his action(s) or omission(s) was in the best interests
of the Company. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until the
Company provides Executive with a copy of a resolution adopted by
an affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to Executive and an
opportunity for Executive, with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the
Executive has been guilty of conduct set forth in subsections (1)
or (2) above, setting forth the particulars in detail. A
determination for Cause by the Board shall not be binding upon or
entitled to deference by any finder of fact in the event of a
dispute, it being the intent of the parties that such finder of
fact shall make an independent determination of whether the
termination was for "Cause" as defined in (1) or (2) above.
(c) " Change in Control "
means:
(1) the acquisition by any
individual, entity, or group (a " Person "), including any
"person" within the meaning of Sections 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the " Exchange
Act "), of beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act, of 20% or more of either
(i) the then outstanding shares of common stock of Spartan Stores
(the " Outstanding Company Common Stock ") or (ii) the
combined voting power of the then outstanding securities of Spartan
Stores entitled to vote generally in the election of directors (the
" Outstanding Company Voting Securities "); provided,
however, that the following acquisitions shall not constitute a
Change in Control: (A) any acquisition by the Company, (B) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any Person controlled by
the Company, (C) any acquisition by any corporation pursuant to a
reorganization, merger, or consolidation involving the Company, if,
immediately after such reorganization, merger, or consolidation,
each of the conditions described in clauses (i), (ii), and (iii) of
subsection (c)(3) shall be satisfied, or (D) any acquisition by the
Executive or any group of persons including the Executive; and
provided further that, for purposes of clause (A), if any Person
(other than the Company or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall become the beneficial owner of 20%
or more of the Outstanding Company Common Stock or 20% or more of
the Outstanding Company Voting Securities by reason of an
acquisition by the Company and such Person shall, after such
acquisition by the Company, become the beneficial owner of any
additional shares of the Outstanding Company Common Stock or any
additional Outstanding Company Voting Securities, such additional
beneficial ownership shall constitute a Change in Control;
(2) individuals who, as of the
date hereof, constitute the Board (the " Incumbent Board ")
cease for any reason to constitute at least a majority of such
Board; provided, however, that any individual who becomes a
director of Spartan Stores subsequent to the date hereof whose
election, or nomination for election by
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the shareholders of
Spartan Stores, was approved by the vote of at least two-thirds of
the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of Spartan
Stores in which such person is named as a nominee for director,
without objection to such nomination) shall be deemed to have been
a member of the Incumbent Board; and provided further, that no
individual who was initially elected as a director of Spartan
Stores as a result of an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person
other than the Board, shall be deemed to have been a member of the
Incumbent Board;
(3) approval by the shareholders
of Spartan Stores of a reorganization, merger, or consolidation
unless, in any such case, immediately after such reorganization,
merger, or consolidation, (i) more than 50% of the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger, or consolidation and more than 50% of the
combined voting power of the then outstanding securities of such
corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately
prior to such reorganization, merger, or consolidation and in
substantially the same proportions relative to each other as their
ownership, immediately prior to such reorganization, merger, or
consolidation, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (other than (A) the Company, any employee benefit plan (or
related trust) sponsored or maintained by the Company or the
corporation resulting from such reorganization, merger, or
consolidation (or any corporation controlled by the Company), or
(B) any Person which beneficially owned, immediately prior to such
reorganization, merger, or consolidation, directly or indirectly,
20% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of the then
outstanding shares of common stock of such corporation or 20% or
more of the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the
election of directors, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
reorganization, merger, or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization,
merger, or consolidation; or
(4) approval by the shareholders
of Spartan Stores of (i) a plan of complete liquidation or
dissolution of Spartan Stores or (ii) the sale or other disposition
of all or substantially all of the assets of Spartan Stores other
than to a corporation with respect to which, immediately after such
sale or other disposition, (A) more than 50% of the then
outstanding shares of common stock
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thereof and more
than 50% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities
immediately prior to such sale or other disposition and in
substantially the same proportions relative to each other as their
ownership, immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (other than
the Company, any employee benefit plan (or related trust) sponsored
or maintained by the Company or such corporation (or any
corporation controlled by the Company), or any Person which
beneficially owned, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20%
or more of the then outstanding shares of common stock thereof or
20% or more of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors thereof were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the
Board providing for such sale or other disposition.
Notwithstanding anything contained in this Agreement to the
contrary, if Executive's employment is terminated prior to a Change
in Control and Executive reasonably demonstrates that such
termination was at the request of or in response to a third party
who has indicated an intention or taken steps reasonably calculated
to effect a Change in Control (a " Third Party "), and who
subsequently effectuates a Change in Control, then for all purposes
of this Agreement, the date of a Change in Control shall mean the
date immediately prior to the date of such termination of
Executive's employment.
(d) " Code " means the
Internal Revenue Code of 1986, as amended.
(e) " Common Stock " means
the common stock of Spartan Stores, no par value per share.
(f) " Date of Termination
" means the effective date on which Executive's employment by the
Company terminates as specified in a Notice of Termination by the
Company or Executive, as the case may be, in a manner that
constitutes a "separation from service" as that term is defined by
Section 409A of the Code. Notwithstanding the previous sentence,
(i) if the Executive's employment is terminated for Disability, as
defined in Section 1(g), then such Date of Termination shall be no
earlier than thirty (30) days following the date on which a Notice
of Termination is received, and (ii) if the Executive's employment
is terminated by the Company other than for Cause, then such Date
of Termination shall be no earlier than thirty (30) days following
the date on which a Notice of Termination is received.
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(g) " Disability " means
Executive's failure to be available to substantially perform his
duties with the Company on a full-time basis for at least one
hundred eighty (180) consecutive days as a result of Executive's
incapacity due to mental or physical illness.
(h) " Good Reason " means,
without Executive's express written consent, the occurrence of any
of the following events after or in connection with a Change in
Control:
(1) (i) the assignment to
Executive of any duties inconsistent in any material adverse
respect with Executive's position(s), duties, responsibilities, or
status with the Company immediately prior to such Change in
Control, (ii) a material adverse change in Executive's positions,
reporting responsibilities, titles or offices with the Company as
in effect immediately prior to such Change in Control, (iii) any
removal or involuntary termination of Executive by the Company
otherwise than as expressly permitted by this Agreement (including
any purported termination of employment which is not effected by a
Notice of Termination), or (iv) any failure to re-elect Executive
to any position with the Company held by Executive immediately
prior to such Change in Control;
(2) a reduction by the Company in
Executive's rate of annual base salary as in effect immediately
prior to such Change in Control or as the same may be increased
from time to time thereafter;
(3) any requirement of the
Company that Executive (i) be based anywhere other than the
facility where Executive is located at the time of the Change in
Control or reasonably equivalent facilities within Kent County,
Michigan or (ii) engage in business travel to an extent
substantially more burdensome than the travel obligations of
Executive immediately prior to such Change in Control;
(4) the failure of the Company to
continue the Company's executive incentive plans or bonus plans in
which Executive is participating immediately prior to such Change
in Control or a reduction of the Executive's target incentive award
opportunity under any such bonus plan, unless Executive is
permitted to participate in other plans providing Executive with
substantially comparable benefits or receives compensation as a
substitute for such plans providing Executive with a substantially
equivalent economic benefit;
(5) the failure of the Company to
(i) continue in effect any employee benefit plan or compensation
plan in which Executive is participating immediately prior to such
Change in Control, unless Executive is permitted to participate in
other plans providing Executive with substantially comparable
benefits or receives compensation as a substitute for such plans
providing Executive with a substantially equivalent after-tax
economic benefit, or the taking of any action by
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the Company which
would adversely affect Executive's participation in or materially
reduce Executive's benefits under any such plan, (ii) provide
Executive and Executive's dependents with welfare benefits
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
in accordance with the most favorable plans, practices, programs,
and policies of the Company in effect for Executive immediately
prior to such Change in Control, (iii) provide other fringe
benefits in accordance with the most favorable plans, practices,
programs, and policies of the Company in effect for Executive
immediately prior to such Change in Control, or (iv) provide
Executive with paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company as in effect
for Executive immediately prior to such Change in Control;
(6) the failure of the Company to
pay any amounts owed Executive as salary, bonus, deferred
compensation or other compensation;
(7) the failure of Spartan Stores
to obtain any assumption agreement contemplated in Section
10(b);
(8) any purported termination of
Executive's employment which is not effected pursuant to a Notice
of Termination which satisfies the requirements of a Notice of
Termination; or
(9) any other material breach by
Spartan Stores of its obligations under this Agreement.
For
purposes of this Agreement, any good faith determination of Good
Reason made by Executive shall be conclusive on the parties; except
that an isolated and insubstantial action taken in good faith and
which is remedied by the Company within ten (10) days after receipt
of notice thereof given by Executive shall not constitute Good
Reason. Any event or condition described in this Section 1(h) which
occurs prior to a Change in Control, but which Executive reasonably
demonstrates was at the request of or in response to a Third Party
who effectuates a Change in Control or who has indicated an
intention or taken steps reasonably calculated to effect a Change
in Control, shall constitute Good Reason following a Change in
Control for purposes of this Agreement notwithstanding that it
occurred prior to the Change in Control.
Executive may not terminate the employment for Good Reason
unless:
(i) Executive notifies the Board
in writing, within sixty (60) days after Executive becomes aware of
the act or omission constituting Good Reason that the act or
omission in question constitutes Good Reason and explaining why the
Executive considers it to constitute Good Reason;
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(ii) the Company fails, within
ten (10) days after notice from Executive under (i) above, to
revoke the action or correct the omission and make the Executive
whole; and
(iii) Executive gives notice of
termination within thirty (30) days after expiration of the ten
(10) day period under (ii) above.
Executive's failure to give notice as provided in (i) above will
not waive Executive's right to resign with Good Reason, provided
that he follows the above procedure, with regard to any subsequent
act or omission constituting Good Reason.
Executive need not fulfill the above conditions a second time if
the Company repeats the act or omission constituting Good
Reason.
(i) " Mandatory Retirement
" means Executive's involuntary retirement as required by a lawful
Company policy requiring Executive to retire at or after age
sixty-five (65), but only if such policy is adopted by the Company
before a Change in Control and only if such policy was not adopted
by the Company at the request of or in response to a Third Party
who subsequently effectuates a Change in Control.
(j) " Nonqualifying
Termination " means a termination of Executive's employment (1)
by the Company for Cause, (2) by Executive for any reason
(including a voluntary retirement) other than for Good Reason with
Notice of Termination, (3) as a result of Executive's death, (4) by
the Company due to Executive's Disability, unless within thirty
(30) days after Notice of Termination is provided to Executive,
Executive shall have returned (or offered to return, if not
permitted by the Company to do so) to substantial performance of
Executive's duties on a full-time basis, or (5) as a result of
Executive's Mandatory Retirement.
(k) " Notice of
Termination " means a written notice by the Company or
Executive, as the case may be, to the other, which (1) indicates
the specific reason for Executive's termination, (2) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive's employment, and (3) specifies the Date of Termination.
The failure by Executive or the Company to set forth in such notice
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Executive or the
Company hereunder or preclude Executive or the Company from
asserting such fact or circumstance in enforcing Executive's or the
Company's rights hereunder.
(l) " SERP " means the
Spartan Stores, Inc. Supplemental Executive Retirement Plan
