NASH FINCH COMPANY

EXECUTIVE INCENTIVE BONUS AND

DEFERRED COMPENSATION PLAN

 

(As Amended Through September 30, 2001.)

 

 

1.         PURPOSE OF THE PLAN.  The purpose of this Executive Incentive Bonus
and Deferred Compensation Plan is to increase the interest of the Company's top
executives and key employees in continuing their employment and to increase
their incentive in the management, growth and success of the business by giving
such employees an opportunity to participate in the profits and growth of the
business in the same manner as if they were shareholders.  The term "Company" as
used in this Plan includes Nash Finch Company and each of its present and future
subsidiaries.

 

2.         ADMINISTRATION OF THE PLAN.  This Plan will be administered by the
Compensation Committee (the "Committee") of the Board of Directors.  Members of
the Committee shall not be eligible to vote on any resolution relating to their
individual eligibility to participate in the Plan or individual contract.  The
Committee is empowered to make such rules and regulations and interpretations as
may be necessary to carry out the Plan, and its decisions by majority vote shall
be binding and conclusive upon all persons participating in this Plan or
claiming any rights thereunder.  A majority of the members of the Committee
shall constitute a quorum for the transaction of business, and all actions taken
at a meeting shall be by the vote of a majority of those present at such
meeting.  Any action may be taken by the Committee without a meeting upon
written consent signed by all the members of the Committee.  The Committee shall
authorize records required to be maintained under the Plan.  The form of the
agreement under this Plan to be entered into with employees shall be approved by
the Committee.

 

3.         PARTICIPANTS.  The Committee shall determine from time to time which
executives or key employees of the Company or any subsidiary shall participate
in the Plan.  Participants may include (a) directors who are full-time Officers
or employees of the Company, (b) full-time officers and other executive
employees of the Company or any subsidiary, and (c) any other full–time
executives or key employees of the Company or any subsidiary selected by the
Committee for any calendar year, established by the Committee pursuant to its
rules and regulations.  Notwithstanding the foregoing, an executive or key
employee who was not participating in the Plan prior to January 1, 2000 shall
not begin participating after December 31, 1999.

 

4.         PROCEDURE FOR SELECTION OF PARTICIPANTS.  At the end of each year or
at such time as the Committee shall establish under its rules and regulations,
the Committee shall, exclusive of any participants who may be members of the
Committee, select the participants to whom allotments are to be made for such
year.  The selection of a participant for any year shall not entitle such
participant to an allotment for any subsequent year for which he is not selected
for an allotment.  Notwithstanding the foregoing, the Committee shall select no
participants to receive allotments under the Plan for any year beginning after
December 31, 1999.

 

5.         AMOUNT OF ALLOTMENTS.  As of the end of each year, the Committee
shall allot to the participants selected for such year, from the amount of the
Incentive Bonus Fund for that year as hereinafter determined, such amount as the
Committee in its sole discretion deems to be advisable and appropriate, but not
more than 33-1/3% of each participant's basic annual salary from the Company or
any subsidiary for such year shall be allotted to him. The Committee shall
notify each participant promptly in writing of any allotment made to him.  Such
allotment shall be evidenced by a written agreement between the Company and the
participant if such allotment is the first for such participant, or such
allotment shall be included as part of the agreement for any prior year entered
into between the Company and the participant.  Each allotment shall be
contingently credited and converted into share equivalents, as further provided
herein, and shall be distributable only in the manner and subject to the
conditions set forth herein.  The entire amount of each allotment to each
participant shall be contingently credited to him at the end of each year.  The
portion of the Incentive Bonus Fund for any year in excess of the maximum
limitation for all participants, as determined by the Committee, shall be
canceled.  In order to qualify for an allotment, a participant must be actively
employed by the Company, or be on an approved leave of absence, on the last day
of the year for which the allotment is made.

 

The allotments to participants for any year shall be made from an Incentive
Bonus Fund computed to be 5% of the excess, if any, of the consolidated net
income of the Company and its consolidated subsidiaries for the year over 6% of
the stockholders' equity, as shown in the consolidated balance sheet of the
Company and its consolidated subsidiaries at the end of the preceding year as
certified by the Company's independent certified public accountants.  No
Incentive Bonus Fund shall be computed if the consolidated net income of the
Company and its consolidated subsidiaries for a year does not exceed 6% of the
stockholders' equity at the end of the preceding year.  However, the Committee
may, in its discretion and by appropriate action, authorize an Incentive Bonus
Fund of any amount for such year in the event that the amount of the Incentive
Bonus Fund computed under the formula for such year is zero or an insignificant
amount in the judgment of the Committee.  "Consolidated net income" as used
herein, shall mean the amount of the net earnings as shown in the consolidated
statement of earnings of the Company and its consolidated subsidiaries for the
year as certified by the Company's independent certified public accountants;
subject, however, to the discretion of the Committee to exclude all or any items
of material amount therein applicable to any prior year.

 

Notwithstanding the foregoing, the Committee shall make no allotments under the
Plan to any participants for any year beginning after December 31, 1999.

 

6.         CONVERSION OF ALLOTMENTS INTO SHARE EQUIVALENTS AND CREDIT OF
DIVIDEND AND INTEREST EQUIVALENTS.  Each allotment contingently credited to a
participant shall be converted into an equivalent number of shares of the common
stock of the Company (the "Common Stock").  Commencing with any such allotment
for 1993, and for subsequent years, the number of such share equivalents shall
be determined by dividing (a) the amount of the allotment by (b) the average,
rounded to the nearest one–tenth of a cent ($.001), of the closing sales prices
per share for the Common Stock reported by the NASDAQ National Market System, or
such other stock exchange or market on which the Common Stock may be listed at
any particular time (the "Average Price"), for the last calendar quarter of the
year for which the allotment is made.  The number of share equivalents so
determined shall be computed to four decimal places.  For purposes of
determining the Average Price, the closing sales price for any trading day for
which there are no reported sales of the Common Stock shall be deemed to be the
last previously reported closing sales price.

 

Each participant shall also be contingently credited as of the end of each year
with an amount equal to the product of (x) the total dividends per share on the
Common Stock declared in such year multiplied by (y) the aggregate number of
share equivalents contingently credited to the said participant as of the
beginning of such year.  The amount so determined and credited shall be
converted to additional share equivalents in the manner stated in the preceding
paragraph using the Average Price for the last calendar quarter of such year. 
In the event that the authorized shares of Common Stock are split or changed in
any manner by reason of any reorganization, merger, consolidation, stock split,
stock dividend, or recapitalization, then the number of share equivalents and
the market value equivalent thereof contingently credited to each participant
shall be appropriately adjusted.

 

The methods for determining share equivalents to be credited to participants, as
set forth in the preceding two paragraphs of this Section 6, shall be effective
for allotments and dividend equivalents contingently credited to participants
for 1993 and subsequent years.  Further, the total "cash" balances contingently
credited to participants' accounts for 1992 and prior years for (i) dividends
declared and (ii) partial share equivalents, shall be converted as of December
31, 1993, into additional share equivalents in the manner stated in the first
paragraph of this Section 6, using the Average Price for the last calendar
quarter of 1993.  The conversion of allotments for 1992 and prior years into
share equivalents shall remain as originally determined; that is, on the basis
of the last available closing market quotation price per share for the Common
Stock for the applicable year.

 

In the event that a participant's allotment and dividend equivalents are to be
distributed to the participant in more than one (1) installment, then the
participant shall be paid an amount, within fifteen (15) days of the end of each
quarter of the calendar year, equal to the interest which would have accrued
during the quarter on the unpaid balance due the participant at the end of such
calendar quarter.  The interest rate shall equal the prime interest rate charged
by Norwest Bank Minnesota, N.A. on the last business day of each quarter. For
example, assume that the unpaid balance due a participant on December 31, Year I
is $240,000, and that the participant will receive monthly payments of $2,000
for a ten (10)-year period beginning in Year II.  Further assume that the prime
interest rates in effect on the last business day of March, June, September and
December, Year II, are 6-1/4%, 6-3/4%, 7-1/4% and 7-3/4%, respectively. During
Year II, the participant will be due the following additional interest
equivalency payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Interest
Equivalency Payments

 

1st Quarter

 

$

234,000

 

x

 

.0625

 

x

 

.25

 

=

 

$

3,656.25

 

2nd Quarter

 

228,000

 

x

 

.0675

 

x

 

.25

 

=

 

3,847.50

 

3rd Quarter

 

222,000

 

x

 

.0725

 

x

 

.25

 

=

 

4,023.75

 

4th Quarter

 

216,000

 

x

 

.0775

 

x

 

.25

 

=

 

4,185.00

 

 

7.         TERMS OF AGREEMENTS.  Each agreement authorized under this Plan shall
cover a period of one year unless additional allotments are made in any
subsequent year, in which case such agreement shall also constitute an agreement
for such subsequent year or years.  Each agreement shall provide that (a) the
participant will continue in full–time employment with the Company or a
subsidiary until age 65 or other age approved and authorized by the Committee
but in no case earlier than age 60; (b) the participant will, upon retirement,
agree to be available for consultation during the period that he is receiving
distributions hereunder; (c) the participant will refrain from actively
participating or engaging in any business in competition with the Company or any
subsidiary; (d) the participant will agree to the terms of accumulation and
distribution of his allotments; and (e) the participant will agree to be bound
concurrently with the Company under this Plan and the rules and regulations of
the Committee promulgated thereunder.

 

8.         FORFEITURES.  Upon termination of a participant's service with the
Company or a subsidiary prior to age 65, such participant shall forfeit 50% of
all allotments and dividend equivalents contingently credited to him in any
year, except that such forfeiture shall not apply in the case of termination of
service (a) attributable to death, disability, or discharge without cause; (b)
for any reason after the participant has attained age 60; or (c) attributable to
any reason approved by the Committee.  The entire amount of a participant's
allotments, dividend equivalents, and interest equivalents shall be forfeited
and canceled if, without the prior written consent of the Company, the
participant at any time prior to his termination of service, or during the
period that he is receiving distributions hereunder, actively participates or
engages in any business in competition with the Company or any subsidiary, or
fails to hold himself available for consultation, or if the employment of the
participant is terminated at any time prior to age 65 because of evidence of
dishonesty or mistrust in his employment or because of his involvement in a
crime or misdemeanor against the Company or any subsidiary, or any employee
thereof, for which he is convicted or which he has confessed in writing to the
Company or to any law enforcement agency.  Allotments and dividend equivalents
contingently credited to a participant, as well as interest equivalents, that
shall have been forfeited by such participant shall be canceled and shall not
thereafter be reallotted to any other participant.

 

9.         DISTRIBUTION OF ALLOTMENTS.  Distribution of the allotments and
dividend equivalents contingently credited to, and accumulated for the benefit
of, a participant as of the end of the year in which termination of his service
occurs, or as of an earlier date of retirement or other date of termination
which does not entitle him to participate under this Plan for such year, shall
be made by payments in cash in such manner and on such dates as determined by
the Committee, in its sole discretion, immediately prior to the date the first
payment is due or, if the Committee shall not have made such prior determination
as aforesaid, then in equal monthly installments over a period of one hundred
twenty (120) months, commencing with the second month following the month or
following the end of the year of termination of service, whichever is
applicable.  Such installment payments shall also include an additional sum
representing interest equivalency pursuant to Section 6 hereof.

 

In the event that a participant dies after retirement but before any or all
payments have been made, all remaining payments shall be made to the person or
persons or the survivors thereof as designated by the participant pursuant to
his agreement with the Company.  The Committee shall cause the Company to make
such payments in the manner of payment then in effect pursuant to said
agreement, or in one or more installments, as the Committee in its sole
discretion may then determine.  The Company shall deduct from the amount of all
payments made under this Plan any taxes required to be withheld under federal,
state or local laws.

 

The amount distributable to a participant shall be the greater of (a) the amount
at which the participant's total share equivalents were contingently credited to
the participant, or (b) an amount equal to the product of (x) the total share
equivalents contingently credited to the participant multiplied by (y) the
Average Price of the Common Stock for either (i) the calendar quarter ending on
the date of termination (if the participant's date of termination is the last
day of a calendar quarter or the next following day), or (ii) the last
sixty–three (63) days U.S. stock markets are open for the trading of shares
prior to or coinciding with the date of termination (if the participant's date
of termination is not the last day of a calendar quarter or the next following
day).

 

A participant who is actively employed by the Company, or is on an approved
leave of absence, on the last day of 1999, may elect to transfer all, but not
part, of the share equivalents contingently credited to the participant pursuant
to the Plan as of December 31, 1999 to the Nash Finch Company Supplemental
Executive Retirement Plan (the “SERP”).  If such an election is made, a dollar
denominated credit will be made to a bookkeeping account established under the
SERP as of January 1, 2000.  The amount of the credit to such account under the
SERP shall be equal to the dollar value of the electing participant’s account
under the Plan as of December 31, 1999, including share equivalents credited as
of that date for 1999, determined in the manner established under this Section 9
for determining amounts distributable to a participant.

 

If a participant makes the election provided for in the preceding paragraph, the
participant shall, as of January 1, 2000, cease to be a participant entitled to
any benefit arising under or in connection with the Plan.  The election shall be
made in the manner, and in accordance with, the terms specified, in the SERP.

 

A participant who is actively employed by the Company, or is on an approved
leave of absence, on September 30, 2001, may elect to transfer all, but not
part, of the share equivalents contingently credited to such participant
pursuant to the Plan as of such date into Performance Units (as defined in the
Stock Incentive Plan, as hereinafter defined) granted under the Nash Finch
Company 2000 Stock Incentive Plan (the “Stock Incentive Plan”).  If such an
election is made by a participant, Performance Units will be granted to such
participant under the Stock Incentive Plan as of October 1, 2001.  Such
Performance Units shall represent the right of such participant to receive a
distribution from the Company in the form of shares of Common Stock (the
“Performance Shares”) upon the achievement of certain employment or service
goals by such participant and upon the termination of such participant’s
employment or other service with the Company, as set forth in more detail in
such participant’s award agreement evidencing such Performance Units.

 

Prior to any such transfer of share equivalents and the grant of Performance
Units under the Stock Incentive Plan to a participant pursuant to the preceding
paragraph, such participant shall be contingently credited as of September 30,
2001 with an amount equal to the product of (x) the total cash dividends per
share on the Common Stock declared during the calendar year 2001 and on or
before September 30, 2001, multiplied by (y) the aggregate number of share
equivalents contingently credited to such participant as of the beginning of the
calendar year 2001.  The amount so determined and credited shall be converted to
additional share equivalents in the manner stated in the first paragraph of
Section 6 of the Plan using the Average Price for the quarter ended September
30, 2001.  In the event that the authorized shares of Common Stock are, on or
before September 30, 2001, split or changed in any manner by reason of any
reorganization, merger, consolidation, stock split, stock dividend, or
recapitalization, then the number of share equivalents then held by such
participant and the market value equivalent thereof contingently credited to
such participant shall be appropriately adjusted.

If a participant makes the election provided for in the two preceding
paragraphs, the participant shall, as of October 1, 2001, cease to be a
participant entitled to any benefit arising under or in connection with the
Plan.

 

10.       RIGHTS OF PARTICIPANTS.  No participant or any other person shall
acquire or have any interest in any fund or in any specific asset or assets of
the Company or any subsidiary by reason of any allotments to him hereunder, nor
any right to receive any distribution under this Plan, except as and to the
extent expressly provided in the Plan.  Nothing in this Plan shall be deemed to
give any officer or employee of the Company or any subsidiary any right to
participate in the Plan except to such extent, if any, as the Committee may
determine in accordance with the provisions of this Plan.  The adoption of this
Plan or the authorization and execution of an agreement thereunder shall not be
held or construed to confer upon any employee any right or guarantee of
continuation of employment by the Company or any subsidiary, nor shall it affect
in any way the terms of any employment agreement now or hereafter in effect
between the employee and the Company or a subsidiary; and, further, it shall not
confer upon any, participant any rights of a shareholder by reason of the share
equivalents contingently credited to him under this Plan.

 

11.       NON-ASSIGNABILITY OF AGREEMENT.  The agreement authorized under this
Plan when entered into between the Company and the employee shall not be
assignable or otherwise subject to hypothecation by the employee, nor Shall the
employee acquire any rights to any distributable amount thereunder except as
provided in this Plan and such agreement.  Such agreement shall continue in
force under its terms whether or not this Plan is amended or terminated, and
shall constitute a legally enforceable contract between the Company and the
employee during the period of its existence.

 

12.       AMENDMENT OR TERMINATION OF PLAN.  The Committee may amend or
discontinue this Plan at any time by the affirmative vote of a majority of such
Committee who are not participants under this Plan.  No amendment, however,
shall alter or impair any agreement then in force without the consent of the
employee covered thereby, and no amendment shall apply to or affect the payment
or distribution of any participant of any amounts contingently credited to him
for any year ended prior to the effective date of such amendment.  Termination
of the Plan shall not affect the agreements theretofore entered into between the
Company and its employees, but all such agreements shall continue in force after
the termination of this Plan in accordance with their terms and provisions.

 

13.       EFFECTIVE DATE OF PLAN.  This Plan shall become effective upon the
approval of the Executive Committee of the Board of Directors of the Company at
any regular or special meeting, or at any adjournment thereof, called and held
before December 31, 1967, and shall remain in effect until terminated by the
Board of Directors.

 

14.       CHANGE IN CONTROL.  For purposes of this Section 14, a "Change in
Control" of the Company shall mean (a) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to any person that is not
controlled by the Company; (b) the approval by the stockholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company; or
(c) a change in control of a nature that would be required to be reported
(assuming such event has not been "previously reported") in response to Item
1(a) of the Current Report on Form 8-K, as in effect on May 1, 1988, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to such reporting
requirement; provided that, without limitation, such a Change in Control shall
be deemed to have occurred at such time as (x) any person is or becomes the
"beneficial owner" (as defined in Rule 13d–3 under the Exchange Act), directly
or indirectly, of 20% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections of
directors; or (y) individuals who constitute the Board of Directors on May 1,
1988, Cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to May 1, 1988, whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors comprising the Board of Directors on May
1, 1988, (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without
objection to such nomination) shall be, for purpose of this clause (y),
considered as though such person were a member of the Board of Directors on May
1, 1988.

 

The Company expressly recognizes that a Change in Control of the Company would
be likely to result in a material alteration or diminution of a participant's
position and responsibilities, and if that were to occur, certain of the terms
of this Plan would be unreasonable or unfair in their application to
participants.

 

Accordingly, if during the term of this Plan, any Change in Control of the
Company shall occur, the following provisions shall be applicable and shall
supersede all other provisions of this Plan:

 

            a.         [Intentionally omitted.]

 

            b.         Forfeitures.  The provisions of Section 8 shall lapse and
shall have no further applicability to any participant; and

 

            c.         Acceleration.  All amounts credited to and accumulated
for the benefit of a participant (or other person receiving payments or entitled
to receive payments under Section 9, such other person to be hereinafter called
"other recipient"), shall become due and payable and shall be paid in full on
the day the Change in Control becomes effective unless a participant or other
recipient, prior thereto, shall notify the Committee, in writing, that such
participant or other recipient waives the right to acceleration, in which case
the provision of Section 9 shall continue to apply to such participant or other
recipient.  In effecting such payment, the Committee may make such arrangements,
including deposits in escrow or in trust in advance of the anticipated effective
date of the Change in Control, as it may deem advisable, to carry out the
foregoing and to protect the interests of the Company in the event such Change
in Control does not occur.