Exhibit
10.9


 


NASH FINCH COMPANY


 


1997 NON-EMPLOYEE DIRECTOR


STOCK COMPENSATION PLAN


(2003 Revision)


 


1.             Description.


 


1.1           Name.  The name of the Plan is the “Nash Finch
Company 1997 Non-Employee Director Stock Compensation Plan (2003 Revision).”


 


1.2           Purpose.  The purpose of the Plan is to provide
Qualified Directors with the opportunity to defer receipt of Director Cash
Compensation through credits to their Share or Cash Accounts.


 


1.3           Type.  The Plan is maintained primarily for the
purpose of providing deferred compensation for Qualified Directors and is
intended to be unfunded for tax purposes. The Plan will be construed and
administered in a manner that is consistent with and gives effect to the
foregoing.


 


1.4           Background.  As originally adopted, the Plan provided
that, as of the Effective Time, all Qualified Directors (a) would receive 50
percent of their Annual Retainer in the form of either Shares or credits to
their Share Accounts under this Plan, and (b) would be entitled to defer
receipt of some or all of the balance of their director compensation through
credits to their Cash or Share Accounts under this Plan.  As part of changes approved by the Board and
the Corporate Governance Committee of the Board to the Company’s overall
program for compensating non-employee directors, the decision was made to
terminate, as of December 31, 2003, the requirement in this Plan that Qualified
Directors receive 50% of their Annual Retainer in the form of Shares or credits
to their Share Accounts.


 


2.             Participation.


 


2.1           Eligibility.


 


(a)           Each individual who
is a Qualified Director at any point during a calendar quarter ending on or
before December 31, 2003 will receive the portion of the Annual Retainer
payable with respect to such quarter in the form of Retainer Shares to the
extent provided and in accordance with Section 3.2.


 


(b)           Each individual who
is a Qualified Director on the first day of a calendar year is eligible to make
deferral elections pursuant to Section 3.3 with respect to such calendar
year.  An individual who becomes a
Qualified Director after the first day of the calendar year is eligible to make
deferral elections pursuant to Section 3.3 with respect to the remainder of
such calendar year.  A Participant who
receives a distribution, pursuant to Section 4.1(d)(i) or (iii), is not
eligible to elect additional deferrals pursuant to Section 3.3 until the
one-year anniversary of such distribution.


 

















 


2.2           Ceasing to be Eligible.  An individual who ceases to be a Qualified Director is not
eligible to (a) receive Retainer Shares pursuant to Section 3.2 other than such
shares relating to the Annual Retainer payable with respect to calendar
quarters ending with the earlier of the calendar quarter during which the
individual ceases to be a director or the calendar quarter ending on December
31, 2003, or (b) make deferrals and receive deferral credits pursuant to
Section 3.3 after such cessation.


 


2.3           Condition of Participation.  Each Qualified Director, as a condition of
participation in the Plan, is bound by all the terms and conditions of the Plan
and the Plan Rules, including but not limited to the reserved right of the
Company to amend or terminate the Plan, and must furnish to the Administrator
such pertinent information, and execute such election forms and other
instruments, as the Administrator or Plan Rules may require by such dates as
the Administrator or Plan Rules may establish.


 


2.4           Termination of Participation.  A Participant will cease to be such as of
the date on which he or she is not then eligible to make deferrals and his or
her entire Account balance has been distributed.


 


3.             Benefits.


 


3.1           Participant Accounts. For each Participant, the
Administrator will establish and maintain a Cash Account, a Share Account or
both to evidence amounts credited with respect to the Participant pursuant to
Sections 3.2, 3.3 and 3.4.


 


3.2           Issuance of Retainer Shares.  As of the first day of each calendar quarter
that immediately follows a calendar quarter whose last day occurs during the
period beginning at the Effective Time and ending on December 31, 2003, each
individual who is a Qualified Director at any time during such immediately
preceding calendar quarter will, unless a deferral election has properly been
made pursuant to Section 3.3(a), be entitled to receive (as soon as reasonably
practical after such immediately preceding calendar quarter) the Retainer
Shares relating to his or her services as a Qualified Director during such
immediately preceding calendar quarter.


 


3.3           Deferral Credits.


 


(a)           With respect to services to be
performed during the period beginning at the Effective Time and ending on
December 31, 2003, a Qualified Director may elect to defer all (but not less
than all) of the Retainer Share Amount relating to his or her services as a
Qualified Director during a calendar year. 
Any such election will automatically apply to the Qualified Director’s
Retainer Share Amount for the year as adjusted from time to time.


 


(b)           Commencing with respect to services
to be performed after the Effective Time, a Qualified Director may elect to
defer all or any portion of his or her Director Cash Compensation relating to
his or her services as a Qualified Director during a calendar year.  Any portion so elected will automatically
apply to the Qualified Director’s Director Cash Compensation for the year as
adjusted from time to time.


 


(c)           Elective deferrals of a Qualified
Director’s Retainer Share Amount and Director Cash Compensation will be made in
accordance with the following rules:


 


(i)            An election made pursuant to this
Section 3.3 will not be effective unless it is made on a properly completed
election form received by the


 

















 


Administrator by the last
day of the calendar year immediately preceding the calendar year to which the
election relates or, in the case of an individual who becomes a Qualified
Director after the first day of the calendar year, within 30 days after the
date such individual becomes a Qualified Director.  Notwithstanding the foregoing, with respect to an initial
deferral election that is made in connection with the adoption of the Plan,
such election will be effective if received by the Administrator by April 30,
1997.  Any deferral elections under this
Section 3.3 will apply only to a Qualified Director’s Retainer Share Amount and
Director Cash Compensation relating to services performed after the effective
date of the election.


 


(ii)           A Qualified Director may revoke a
deferral election made pursuant to this Section 3.3 at any time.  Any such revocation will be effective with
respect to any payment of a Qualified Director’s Retainer Share Amount and
Director Cash Compensation that (A) follows by at least 30 days (or such
shorter period as Plan Rules may allow) the Administrator’s receipt of a
properly completed form, and (B) relates to services as a Qualified Director
after the date on which the Administrator receives such notice.  Upon making a revocation, the Qualified
Director will be unable to make further deferrals of his or her Retainer Share
Amount (if then payable) and Director Cash Compensation until the next calendar
year.


 


(iii)          In conjunction with each deferral
election made pursuant to Section 3.3(b), a Qualified Director must elect, in
accordance with and subject to Plan Rules, how the deferral is to be allocated
(in increments of five percent only) among his or her Cash Account and Share
Account.  Such an election is
irrevocable after the latest date by which the deferral election to which it
relates must be received by the Administrator to be effective.


 


(iv)          Deferrals of the Retainer Share Amount
pursuant to Section 3.3(a) will be credited to a Qualified Director’s Share
Account as of the date on which the Retainer Shares would have been issued
pursuant to Section 3.2 but for his or her deferral election.  Deferrals of Director Cash Compensation
pursuant to Section 3.3(b) will be credited to a Qualified Director’s Cash
Account or Share Account, as the case may be, as of the date on which such
Director Cash Compensation would have been paid but for his or her deferral
election.  Such credits to the Qualified
Director’s Cash Account will be in U.S. dollars in an amount equal to the
amount of the deferral allocated to the Cash Account by the Qualified
Director.  Such credits to a Qualified
Director’s Share Account will be the number of full and fractional Share Units
determined by dividing the amount of Director Cash Compensation to be allocated
to the Share Account by the Market Price on the date as of which the credit is
made.


 


3.4           Earnings Credits.


 


(a)           Cash Account.  As of the first day of each calendar
quarter, a Participant’s Cash Account will be credited with interest,
calculated on the basis of the balance in the Participant’s Cash Account as of
the last day of the immediately preceding calendar quarter, in an amount equal
to the “applicable percentage” of the average daily balance of the Account for
such immediately preceding calendar quarter. 
The applicable percentage for a given calendar quarter is the quarterly
equivalent of the average of the annual yield set forth for each month during
such calendar quarter in the Moody’s Bond Record, published by Moody’s
Investor’s Service, Inc. (or any successor thereto) under the heading of
“Moody’s


 

















 


Corporate Bond Yield
Averages — Av. Corp.” or, if such yield is no longer available, a substantially
similar average selected by the Administrator.


 


(b)           Share Account.


 


(i)            As of the first day of the calendar
quarter first following the date on which dividends are paid on Shares, a
Participant’s Share Account will be credited with that number of full and
fractional Share Units determined by dividing (A) the dollar amount of the
dividends that would have been payable to the Participant if the number of
Share Units credited to the Participant’s Share Account on the record date for
such dividend payment had then been Shares registered in the name of such
Participant by (B) the Market Price on the date as of which the credit is made.


 


(ii)           In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering or any other change in the Company’s corporate
structure or Shares, the Administrator will make such adjustment, if any, as
the Administrator may deem appropriate in the number and kind of Share Units
credited to Share Accounts.


 


3.5           Vesting. 
Each Participant always has a fully vested nonforfeitable interest in
his or her Account.


 


4.             Distribution.


 


4.1           Distribution to Participant.


 


(a)           Form.  Distribution to a Participant will be made
in the form of a lump sum payment unless (i) the Participant elects, on a
properly completed form, to receive his or her distribution in the form of
annual installment payments for a period of not more than 10 years and (ii)
other than cessation resulting from Disability, the date on which he or she
ceases to be a member of the Board follows by more than one year the date on
which a properly completed election form is received by the Administrator.  Any election made pursuant to this Section
4.1(a) may be changed from time to time upon the Administrator’s receipt of a
properly completed form, provided that, other than cessation resulting from
Disability, such change will not be valid and will not have any effect unless
it is made on a properly completed form received by the Administrator more than
one year prior to a Participant’s cessation of service as a member of the
Board.  Any election made pursuant to
this Section 4.1(a) will apply to the entire balance of the Participant’s
Account attributable to deferral credits with respect to the period through the
date on which he or she ceases to be a member of the Board.  Any distribution from a Participant’s Cash
Account will be made in cash only.  Any
distribution from a Participant’s Share Account will be made in full Shares
only and cash in lieu of any fractional Share.


 


(b)           Time.  Distribution to a Participant will be made
or commence on or as soon as administratively practicable after the first day
of the calendar quarter that follows the date on which the Participant ceases
to be a member of the Board.


 


(c)           Amount.


 


(i)            Cash Account.


 

















 


(A)          Lump Sum.  The amount of a lump sum payment from a
Participant’s Cash Account will be equal to the balance of the Account as of
the first day of the calendar month coinciding with or immediately preceding
the date on which the payment is made.


 


(B)           Installments.  The amount of an installment payment from a
Participant’s Cash Account will be determined by dividing the balance of the
Account as of the first day of the calendar month coinciding with or immediately
preceding the date on which the payment is made by the total number of
remaining payments (including the current payment).


 


(ii)           Share Account.


 


(A)          Lump Sum.  A lump sum distribution from a Participant’s
Share Account will consist of the number of Shares equal to the number of full
Share Units credited to the Account as of the first day of the calendar month
coinciding with or immediately preceding the date on which the distribution is
made plus cash in lieu of any fractional Share Unit then credited to the
Account in an amount based on the Market Price on that date.


 


(B)           Installments.  Installment distributions from a
Participant’s Share Account, other than the final distribution, will consist of
the number of Shares determined by dividing the number of full Share Units
credited to the Account as of the first day of the calendar month coinciding
with or immediately preceding the date on which the distribution is made by the
total number of remaining Share distributions (including the current payment)
and rounding the quotient to the next higher full Share.  The amount of the final payment will be
determined in accordance with clause (A).


 


(d)           Special Rules.  The provisions of this Section 4.1(d) will
apply notwithstanding Section 4.1(a), (b) or (c) or any election by a
Participant to the contrary.


 


(i)            Withdrawals Due to Unforeseeable
Emergency.  A distribution will be
made to a Participant from his or her Share or Cash Account if the Participant
submits a written distribution request to the Administrator and the
Administrator determines that the Participant has experienced an Unforeseeable
Emergency.  The amount of the
distribution may not exceed the lesser of (a) the amount necessary to satisfy
the emergency, as determined by the Administrator, or (b) the balance of the
Participant’s Account as of the date of the distribution determined in
accordance with Section 4.1(c). 
Payments made on account of an Unforeseeable Emergency will not be made
to the extent that such Unforeseeable Emergency is or may be relieved through
reimbursement or compensation by insurance or otherwise, by liquidation of the
Participant’s assets (to the extent that such liquidation would not itself
cause severe financial hardship) or by cessation of deferrals under Section
3.3.  Any distribution pursuant to this
Section 4.1(d)(i) will be made in the form of a lump sum payment (in cash from
the Cash Account and in Shares from the Share Account) as soon as
administratively practicable after the Administrator’s determination that the Participant
has experienced an Unforeseeable Emergency and will be made first from the
Participant’s Cash Account and then from the Participant’s Share Account, with
the amount distributed from the Share Account determined based upon the


 

















 


Market Price as of the first
day immediately preceding the date on which the distribution is made.


 


(ii)           Small Benefits.  If the balance of the Cash Account of a
Participant who has ceased to be a member of the Board is less than $5,000 as
of the first day of a calendar month, such balance will be distributed to the
Participant in the form of a lump sum cash payment as soon as administratively
practicable thereafter.


 


(iii)          Accelerated Distribution.  A Participant may, at any time, elect an
immediate distribution of his or her Account in an amount equal to 90 percent
of the balance of the Account as of the date of the distribution determined in
accordance with Section 4.1(c), in which case the remaining balance of the
Account will be forfeited.  The
distribution will be made in the form of a lump sum payment as soon as
administratively practicable after the Administrator’s receipt of a written
application on a form furnished by the Administrator.  Any distribution from a Participant’s Cash Account will be made
in cash only.  Any distribution from a
Participant’s Share Account will be made in full Shares only and cash in lieu
of any fractional Share.


 


(e)           Reduction of Account Balance.  The balance of the Account from which a
distribution is made will be reduced by the amount of the distribution as of
the date of the distribution.


 


4.2           Distribution to Beneficiary.


 


(a)           Form.  In the event of a Participant’s death, the
balance of the Participant’s Account will be distributed to the Participant’s
Beneficiary in a lump sum payment whether or not payments had commenced to the
Participant in the form of installments prior to his or her death.  Any distribution from a Participant’s Cash
Account will be made in cash and any distribution from a Participant’s Share
Account will be made in full Shares and cash in lieu of any fractional Share.


 


(b)           Time.  Distribution to a Beneficiary will be made
as soon as administratively practicable after the date on which the
Administrator receives notice of the Participant’s death.


 


(c)           Amount.  The amount of the payment will be determined
in accordance with Section 4.1(c).


 


(d)           Reduction of Account Balance.  The balance of the Account from which a
distribution is made will be reduced by the amount of the distribution as of
the date of the distribution.


 


(e)           Beneficiary Designation.


 


(i)            Each Participant may designate, on a
form furnished by the Administrator, one or more primary Beneficiaries or
alternative Beneficiaries to receive all or a specified part of his or her
Account after his or her death, and the Participant may change or revoke any
such designation from time to time.  No
such designation, change or revocation is effective unless executed by the
Participant and received by the Administrator during the Participant’s
lifetime.


 

















 


(ii)           If, for all or any portion of his or
her Account, a Participant fails to designate a Beneficiary, revokes a
Beneficiary designation without naming another Beneficiary or designates one or
more Beneficiaries, none of whom survives the Participant or exists at the time
in question, such Account or portion will be paid to the Participant’s
surviving spouse or, if the Participant is not survived by a spouse, to the
representative of the Participant’s estate.


 


(iii)          The automatic Beneficiaries specified
above and, unless the designation otherwise specifies, the Beneficiaries
designated by the Participant, become fixed as of the Participant’s death so
that, if a Beneficiary survives the Participant but dies before the receipt of
the payment due such Beneficiary, the payment will be made to the
representative of such Beneficiary’s estate. 
Any designation of a Beneficiary by name that is accompanied by a
description of relationship or only by statement of relationship to the Participant
is effective only to designate the person or persons standing in such
relationship to the Participant at the Participant’s death.


 


4.3           Limitations on Share Distributions.  Notwithstanding any other provision of the
Plan to the contrary, neither the Company nor the Trustee is required to issue
or distribute any Shares under this Plan, and a distributee may not sell,
assign, transfer or otherwise dispose of Shares issued or distributed pursuant
to the Plan, unless (a) there is in effect with respect to such Shares a
registration statement under the Securities Act and any applicable state
securities laws or an exemption from such registration under the Securities Act
and applicable state securities laws, and (b) there has been obtained any other
consent, approval or permit from any other regulatory body which the Company
deems necessary or advisable. The Company or the Trustee may condition such
issuance, distribution, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing Shares, as may be deemed necessary or
advisable by the Company in order to comply with such securities laws or other
restrictions.


 


4.4           Payment In Event of Incapacity.  If any individual entitled to receive any
payment under the Plan is, in the judgment of the Administrator, physically,
mentally or legally incapable of receiving or acknowledging receipt of the
payment, and no legal representative has been appointed for the individual, the
Administrator may (but is not required to) cause the payment to be made to any
one or more of the following as may be chosen by the Administrator: the
Beneficiary (in the case of the incapacity of a Participant); the institution
maintaining the individual; a custodian for the individual under the Uniform
Transfers to Minors Act of any state; or the individual’s spouse, children,
parents, or other relatives by blood or marriage. The Administrator is not
required to see to the proper application of any such payment, and the payment
completely discharges all claims under the Plan against the Company, the Plan
and the Trust to the extent of the payment.


 


5.             Source
Of Payments; Nature Of Interest.


 


5.1           Establishment of Trust.


 


(a)           The Company may establish a Trust
with an independent corporate trustee. 
The Trust must be a grantor trust with respect to which the Company is
treated as grantor for purposes of Code section 677 and must provide that, upon
the insolvency of the Company, Trust assets will be used to satisfy claims of
the Company’s general creditors.  The
Company will pay all taxes of any and all kinds whatsoever payable in respect
of the Trust assets or


 

















 


any transaction with respect
to the Trust assets.  The Company may
from time to time transfer to the Trust cash, marketable securities or other
property acceptable to the Trustee in accordance with the terms of the Trust.


 


(b)           Notwithstanding subsection (a), not
later than the effective date of a Change in Control, the Company must transfer
to the Trust an amount not less than the amount by which (i) 125 percent of the
aggregate balance of all Participants’ Accounts as of the last day of the month
immediately preceding the effective date of the Change in Control exceeds (ii)
the value of the Trust assets attributable to amounts previously contributed by
the Company as of the most recent date as of which such value was determined.


 


5.2           Source of Payments.


 


(a)           The Company will pay, from its
general assets, the benefits pursuant to Section 4 attributable to a
Participant’s Account, and all costs, charges and expenses relating thereto.


 


(b)           The Trustee will make distributions
to Participants and Beneficiaries from the Trust in satisfaction of the
Company’s obligations under the Plan in accordance with the terms of the
Trust.  The Company is responsible for
paying any benefits attributable to a Participant’s Account that are not paid
by the Trust.


 


5.3           Status of Plan. 
Nothing contained in the Plan or Trust is to be construed as providing
for assets to be held for the benefit of any Participant or any other person or
persons to whom benefits are to be paid pursuant to the terms of the Plan, the
Participant’s or other person’s only interest under the Plan being the right to
receive the benefits set forth herein. The Trust is established only for the
convenience of the Company and the Participants, and no Participant has any
interest in the assets of the Trust prior to distribution of such assets
pursuant to the Plan.  Until such time
as Shares are distributed to a Participant, Beneficiary of a deceased
Participant or other person, he or she has no rights as a shareholder with
respect to any Shares Units credited to a Share Account pursuant to the
Plan.  To the extent that the
Participant or any other person acquires a right to receive benefits under the
Plan or the Trust, such right is no greater than the right of any unsecured
general creditor of the Company.


 


5.4           Non-Assignability of Benefits.  The benefits payable under the Plan and the
right to receive future benefits under the Plan may not be anticipated,
alienated, sold, transferred, assigned, pledged, encumbered, or subjected to
any charge or legal process.


 


6.             Amendment
and Termination.


 


6.1           Amendment.


 


(a)           The Company reserves the right to
amend the Plan at any time to any extent that it may deem advisable.  To be effective, an amendment must be stated
in a written instrument approved in advance or ratified by the Board and
executed in the name of the Company by its Chief Executive Officer, President
or a Vice President and attested by the Secretary or an Assistant Secretary.


 


(b)           An amendment adopted in accordance
with Section 6.1(a) is binding on all interested parties as of the effective
date stated in the amendment; provided, however, that no amendment will have
any retroactive effect so as to deprive any Participant, or the


 

















 


Beneficiary of a deceased
Participant, of any benefit to which he or she is entitled under the terms of
the Plan in effect immediately prior to the effective date of the amendment,
determined as if such Participant had terminated service as a director
immediately prior to the effective date of the amendment.


 


(c)           Without limiting Section 6.1(a), the
Company reserves the right to amend this Plan to change the method of
determining the earnings credited to Participants’ Accounts pursuant to Section
3.4 and to apply such new method not only with respect to the portion of the
Accounts attributable to credits made after the date on which such amendment is
adopted but also with respect to the portion of the Accounts attributable to
credits made prior to the date on which such amendment is adopted and
regardless of whether such new method would result in materially lower earnings
credits than the old method.


 


(d)           The provisions of the Plan in effect
at the termination of a Participant’s service as a director will, except as
otherwise expressly provided by a subsequent amendment, continue to apply to
such Participant.


 


6.2           Termination. 
The Company reserves the right to terminate the Plan at any time. The
Plan will terminate as of the date specified by the Company in a written
instrument by its authorized officers to the Administrator, adopted in the
manner of an amendment.  Upon the
termination of the Plan, any benefits to which Participants have become
entitled prior to the effective date of the termination will continue to be
paid in accordance with the provisions of Section 4, provided that a majority
of the members of the Board who are not then Participants may cause the entire
interest in the Plan of any or all Participants, or the Beneficiaries of any or
all deceased Participants, to be distributed in the form of an immediate lump
sum payment.


 


7.             Definitions,
Construction and Interpretation. 
The definitions and rules of construction and interpretation set forth
in this Section 7 apply in construing the Plan unless the context otherwise
indicates.


 


7.1           Account. 
“Account” means the bookkeeping account or accounts maintained with
respect to a Participant pursuant to Section 3.1.


 


7.2           Administrator. 
The “Administrator” of the Plan is the Corporate Governance Committee of
the Board or such other committee or the person to whom administrative duties
are delegated pursuant to the provisions of Section 8.1, as the context
requires.


 


7.3           Annual Retainer. 
“Annual Retainer” means the regular retainer payable by the Company to a
Qualified Director for a 12-month period of service as a Qualified Director,
exclusive of fees specifically paid for attending or chairing regular or
special meetings of the Board and Board committees, fees or special retainers
paid for membership on standing Board committees or for serving as the chair of
the Board or standing Board committees, expense allowances or reimbursements,
insurance premiums and any other payments that are determined by reference to factors
other than holding office as a Qualified Director.


 


7.4           Beneficiary. 
“Beneficiary” with respect to a Participant is the person designated or
otherwise determined under the provisions of Section 4.2(e) as the distributee
of benefits payable after the Participant’s death.  A person designated or otherwise determined to be a Beneficiary
under the terms of the Plan has no interest in or right under the Plan until
the Participant in question has died.  A
Beneficiary will cease to be such on the day on which all benefits to which he,
she or it is entitled under the Plan have been distributed.


 

















 


7.5           Board. 
“Board” means the board of directors of the Company.


 


7.6           Cash Account. 
“Cash Account” means an Account to which amounts are credited in U.S.
dollars.


 


7.7           Change in Control. 
“Change in Control” means any of the following:


 


(a)           the sale, lease, exchange or other
transfer, directly or indirectly, of all or substantially all of the assets of
the Company, in one transaction or in a series of related transactions, to any
person;


 


(b)           the approval by the stockholders of
the Company of any plan or proposal for the liquidation or dissolution of the
Company;


 


(c)           any person is or becomes after the
Effective Time the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of (i) 20 percent or more, but not more
than 50 percent, of the combined voting power of the Company’s outstanding
securities ordinarily having the right to vote at elections of directors,
unless the transaction resulting in such ownership has been approved in advance
by the continuity directors, or (ii) more than 50 percent of the combined
voting power of the Company’s outstanding securities ordinarily having the
right to vote at elections of directors (regardless of any approval by the
continuity directors);


 


(d)           a merger or consolidation to which
the Company is a party if the stockholders of the Company immediately prior to
the effective date of such merger or consolidation have beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) immediately following the
effective date of such merger or consolidation of securities of the surviving
company representing (a) 50 percent or more, but not more than 80 percent, of
the combined voting power of the surviving corporation’s then outstanding
securities ordinarily having the right to vote at elections of directors,
unless such merger or consolidation has been approved in advance by the
continuity directors, or (b) less than 50 percent of the combined voting power
of the surviving corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval by the
continuity directors);


 


(e)           the continuity directors cease for
any reason to constitute at least a majority of the Company’s board of
directors; or


 


(f)            a change in control of the Company
of a nature that would be required to be reported pursuant to section 13 or
15(d) of the Exchange Act, whether or not the Company is then subject to such reporting
requirement.


 


(g)           For purposes of this Section 7.7:


 


(i)            a “continuity director” means any
individual who is a member of the Board as of the Effective Time while he or
she is a member of the Board, and any individual who subsequently becomes a member
of the Board whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors who
are continuity directors (either by a specific


 

















 


vote or by approval of the
proxy statement of the Company in which such individual is named as a nominee
for director without objection to such nomination);


 


(ii)           “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time; and


 


(iii)          “person” means any individual,
corporation, partnership, group, association or other “person,” as such term is
defined in section 14(d) of the Exchange Act, other than (A) the Company; (B)
any corporation at least a majority of whose securities having ordinary voting
power for the election of directors is owned, directly or indirectly, by the
Company; (C) any other entity in which the Company, by virtue of a direct or
indirect ownership interest, has the right to elect a majority of the members
of the entity’s governing body; or (D) any benefit plan sponsored by the
Company, a corporation described in clause (B) or an entity described in clause
(C).


 


7.8           Code. 
“Code” means the Internal Revenue Code of 1986, as amended.  Any reference to a specific provision of the
Code includes a reference to that provision as it may be amended from time to
time and to any successor provision.


 


7.9           Company. 
“Company” means Nash Finch Company.


 


7.10         Cross Reference. 
References in the Plan to a particular section refer to that section
within the Plan, references within a section of the Plan to a particular
subsection refer to that subsection within the same section, and references
within a section or subsection to a particular clause refer to that clause
within the same section or subsection, as the case may be.


 


7.11         Director Cash Compensation.  “Director Cash Compensation” means all amounts payable in cash by
the Company to a Qualified Director for his or her services to the Company as a
Qualified Director, (a) including an annual retainer for Board and Board committee
membership, an annual retainer for chairing the Board or a Board committee, and
fees specifically paid for attending meetings of the Board and Board
committees, but (b) excluding equity-based compensation arrangements such as
stock options and performance or restricted stock units granted under
equity-based compensation plans of the Company, expense allowances or
reimbursements and insurance premiums paid to or on behalf of Qualified
Directors, and, for the period beginning at the Effective Time and ending on
December 31, 2003, the Retainer Share Amount.


 


7.12         Disability. 
“Disability” means the disability of a Qualified Director such as would
entitle the Qualified Director to receive income benefits pursuant to the
long-term disability plan of the Company then covering the Qualified Director
or, if no such plan exists or is applicable to the Qualified Director, the
permanent and total disability of the Qualified Director within the meaning of
Code section 22(e)(3).


 


7.13         Effective Time. 
“Effective Time” means such time as the Plan is originally approved by
the Company’s stockholders.


 


7.14         Governing Law. 
All questions pertaining to the construction, validity, effect and
enforcement of the Plan will be determined in accordance with the internal,
substantive laws of the State of Minnesota without regard to the conflict of
laws rules of the State of Minnesota or any other jurisdiction.


 

















 


7.15         Headings.  The
headings of sections are included solely for convenience of reference; if there
exists any conflict between such headings and the text of the Plan, the text
will control.


 


7.16         Market Price. 
“Market Price” means the closing sale price for Shares on a specified
date or, if Shares were not then traded, on the most recent prior date when
Shares were traded, all as reported on the Nasdaq National Market or such other
exchange as the Shares may be traded from time to time.


 


7.17         Number and Gender. 
Wherever appropriate, the singular may be read as the plural, the plural
may be read as the singular, and one gender may be read as the other gender.


 


7.18         Participant. 
“Participant” is a current or former Qualified Director to whose Account
amounts have been credited pursuant to Section 3 and who has not ceased to be a
Participant pursuant to Section 2.4.


 


7.19         Plan.  “Plan”
means the Nash Finch Company 1997 Non-Employee Director Stock Compensation
Plan, as from time to time amended or restated.


 


7.20         Plan Rules. 
“Plan Rules” are rules, policies, practices or procedures adopted by the
Administrator pursuant to Section 8.2.


 


7.21         Qualified Director. 
“Qualified Director” means an individual who is a member of the Board
and who is not a current employee of the Company or any of its subsidiaries.


 


7.22         Retainer Shares. 
“Retainer Shares” means the number of full and fractional Shares
determined by dividing the Retainer Share Amount for a calendar quarter by the
Market Price on the first day of the calendar quarter that first follows the
calendar quarter for which such Retainer Share Amount has been determined.  No Retainer Shares will be issuable
hereunder for any calendar quarter beginning after December 31, 2003.


 


7.23         Retainer Share Amount.  “Retainer Share Amount” means, with respect to any calendar
quarter whose last day occurs during the period beginning at the Effective Time
and ending on December 31, 2003, the amount determined by (i) taking an amount
equal to 50 percent (33-1/3 percent with respect to the calendar quarters in
the 1997 calendar year) of the Annual Retainer payable by the Company to
Qualified Directors for such calendar quarter and (ii) multiplying such amount
by a fraction, the numerator of which is the number of days during such
calendar quarter (or the number of days after the Effective Time with respect
to the calendar quarter in which the Effective Time occurs) that the individual
served as a Qualified Director and the denominator of which is the total number
of days in such calendar quarter.  No
Retainer Share Amount will be calculated hereunder for any calendar quarter
beginning after December 31, 2003.


 


7.24         Securities Act. 
“Securities Act” means the Securities Act of 1933, as amended. Any
reference to a specific provision of the Securities Act includes a reference to
that provision as it may be amended from time to time and to any successor
provision.


 


7.25         Share Account. 
“Share Account” means an Account to which amounts are credited in Share
Units.


 


7.26         Share Units. 
“Share Units” means a unit credited to a Participant’s Share Account
pursuant to the Plan, each of which represents the equivalent of one Share.


 

















 


7.27         Shares. 
“Shares” means shares of common stock of the Company, $1.66-2/3 par
value, or such other class or kind of shares or other securities as may be
applicable pursuant to Section 3.3(b)(ii).


 


7.28         Trust. 
“Trust” means any trust or trusts established by the Company pursuant to
Section 5.1.


 


7.29         Trustee. 
“Trustee” means the independent corporate trustee or trustees that at
the relevant time has or have been appointed to act as Trustee of the Trust.


 


7.30         Unforeseeable Emergency.  “Unforeseeable Emergency” means an unanticipated emergency that
is caused by an event beyond the Participant’s control resulting in a severe
financial hardship that cannot be satisfied through other means.  The existence of an unforeseeable emergency
will be determined by the Administrator.


 


8.             Administration.


 


8.1           Administrator. 
The general administration of the Plan and the duty to carry out its
provisions will be vested in the Corporate Governance Committee of the Board or
such other Board committee as may be subsequently designated as Administrator
by the Board.  Such committee may
delegate such duty or any portion thereof to a named person and may from time
to time revoke such authority and delegate it to another person.


 


8.2           Plan Rules and Regulations.  The Administrator has the discretionary
power and authority to make such Plan Rules as the Administrator determines to
be consistent with the terms, and necessary or advisable in connection with the
administration, of the Plan and to modify or rescind any such Plan Rules.


 


8.3           Administrator’s Discretion.  The Administrator has the sole discretionary
power and authority to make all determinations necessary for administration of
the Plan, except those determinations that the Plan requires others to make,
and to construe, interpret, apply and enforce the provisions of the Plan and
Plan Rules whenever necessary to carry out its intent and purpose and to
facilitate its administration, including, without limitation, the discretionary
power and authority to remedy ambiguities, inconsistencies, omissions and
erroneous benefit calculations.  In the
exercise of its discretionary power and authority, the Administrator will treat
all similarly situated persons uniformly.


 


8.4           Specialist’s Assistance.  The Administrator may retain such actuarial, accounting, legal,
clerical and other services as may reasonably be required in the administration
of the Plan, and may pay reasonable compensation for such services.  All costs of administering the Plan will be
paid by the Company.


 


8.5           Indemnification. 
The Company agrees to indemnify and hold harmless, to the extent
permitted by law, each director, officer and employee of the Company and any
subsidiary or affiliate of the Company against any and all liabilities, losses,
costs and expenses (including legal fees) of every kind and nature that may be
imposed on, incurred by, or asserted against such person at any time by reason
of such person’s services in connection with the Plan, but only if such person
did not act dishonestly or in bad faith or in willful violation of the law or
regulations under which such liability, loss, cost or expense arises.  The Company has the right, but not the
obligation, to select


 

















 


counsel and control the defense and
settlement of any action for which a person may be entitled to indemnification
under this provision.


 


9.             Miscellaneous.


 


9.1           Withholding and Offsets.  The Company and the Trustee retain the right to withhold from any
compensation, deferral and/or benefit payment pursuant to the Plan, any and all
tax as the Company or Trustee deems necessary, and the Company and the Trustee
may offset against amounts payable to a Participant or Beneficiary under the
Plan any amounts then owing to the Company by such Participant or Beneficiary.  The Company or the Trustee, as the case may
be, in its sole discretion, may permit Participants to elect whether to satisfy
their obligations under this Section 9.1 by having such amounts withheld from
any compensation, deferral and/or benefit payment pursuant to the Plan or by
remitting such amounts to the Company or the Trustee, or by a combination of
such methods.


 


9.2           Other Benefits. 
Neither amounts deferred nor amounts paid pursuant to the Plan
constitute salary or compensation for the purpose of computing benefits under
any other benefit plan, practice, policy or procedure of the Company unless
otherwise expressly provided thereunder.


 


9.3           No Warranties Regarding Tax Treatment.  The Company makes no warranties regarding
the tax treatment to any person of any deferrals or payments made pursuant to
the Plan, and each Participant will hold the Administrator and the Company and
their officers, directors, employees, agents and advisors harmless from any
liability resulting from any tax position taken in good faith in connection
with the Plan.


 


9.4           No Rights to Continued Service Created.  Neither the establishment of or
participation in the Plan gives any individual the right to continued service
on the Board or limits the right of the Company or its stockholders to
terminate or modify the terms and conditions of service of such individual on
the Board or otherwise deal with any individual without regard to the effect
that such action might have on him or her with respect to the Plan.


 


9.5           Successors. 
Except as otherwise expressly provided in the Plan, all obligations of
the Company under the Plan are binding on any successor to the Company whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise of all or substantially all of the business
and/or assets of the Company.