**Exhibit 10.21**

 

**PERFORMANCE UNIT AWARD AGREEMENT**

 

THIS PERFORMANCE UNIT AWARD AGREEMENT is entered into and effective as ofthis 1st day of October, 2001 (the “Date of Grant”), by and between Nash-FinchCompany (the “Company”) and Bruce A. Cross (the “Grantee”).

 

A. The Company has adopted the Nash-Finch Company 2000 Stock Incentive Plan(the “Plan”) authorizing the Board of Directors of the Company, or a committeeas provided for in the Plan (the Board or such a committee to be referred to asthe “Committee”), to grant performance unit awards to employees andnon-employee directors, consultants and independent contractors of the Companyand its Subsidiaries (as defined in the Plan).

 

B. The Company has amended the Nash Finch CompanyExecutive Incentive Bonus and Deferred Compensation Plan (the “DeferredCompensation Plan”) to permit a participant in the Deferred Compensation Planwho was actively employed by the Company, or was on an approved leave ofabsence, on September 30. 2001, to transfer all, but not part, of theshare equivalents contingently credited to such participant pursuant to theDeferred Compensation Plan into Performance Units (as defined in the Plan)granted under the Plan and payable in shares of Common Stock (as defined in thePlan) upon the achievement of certain employment or service goals by suchparticipant and upon the termination of such participant’s employment or otherservice with the Company.

 

C. The Grantee, who was a participant in the Deferred Compensation Plan andwas actively employed by the Company on September 30, 2001, has elected totransfer all of the share equivalents contingently credited to him pursuant tothe Deferred Compensation Plan into Performance Units granted under the Plan,and the Company desires to grant the Grantee a Performance Unit award payablein shares of Common Stock pursuant to this Agreement and the terms of the Planand the Deferred Compensation Plan.

 

Accordingly, the parties agree as follows:

 

1.                                       Grant of Performance Unit Award.

 

The Company hereby grants to the Grantee aperformance unit award (the “Award”) consisting of Six Thousand Six HundredEighty-four and 1654/ten thousands (6,684.1654) performance units (the “PerformanceUnits”), which Performance Units shall be reflected in a book account maintainedby the Company and shall be settled pursuant to Section 2 in shares of theCompany’s common stock, par value $1.66 2/3 per share (together with the CommonStock Purchase Rights attached thereto, the “Common Stock”) to the extentprovided for in this Agreement and the Plan.  Each reference to the Performance Units inthis Agreement will be deemed to include any additional Performance Unitsgranted to the Grantee pursuant to Section 4.1 and any additionalPerformance Units granted to the Grantee or other securities issued to theGrantee pursuant to Section 4.2, and shall also include the PerformanceShares (as defined in Section 2) underlying such Performance Units.

 

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2.                                       Settlement of Performance Units andDistribution of Performance Shares to Grantee.

 

Subject to the forfeiture provisions in Section 3 below, as soon asadministratively practicable following termination of the Grantee’s employment,the Company shall in full settlement of the Performance Units, distribute tothe Grantee one share of Common Stock for each Performance Unit or fractionalPerformance Unit granted to the Grantee (each, a “Performance Share”).Performance Shares shall not be distributed to the Grantee until all cashdividends declared and with a record date prior to Grantee’s termination ofemployment have been paid to the Grantee in the form of additional PerformanceUnits pursuant to Section 4.1. If the Grantee dies after termination ofhis employment but before all of the Performance Shares have been distributedto the Grantee, all remaining Performance Units shall be settled and theunderlying Performance Shares shall be delivered to the beneficiary designatedpursuant to Section 6.3.

 

3.                                       Forfeitures and Effect of Termination ofEmployment and Effect of Breach of Non-Competition and Cooperation Agreement.

 

3.1.                              Termination Due to Death or Disability orTermination by the Company Without Cause.  Ifthe Grantee’s employment is terminated at any time by reason of the Grantee’s deathor Disability (as such term is defined in the Plan) or is terminated at anytime by the Company without Cause (as defined in Section 3.5 below), thePerformance Units granted to the Grantee shall be settled and the underlyingPerformance Shares shall be distributed to the Grantee, without forfeiture, inthe manner described in Section 2.

 

3.2.                              Termination For Any Reason After the GranteeHas Attained Age 60.  If the Grantee’s employment is terminated forany reason whatsoever except for Cause (as defined in Section 3.5 below),after the Grantee has attained age 60, the Performance Units granted to theGrantee shall be settled and the underlying Performance Shares shall bedistributed to the Grantee, without forfeiture, in the manner described in Section 2.

 

3.3.                              Termination For AnyReason Approved by the Committee.  If the Grantee’s employment isterminated for any reason whatsoever including for Cause (as defined in Section 3.5below) and the Committee has either prior to or after the date of such terminationspecifically approved of the reason for such termination for purposes of this Section 3.3,the Performance Units granted to the Grantee shall be settled and theunderlying Performance Shares shall be distributed to the Grantee in the mannerand at the time or times determined by the Committee.

 

3.4.                              Termination For AnyReason Prior to the Grantee’s Attaining Age 60.  Exceptas otherwise provided in Section 3.1, 3.2 or 3.3 above, if the Grantee’semployment is terminated for any reason whatsoever except for Cause (as definedin Section 3.5) prior to the Grantee’s attaining age 60, the Grantee shallforfeit 50% of the Performance Units granted to the Grantee, and the remaining50% of the Performance Units shall be settled and the underlying Performance Sharesshall be distributed to the Grantee in the manner described in Section 2.

 

3.5.                              Termination ForCause Prior to the Grantee’s Attaining Age 65.  Notwithstanding Section 3.2and except as otherwise provided in Section 3.3 above, if the Grantee’semployment is terminated for Cause (as defined below) at any time prior to theGrantee’s attaining age 65, the Grantee shall forfeit 100% of the PerformanceUnits granted to the Grantee. “Cause” means because of evidence of dishonestyor mistrust in the Grantee’s employment or other service with the Company orbecause of his involvement in a crime or misdemeanor against the Company or

 

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anySubsidiary, or any employee thereof, for which the Grantee is convicted orwhich he has confessed in writing to the Company or to any law enforcementagency.

 

3.6.                              Non-Competition and Cooperation Agreement andEffect of Breach.  The Grantee agrees that after termination ofemployment, and if Performance Shares shall have been distributed to himpursuant to Section 2 as a result thereof, he will be available forconsultation and will refrain from actively participating or engaging in anybusiness in competition with the Company or any Subsidiary for a period of oneyear following the date of termination of employment (the “Non-CompetitionPeriod”). Notwithstanding Sections 3.1, 3.2, 3.3 and 3.4 above, if the Grantee,at any time prior to his termination of employment, or during theNon-Competition Period, without the prior written consent of the Committee,actively participates or engages in any business in competition with theCompany or any Subsidiary or fails to hold himself available for consultation,the Committee may in its sole discretion require the Grantee to forfeit 100% ofthe Performance Units granted to the Grantee, including any Performance Sharespreviously distributed to the Grantee.

 

4.                                       Dividends and Other Distributions.

 

4.1.                              Cash Dividends.

 

(a)                                  If during a calendar quarter that ends priorto the date of the Grantee’s termination of employment, a record date for acash dividend declared by the Company’s Board of Directors occurs, the Granteewill be granted additional Performance Units pursuant to this Section 4.1(a).At the end of each calendar quarter in which a record date for a cash dividenddeclared by the Company’s Board of Directors occurs, the Grantee will begranted that number of additional Performance Units equal to the quotient of(x) the product of (i) the total cash dividends per share on the Common Stockfor which a record date occurs during such quarter multiplied by (ii) theaggregate number of Performance Units held by the Grantee as of the beginningof such quarter, divided by (y) the Fair Market Value (as defined in the Plan)for the Common Stock on the last day of such calendar quarter or, if shares ofthe Common Stock were not then traded, on the most recent prior date when suchshares were traded.  The number ofPerformance Units so determined shall be computed to four decimal places.  Any additional Performance Units granted underthis Section 4.1(a) shall be settled and the underlying Performance Sharesdistributed to the Grantee in the manner described in Section 2 and shallotherwise be subject to the forfeiture provisions in Section 3 and theother terms and conditions of this Agreement.

 

(b)                                 If during the calendar quarter in which, andon or prior to the date, the Grantee’s employment terminates, a record date fora cash dividend declared by the Company’s Board of Directors occurs, the Granteewill be granted as of the date of such termination additional Performance Unitspursuant to this Section 4.1(b). As of the date of such termination, theGrantee will be granted that number of additional Performance Units equal tothe quotient of (x) the product of (i) the total cash dividends per share onthe Common Stock for which a record date occurs during such quarter and priorto the date of such termination, multiplied by (ii) the aggregate number ofPerformance Units held by the Grantee as of the beginning of such quarter,divided by (y) the Fair Market Value (as defined in the Plan) for the CommonStock on the date Grantee’s employment terminates or, if shares of the CommonStock were not then traded, on the most recent prior date when such shares weretraded.  The number of Performance Unitsso determined shall be computed to four decimal places.  Any additional

 

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PerformanceUnits granted under this Section 4.1(b) shall be settled and the underlyingPerformance Shares distributed to the Grantee in the manner described in Section 2and shall otherwise be subject to the forfeiture provisions in Section 3and the other terms and conditions of this Agreement.

 

4.2.                              Adjustments for Other Distributions andEvents.  In the event of any reorganization, merger,consolidation, recapitalization, liquidation, reclassification, stock dividend,stock split, combination of shares, rights offering or divestiture (including aspin-off) or any other similar change in the corporate structure or shares ofthe Company, the Committee (or, if the Company is not, the survivingcorporation in any such transaction, the board of directors of the survivingcorporation), in order to prevent dilution or enlargement of the rights of theGrantee, will make appropriate adjustment (which determination will beconclusive) as to the number and kind of securities or other property(including cash) subject to the Performance Units; provided, however, that suchadditional Performance Units, such reduced number of Performance Units or suchother securities shall be, unless otherwise determined by the Committee,distributed to the Grantee in the manner described in Section 2 and shallotherwise be subject to the forfeiture provisions in Section 3 and theother terms and conditions of thisAgreement.

 

5.                                       Change in Control.

 

5.1.                              Definition of Change in Control.  Forpurposes of this Section 5, a “Change in Control” of the Company shallmean (a) the sale, lease, exchange or other transfer of all or substantiallyall of the assets of the Company (in one transaction or in a series of relatedtransactions) to any person that is not controlled by the Company; (b) theapproval by the stockholders of the Company of any plan or proposal for theliquidation or dissolution of the Company; or (c) a change in control of anature that would be required to be reported (assuming such event has not been “previouslyreported”) in response to Item 1(a) of the Current Report on Form 8-K, as ineffect on October 1, 2001, pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), whether ornot the Company is then subject to such reporting requirement; provided that,without limitation, such a Change in Control shall be deemed to have occurredat such time as (x) any person is or becomes the “beneficial owner” (as definedin Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or moreof the combined voting power of the Company’s outstanding securities ordinarilyhaving the right to vote at elections of directors; or (y) individuals whoconstitute the Board of Directors on the date of this Agreement, cease for anyreason to constitute at least a majority thereof, provided that any personbecoming a director subsequent to the date of this Agreement, whose election,or nomination for election by the Company’s stockholders, was approved by avote of at least a majority of the directors comprising the Board of Directorson the date of this Agreement, (either by a specific vote or by approval of theproxy statement of the Company in which such person is named as a nominee fordirector, without objection to such nomination) shall be, for purpose of thisclause (y), considered as though such person were a member of the Board ofDirectors on the date of this Agreement.

 

5.2.                              Impact of Change in Control.  TheCompany expressly recognizes that a Change in Control of the Company would belikely to result in a material alteration or diminution of the Grantee’sposition and responsibilities with the Company, and if that were to occur,certain of the terms of this Agreement would be unreasonable or unfair in theirapplication to the Grantee.  Accordingly,if (i) prior to the date that all of the Performance Units have been settledand all the underlying Performance Shares have been distributed to the Granteepursuant to Section 2, or (ii) prior to the expiration date of theNon-Competition Period in the event such settlement and distribution shall haveoccurred, any Change in Control of the Company shall occur: (a) the forfeitureprovisions in Section 3 (including without limitation the Grantee’sobligations under Section 3.6) shall lapse and shall have no furtherapplicability to the Grantee; and (b) all the

 

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Performance Units shallbe settled and all the underlying Performance Shares shall be distributed tothe Grantee (or other person receiving distributions or entitled to receivedistributions under Section 2, such other person to be hereinafter called “otherrecipient”), on the day the Change in Control becomes effective unless theGrantee or other recipient, prior thereto, shall notify the Committee, inwriting, that the Grantee or such other recipient waives the right to acceleration,in which case Section 2 shall continue to apply to the Grantee or suchother recipient.  In effecting suchdistribution, the Committee may make such arrangements, including deposits inescrow or in trust in advance of the anticipated effective date of the Changein Control, as it may deem advisable, to carry out the foregoing and to protectthe interests of the Company in the event such Change in Control does notoccur.

 

5.3.                              Limitation on Change in Control Payments.  Notwithstandinganything in this Section 5 to the contrary, if, with respect to theGrantee, acceleration of the distribution of the Performance Shares as providedabove (which acceleration could be deemed a “payment” within the meaning of Section 280G(b)(2)of the Internal Revenue Code of 1986, as amended (the “Code”)), together withany other payments which the Grantee has the right to receive from the Companyor any corporation which is a member of an “affiliated group” (as defined in Section 1504(a)of the Code without regard to Section 1504(b) of the Code) of which theCompany is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2)of the Code), the payments to the Grantee as set forth herein will be reducedto the largest amounts as will result in no portion of such payments beingsubject to the excise tax imposed by Section 4999 of the Code; provided,however, that if the Grantee is subject to a separate agreement with theCompany or a Subsidiary that expressly addresses the potential application ofSections 280G or 4999 of the Code (including, without limitation, that “payments”under such agreement or otherwise will be reduced, that such “payments” willnot be reduced or that the Grantee will have the discretion to determine which “payments”will be reduced), then this Section 5.3(b) will not apply, and any “payments”to the Grantee pursuant to Section 5.2 of this Agreement will be treatedas “payments” arising under such separate agreement.

 

6.                                       Rights of Grantee.

 

6.1.                              Employmentor Service.  Nothing in thisAgreement will interfere with or limit in any way the right of the Company orany Subsidiary to terminate the employment or service of the Grantee at anytime, nor confer upon the Grantee any right to continue in the employ orservice of the Company or any Subsidiary at any particular position or rate ofpay or for any particular period of time.

 

6.2.                              Rights as a Shareholder.  TheGrantee will have no rights as a shareholder of the Company as a result of thisAgreement and with respect to any Performance Units until such PerformanceUnits have been settled and distributed to the Grantee in the form ofPerformance Shares and the Grantee has become the holder of record of suchPerformance Shares.  No adjustment willbe made for dividends or distributions with respect to the Performance Sharesas to which there is a record date preceding the date the Grantee becomes theholder of record of the Performance Shares, except as may otherwise be providedin Section 4 of this Agreement, the Plan or determined by the Committee inits sole discretion.

 

6.3.                              Restrictions on Transfer.  Exceptpursuant to testamentary will or the laws of descent and distribution or asotherwise expressly permitted by the Plan, unless approved by the Committee inits sole discretion, no right or interest of the Grantee in the PerformanceUnits granted hereunder (or the underlying Performance Shares prior to thedistribution thereof

 

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pursuantto Section 2) will be assignable or transferable, or subjected to anylien, during the lifetime of the Grantee, either voluntarily or involuntarily,directly or indirectly, by operation of law or otherwise.  A Grantee will, however, be entitled todesignate, by a signed writing delivered to the Company prior to the Grantee’sdeath, a beneficiary to receive the Performance Units upon the Grantee’s death,and in the event of the Grantee’s death, distribution of any Performance Sharesunderlying such Performance Units will be made to such beneficiary, or in theabsence of such beneficiary, to the representative of the Grantee’s estate.

 

7.                                       Withholding Taxes.

 

The Company is entitled to (a) withhold and deductfrom any amounts that may be due and owing to the Grantee from the Company, ormake other arrangements for the collection of, all amounts necessary to satisfyany federal, state or local withholding and employment-related tax requirementsattributable to the receipt of the Performance Units, the receipt of dividendsor distributions on the Performance Units, the lapse or termination of theforfeiture provisions applicable to the Performance Units, or the distributionof the Performance Shares, or (b) require the Grantee promptly to remit theamount of such withholding to the Company.  In the event that the Company is unable towithhold such amounts, for whatever reason, the Grantee agrees to pay to theCompany an amount equal to the amount the Company would otherwise be requiredto withhold under federal, state or local law.

 

8.                                       Subjectto Plan.

 

The Performance Units granted pursuant tothis Agreement have been granted under, and are subject to the terms of, thePlan.  Terms of the Plan are incorporatedby reference in this Agreement in their entirety, and the Grantee, by executionhereof, acknowledges having received a copy of the Plan.  The provisions of this Agreement will beinterpreted as to be consistent with the Plan, and any ambiguities in thisAgreement will be interpreted by reference to the Plan.  In the event that any provision of this Agreementis inconsistent with the terms of the Plan, the terms of the Plan will prevail.

 

9.                                       Miscellaneous.

 

9.1.                              Binding Effect.  ThisAgreement will be binding upon the heirs, executors, administrators andsuccessors of the parties to this Agreement.

 

9.2.                              Governing Law.  ThisAgreement and all rights and obligations under this Agreement will be construedin accordance with the Plan and governed by the laws of the State of Minnesota,without regard to conflicts of laws provisions.  Any legal proceeding related to this Agreementwill be brought in an appropriate Minnesota court, andthe parties to this Agreement consent to the exclusive jurisdiction of thecourt for this purpose.

 

9.3.                              Entire Agreement.  ThisAgreement and the Plan set forth the entire agreement and understanding of theparties to this Agreement with respect to the grant of the Performance Unitshereunder and the administration of the Plan and supersede all prioragreements, arrangements, plans and understandings relating to the grant of thePerformance Units hereunder and the administration of the Plan.

 

9.4.                              Amendmentand Waiver.  Other than as providedin the Plan, this Agreement may be amended, waived, modified or canceled onlyby a written instrument executed by the parties to this Agreement or, in thecase of a waiver, by the party waiving compliance.

 

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9.5.                              Termination of Employment.  Forpurposes of this Agreement, the Grantee’s employment will be considered to beterminated when the Grantee ceases to perform services for the Company and allof its Subsidiaries as an employee of any of such entities.

 

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The parties hereto have executed this Agreementeffective the day and year first above written.

 

 
|                                | NASH-FINCH COMPANY                         |
|-------------------------------------|--------------------------------------------|
|                                |                                       |   |
|                                | By:                                        |   /s/ Ron Marshall |   |
|                                |                                       |   |   |
|                                | Its                                        |   |   |
|                                |                                       |   |
|                                |                                       |   |
| By execution of this Agreement,     | GRANTEE                                    |   |
| The Grantee acknowledges            |                                       |   |
| having received a copy of the Plan. |     /s/ Bruce A. Cross |   |
|                                | (Name)                                     |   |
|                                |                                       |   |
|                                |                                       |   |
|                                |                                       |   |
|                                |                                       |   |
|                                |                                       |   |
|                                |                                       |   |
|                                | (Address)                                  |   |
|                                     |                                            |  |  |  |  |  |

 

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