**Exhibit10.9**

 

**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 FinchCompany 1997 Non-Employee Director Stock Compensation Plan (2003 Revision).”***

 

## ***1.2           Purpose.  The purpose of the Plan is to provideQualified Directors with the opportunity to defer receipt of Director CashCompensation through credits to their Share or Cash Accounts.***

 

## ***1.3           Type.  The Plan is maintained primarily for thepurpose of providing deferred compensation for Qualified Directors and isintended to be unfunded for tax purposes. The Plan will be construed andadministered in a manner that is consistent with and gives effect to theforegoing.***

 

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

 

2.             Participation.

 

2.1           Eligibility.

 

### **(a)           Each individual whois a Qualified Director at any point during a calendar quarter ending on orbefore December 31, 2003 will receive the portion of the Annual Retainerpayable with respect to such quarter in the form of Retainer Shares to theextent provided and in accordance with Section 3.2.**

 

### **(b)           Each individual whois a Qualified Director on the first day of a calendar year is eligible to makedeferral elections pursuant to Section 3.3 with respect to such calendaryear.  An individual who becomes aQualified Director after the first day of the calendar year is eligible to makedeferral elections pursuant to Section 3.3 with respect to the remainder ofsuch calendar year.  A Participant whoreceives a distribution, pursuant to Section 4.1(d)(i) or (iii), is noteligible to elect additional deferrals pursuant to Section 3.3 until theone-year anniversary of such distribution.**

 

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2.2           Ceasing to be Eligible.  An individual who ceases to be a Qualified Director is noteligible to (a) receive Retainer Shares pursuant to Section 3.2 other than suchshares relating to the Annual Retainer payable with respect to calendarquarters ending with the earlier of the calendar quarter during which theindividual ceases to be a director or the calendar quarter ending on December31, 2003, or (b) make deferrals and receive deferral credits pursuant toSection 3.3 after such cessation.

 

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

 

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

 

3.             Benefits.

 

3.1           Participant Accounts. For each Participant, theAdministrator will establish and maintain a Cash Account, a Share Account orboth to evidence amounts credited with respect to the Participant pursuant toSections 3.2, 3.3 and 3.4.

 

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

 

3.3           Deferral Credits.

 

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

 

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

 

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

 

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

 

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Administrator by the lastday of the calendar year immediately preceding the calendar year to which theelection relates or, in the case of an individual who becomes a QualifiedDirector after the first day of the calendar year, within 30 days after thedate such individual becomes a Qualified Director.  Notwithstanding the foregoing, with respect to an initialdeferral 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 thisSection 3.3 will apply only to a Qualified Director’s Retainer Share Amount andDirector Cash Compensation relating to services performed after the effectivedate of the election.

 

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

 

(iii)          In conjunction with each deferralelection made pursuant to Section 3.3(b), a Qualified Director must elect, inaccordance 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 ShareAccount.  Such an election isirrevocable after the latest date by which the deferral election to which itrelates must be received by the Administrator to be effective.

 

(iv)          Deferrals of the Retainer Share Amountpursuant to Section 3.3(a) will be credited to a Qualified Director’s ShareAccount as of the date on which the Retainer Shares would have been issuedpursuant to Section 3.2 but for his or her deferral election.  Deferrals of Director Cash Compensationpursuant to Section 3.3(b) will be credited to a Qualified Director’s CashAccount or Share Account, as the case may be, as of the date on which suchDirector Cash Compensation would have been paid but for his or her deferralelection.  Such credits to the QualifiedDirector’s Cash Account will be in U.S. dollars in an amount equal to theamount of the deferral allocated to the Cash Account by the QualifiedDirector.  Such credits to a QualifiedDirector’s Share Account will be the number of full and fractional Share Unitsdetermined by dividing the amount of Director Cash Compensation to be allocatedto the Share Account by the Market Price on the date as of which the credit ismade.

 

3.4           Earnings Credits.

 

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

 

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Corporate Bond YieldAverages — Av. Corp.” or, if such yield is no longer available, a substantiallysimilar average selected by the Administrator.

 

(b)           Share Account.

 

(i)            As of the first day of the calendarquarter first following the date on which dividends are paid on Shares, aParticipant’s Share Account will be credited with that number of full andfractional Share Units determined by dividing (A) the dollar amount of thedividends that would have been payable to the Participant if the number ofShare Units credited to the Participant’s Share Account on the record date forsuch dividend payment had then been Shares registered in the name of suchParticipant 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 corporatestructure or Shares, the Administrator will make such adjustment, if any, asthe Administrator may deem appropriate in the number and kind of Share Unitscredited to Share Accounts.

 

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

 

4.             Distribution.

 

4.1           Distribution to Participant.

 

(a)           Form.  Distribution to a Participant will be madein the form of a lump sum payment unless (i) the Participant elects, on aproperly completed form, to receive his or her distribution in the form ofannual 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 sheceases to be a member of the Board follows by more than one year the date onwhich a properly completed election form is received by the Administrator.  Any election made pursuant to this Section4.1(a) may be changed from time to time upon the Administrator’s receipt of aproperly completed form, provided that, other than cessation resulting fromDisability, such change will not be valid and will not have any effect unlessit is made on a properly completed form received by the Administrator more thanone year prior to a Participant’s cessation of service as a member of theBoard.  Any election made pursuant tothis Section 4.1(a) will apply to the entire balance of the Participant’sAccount attributable to deferral credits with respect to the period through thedate on which he or she ceases to be a member of the Board.  Any distribution from a Participant’s CashAccount will be made in cash only.  Anydistribution from a Participant’s Share Account will be made in full Sharesonly and cash in lieu of any fractional Share.

 

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

 

(c)           Amount.

 

(i)            Cash Account.

 

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

 

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

 

(ii)           Share Account.

 

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

 

(B)           Installments.  Installment distributions from aParticipant’s Share Account, other than the final distribution, will consist ofthe number of Shares determined by dividing the number of full Share Unitscredited to the Account as of the first day of the calendar month coincidingwith or immediately preceding the date on which the distribution is made by thetotal 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 bedetermined in accordance with clause (A).

 

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

 

(i)            Withdrawals Due to UnforeseeableEmergency.  A distribution will bemade to a Participant from his or her Share or Cash Account if the Participantsubmits a written distribution request to the Administrator and theAdministrator determines that the Participant has experienced an UnforeseeableEmergency.  The amount of thedistribution may not exceed the lesser of (a) the amount necessary to satisfythe emergency, as determined by the Administrator, or (b) the balance of theParticipant’s Account as of the date of the distribution determined inaccordance with Section 4.1(c). Payments made on account of an Unforeseeable Emergency will not be madeto the extent that such Unforeseeable Emergency is or may be relieved throughreimbursement or compensation by insurance or otherwise, by liquidation of theParticipant’s assets (to the extent that such liquidation would not itselfcause severe financial hardship) or by cessation of deferrals under Section3.3.  Any distribution pursuant to thisSection 4.1(d)(i) will be made in the form of a lump sum payment (in cash fromthe Cash Account and in Shares from the Share Account) as soon asadministratively practicable after the Administrator’s determination that the Participanthas experienced an Unforeseeable Emergency and will be made first from theParticipant’s Cash Account and then from the Participant’s Share Account, withthe amount distributed from the Share Account determined based upon the

 

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

 

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

 

(iii)          Accelerated Distribution.  A Participant may, at any time, elect animmediate distribution of his or her Account in an amount equal to 90 percentof the balance of the Account as of the date of the distribution determined inaccordance with Section 4.1(c), in which case the remaining balance of theAccount will be forfeited.  Thedistribution will be made in the form of a lump sum payment as soon asadministratively practicable after the Administrator’s receipt of a writtenapplication on a form furnished by the Administrator.  Any distribution from a Participant’s Cash Account will be madein cash only.  Any distribution from aParticipant’s Share Account will be made in full Shares only and cash in lieuof any fractional Share.

 

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

 

4.2           Distribution to Beneficiary.

 

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

 

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

 

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

 

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

 

(e)           Beneficiary Designation.

 

(i)            Each Participant may designate, on aform furnished by the Administrator, one or more primary Beneficiaries oralternative Beneficiaries to receive all or a specified part of his or herAccount after his or her death, and the Participant may change or revoke anysuch designation from time to time.  Nosuch designation, change or revocation is effective unless executed by theParticipant and received by the Administrator during the Participant’slifetime.

 

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

 

(iii)          The automatic Beneficiaries specifiedabove and, unless the designation otherwise specifies, the Beneficiariesdesignated by the Participant, become fixed as of the Participant’s death sothat, if a Beneficiary survives the Participant but dies before the receipt ofthe payment due such Beneficiary, the payment will be made to therepresentative of such Beneficiary’s estate. Any designation of a Beneficiary by name that is accompanied by adescription of relationship or only by statement of relationship to the Participantis effective only to designate the person or persons standing in suchrelationship to the Participant at the Participant’s death.

 

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

 

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

 

5.             SourceOf Payments; Nature Of Interest.

 

5.1           Establishment of Trust.

 

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

 

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any transaction with respectto the Trust assets.  The Company mayfrom time to time transfer to the Trust cash, marketable securities or otherproperty acceptable to the Trustee in accordance with the terms of the Trust.

 

(b)           Notwithstanding subsection (a), notlater than the effective date of a Change in Control, the Company must transferto the Trust an amount not less than the amount by which (i) 125 percent of theaggregate balance of all Participants’ Accounts as of the last day of the monthimmediately preceding the effective date of the Change in Control exceeds (ii)the value of the Trust assets attributable to amounts previously contributed bythe 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 itsgeneral assets, the benefits pursuant to Section 4 attributable to aParticipant’s Account, and all costs, charges and expenses relating thereto.

 

(b)           The Trustee will make distributionsto Participants and Beneficiaries from the Trust in satisfaction of theCompany’s obligations under the Plan in accordance with the terms of theTrust.  The Company is responsible forpaying any benefits attributable to a Participant’s Account that are not paidby the Trust.

 

5.3           Status of Plan. Nothing contained in the Plan or Trust is to be construed as providingfor assets to be held for the benefit of any Participant or any other person orpersons to whom benefits are to be paid pursuant to the terms of the Plan, theParticipant’s or other person’s only interest under the Plan being the right toreceive the benefits set forth herein. The Trust is established only for theconvenience of the Company and the Participants, and no Participant has anyinterest in the assets of the Trust prior to distribution of such assetspursuant to the Plan.  Until such timeas Shares are distributed to a Participant, Beneficiary of a deceasedParticipant or other person, he or she has no rights as a shareholder withrespect to any Shares Units credited to a Share Account pursuant to thePlan.  To the extent that theParticipant or any other person acquires a right to receive benefits under thePlan or the Trust, such right is no greater than the right of any unsecuredgeneral creditor of the Company.

 

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

 

6.             Amendmentand Termination.

 

6.1           Amendment.

 

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

 

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

 

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

 

(c)           Without limiting Section 6.1(a), theCompany reserves the right to amend this Plan to change the method ofdetermining the earnings credited to Participants’ Accounts pursuant to Section3.4 and to apply such new method not only with respect to the portion of theAccounts attributable to credits made after the date on which such amendment isadopted but also with respect to the portion of the Accounts attributable tocredits made prior to the date on which such amendment is adopted andregardless of whether such new method would result in materially lower earningscredits than the old method.

 

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

 

6.2           Termination. The Company reserves the right to terminate the Plan at any time. ThePlan will terminate as of the date specified by the Company in a writteninstrument by its authorized officers to the Administrator, adopted in themanner of an amendment.  Upon thetermination of the Plan, any benefits to which Participants have becomeentitled prior to the effective date of the termination will continue to bepaid in accordance with the provisions of Section 4, provided that a majorityof the members of the Board who are not then Participants may cause the entireinterest in the Plan of any or all Participants, or the Beneficiaries of any orall deceased Participants, to be distributed in the form of an immediate lumpsum payment.

 

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

 

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

 

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

 

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

 

7.4           Beneficiary. “Beneficiary” with respect to a Participant is the person designated orotherwise determined under the provisions of Section 4.2(e) as the distributeeof benefits payable after the Participant’s death.  A person designated or otherwise determined to be a Beneficiaryunder the terms of the Plan has no interest in or right under the Plan untilthe Participant in question has died.  ABeneficiary 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.

 

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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 othertransfer, directly or indirectly, of all or substantially all of the assets ofthe Company, in one transaction or in a series of related transactions, to anyperson;

 

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

 

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

 

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

 

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

 

(f)            a change in control of the Companyof a nature that would be required to be reported pursuant to section 13 or15(d) of the Exchange Act, whether or not the Company is then subject to such reportingrequirement.

 

(g)           For purposes of this Section 7.7:

 

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

 

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

 

(ii)           “Exchange Act” means the SecuritiesExchange 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 isdefined 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 votingpower for the election of directors is owned, directly or indirectly, by theCompany; (C) any other entity in which the Company, by virtue of a direct orindirect ownership interest, has the right to elect a majority of the membersof the entity’s governing body; or (D) any benefit plan sponsored by theCompany, 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 theCode includes a reference to that provision as it may be amended from time totime 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 sectionwithin the Plan, references within a section of the Plan to a particularsubsection refer to that subsection within the same section, and referenceswithin a section or subsection to a particular clause refer to that clausewithin the same section or subsection, as the case may be.

 

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

 

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

 

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

 

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

 

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7.15         Headings.  Theheadings of sections are included solely for convenience of reference; if thereexists any conflict between such headings and the text of the Plan, the textwill control.

 

7.16         Market Price. “Market Price” means the closing sale price for Shares on a specifieddate or, if Shares were not then traded, on the most recent prior date whenShares were traded, all as reported on the Nasdaq National Market or such otherexchange 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 pluralmay 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 Accountamounts have been credited pursuant to Section 3 and who has not ceased to be aParticipant pursuant to Section 2.4.

 

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

 

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

 

7.21         Qualified Director. “Qualified Director” means an individual who is a member of the Boardand 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 Sharesdetermined by dividing the Retainer Share Amount for a calendar quarter by theMarket Price on the first day of the calendar quarter that first follows thecalendar quarter for which such Retainer Share Amount has been determined.  No Retainer Shares will be issuablehereunder for any calendar quarter beginning after December 31, 2003.

 

7.23         Retainer Share Amount.  “Retainer Share Amount” means, with respect to any calendarquarter whose last day occurs during the period beginning at the Effective Timeand ending on December 31, 2003, the amount determined by (i) taking an amountequal to 50 percent (33-1/3 percent with respect to the calendar quarters inthe 1997 calendar year) of the Annual Retainer payable by the Company toQualified Directors for such calendar quarter and (ii) multiplying such amountby a fraction, the numerator of which is the number of days during suchcalendar quarter (or the number of days after the Effective Time with respectto the calendar quarter in which the Effective Time occurs) that the individualserved as a Qualified Director and the denominator of which is the total numberof days in such calendar quarter.  NoRetainer Share Amount will be calculated hereunder for any calendar quarterbeginning after December 31, 2003.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.             Administration.

 

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

 

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

 

8.3           Administrator’s Discretion.  The Administrator has the sole discretionarypower and authority to make all determinations necessary for administration ofthe Plan, except those determinations that the Plan requires others to make,and to construe, interpret, apply and enforce the provisions of the Plan andPlan Rules whenever necessary to carry out its intent and purpose and tofacilitate its administration, including, without limitation, the discretionarypower and authority to remedy ambiguities, inconsistencies, omissions anderroneous benefit calculations.  In theexercise of its discretionary power and authority, the Administrator will treatall 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 administrationof the Plan, and may pay reasonable compensation for such services.  All costs of administering the Plan will bepaid by the Company.

 

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

 

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counsel and control the defense andsettlement of any action for which a person may be entitled to indemnificationunder this provision.

 

9.             Miscellaneous.

 

9.1           Withholding and Offsets.  The Company and the Trustee retain the right to withhold from anycompensation, deferral and/or benefit payment pursuant to the Plan, any and alltax as the Company or Trustee deems necessary, and the Company and the Trusteemay offset against amounts payable to a Participant or Beneficiary under thePlan any amounts then owing to the Company by such Participant or Beneficiary.  The Company or the Trustee, as the case maybe, in its sole discretion, may permit Participants to elect whether to satisfytheir obligations under this Section 9.1 by having such amounts withheld fromany compensation, deferral and/or benefit payment pursuant to the Plan or byremitting such amounts to the Company or the Trustee, or by a combination ofsuch methods.

 

9.2           Other Benefits. Neither amounts deferred nor amounts paid pursuant to the Planconstitute salary or compensation for the purpose of computing benefits underany other benefit plan, practice, policy or procedure of the Company unlessotherwise expressly provided thereunder.

 

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

 

9.4           No Rights to Continued Service Created.  Neither the establishment of orparticipation in the Plan gives any individual the right to continued serviceon the Board or limits the right of the Company or its stockholders toterminate or modify the terms and conditions of service of such individual onthe Board or otherwise deal with any individual without regard to the effectthat 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 ofthe Company under the Plan are binding on any successor to the Company whetherthe existence of such successor is the result of a direct or indirect purchase,merger, consolidation or otherwise of all or substantially all of the businessand/or assets of the Company.

 

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