**Exhibit 10.7**

 

**NON-STATUTORY STOCK OPTION AGREEMENT**

 

THIS AGREEMENT is entered into and effective as of this      day of               ,200   (the “Date of Grant”), by and between Nash Finch Company (the “Company”)and [*NAME OF OPTIONEE*] (the “Optionee”).

 

A.           The Company has adopted the Nash FinchCompany 2000 Stock Incentive Plan (the “Plan”) authorizing the Board ofDirectors of the Company, or a committee as provided for in the Plan (the Boardor such a committee to be referred to as the “Committee”), to grantnon-statutory stock options to employees and non-employee directors,consultants and independent contractors of the Company and its Subsidiaries (asdefined in the Plan).

 

B.             The Company desires to give the Optioneean inducement to acquire a proprietary interest in the Company and an addedincentive to advance the interests of the Company by granting to the Optioneean option to purchase shares of common stock of the Company pursuant to thePlan.

 

Accordingly, the parties agree as follows:

 

# 1.                                       Grant of Option.

 

The Company hereby grants to the Optionee theright, privilege, and option (the “Option”) to purchase                                    (            )shares (the “Option Shares”) of the Company’s common stock, $1.66-2/3 par value(the “Common Stock”), according to the terms and subject to the conditionshereinafter set forth and as set forth in the Plan.  The Option is not intended to be an “incentivestock option,” as that term is used in Section 422 of the Internal RevenueCode of 1986, as amended (the “Code”).

 

# 2.                                       Option Exercise Price.

#  

The per share price to be paid by Optionee inthe event of an exercise of the Option will be $           .

 

# 3.                                       Duration of Option and Time of Exercise.

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## ***3.1***                                 Initial Period ofExercisability.  The Option will becomeexercisable with respect to the Option Shares in five installments.  The following table sets forth the initialdates of exercisability of each installment and the number of Option Shares asto which this Option will become exercisable on such dates:

 
| **Initial Date of  Exercisability**                                                                                                  | ** ** | **Number of Option Shares  Available for Exercise** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------|
| ** **                                                                                                                           | ** ** | ** **                                          |
|                    ,  200   |       |                                                |
|                    ,  200   |       |                                                |
|                    ,  200   |       |                                                |
|                    ,  200   |       |                                                |
|                    ,  200   |       |                                                |

 

The foregoing rights toexercise this Option will be cumulative with respect to the Option Sharesbecoming exercisable on each such date, but in no event will this Option beexercisable after, and this

 

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Option will become void andexpire as to all unexercised Option Shares at, 4:30 p.m. Minneapolis, Minnesotatime) on                   ,200   (the “Time of Termination”).

 

## ***3.2***                                 Termination of Employment orOther Service.

## *** ***

### **(a)**                                  Termination Due to Death, Disability or Retirement.

### ** **

#### **(i)  In the event the Optionee’semployment or other service with the Company and all Subsidiaries is terminatedby reason of death or Disability, this Option will become immediatelyexercisable in full and remain exercisable for a period of three years aftersuch termination (but in no event after the Time of Termination).**

#### ** **

#### **(ii)  In the event the Optionee’semployment or other service with the Company and all Subsidiaries is terminatedby reason of Retirement, this Option will remain exercisable, to the extentexercisable as of the date of such termination, for a period of three yearsafter such termination (but in no event after the Time of Termination).**

#### ** **

### **(b)**                                 Termination for Reasons Other Than Death, Disability or Retirement.  In the event that the Optionee’semployment or other service with the Company and all Subsidiaries is terminatedfor any reason other than death, Disability or Retirement, or the Optionee isin the employ or other service of a Subsidiary and the Subsidiary ceases to bea Subsidiary of the Company (unless the Optionee continues in the employ of theCompany or another Subsidiary), all rights of the Optionee under the Plan andthis Agreement will immediately terminate without notice of any kind, and thisOption will no longer be exercisable; provided, however, that if suchtermination is due to any reason other than voluntary termination by theOptionee or termination by the Company or any Subsidiary for “cause” (asdefined in the Plan), this Option will remain exercisable to the extentexercisable as of such termination for a period of three months after suchtermination (but in no event after the Time of Termination).

### ** **

## ***3.3***                                 Change in Control.

## *** ***

### **(a)**                                  Impact of Change in Control.  If a Change in Control (as defined in thePlan) of the Company occurs, this Option, if it has been outstanding for atleast six months, will become immediately exercisable in full and will remainexercisable until the Time of Termination, regardless of whether the Optioneeremains in the employ or other service of the Company or any Subsidiary.  In addition, if a Change in Control of theCompany occurs, the Committee, in its sole discretion and without the consentof the Optionee, may determine that the Optionee will receive, with respect tosome or all of the Option Shares, as of the effective date of any such Changein Control of the Company, cash in an amount equal to the excess of the FairMarket Value (as defined in the Plan) of such Option Shares immediately priorto the effective date of such Change in Control of the Company over the optionexercise price per share of this Option.

### ** **

### **(b)**                                 Limitation on Change in Control Payments.  Notwithstanding anything in this Section 3.3to the contrary, if, with respect to the Optionee, acceleration of the vestingof this Option or the payment of cash in exchange for all or part of the OptionShares as provided above (which acceleration or payment could be deemed a “payment”within the meaning of Section

 

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### **280G(b)(2) of the Code), togetherwith any other payments which the Optionee has the right to receive from theCompany or any corporation which is a member of an “affiliated group” (asdefined in Section 1504(a) of the Code without regard to Section 1504(b)of the Code) of which the Company is a member, would constitute a “parachutepayment” (as defined in Section 280G(b)(2) of the Code), the payments tothe Optionee as set forth herein will be reduced to the largest amount as willresult in no portion of such payments being subject to the excise tax imposedby Section 4999 of the Code; provided, however, that if the Optionee issubject to a separate agreement with the Company or a Subsidiary that expresslyaddresses the potential application of Sections 280G or 4999 of the Code(including, without limitation, that “payments” under such agreement orotherwise will be reduced, that the Optionee will have the discretion todetermine which “payments” will be reduced, that such “payments” will not bereduced or that such “payments” will be “grossed up” for tax purposes), thenthis Section 3.3(b) will not apply, and any “payments” to the Optioneepursuant to Section 3.3(a) of this Agreement will be treated as “payments”arising under such separate agreement.**

 

# 4.                                       Manner of Option Exercise.

#  

## ***4.1***                                 Notice.  This Option may be exercised by the Optioneein whole or in part from time to time, subject to the conditions contained inthe Plan and in this Agreement, by delivery, in person, by facsimile orelectronic transmission or through the mail, to the Company at its principalexecutive office in Minneapolis, Minnesota (Attention: Secretary), of a writtennotice of exercise.  Such notice must bein a form satisfactory to the Committee, must identify the Option, must specifythe number of Option Shares with respect to which the Option is beingexercised, and must be signed by the person or persons so exercising theOption.  Such notice must be accompaniedby payment in full of the total purchase price of the Option Sharespurchased.  In the event that the Optionis being exercised, as provided by the Plan and Section 3.2 above, by anyperson or persons other than the Optionee, the notice must be accompanied byappropriate proof of right of such person or persons to exercise theOption.  As soon as practicable after theeffective exercise of the Option, the Optionee will be recorded on the stocktransfer books of the Company as the owner of the Option Shares purchased, andthe Company will deliver to the Optionee one or more duly issued stock certificatesevidencing such ownership.

## *** ***

## ***4.2***                                 Payment.  At the time of exercise of this Option, theOptionee must pay the total purchase price of the Option Shares to be purchasedentirely in cash (including a check, bank draft or money order, payable to theorder of the Company); provided, however, that the Committee, in its solediscretion, may allow such payment to be made, in whole or in part, by tenderof a promissory note (on terms acceptable to the Committee in its solediscretion) or a Broker Exercise Notice or Previously Acquired Shares (as suchterms are defined in the Plan), or by a combination of such methods.  In the event the Optionee is permitted to paythe total purchase price of this Option in whole or in part with PreviouslyAcquired Shares, the value of such shares will be equal to their Fair MarketValue on the date of exercise of this Option.

 

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# 5.                                       Rights of Optionee; Transferability.

#  

## ***5.1***                                 Employment or Service.  Nothing in this Agreement will interfere withor limit in any way the right of the Company or any Subsidiary to terminate theemployment or other service of the Optionee at any time, nor confer upon theOptionee any right to continue in the employ or other service of the Company orany Subsidiary at any particular position or rate of pay or for any particularperiod of time.

## *** ***

## ***5.2***                                 Rights as a Shareholder.  The Optionee will have no rights as ashareholder unless and until all conditions to the effective exercise of thisOption (including, without limitation, the conditions set forth in Sections 4and 6 of this Agreement) have been satisfied and the Optionee has become theholder of record of such shares.  Noadjustment will be made for dividends or distributions with respect to thisOption as to which there is a record date preceding the date the Optioneebecomes the holder of record of such shares, except as may otherwise beprovided in the Plan or determined by the Committee in its sole discretion.

## *** ***

## ***5.3***                                 Restrictions on Transfer.  Except pursuant to testamentary will or thelaws of descent and distribution or as otherwise expressly permitted by thePlan, no right or interest of the Optionee in this Option prior to exercise maybe assigned or transferred, or subjected to any lien, during the lifetime ofthe Optionee, either voluntarily or involuntarily, directly or indirectly, byoperation of law or otherwise.  TheOptionee will, however, be entitled to designate a beneficiary to receive thisOption upon such Optionee’s death, and, in the event of the Optionee’s death,exercise of this Option (to the extent permitted pursuant to Section 3.2(a)of this Agreement) may be made by the Optionee’s legal representatives, heirsand legatees.

## *** ***

## ***5.4***                                 Breach of Confidentiality orNon-Compete Agreements.  Notwithstanding anything inthis Agreement or the Plan to the contrary, and in addition to the terms setforth in Section 6.3 of this Agreement, in the event that the Optioneematerially breaches the terms of any confidentiality or non-compete agreement enteredinto with the Company or any Subsidiary, including but not limited to thoseprovided for in Section 6 of this Agreement, whether such breach occursbefore or after termination of the Optionee’s employment or other service withthe Company or any Subsidiary, the Committee in its sole discretion mayimmediately terminate all rights of the Optionee under the Plan and thisAgreement without notice of any kind.

## *** ***

6.                                       OptioneeCovenants.

 

6.1                                 CompetitiveActivities.  Optioneeagrees that, without the prior written consent of the Company, he or she willnot alone or in any capacity (other than by way of holding shares listed on astock exchange in a number not exceeding five percent of the outstanding classor series so listed) with any other person or entity:

 

(a)                                  directly orindirectly engage in the business of the wholesale distribution of food andrelated products, in competition with the Company or any Subsidiary, inassociation with or as an officer, director, employee, principal, agent orconsultant of SUPERVALU, INC., Fleming Companies, Inc., Roundy’s, Inc., SpartanStores, Inc., Merchants Distributors, Inc., Laurel Grocery Company, L.L.C. orany of their respective subsidiaries, affiliates or successors, as and wheresuch business of the Company or any Subsidiary may then be conducted; provided,however, that this clause (a) shall not apply after a Change in Control; or

 

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(b)                                 in any wayinterfere or attempt to interfere with the business of the Company or anySubsidiary whether by way of interfering with or disrupting the Company’s orany Subsidiary’s relationships with any of its or their current or potentialvendors, suppliers, distributors or customers, or by doing or saying anythingto disparage or cause injury to the business, reputation, management,employees, officers or directors or products or services of the Company or anySubsidiary; or

 

(c)                                  directly orindirectly, solicit for employment, employ or attempt to employ any employee ofthe Company or any Subsidiary.

 

6.2                                 ConfidentialInformation.  Optioneeagrees not to use, other than in connection with his or her employment with theCompany or any Subsidiary, or disclose any Confidential Information to anyperson not employed by the Company or any Subsidiary or not authorized by theCompany to receive such Confidential Information, without the prior writtenconsent of the Company; and to use reasonable and prudent care to safeguard andprotect and prevent the unauthorized disclosure of Confidential Information.  For these purposes, “Confidential Information”shall mean information, knowledge or data which is confidential and proprietaryto the Company or any Subsidiary, whether or not trade secrets, or which theCompany or any Subsidiary has an obligation to treat as confidential iffurnished by another party.  It includesinformation relating to financial matters, business plans and to business asconducted or anticipated to be conducted, and to past or current or anticipatedproducts or services.  It also includes,without limitation, information concerning technology, research, businessdevelopment, purchasing, accounting, marketing, selling, processes, programs,trade “know how”, details of contracts, strategies, pricing practices, andbusiness methods and practices, all relating in any way to the business of theCompany or any Subsidiary and its or their customers, vendors, suppliers,distributors and other persons and entities with which the Company or anySubsidiary does business.  The foregoingobligation of confidentiality shall remain in effect for so long as theConfidential Information remains confidential.

 

6.3                                 Term ofOptionee Covenants; Remedies for Breach.  Except as provided in Section 6.2 ofthis Agreement, the covenants contained in this Section 6 shall beeffective during the term of the Option provided for herein, and for a periodof one year following the earlier of the Time of Termination, or the date theOption ceases to be exercisable pursuant to the terms of Section 3.2 ofthis Agreement.  If any such covenant isbreached, the Option shall be terminated in accordance with Section 5.4 ofthis Agreement; and, in addition to any other legal remedies as may beavailable to it, the Company shall be entitled to an immediate injunction froma court of competent jurisdiction to prevent the continuation of the breachwithout further having to show damage.

 

Further, in the event of abreach of the covenants contained in Section 6.1 of this Agreement, theOptionee shall pay to the Company the sum of all gains realized by him or herwith respect to any exercise of the Option pursuant to Section 4.1 of thisAgreement.  For this purpose, withrespect to any single exercise of the Option, the “gain realized” shall equal(i) the difference between the Fair Market Value on the date the exercise ofthe Option is effective and the exercise price set forth in Section 2 ofthis Agreement, multiplied by (ii) the number of Option Shares purchased onsuch date.  Payment shall be made by theOptionee to the Company within 30 days after the date of written notice fromthe Company to the Optionee that such payment is due.

 

7.                                       Securities Lawand Other Restrictions.

 

Notwithstanding any other provision of thePlan or this Agreement, the Company will not be required to issue, and theOptionee may not sell, assign, transfer or otherwise dispose of, any OptionShares, unless (a) there is in effect with respect to the Option Shares a registrationstatement under the

 

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Securities Act of 1933, asamended, and any applicable state or foreign securities laws or an exemptionfrom such registration, and (b) there has been obtained any other consent,approval or permit from any other regulatory body which the Committee, in its solediscretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon thereceipt of any representations or agreements from the parties involved, and theplacement of any legends on certificates representing Option Shares, as may bedeemed necessary or advisable by the Company in order to comply with suchsecurities law or other restrictions.

 

# 8.                                       Withholding Taxes.

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# The Company is entitled to (a) withholdand deduct from future wages of the Optionee (or from other amounts that may bedue and owing to the Optionee from the Company), or make other arrangements forthe collection of, all legally required amounts necessary to satisfy anyfederal, state or local withholding and employment-related tax requirementsattributable to the Option, including, without limitation, the grant orexercise of this Option, or (b) require the Optionee promptly to remit theamount of such withholding to the Company before acting on the Optionee’snotice of exercise of this Option.  Inthe event that the Company is unable to withhold such amounts, for whateverreason, the Optionee agrees to pay to the Company an amount equal to the amountthe Company would otherwise be required to withhold under federal, state orlocal law.

 

# 9.                                       Adjustments.

#  

In the event of any reorganization, merger,consolidation, recapitalization, liquidation, reclassification, stock dividend,stock split, combination of shares, rights offering, divestiture orextraordinary dividend (including a spin-off), or any other change in thecorporate structure or shares of the Company, the Committee (or, if the Companyis not the surviving corporation in any such transaction, the board ofdirectors of the surviving corporation), in order to prevent dilution orenlargement of the rights of the Optionee, will make appropriate adjustment(which determination will be conclusive) as to the number and kind ofsecurities or other property (including cash) subject to, and the exerciseprice of, this Option.

 

# 10.                                 Subject to Plan.

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The Option and the Option Shares granted andissued pursuant to this Agreement have been granted and issued under, and aresubject to the terms of, the Plan.  Theterms of the Plan are incorporated by reference in this Agreement in theirentirety, and the Optionee, by execution of this Agreement, acknowledges havingreceived a copy of the Plan.  Theprovisions of this Agreement will be interpreted as to be consistent with thePlan, and any ambiguities in this Agreement will be interpreted by reference tothe Plan.  In the event that anyprovision of this Agreement is inconsistent with the terms of the Plan, theterms of the Plan will prevail.

 

# 11.                                 Miscellaneous.

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## ***11.1***                           Binding Effect.  This Agreement will be binding upon theheirs, executors, administrators and successors of the parties to thisAgreement.

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## ***11.2***                           Governing Law.  This Agreement and all rights and obligationsunder this Agreement will be construed in accordance with the Plan and governedby the laws of the State of Minnesota, without regard to conflicts of lawsprovisions.  Any legal proceeding relatedto this Agreement will be

 

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## ***brought in an appropriate Minnesota court, and the parties to thisAgreement consent to the exclusive jurisdiction of the court for this purpose.***

 

## ***11.3***                           Entire Agreement.  This Agreement and the Plan set forth theentire agreement and understanding of the parties to this Agreement withrespect to the grant and exercise of this Option and the administration of thePlan and supersede all prior agreements, arrangements, plans and understandingsrelating to the grant and exercise of this Option and the administration of thePlan.

## *** ***

## ***11.4***                           Amendment and Waiver.  Other than as provided in the Plan, thisAgreement may be amended, waived, modified or canceled only by a writteninstrument executed by the parties to this Agreement or, in the case of awaiver, by the party waiving compliance.

## *** ***

11.5                           Severability.  Whenever possible, each provision of thisAgreement will be interpreted so that it is valid under the applicablelaw.  If any provision of this Agreementis to any extent invalid under the applicable law, that provision will still beeffective to the extent it remains valid. The remainder of this Agreement will also continue to be valid, and theentire Agreement will continue to be valid in other jurisdictions.

 

The parties to this Agreement have executedthis Agreement effective the day and year first above written.

 
|                              | NASH FINCH COMPANY |
|-----------------------------------|--------------------|
|                              |               |
|                              | By:                |   |   |
|                              |               | Its: | Senior Vice President, General Counsel &  Secretary |
|                              |               |   |
|                              |               |
| By execution of  this Agreement,  | OPTIONEE           |
| the Optionee  acknowledges having |               |
| received a copy  of the Plan.     |               |   |
|                              |               | (Signature) |
|                              |               |   |
|                              |               |   |   |
|                              |               | (Name  and Address) |
|                              |               |   |
|                              |               |   |
|                              |               |   |
|                                   |                    |  |  |  |

 

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