**Exhibit 10.20**

 

**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 Ron Marshall (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.                                       Grantof Performance Unit Award.

 

The Company hereby grants to the Grantee aperformance unit award (the “Award”) consisting of Fifteen Thousand NineHundred Fourteen and 4764/ten thousands (15,914.4764) 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 PerformanceUnits in this Agreement will be deemed to include any additional PerformanceUnits granted 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. If the Grantee’s employment is terminatedat any time by reason of the Grantee’s death or Disability (as such term isdefined in the Plan) or is terminated at any time by the Company without Cause(as defined in Section 3.5 below), 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.

 

3.2.                              Termination For Any Reason After the Grantee Has Attained Age 60. If the Grantee’s employment is terminated for any reason whatsoeverexcept for Cause (as defined in Section 3.5 below), after the Grantee hasattained age 60, the Performance Units granted to the Grantee shall be settledand the underlying Performance Shares shall be distributed to the Grantee,without forfeiture, in the manner described in Section 2.

 

3.3.                              Termination For Any Reason Approved by theCommittee. 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 Any Reason Prior to the Grantee’sAttaining Age 60. Except as otherwise provided in Section 3.1,3.2 or 3.3 above, if the Grantee’s employment is terminated for any reasonwhatsoever except for Cause (as defined in Section 3.5) prior to theGrantee’s attaining age 60, the Grantee shall forfeit 50% of the PerformanceUnits granted to the Grantee, and the remaining 50% of the Performance Unitsshall be settled and the underlying Performance Shares shall be distributed tothe Grantee in the manner described in Section 2.

 

3.5.                              Termination ForCause Prior to the Grantee’s Attaining Age 65. Notwithstanding Section 3.2 and except as otherwise provided in Section 3.3above, if the Grantee’s employment is terminated for Cause (as defined below)at any time prior to the Grantee’s attaining age 65, the Grantee shall forfeit100% of the Performance Units granted to the Grantee. “Cause” means because ofevidence of dishonesty or mistrust in the Grantee’s employment or other servicewith the Company or because of his involvement in a crime or misdemeanoragainst the Company or any

 

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Subsidiary,or any employee thereof, for which the Grantee is convicted or which hehas confessed in writing to the Company or to any law enforcement agency.

 

3.6.                              Non-Competition and Cooperation Agreement and Effect of Breach. The Grantee agrees that after termination of employment, and ifPerformance Shares shall have been distributed to him pursuant to Section 2as a result thereof, he will be available for consultation and will refrainfrom actively participating or engaging in any business in competition with theCompany or any Subsidiary for a period of one year following the date oftermination of employment (the “Non-Competition Period”). NotwithstandingSections 3.1, 3.2, 3.3 and 3.4 above, if the Grantee, at any time prior to histermination of employment, or during the Non-Competition Period, without theprior written consent of the Committee, actively participates or engages in anybusiness in competition with the Company or any Subsidiary or fails to holdhimself available for consultation, the Committee may in its sole discretionrequire the Grantee to forfeit 100% of the Performance Units granted to theGrantee, including any Performance Shares previously distributed to theGrantee.

 

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 of Performance Units so determined shall becomputed 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, theGrantee will be granted as of the date of such termination additionalPerformance Units pursuant to this Section 4.1(b). As of the date of suchtermination, the Grantee will be granted that number of additional PerformanceUnits equal to the quotient of (x) the product of (i) the total cash dividendsper share on the Common Stock for which a record date occurs during suchquarter and prior to the date of such termination, 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 date Grantee’s employment terminates or, if sharesof the Common Stock were not then traded, on the most recent prior date whensuch shares were traded. The number of Performance Units so determined shall becomputed to four decimal places. Any additional Performance Units granted underthis Section 

 

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4.1(b) shall be settled and the underlying PerformanceShares distributed to the Grantee in the manner described in Section 2 andshall otherwise be subject to the forfeiture provisions in Section 3 andthe other terms and conditions of this Agreement.

 

4.2.                              Adjustmentsfor Other Distributions and Events. In the event of any reorganization,merger, consolidation, recapitalization, liquidation, reclassification, stockdividend, stock split, combination of shares, rights offering or divestiture(including a spin-off) or any other similar change in the corporate structureor shares of the Company, the Committee (or, if the Company is not,the surviving corporation in any such transaction, the board of directors ofthe surviving corporation), in order to prevent dilution or enlargement of therights of the Grantee, will make appropriate adjustment (which determinationwill be conclusive) 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.                              Definitionof Change in Control. For purposes of this Section 5, a “Change inControl” of the Company shall mean (a) the sale, lease, exchange or othertransfer of all or substantially all of the assets of the Company (in onetransaction or in a series of related transactions) to any person that is notcontrolled by the Company; (b) the approval by the stockholders of the Companyof any plan or proposal for the liquidation or dissolution of the Company; or(c) a change in control of a nature that would be required to be reported(assuming such event has not been “previously reported”) in response to Item1(a) of the Current Report on Form 8-K, as in effect on October 1, 2001,pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), whether or not the Company is then subject tosuch reporting requirement; provided that, without limitation, such a Change inControl shall be deemed to have occurred at such time as (x) any person is orbecomes the “beneficial owner” (as defined in Rule 13d-3 under the ExchangeAct), directly or indirectly, of 20% or more of the combined voting power ofthe Company’s outstanding securities ordinarily having the right to vote atelections of directors; or (y) individuals who constitute the Board ofDirectors on the date of this Agreement, cease for any reason to constitute atleast a majority thereof, provided that any person becoming a directorsubsequent to the date of this Agreement, whose election, or nomination forelection by the Company’s stockholders, was approved by a vote of at least amajority of the directors comprising the Board of Directors on the date of thisAgreement, (either by a specific vote or by approval of the proxy statement ofthe Company in which such person is named as a nominee for director, withoutobjection to such nomination) shall be, for purpose of this clause (y),considered as though such person were a member of the Board of Directors on thedate of this Agreement.

 

5.2.                              Impactof Change in Control. The Company expressly recognizes that a Change inControl of the Company would be likely to result in a material alteration ordiminution of the Grantee’s position and responsibilities with the Company, andif that were to occur, certain of the terms of this Agreement would beunreasonable or unfair in their application to the Grantee. Accordingly, if (i)prior to the date that all of the Performance Units have been settled and all theunderlying Performance Shares have been distributed to the Grantee pursuant to Section 2,or (ii) prior to the expiration date of the Non-Competition Period in the eventsuch settlement and distribution shall have occurred, any Change in Control ofthe Company shall occur: (a) the forfeiture provisions in Section 3(including without limitation the Grantee’s obligations under Section 3.6)shall lapse and shall have no further applicability to the Grantee; and (b) allthe Performance Units shall be settled and

 

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all the underlyingPerformance Shares shall be distributed to the Grantee (or other personreceiving distributions or entitled to receive distributions under Section 2,such other person to be hereinafter called “other recipient”), on the day theChange in Control becomes effective unless the Grantee or other recipient,prior thereto, shall notify the Committee, in writing, that the Grantee or suchother recipient waives the right to acceleration, in which case Section 2shall continue to apply to the Grantee or such other recipient. In effectingsuch distribution, the Committee may make such arrangements, including depositsin escrow 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.                              Limitationon Change in Control Payments. Notwithstanding anything in this Section 5to the contrary, if, with respect to the Grantee, acceleration of thedistribution of the Performance Shares as provided above (which accelerationcould be deemed a “payment” within the meaning of Section 280G(b)(2) ofthe Internal Revenue Code of 1986, as amended (the “Code”)), together with anyother payments which the Grantee has the right to receive from the Company orany 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.                                       Rightsof Grantee.

 

6.1.                              Employmentor Service. Nothing in this Agreement will interfere with or limit in anyway the right of the Company or any Subsidiary to terminate the employment orservice of the Grantee at any time, nor confer upon the Grantee any right tocontinue in the employ or service of the Company or any Subsidiary at anyparticular position or rate of pay or for any particular period of time.

 

6.2.                              Rightsas a Shareholder. The Grantee will have no rights as a shareholder of theCompany as a result of this Agreement and with respect to any Performance Unitsuntil such Performance Units have been settled and distributed to the Granteein the form of Performance Shares and the Grantee has become the holder ofrecord of such Performance Shares. No adjustment will be made for dividends ordistributions with respect to the Performance Shares as to which there is arecord date preceding the date the Grantee becomes the holder of record of thePerformance Shares, except as may otherwise be provided in Section 4 ofthis Agreement, the Plan or determined by the Committee in its sole discretion.

 

6.3.                              Restrictionson Transfer. Except pursuant to testamentary will or the laws of descentand distribution or as otherwise expressly permitted by the Plan, unlessapproved by the Committee in its sole discretion, no right or interest of theGrantee in the Performance Units granted hereunder (or the underlyingPerformance Shares prior to the distribution thereof pursuant to Section 2)will be assignable or transferable, or subjected to any lien, during the

 

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lifetimeof the Grantee, either voluntarily or involuntarily, directly or indirectly, byoperation 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.                                       WithholdingTaxes.

 

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 unableto withhold 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.                                       Subject to Plan.

 

ThePerformance Units granted pursuant to this Agreement have been granted under,and are subject to the terms of, the Plan. 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 thisAgreement will be interpreted as to be consistent with the Plan, and anyambiguities in this Agreement will be interpreted by reference to the Plan. Inthe event that any provision of this Agreement is inconsistent with the termsof the Plan, the terms of the Plan will prevail.

 

9.                                       Miscellaneous.

 

9.1.                              BindingEffect. This Agreement will be binding upon the heirs, executors,administrators and successors of the parties to this Agreement.

 

9.2.                              GoverningLaw. This Agreement and all rights and obligations under this Agreementwill be construed in accordance with the Plan and governed by the laws of theState of Minnesota, without regard to conflicts of laws provisions. Any legalproceeding related to this Agreement will be brought in an appropriateMinnesota court, and the parties to this Agreementconsent to the exclusive jurisdiction of the court for this purpose.

 

9.3.                              Entire Agreement. This Agreement and the Plan set forth theentire agreement and understanding of the parties to this Agreement withrespect to the grant of the Performance Units hereunder and the administrationof the Plan and supersede all prior agreements, arrangements, plans andunderstandings relating to the grant of the Performance Units hereunder and theadministration of the Plan.

 

9.4.                              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.

 

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9.5.                              Termination of Employment. For purposes of this Agreement, the Grantee’semployment will be considered to be terminated when the Grantee ceases toperform services for the Company and all of its Subsidiaries as an employee ofany 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/ Ron Marshall |   |
|                                | (Name)                             |
|                                |                               |
|                                |                               |   |
|                                |                               |   |
|                                |                               |   |
|                                |                               |   |
|                                |                               |   |
|                                | (Address)                          |
|                                     |                                    |  |  |  |

 

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