Amendment to Employment Agreement

Change in Control

 

 

 

NASH FINCH COMPANY

March 16, 2006

Mr. Alec Covington
304 View Point
St. Augustine, FL 3280

 

 

 

Re:

 

Employment Terms

Dear Alec:

On behalf of the Board of Directors (the “Board”) of Nash-Finch Company (the “Company”), I am pleased to offer you employment with the Company on the following terms:

     1. COMMENCEMENT DATE: Your employment with the Company will commence on May 1, 2006 (your “Commencement Date”).

     2. POSITION; PRINCIPAL PLACE OF EMPLOYMENT: You will be employed as the President and Chief Executive of the Company (“CEO”). Your principal place of employment will be at the Company’s headquarters in Edina, Minnesota.

     3. BOARD MEMBERSHIP: The Board shall take such action as may be necessary to appoint or elect you as a member of the Board as of your Commencement Date. Thereafter, during your employment with the Company, the Board shall nominate you for re-election as a member of the Board at the expiration of your then-current term. You agree to serve without additional compensation as an officer and director of any of the Company’s subsidiaries. You may, with the Board’s approval, serve on up to two (2) outside boards of directors so long as your duties as a board member do not interfere with your performance as CEO.

     4. BASE SALARY: You will be paid a base salary (the “Base Salary”) at an annual rate of not less than eight hundred fifty thousand dollars ($850,000), payable in accordance with the regular payroll practices of the Company. Your Base Salary shall be reviewed annually by the Board (or a committee thereof) and may be increased, but not decreased, from time to time by the Board.

     5. ANNUAL BONUS: You will be eligible to participate in the Company’s annual bonus and other incentive compensation plans and programs for the Company’s senior executives at a level commensurate with your position. You will have the opportunity to earn an annual maximum bonus measured against objective criteria to be determined by the Board (or a committee thereof) of up to one hundred percent (100%) of Base Salary. Your 2006 annual bonus shall be your full annual maximum bonus, less any annual bonus amounts earned from your prior employer for performance during 2006.

 


 

Mr. Alec Covington
March 16, 2006
Page 2

     6. INITIAL EQUITY AWARDS: The Board or the Committee (as defined in the Company’s 2000 Stock Incentive Plan (the “Stock Incentive Plan”)) shall award you fifty-four thousand (54,000) performance units denominated as restricted stock units as of your Commencement Date (the “Time-Vesting RSUs”). Subject to accelerated vesting as set forth in this Agreement, the Time-Vesting RSUs shall vest in three (3) equal amounts on the first three anniversaries of your Commencement Date, provided that you are employed on each vesting date.

The Board or the Committee shall award you as of the Commencement Date one hundred thousand (100,000) performance units (the “Performance-Vesting RSUs”). Subject to accelerated vesting as set forth in this Agreement, the Performance-Vesting RSUs shall vest in five (5) equal amounts on the first five anniversaries of your Commencement Date only if the EBITDA for the 4 fiscal quarters ending on or before such anniversary date exceeds the EBITDA for the 2005 fiscal year of the Company (as such 2005 EBITDA may be equitably adjusted by the Board in its discretion to take into account acquisitions or divestitures that take place after your Commencement Date). The Company will make additional cash payments equal to forty-eight percent (48%) of the value of the Performance RSUs that are settled on any particular date.

If on any date the Company shall pay any dividend on its common stock (“Common Stock”) (other than a dividend payable in Common Stock), the number of RSUs credited to you will as of such date be increased by an amount equal to: (x) the product of the number of RSUs credited to you as of the record date for such dividend multiplied by the per share amount of any dividend (or, in the case of any dividend payable in property other than cash, the per share value of such dividend, as determined in good faith by the Board), divided by (y) the fair market value of a share of Common Stock on the payment date of such dividend as determined under the Stock Incentive Plan. In the case of any dividend declared on Common Stock which is payable in Common Stock, the number of RSUs credited to you will be increased by a number equal to the product of (x) the aggregate number of RSUs that have been credited to you through the related dividend record date multiplied by (y) the number of shares Common Stock (including any fraction thereof) payable as a dividend on a share of Common Stock. The number and terms of the RSUs shall be adjusted in accordance with the provisions of the Stock Incentive Plan.

At the earlier of (x) thirty (30) days after any termination of employment or (y) a Change in Control (as defined on Exhibit A) as provided in Section 12, the Company shall pay to you a number of shares of Common Stock equal to the aggregate number of vested RSUs credited to you as of such date (provided that all RSUs awarded pursuant to this Section 6 shall vest in full upon a Change in Control); provided, however, that in the event that the Company is involved in a transaction in which the shares of Common Stock will be exchanged for cash, the Company shall pay to you immediately prior to the consummation of such transaction a number of shares of Common Stock equal to the aggregate number of RSUs credited to you (whether vested or unvested) as of such date.

 


 

Mr. Alec Covington
March 16, 2006
Page 3

     7. ANNUAL LONG-TERM INCENTIVE COMPENSATION: The Company shall grant to you with respect to the performance period whose first fiscal year contains the Commencement Date an award of performance units with a value of one million two hundred fifty thousand dollars ($1,250,000), subject to the Company’s Long Term Incentive Program. The value actually paid for such grant will depend on the degree to which performance goals are achieved over the performance period. Awards for future long term incentive performance periods will be determined in the discretion of the Board, however, in no event shall the value of such awards be less than $1,250,000.

     8. EMPLOYEE BENEFITS; PERQUISITES; VACATION: You will be entitled to participate in all employee benefit plans that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives at a level commensurate with your position, subject to satisfying the applicable eligibility requirements. You will be eligible as of your Commencement Date to participate in the Company’s Supplemental Executive Retirement Plan. You will be entitled to annual paid vacation in accordance with the Company’s policy applicable to senior executives, but in no event less than four (4) weeks per year (as prorated for partial years). The Company shall provide to you, at the Company’s cost, all perquisites which other senior executives of the Company are generally entitled to receive in accordance with Company policy as set by the Board from time to time.

     9. LIFE INSURANCE: The Company will maintain term life insurance on your behalf with a death benefit of at least $2 million.

     10. RELOCATION: You will relocate to the vicinity of the Company’s headquarters within a time frame mutually agreed upon between you and the Board. You will be entitled to relocation benefits in accordance with the Company’s relocation policy (other than reasonable costs that may exceed dollar limitations) plus an additional cash payment of eighty thousand dollars ($80,000) for the payment of relocation expenses outside Company policy. With the exception of the $80,000 payment described in the preceding sentence, the Company shall gross up for tax purposes any income taxable to you arising pursuant to the payment or benefits provided under this Section 9, so that the economic benefit is the same to you as if such payment or benefits were provided on a non-taxable basis to you. In addition, the Company will reimburse you for reasonable expenses that you incur for tax planning relating to your family charitable trust in connection with your relocation.

     11. TERMINATION: Your employment may be terminated by either party at any time, and shall terminate on the first of the following to occur of your death, Disability, termination by the Company for Cause, termination by the Company without Cause, termination by you for Good Reason or termination by you without Good Reason (Disability, Cause and Good Reason are each defined on Exhibit A). Any termination payments made and benefits provided under this Agreement to you shall be in lieu of any termination or severance payments or benefits for which you may be eligible under any of the plans, policies or programs of the Company or its affiliates. Except to the extent otherwise provided in this Agreement, all benefits, including, without limitation, restricted stock units and other awards under the

 


 

Mr. Alec Covington
March 16, 2006
Page 4

Company’s long-term incentive programs, shall be subject to the terms and conditions of the plan or arrangement under which such benefits accrue, are granted or are awarded.

          (a) DISABILITY. In the event that your employment ends on account of your Disability, the Company shall pay or provide you (i) any unpaid Base Salary through the date of termination and any accrued vacation in accordance with Company policy; (ii) any unpaid bonus earned with respect to any fiscal year ending on or preceding the date of termination; (iii) reimbursement for any unreimbursed expenses incurred through the date of termination; (iv) reimbursement for any unpaid relocation expenses (including the related gross-up) in accordance with Section 10; and (v) all other payments, benefits or perquisites to which you may be entitled under the terms of any applicable compensation arrangement or benefit, equity or perquisite plan or program or grant or this Agreement (collectively, “Accrued Amounts”). You will also be paid a pro-rata portion of your annual bonus for the performance year in which your termination occurs, payable at the time that annual bonuses are paid to other senior executives (determined by multiplying the amount you would have received based upon target performance had employment continued through the end of the performance year by a fraction, the numerator of which is the number of days during the performance year of termination that you are employed by the Company and the denominator of which is 365) (the “Termination Year Bonus”). Upon such termination, the Time-Vesting RSUs will fully vest and become nonforfeitable, and the Performance-Vesting RSUs will continue to be outstanding and shall vest or not vest in accordance with their terms.

          (b) DEATH. In the event that your employment ends on account of your death, your estate (or to the extent a beneficiary has been designated in accordance with a program, the beneficiary under such program) shall be entitled to any Accrued Amounts and the Termination Year Bonus. Upon such termination, the Time-Vesting RSUs will fully vest and become nonforfeitable, and the Performance-Vesting RSUs will continue to be outstanding and shall vest or not vest in accordance with their terms.

          (c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If your employment should be terminated (i) by the Company for Cause, or (ii) by you without Good Reason, the Company will pay you only the Accrued Amounts.

          (d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If your employment is terminated by the Company without Cause (other than a termination due to Disability or death) or by you for Good Reason, the Company shall pay or provide you with (i) the Accrued Amounts; (ii) the Termination Year Bonus; (iii) an amount equal to the product of (A) the sum of (1) your then Base Salary and (2) your then target annual bonus multiplied by (B) two, payable in substantially equal installments in accordance with the Company’s regular payroll cycle over a period of twenty-four (24) months from your date of termination (with such payments commencing on the earliest payroll date that does not result in adverse tax consequences you under Section 409A of the Internal Revenue Code, and with the initial payment, including any payments that have been delayed because of Code Section 409A); and (iv) subject to your continued co-payment of premiums, continued participation for two years in all medical, dental and vision plans which cover you (and eligible dependents) upon the same

 


 

Mr. Alec Covington
March 16, 2006
Page 5

terms and conditions (except for the requirements of your continued employment) in effect for active employees of the Company. In the event you obtain other employment that offers substantially similar or improved benefits, as to any particular medical, dental or vision plan, such continuation of coverage by the Company for such similar or improved benefit under such plan under this subsection shall immediately cease. The continuation of health benefits under this subsection shall reduce and count against your rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). Upon such termination, the Time-Vesting RSUs described in Paragraph 6 will fully vest and become nonforfeitable, and the Performance-Vesting RSUs described in Paragraph 6 will continue to be outstanding and shall vest or not vest in accordance with their terms and based upon the actual performance of the Company. In the event that you die before all payments pursuant to this Section 11 have been paid, all remaining payments shall be made to the beneficiary specifically designated by you in writing prior to your death, or, if no such beneficiary was designated (or the Company is unable in good faith to determine the beneficiary designated), to your personal representative or estate.

     12. CONDITIONS: Any payments or benefits made or provided pursuant to Section 11 (other than Accrued Amounts) are subject to your:

          (a) compliance with the restrictive covenant provisions of Section 14 hereof;

          (b) delivery to the Company of an executed Agreement and General Release (the "General Release”), which shall be substantially in the form attached hereto as Exhibit B (with such changes therein or additions thereto as needed under then applicable law to give effect to its intent and purpose) within twenty-one (21) days of presentation thereof by the Company to you; and

          (c) delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans.

     13. CHANGE IN CONTROL: As of your Commencement Date, you and the Company shall enter into the change in control agreement attached hereto as Exhibit C (the “Change in Control Agreement”). Upon a Change in Control of the Company, in addition to any payments and benefits provided under the Change in Control Agreement, the RSUs will fully vest and become nonforfeitable. Except as set forth in the immediately preceding sentence, in the event that your employment is terminated and you are due payments and benefits from the Company under the Change in Control Agreement and such payments and benefits are greater than those provided in this Agreement, then you will only receive benefits and payments under the Change in Control Agreement and no benefits or payments shall be provided or paid under this Agreement. However, should the benefits and payments due you under this Agreement be greater than those under the Change in Control Agreement, then benefits and payments will only be paid and provided under this Agreement and no benefits or payments will be provided or paid under the Change in Control Agreement.

 


 

Mr. Alec Covington
March 16, 2006
Page 6

     14. RESTRICTIVE COVENANTS

          (a) CONFIDENTIALITY. You agree that you shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of your employment and for the benefit of the Company, either during the period of your employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which shall have been obtained by you during your employment by the Company. The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to you; (ii) becomes known to the public subsequent to disclosure to you through no wrongful act of you or any representative of you; or (iii) you are required to disclose by applicable law, regulation or legal process (provided that you provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information). Notwithstanding clauses (i) and (ii) of the preceding sentence, your obligation to maintain such disclosed information in confidence shall not terminate where only portions of the information are in the public domain.

          (b) NONSOLICITATION. During your employment with the Company and for the two (2)-year period thereafter, you agree that you will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any managerial level employee of the Company or any of its subsidiaries or affiliates to leave such employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee (provided, that the foregoing shall not be violated by general advertising not targeted at Company employees nor by serving as a reference for an employee with regard to an entity with which you are not affiliated) or (ii) any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer (provided, that the foregoing shall not apply to any product or service which is not covered by the noncompetition provision set forth in Section 14(c), below).

          (c) NONCOMPETITION. During your employment hereunder and for the two (2)-year period thereafter, you agree that you will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to Supervalu Inc., C&S Wholesale Grocers, Inc., Spartan Stores, Inc., Roundy’s Supermarkets, Inc., or any successors or affiliates thereof. This Section 14(c) shall not prevent you from owning not more than one percent (1%) of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business.

 


 

Mr. Alec Covington
March 16, 2006
Page 7

          (d) RETURN OF COMPANY PROPERTY AND RECORDS. You agree that upon termination of your employment, for any cause whatsoever, you will surrender to the Company in good condition (reasonable wear and tear excepted) all property and equipment belonging to the Company and all records kept by you containing the names, addresses or any other information with regard to customers or customer contacts of the Company, or concerning any proprietary or confidential information of the Company or any operational, financial or other documents given to you during your employment with the Company.

          (e) COOPERATION. You agree that, following termination of your employment for any reason, you will upon reasonable advance notice, and to the extent it does not interfere with previously scheduled travel plans and does not unreasonably interfere with other business activities or employment obligations, assist and cooperate with the Company with regard to any matter or project in which you were involved during your employment, including any litigation. The Company shall compensate you for any lost wages or expenses associated with such cooperation and assistance.

          (f) EQUITABLE RELIEF AND OTHER REMEDIES. You acknowledge and agree that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section would be inadequate and, in recognition of this fact, the parties agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the other party, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

          (g) REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 14 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

          (h) SURVIVAL OF PROVISIONS. The obligations contained in this Section 14 shall survive the termination or expiration of your employment with the Company and shall be fully enforceable thereafter.

     15. INDEMNIFICATION; LIABILITY INSURANCE: The Company agrees to indemnify you and hold you harmless to the fullest extent permitted by applicable law and under the by-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, and damages resulting from your good faith performance of your duties and obligations with the Company. The Company shall cover you under directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and directors.

 

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Mr. Alec Covington
March 16, 2006
Page 8

On behalf of the Board, I am excited to offer you employment with the Company and look forward to a mutually rewarding relationship.

 

 

 

 

 

 

Very truly yours,


Allister Graham
          Chairman of the Board
 

 

 

 

 

 

 

 

 

 

 

 

Agreed and Accepted

 

 

 

 

Alec Covington

Dated:                                         , 2006

 


 

EXHIBIT A

Definitions

          “Board” means the board of directors of the Parent Corporation duly qualified and acting at the time in question.

          “Cause” shall mean (i) your indictment for or conviction of (or a plea of guilty or nolo contendere to) a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (ii) a determination by the Board that you have (A) willfully and continuously failed to perform substantially your duties (other than any such failure resulting from the your Disability or incapacity due to bodily injury or physical or mental illness), after a written demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (B) engaged in illegal conduct, an act of dishonesty or gross misconduct in the cause of your employment injurious to the Company, or (C) willfully violated a material requirement of the Company’s code of conduct or your fiduciary duty to the Company. No act or failure to act on your part shall be considered “willful” unless it is done, or omitted to be done, by your in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Notwithstanding the foregoing, the Company may not terminate your employment for Cause unless and until (A) a determination that Cause exists is made and approved by a majority of the Company’s Board, (B) you are given written notice of the Board meeting called to make such determination, and (C) you and your legal counsel are given the opportunity to address such meeting.

          “Change in Control” means: (i) the sale, lease, exchange, or other transfer of all or substantially all of the assets of the Parent Corporation (in one transaction or in a series of related transactions) to a corporation that is not controlled by the Parent Corporation; (ii) the approval by the stockholders of the Parent Corporation of any plan or proposal for the liquidation or dissolution of the Parent Corporation; or (iii) 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 Item 1(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to section 13 or 15(d) of the Exchange Act, whether or not the Parent Corporation is then subject to such reporting requirement; provided that, without limitation, such a Change in Control will be deemed to have occurred at such time as: (A) any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty percent (30%) or more of the combined voting power of the Parent Corporation’s outstanding securities ordinarily having the right to vote at elections of directors, or (B) individuals who constitute the Board on the date of this Agreement (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date of this Agreement whose election, or nomination for election, by the Parent Corporation’s stockholders, was approved by a vote of at least a majority of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Parent Corporation in which such person is named as a nominee for director, without objection to such nomination) will, for purposes of this clause (B), be deemed to be a member of the Incumbent Board.

          “Disability” shall (i) have the meaning defined under the Company’s then-current long-term disability insurance plan, policy, program or contract as entitles you to payment of disability benefits thereunder, or (ii) if there shall be no such plan, policy, program or contract,

 


 

mean permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (a) “Good Reason” shall mean, without your express written consent, the occurrence of any of the following events:

          (i) an adverse change in your status or positions as President and Chief Executive Officer of the Company (including as a result of a material diminution in your duties or responsibilities) other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned or the assignment to you of any duties or responsibilities which, in your reasonable judgment, are inconsistent in any material respect with your positions (including titles and reporting relationships), authority, duties or responsibilities as contemplated by this Agreement, or any removal of you from or any failure to reappoint or reelect you to such positions (except in connection with the termination of your employment for Cause or Disability, as a result of your death or by you other than for Good Reason);

          (ii) any failure by the Company to comply with any of the material provisions regarding your Base Salary, bonus, annual long-term incentive compensation, benefits and perquisites, relocation, and other benefits and amounts payable to you under this Agreement;

          (iii) your being required to relocate to a principal place of employment more than sixty (60) miles from your principal place of employment with the Company as of the Commencement Date;

          (iv) the failure by the Company to elect or to reelect you as a director or the removal of you from such position; or

          (v) the failure of the Company to obtain an agreement from any successor to all or substantially all of the assets or business of the Company to assume and agree to perform this Agreement within fifteen (15) days after a merger, consolidation, sale or similar transaction.

          “Parent Corporation” means Nash-Finch Company and any Successor.

          “Person” means and includes any individual, corporation, partnership, group, association or other “person”, as such term is used in section 14(d) of the Exchange Act, other than the Parent Corporation, a wholly-owned subsidiary of the Parent Corporation or any employee benefit plan(s) sponsored by the Parent Corporation or a wholly-owned subsidiary of the Parent Corporation.

          “Successor” means any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Parent Corporation’s business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Parent Corporation’s voting securities, all or substantially all of its assets or otherwise.

 

Top of the Document

 

Exhibit 10.1

NASH FINCH COMPANY

 


February 27, 2007

Mr. Alec Covington
2900 Thomas Avenue South
Unit 2208
Minneapolis MN 55416

Re: Amendment to Employment Agreement

Dear Alec:

By letter to you dated March 16, 2006, as supplemented and modified by subsequent letter (collectively the “March 16 Letter”), the Board of Directors of Nash-Finch Company summarized the terms on which you have been offered employment as President and CEO of the Company. This letter amends and clarifies the March 16 Letter in the following respects:

     1. TERMINATION OF PERFORMANCE UNITS: Pursuant to the March 16 Letter on your commencement of employment you were awarded one hundred thousand (100,000) performance units designated as Restricted Stock Units (“RSUs”) which were to vest in five (5) equal amounts on the first five anniversaries of your commencement of employment if certain performance criteria were met. You hereby voluntarily terminate and agree to cancel all rights to such performance RSUs, and after the date hereof the Company shall no longer be obligated to deliver any cash, shares of common stock or other property in connection with such performance RSUs and you shall no longer have any further rights with respect to such RSUs, including without limitation any right to a cash payment equal to forty-eight percent (48 %) of the value of the performance RSUs upon settlement.

     2. NEW EQUITY AWARD: In replacement of the performance RSUs, the Company will, upon execution of this agreement, grant to you 152,500 RSUs which will vest 40% on May 1, 2008 and 20% on each of May 1, 2009, 2010 and 2011, subject to your continued employment with the Company. However, all such RSUs shall vest in full upon a Change in Control, or upon termination of your employment by reason of death, Disability, termination without Cause or your resignation for Good Reason. Shares of the Company’s Common Stock equal to the number of vested RSUs shall be payable upon the date that is six months and one day following your termination of employment.

     3. SERP: Pursuant to the authority vested in the Committee under the terms of the Nash-Finch Supplemental Executive Retirement Plan (“SERP”), you have a fully vested, non forfeitable interest in your SERP account as of February 27, 2007.

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     4. CHANGE IN CONTROL AGREEMENT: You agree to enter into the form of change in control agreement attached hereto as Exhibit A, which such agreement shall supersede and replace the change in control agreement entered into in connection with your employment.

Capitalized terms used herein which are not defined herein shall have the meaning set forth in the March 16 Letter. Except as provided above, all the terms and conditions of the March 16 Letter remain in full force and effect. Please indicate your acceptance of these revised terms by signing and dating a copy of this letter where indicated below and returning it to me.

 

 

 

 

 

 

Very truly yours,
 

 

 

/s/ William Voss  

 

 

 

 

 

William Voss
Chairman of the Board 

 

 

Agreed and Accepted

/s/ Alec Covington

 

Alec Covington

     Dated: February 27, 2007

2

Exhibit 10.31

February 28, 2011

Alec Covington
2900 Thomas Avenue South, Unit #2208
Minneapolis, MN 55416

Dear Mr. Covington:

By letter to you dated February 26, 2008 (the “February 26 Letter”), the Company set forth the benefits which the Company agreed to provide you in the event your employment with the Company is terminated in connection with a Change in Control. The Board has reviewed your February 26 Letter and desires to amend certain provisions to comply with applicable requirements of Section 409A of the Internal Revenue Code (“Section 409A”). This letter restates and supersedes the February 26 Letter.

You are presently the President and Chief Executive Officer of Nash Finch Company, a Delaware corporation. The Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control may arise and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

Accordingly, the Board has determined that appropriate steps should be taken to minimize the risk that Company management will depart prior to a Change in Control, thereby leaving the Company without adequate management personnel during such a critical period, and that appropriate steps also be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control. In particular, the Board believes it important, should Nash Finch Company or its stockholders receive a proposal of transfer of control, that you be able to continue your management responsibilities and assess and advise the Board whether such proposal would be in the best interests of Nash Finch Company and its stockholders and to take other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own personal situation.

The Board recognizes that continuance of your position with the Company involves a substantial commitment to the Company in terms of your personal life and professional career and the possibility of foregoing present and future career opportunities, for which the Company receives substantial benefits. Therefore, to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, sets forth the benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control under the circumstances described below.

     1. Definitions. The following terms will have the meaning set forth below unless the context clearly requires otherwise. Terms defined elsewhere in this Agreement will have the same meaning throughout this Agreement.

1


 

     (a) “Agreement” means this letter agreement as amended, extended or renewed from time to time in accordance with its terms.

     (b) “Board” means the board of directors of the Parent Corporation duly qualified and acting at the time in question.

     (c) “Cause” means: (i) the willful and continued failure by you to substantially perform your duties to the Company (other than any such failure resulting from your Disability or incapacity due to bodily injury or physical or mental illness) after a demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which you have not substantially performed your duties; or (ii) your conviction (including a plea of nolo contendere) of a felony or gross misdemeanor under federal or state law that the Board determines is injurious to reputation or the business of the Company; (iii) your commission of any act involving dishonesty, fraud, gross negligence or other willful misconduct in the performance of your duties of the Company or (iv) your breach of any confidentiality, non-compete or non-solicitation covenants you may have with the Company. For purposes of this definition, no act, or failure to act, on your part will be considered “willful” unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board (or a committee hereof) or based upon the advice of counsel for the Company will be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. It is also expressly understood that your attention to matters not directly related to the business of the Company will not provide a basis for termination for Cause so long as the Board does not expressly disapprove in writing of your engagement on such activities either before or within a reasonable period of time after the Board knew or could reasonably have known that you engaged in those activities. Notwithstanding the foregoing, you will not be deemed to have been terminated for Cause unless and until there has been delivered to you a copy of a resolution duly adopted by the Board (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above and specifying the particulars thereof in detail.

     (d) “Change in Control” means:

     (i) Any one person or more than one person acting as a group acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50 percent (50%) of the total fair market value or total voting power of the stock of the Company. However, if any one person or more than one person acting as a group, is considered to own more than 50 percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control;

     (ii) Any one person, or more than one person acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company;

     (iii) Any one person, or more than one person acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) all or substantially all of the assets of the Company immediately prior to such acquisition or acquisitions; or

     (iv) A majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election;

provided, that the transaction or event described in subsection (i), (ii), (iii) or (iv) also constitutes a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5).

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     (e) “Code” means the Internal Revenue Code of 1986, as amended.

     (f) “Company” means the Parent Corporation, any Subsidiary and any Successor.

     (g) “Confidential Information” means information which is proprietary to the Company or proprietary to others and entrusted to the Company, whether or not trade secrets. It includes information relating to business plans and to business as conducted or anticipated to be conducted, and to past or current or anticipated products or services. It also includes, without limitation, information concerning research, development, purchasing, accounting, marketing and selling. All information which you have a reasonable basis to consider confidential is Confidential Information, whether or not originated by you and without regard to the manner in which you obtain access to that and any other proprietary information.

     (h) “Date of Termination” following a Change in Control (or prior to a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of any Person (other than the Company) related to the Change in Control) means: (i) if your employment is to be terminated for Disability, thirty (30) calendar days after Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during such thirty (30)-calendar-day period); (ii) if your employment is to be terminated by the Company for Cause or by you for Good Reason, the date specified in the Notice of Termination; (iii) if your employment is to be terminated by the Company for any reason other than Cause, Disability, death or Retirement, the date specified in the Notice of Termination, which in no event may be a date earlier than ninety (90) calendar days after the date on which a Notice of Termination is given, unless an earlier date has been expressly agreed to by you in writing either in advance of, or after, receiving such Notice of Termination; or (iv) if your employment is terminated by reason of death or Retirement, the date of death or Retirement, respectively; provided that in all events the applicable “Date of Termination” shall be the date of your “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). In the case of termination by the Company of your employment for Cause, if you have not previously expressly agreed in writing to the termination, then within thirty (30) calendar days after receipt by you of the Notice of Termination with respect thereto, you may notify the Company that a dispute exists concerning the termination, in which event the Date of Termination will be the date set either by mutual written agreement of the parties or by the judge or arbitrators in a proceeding as provided in Section 13 of this Agreement. During the pendency of any such dispute, the Company will continue to pay you your full compensation and benefits in effect just prior to the time the Notice of Termination is given and until the dispute is resolved in accordance with Section 13 of this Agreement.

     (i) “Disability” means a disability as defined in the Company’s long-term disability plan as in effect immediately prior to the Change in Control or, in the absence of such a plan, means permanent and total disability as defined in section 22(e)(3) of the Code.

     (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (k) “Good Reason” means:

     (i) a material adverse change in your status or position(s) as an executive of the Company as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in your status or position(s) as a result of a material diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);

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     (ii) a reduction by the Company in your rate of total compensation (including, without limitation, salary and bonus potential) (or an adverse change in the form or timing of the payment thereof) as in effect immediately prior to the Change in Control;

     (iii) the failure by the Company to continue in effect any Plan in which you (and/or your family) are participating at any time during the ninety (90)-calendar-day period immediately preceding the Change in Control (or Plans providing you (and/or your family) with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect immediately prior to the ninety (90)-calendar-day period immediately preceding the time of the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect you (and/or your family’s) continued participation in any of such Plans on at least as favorable a basis to you (and/or your family) as is the case on the date of the Change in Control or which would materially reduce your (and/or your family’s) benefits in the future under any of such Plans or deprive you (and/or your family) of any material benefit enjoyed by you (and/or your family) at the time of the Change in Control;

     (iv) the Company’s requiring you to be based more than fifty (50) miles from where your office is located immediately prior to the Change in Control, except for required travel on the Company’s business, and then only to the extent substantially consistent with the business travel obligations which you undertook on behalf of the Company during the ninety (90)-calendar-day period immediately preceding the Change in Control (without regard to travel related or in anticipation of the Change in Control);

     (v) the failure by the Company to obtain from any Successor the assent to this Agreement contemplated by Section 6 of this Agreement.

     (vi) any purported termination by the Company of your employment which is not properly effected pursuant to a Notice of Termination and pursuant to any other requirements of this Agreement, and for purposes of this Agreement, no such purported termination will be effective; or

     (vii) any refusal by the Company to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company which, at any time prior to the Change in Control, you were not expressly prohibited in writing by the Board from attending to or engaging in.

Notwithstanding anything in the foregoing to the contrary, your termination of employment with the Company for any reason other than death, Disability or Retirement within six (6) calendar months following a Change in Control will be conclusively deemed to be for Good Reason.

     (l) “Highest Monthly Compensation” means one-twelfth (1/12) of the highest amount of your compensation for any twelve (12) consecutive calendar-month period during the thirty-six (36) consecutive calendar-month period prior to the month that includes the Date of Termination. For purposes of this definition, “compensation” means your base pay plus short term bonus target.

     (m) “Notice of Termination” means a written notice which indicates the specific termination provision in this Agreement pursuant to which the notice is given. Any purported termination by the Company or by you following a Change in Control (or prior to a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of any Person (other than the Company) related to the Change in Control) must be communicated by written Notice of Termination.

     (n) “Parent Corporation” means Nash Finch Company and any Successor.

     (o) “Person” means and includes any individual, corporation, partnership, group, association or other “person”, as such term is used in section 14(d) of the Exchange Act, other than the Parent Corporation, a wholly-owned subsidiary of the Parent Corporation or any employee benefit plan(s) sponsored by the Parent Corporation or a wholly-owned subsidiary of the Parent Corporation.

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     (p) “Plan” means any compensation plan (such as a stock option, restricted stock plan or other equity-based plan), or any employee benefit plan (such as a thrift, pension, profit sharing, medical, dental, disability, accident, life insurance, relocation, salary continuation, expense reimbursements, vacation, fringe benefits, office and support staff plan or policy) or any other plan, program, policy or agreement of the Company intended to benefit you (and/or your family) (including, without limitation, the Company’s 2000 Stock Incentive Plan, Profit Sharing Plan, Income Deferral Plan, Deferred Compensation Plan and Supplemental Executive Retirement Plan).

     (q) “Retirement” means the day on which you attain the age of sixty-five (65).

     (r) “Subsidiary” means any corporation at least a majority of whose securities having ordinary voting power for the election of directors is at the time owned by the Company and/or one (1) or more Subsidiaries.

     (s) “Successor” means any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Parent Corporation’s business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Parent Corporation’s voting securities, all or substantially all of its assets or otherwise.

     2. Term of Agreement. This Agreement is effective immediately and will continue in effect until December 31, 2008; provided, however, that commencing on January 1, 2009 and each January 1 thereafter, the term of this Agreement will automatically be extended for one (1) additional year beyond the expiration date otherwise then in effect, unless at least ninety (90) calendar days prior to any such January 1, the Company or you has been given notice that this Agreement will not be extended; and, provided, further, that this Agreement will continue in effect beyond the termination date then in effect for a period of twenty-four (24) calendar months following a Change in Control if a Change in Control has occurred during such term.

     3. Benefits upon a Change in Control Termination. If your employment by the Company is terminated for any reason other than death, Cause, Disability or Retirement, or if you terminate your employment by the Company for Good Reason either within: (a) twenty-four (24) calendar months following a Change in Control; or (b) prior to a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of a Person (other than the Company) related to the Change in Control, then, subject to your execution of a general release of claims against the Company in the Company’s customary form for such purpose (a “Release”) within 55 days of your Termination of Employment and not revoking such Release:

     (i) Cash Payment. On the later to occur of six months following the Date of Termination or sixteen days following your timely execution of a Release, the Company will make a lump-sum cash payment to you in an amount equal to the product of (A) your Highest Monthly Compensation multiplied by (B) the lesser of (I) the number of full or partial calendar months remaining until your Retirement or (II) thirty-six (36).

     (ii) Welfare Plans. The Company will maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (A) thirty-six (36) calendar months after the Date of Termination or (B) your Retirement, all insured and self-insured employee welfare benefit Plans (including, without limitation, health, life, dental and disability plans) in which you were entitled to participate at any time during the ninety (90)-calendar-day period immediately preceding the Change in Control, provided that your continued participation is possible under the general terms and provisions of such Plans and any applicable funding media and provided that you continue to pay an amount equal to your regular contribution under such Plans for such participation (based upon your level of benefits and employment status most favorable to you at any time during the ninety (90)-calendar-day period immediately preceding the Change in Control). If the thirty-six (36) month-period ends before you have reached Retirement and you have not previously received or are not then receiving equivalent benefits from a new employer (including coverage for any pre-existing conditions), the Company will arrange, at its sole cost and expense, to enable you to

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convert your and your dependents’ coverage under such plans to individual policies or programs under the same terms as executives of the Company may apply for such conversions. In the event that you or your dependents’ participation in any such Plan is barred, the Company, at its sole cost and expense, will arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on a federal, state and local income and employment after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this clause (ii) or, if such insurance is not available at a reasonable cost to the Company, the Company will otherwise provide you and your dependents equivalent benefits (on a federal, state and local income and employment after-tax basis). You will not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.

     (iii) Tax Reimbursement.

     (A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payments or distributions by the Company, any person or entity whose actions result in a Change of Control or any person or entity affiliated with the Company or such person or entity, to or for your benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, any option agreement, restricted stock award agreement or otherwise, but determined without regard to any payments required under this Section 3(iii)) (collectively, the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code or you incur any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then you shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that, after your payment of all taxes (and any interest or penalties imposed with respect to such taxes), including any income taxes and Excise Tax imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     (B) Subject to the provisions of clause (D), below, all determinations required to be made under this Section 3(iii), including whether and when a Gross-Up Payment is required and the amount such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by an accounting firm of national reputation selected by the Company ( the “Accounting Firm”), which shall provide detailed supporting calculations both to you and to the Company within fifteen (15) business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, you shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the “Accounting Firm” hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 3(iii), shall be paid by the Company on your behalf within five days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish evidence of its determination that failure to report the Excise Tax on your applicable federal income tax return would not result in the imposition of a penalty. Any determination by the Accounting Firm shall be binding upon you and the Company.

     (C) As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which should have been made by the Company will not have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to clause (D) below and you thereafter are required to make a payment of any additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for your benefit.

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     (D) You shall notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after you know of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. You shall not pay such claim prior to the expiration of the thirty (30)-day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies you in writing prior to the expiration of such period that it desires to contest such claim, you shall:

     (1) give the Company any information reasonably requested by the Company relating to such claim;

     (2) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

     (3) cooperate with the Company in good faith in order to effectively contest such claim; and

     (4) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this clause (D), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct you to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine. If the Company directs you to pay such claim and sue for a refund, the Company shall: (i) to the extent not prohibited by law, rule or regulation, advance the amount of such payment to you on an interest-free basis; or (ii) to the extent any such advance is so prohibited, pay such amount directly; and, in either case, shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or advance or with respect to any imputed income with respect to such payment or advance; and provided further that any extension of the statute of limitations relating to payment of taxes for your taxable year with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

     (E) If, after your receipt of an amount advanced by the Company pursuant to clause (D), above, you become entitled to receive any refund with respect to such claim, you shall (subject to the Company’s complying with the requirements of clause (D)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after your receipt of an amount advanced by the Company

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pursuant to clause (D), above, a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

     (iv) Non-Competition Obligations. As consideration for the Gross-Up Payment (which is hereby acknowledged by you as providing you with additional and sufficient benefit to support the following covenant), you agree that in the event your employment with the Company is terminated upon conditions entitling you to the payments and benefits provided for under Section 3 of the Agreement, you will not, without the prior written consent of the Company (given after the consummation of the Change in Control), alone or in any capacity (other than by way of holding shares of a publicly traded company in an amount not exceeding five percent (5%) of the outstanding class or series so traded) with any other person or entity, directly or indirectly engage in competition with the Company or any Subsidiary, in association with or as an officer, director, employee, principal, agent or consultant of or to SuperValu, Inc., Spartan Stores, Inc., Merchants Distributors, Inc., Laurel Grocery Company, L.L.C., C&S Wholesale Grocers or any of their respective subsidiaries, affiliates or successors for a period ending one (1) year after such date of termination.

     4. Indemnification. Following a Change in Control, the Company will indemnify and pay your expenses, as incurred, to the full extent permitted by law and the Company’s certificate of incorporation and bylaws for damages, costs and expenses (including, without limitation, judgments, fines, penalties, settlements and reasonable fees and expenses of your counsel) incurred in connection with all matters, events and transactions relating to your service to or status with the Company or any other corporation, employee benefit plan or other entity with whom you served at the request of the Company.

     5. Confidentiality. You will not use, other than in connection with your employment with the Company, or disclose any Confidential Information to any person not employed by the Company or not authorized by the Company to receive such Confidential Information, without the prior written consent of the Company; and you will use reasonable and prudent care to safeguard and protect and prevent the unauthorized disclosure of Confidential Information. Nothing in this Agreement will prevent you from using, disclosing or authorizing the disclosure of any Confidential Information: (a) which is or hereafter becomes part of the public domain or otherwise becomes generally available to the public through no fault of yours; (b) to the extent and upon the terms and conditions that the Company may have previously made the Confidential Information available to certain persons; or (c) to the extent that you are required to disclose such Confidential Information by law or judicial or administrative process.

     6. Successors. The Company will seek to have any Successor, by agreement in form and substance satisfactory to you, assent to the fulfillment by the Company of the Company’s obligations under this Agreement. Failure of the Company to obtain such assent at least three (3) business days prior to the time a Person becomes a Successor (or where the Company does not have at least three (3) business days’ advance notice that a Person may become a Successor, within one (1) business day after having notice that such Person may become or has become a Successor) will constitute Good Reason for termination by you of your employment.

     7. Fees and Expenses. The Company, upon demand, will pay or reimburse you for all reasonable legal fees, court costs, experts’ fees and related costs and expenses incurred by you in connection with any actual, threatened or contemplated litigation or legal, administrative, arbitration or other proceeding relating to this Agreement to which you are or reasonably expect to become a party, whether or not initiated by you, including, without limitation, your seeking to obtain or enforce any right or benefit provided by this Agreement; provided, however, you will be required to repay (without interest) any such amounts to the Company to the extent that a court issues a final and non-appealable order setting forth the determination that the position taken by you was frivolous or advanced by you in bad faith.

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     8. Binding Agreement. This Agreement inures to the benefit of, and is enforceable by, you, your personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you die while any amount would still be payable to you under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, will be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

     9. No Mitigation. You will not be required to mitigate the amount of any payments or benefits the Company becomes obligated to make or provide to you in connection with this Agreement by seeking other employment or otherwise. The payments or benefits to be made or provided to you in connection with this Agreement may not be reduced, offset or subject to recovery by the Company by any payments or benefits you may receive from other employment or otherwise.

     10. No Setoff. The Company will have no right to setoff payments or benefits owed to you under this Agreement against amounts owed or claimed to be owed by you to the Company under this Agreement or otherwise.

     11. Taxes. All payments and benefits to be made or provided to you in connection with this Agreement will be subject to required withholding of federal, state and local income, excise and employment-related taxes.

     12. Notices. For the purposes of this Agreement, notices and all other communications provided for in, or required under, this Agreement must be in writing and will be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid and addressed to each party’s respective address set forth on the first page of this Agreement (provided that all notices to the Company must be directed to the attention of the chair of the Board), or to such other address as either party may have furnished to the other in writing in accordance with these provisions, except that notice of change of address will be effective only upon receipt.

     13. Disputes. Any dispute, controversy or claim for damages rising under or in connection with this Agreement may, in your sole discretion, be settled exclusively by such judicial remedies that you may seek to pursue or by arbitration in Minneapolis, Minnesota by three (3) arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. The Company will be entitled to seek an injunction or restraining order in a court of competent jurisdiction (within or without the State of Minnesota) to enforce the provisions of Section 5 of this Agreement.

     14. Jurisdiction. Except as specifically provided otherwise in this Agreement, the parties agree that any action or proceeding arising under or in connection with this Agreement must be brought in a court of competent jurisdiction in the State of Minnesota, and hereby consent to the exclusive jurisdiction of said courts for this purpose and agree not to assert that such courts are an inconvenient forum.

     15. Related Agreements. To the extent that any provision of any other Plan or agreement between the Company and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while such other Plan or agreement remains in force, the provision of this Agreement will control and such provision of such other Plan or agreement will be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose. Nothing in this Agreement prevents or limits your continuing or future participation in any Plan provided by the Company and for which you may qualify, and nothing in this Agreement limits or otherwise affects the rights you may have under any Plans or other agreements with the Company. Amounts which are vested benefits or which you are otherwise entitled to receive under any Plan or other agreement with the Company at or subsequent to the Date of Termination will be payable in accordance with such Plan or other agreement.

     16. No Employment or Service Contract. Nothing in this Agreement is intended to provide you with any right to continue in the employ of the Company for any period of specific duration or interfere with or

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otherwise restrict in any way your rights or the rights of the Company, which rights are hereby expressly reserved by each, to terminate your employment at any time for any reason or no reason whatsoever, with or without cause.

     17. Survival. The respective obligations of, and benefits afforded to, the Company and you which by their express terms or clear intent survive termination of your employment with the Company or termination of this Agreement, as the case may be, including, without limitation, the provisions of Sections 3, 4, 5, 6, 7, 10, 11, 12 and 13 of this Agreement, will survive termination of your employment with the Company or termination of this Agreement, as the case may be, and will remain in full force and effect according to their terms.

     18. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the chair of the Board. No waiver by any party to this Agreement at any time of any breach by another party to this Agreement of, or of compliance with, any condition or provision of this Agreement to be performed by such party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter to this Agreement have been made by any party which are not expressly set forth in this Agreement.

This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws provisions of any jurisdiction), except to the extent that the provisions of the corporate law of Delaware may apply to the internal affairs of the Company. Headings are for purposes of convenience only and do not constitute a part of this Agreement. The parties to this Agreement agree to perform, or cause to be performed, such further acts and deeds and to execute and deliver, or cause to be executed and delivered, such additional or supplemental documents or instruments as may be reasonably required by the other party to carry into effect the intent and purpose of this Agreement. The invalidity or unenforceability of all or any part of any provision of this Agreement will not affect the validity or enforceability of the remainder of such provision or of any other provision of this Agreement, which will remain in full force and effect. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument.

If this letter correctly sets forth our agreement on the subject matter discussed above, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

Sincerely,

NASH FINCH COMPANY.

 

 

 

 

 

By:

 

 

 

 

 

 

 

William R. Voss

 

 

 

 

Chair, Nash Finch Board of Directors

 

 

 

 

 

 

 

Agreed to this 28th day of February 2011.

 

 

 

 

 

 

 

 

 

 

 

 

Alec C. Covington

 

 

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