<PAGE>
OWD DRAFT 03/28/94
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
-----------------------------------------------------
NASH-FINCH COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
----------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a6(i)(4) and
0-11.
1 Title of each class of securities to which transaction
applies:
............................................................
2 Aggregate number of securities to which transaction
applies:
............................................................
3 Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
............................................................
4 Proposed maximum aggregate value of transaction:
............................................................
*Set forth the amount on which the filing fee is calculated and state how its
determined.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1 Amount Previously Paid:
............................................................
2 Form, Schedule or Registration Statement No.:
............................................................
3 Filing Party:
............................................................
4 Date Filed:
............................................................
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<PAGE>
[GRAPHIC]
7600 FRANCE AVENUE SOUTH
EDINA, MINNESOTA 55435
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1994
------------------------
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of Stockholders of Nash
Finch Company ("Nash Finch") will be held at the Lutheran Brotherhood Building,
625 Fourth Avenue South, Minneapolis, Minnesota, on Tuesday, May 10, 1994, at
10:00 a.m., local time, for the following purposes:
1. To elect five directors, four to serve for three-year terms, and one to
serve for a two-year term.
2. To consider and act upon a proposal to adopt the Nash Finch 1994 Stock
Incentive Plan.
3. To consider and act upon the selection of KPMG Peat Marwick by the Board
of Directors as independent public accountants to audit the books,
records and accounts of Nash Finch for the fiscal year ending December
31, 1994.
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record as shown on the books of Nash Finch at the close
of business on March 21, 1994 are entitled to notice of and to vote at the
Annual Meeting or any adjournment or adjournments thereof.
Your attention is directed to the enclosed proxy statement and proxy card.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO FILL IN, DATE,
SIGN AND RETURN PROMPTLY THE PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By Order Of The Board of Directors
Norman R. Soland
Vice President, Secretary
and General Counsel
April 1, 1994
<PAGE>
[GRAPHIC]
7600 FRANCE AVENUE SOUTH
EDINA, MINNESOTA 55435
TELEPHONE NO. (612) 832-0534
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 10, 1994
------------------------
INTRODUCTION
The Board of Directors of Nash Finch Company ("Nash Finch") solicits your
proxy for use at the Annual Meeting of Stockholders to be held on May 10, 1994
(the "Annual Meeting"), and any adjournment or adjournments thereof. A proxy
card is enclosed herewith. Any proxy given pursuant to this solicitation and
received in time for the Annual Meeting will be voted in accordance with the
instructions given in such proxy. Any stockholder who executes and delivers the
proxy may revoke it at any time prior to its use by giving notice in writing to
the Secretary of Nash Finch, by filing a revoking instrument or a duly executed
proxy bearing a later date with the Secretary of Nash Finch, or by attending the
Annual Meeting and voting said stock in person. The execution by a stockholder
of a later dated proxy will revoke all proxies previously executed by such
stockholder. However, a stockholder who attends the Annual Meeting need not
revoke his proxy and vote in person unless he wishes to do so. This proxy
material is first being mailed to the Nash Finch stockholders on or about April
1, 1994.
PURPOSES OF MEETING
The following business will be attended to at the Annual Meeting (the Board
of Directors recommends a vote FOR the following):
FIRST: To elect five directors, four to serve for three-year terms, and one
to serve for a two-year term.
SECOND: To consider and act upon a proposal to adopt the Nash Finch 1994
Stock Incentive Plan.
THIRD: To consider and act upon the selection of KPMG Peat Marwick by the
Board of Directors as independent public accountants to audit the books, records
and accounts of Nash Finch for the fiscal year ending December 31, 1994.
FOURTH: To transact such other business as may properly be brought before
the Annual Meeting or any adjournment or adjournments thereof.
<PAGE>
OUTSTANDING SHARES; VOTING RIGHTS
The close of business on Monday, March 21, 1994 has been fixed by the Board
of Directors of Nash Finch as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. On March
21, 1994, Nash Finch had outstanding 10,872,424 shares of common stock, par
value $1.66 2/3 per share ("Common Stock"), each such share entitling the holder
thereof to one vote in person or by proxy. The holders of a majority of the
total shares issued and outstanding (5,436,213 shares), whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting.
Shares of Common Stock represented by properly executed proxies will be
voted in accordance with the choices specified therein, and where no choice is
specified, such shares will be voted (i) for the election of the five nominees,
(ii) for the adoption of the Nash Finch 1994 Stock Incentive Plan (the "1994
Plan"), (iii) for the selection of KPMG Peat Marwick as independent public
accountants for the fiscal year ending December 31, 1994, and (iv) with respect
to any other business which may properly come before the Annual Meeting or any
adjournment or adjournments thereof, according to the best judgment of the
proxies named on the enclosed proxy card.
In general, shares of Common Stock represented by a properly signed and
returned proxy will be counted as shares present and entitled to vote at the
Annual Meeting for purposes of determining a quorum, without regard to whether
the proxy reflects votes withheld from director nominees or abstentions (or is
left blank) or reflects a "broker non-vote" on a particular matter (i.e., a
proxy returned by a broker on behalf of its beneficial owner customer that is
not voted on that particular matter because voting instructions have not been
received and the broker has no discretionary authority to vote).
Stockholders may vote for all nominees for director, or withhold authority
to vote for all or certain nominees. Withheld shares will be treated as shares
present and entitled to vote and will be counted as voted shares. In connection
with each of the other two proposals, stockholders may vote for or against the
proposal, or abstain. Abstentions will be treated as shares present and entitled
to vote but not cast in favor of the proposal, thus having the same effect as
votes against the proposal. Broker non-votes, as to a particular matter, will be
treated as shares not entitled to vote on that matter, and thus will not be
counted as voted shares. The election of directors and approval of each of the
other two proposals, under Nash Finch's Bylaws, requires the affirmative vote of
a majority of the total shares present and entitled to vote on each such matter.
PRINCIPAL STOCKHOLDERS AND BENEFICIAL
OWNERSHIP OF MANAGEMENT
Set forth in the following table is information, as of March 1, 1994 unless
otherwise indicated, pertaining to (a) persons who, to the best of Nash Finch's
knowledge, owned beneficially more than five percent of the outstanding Common
Stock of Nash Finch, (b) the individual ownership of directors, nominees and
named executive officers and (c) the ownership of Nash Finch Common Stock by its
directors and executive officers as a group.
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
----------------------
PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OF CLASS
- ------------------------------------ ---------- --------
<S> <C> <C>
Empire Company Limited 739,451(2) 6.80%
115 King Street
Stellarton, Nova Scotia
Canada
Carole F. Bitter 0 --
Harold B. Finch, Jr. 160,055(3) 1.47%
Richard A. Fisher 1,000 *
Alfred N. Flaten, Jr. 4,600(4) *
Allister P. Graham 1,000 *
John H. Grunewald 2,000 *
Richard G. Lareau 3,000(5) *
Russell N. Mammel 31,860(6) *
Donald R. Miller 39 *
Robert F. Nash 110,290(7) 1.01%
Jerome O. Rodysill 21,015(8) *
Arthur C. Wangaard, Jr. 2,800 *
David W. Bell 3,736(9) *
Norman R. Soland 2,944(10) *
All Directors and Executive Officers 352,000(11) 3.24%
as a Group (19 persons)
<FN>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares.
(2) Empire Company Limited has reported in a Schedule 13D filed with the
Securities and Exchange Commission that, as of May 28, 1993, it was the
beneficial owner of all such shares, possessing sole voting and investment
power with respect to all such shares, and all such shares were purchased
for investment purposes. To the best of Nash Finch's knowledge, as of
March 1, 1994, no additional Schedule 13D filings have been made by Empire
Company Limited, and the information set forth above has not changed since
the date of such filing.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(3) Includes 15,396 shares owned beneficially by the estate of Mr. Finch's
deceased daughter, as to which he exercises voting and investment power as
personal representative of the estate. Also includes 14,070 shares owned
beneficially by Mr. Finch's wife as to which he may be deemed to share
voting and investment power, but as to which shares he disclaims any
beneficial interest.
(4) Includes 4,025 shares owned beneficially by Mr. Flaten and his wife
jointly as to which he shares voting and investment power.
(5) Includes 1,000 shares owned beneficially by Mr. Lareau's wife as to which
he may be deemed to share voting and investment power, but as to which
shares he disclaims any beneficial interest.
(6) Includes 3,600 shares owned beneficially by Mr. Mammel's wife as to which
he may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(7) Includes 28,082 shares owned beneficially by Mr. Nash's wife as to which
he may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(8) Includes 10,620 shares held by a trust for the benefit of Mr. Rodysill's
wife, of which Mr. Rodysill is a co-trustee with his son and as to which
he shares voting and investment power.
(9) The shares are owned beneficially by Mr. Bell and his wife jointly and as
to which he shares voting and investment power.
(10) The shares are owned beneficially by Mr. Soland and his wife jointly and
as to which he shares voting and investment power.
(11) Includes 70,718 shares as to which voting and investment power are shared
or may be deemed to be shared.
</TABLE>
ELECTION OF DIRECTORS
NOMINATION
The Nash Finch Restated Certificate of Incorporation and Bylaws, each as
amended, provide that the Board of Directors shall consist of not less than nine
nor more than 17 members, as determined from time to time by the Board of
Directors, divided into three classes of as nearly equal size as possible. The
term of each class of directors is three years, and the term of one class
expires each year in rotation. The Board of Directors has determined that there
will be 12 directors of Nash Finch for the ensuing year.
The terms of five current members of the Board of Directors will expire at
the Annual Meeting. The terms of the remaining seven current members of the
Board of Directors will not expire this year, but will expire as indicated
below. The Board of Directors has nominated four of the nominees listed below to
serve as directors of Nash Finch for terms of three years, expiring at the 1997
Annual Meeting of Stockholders or until their successors are duly elected and
qualified; and one of the nominees listed below to serve as a director for a
term of two years, expiring at the 1996 Annual Meeting of Stockholders or until
her successor is duly elected and qualified.
4
<PAGE>
The five nominees currently serve as directors and have served continuously
from the dates indicated below. Three of the nominees were elected at the 1991
Annual Meeting of Stockholders held on May 14, 1991. Harold B. Finch, Jr. was
elected at the 1992 Annual Meeting of Stockholders held on May 12, 1992. The
remaining nominee is Carole F. Bitter, who is described below and has served on
the Board of Directors since November 1, 1993, the effective date of her
election to the Board to fill a vacancy created by an increase in the number of
directors.
The affirmative vote of a majority of the total shares represented in person
or by proxy and entitled to vote is required for the election of the five
nominees. It is the intention of the persons named in the enclosed form of proxy
to vote such proxy for the election of the five nominees named in the proxy,
unless otherwise directed by the stockholder. Nash Finch's Board of Directors
recommends a vote FOR the election of each of the nominees. While the Board of
Directors has no reason to believe that any of those named will not be available
as a candidate, should such a situation arise, the proxy will be voted for the
election as directors of such other persons as determined in the discretion of
the proxies named on the enclosed proxy card. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
INFORMATION ABOUT DIRECTORS AND NOMINEES
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---------------------------- --- ------------------------------------------------------------------- ---------
<S> <C> <C> <C>
NOMINEES FOR THREE-YEAR TERMS EXPIRING IN 1997:
Harold B. Finch, Jr. 66 Chairman of the Board and Chief Executive Officer of Nash Finch 1968
Russell N. Mammel 67 Retired President and Chief Operating Officer of Nash Finch 1974
Donald R. Miller 66 Management Consultant 1978
Robert F. Nash 60 Vice President and Treasurer of Nash Finch 1968
NOMINEE FOR TWO-YEAR TERM EXPIRING IN 1996:
Carole F. Bitter 48 President and Chief Executive Officer of Harold Friedman, Inc. 1993
(operator of retail supermarkets)
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1996:
Richard A. Fisher 64 Retired Vice President -- Finance and Treasurer, Network Systems 1984
Corporation (manufacturer of data communications systems)
John H. Grunewald 57 Executive Vice President, Finance and Administration, Polaris 1992
Industries L.P. (manufacturer of recreational equipment)
Arthur C. Wangaard, Jr. 66 Retired Vice President, Secretary and General Counsel of Nash Finch 1968
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---------------------------- --- ------------------------------------------------------------------- ---------
<S> <C> <C> <C>
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1995:
Alfred N. Flaten, Jr. 59 President and Chief Operating Officer of Nash Finch 1990
Allister P. Graham 57 Chairman and Chief Executive Officer of The Oshawa Group Limited 1992
(food and pharmaceutical distributor in Canada)
Richard G. Lareau 65 Partner, Oppenheimer Wolff & Donnelly (law firm) 1984
Jerome O. Rodysill 65 Retired Senior Vice President of Nash Finch 1974
</TABLE>
OTHER INFORMATION ABOUT DIRECTORS AND NOMINEES
Except as indicated below, there has been no change in principal occupations
or employment during the past five years for the directors or nominees for
election as directors.
Mr. Fisher retired in December 1992 as Vice President-Finance and Treasurer
of Network Systems Corporation, a position he had held for more than five years.
Mr. Grunewald has served as Executive Vice President, Finance and
Administration of Polaris Industries, L.P., a manufacturer of recreational
equipment, since September 1993. He previously served as Executive Vice
President, Chief Financial Officer and Secretary of Pentair, Inc. for more than
five years, a position from which he retired in June 1993.
Mr. Flaten's election as President and Chief Operating Officer of Nash Finch
was effective in November 1991. He had been elected Executive Vice President,
Sales and Operations of Nash Finch in February 1991. He was previously an
operating officer of Nash Finch, having served as Vice President, Corporate
Retail Operations from January 1989 to February 1991.
Mr. Graham was elected Chairman and Chief Executive Officer of The Oshawa
Group Limited, a publicly held Canadian food and pharmaceutical distributor, in
February 1990, and served as President and Chief Operating Officer of The Oshawa
Group Limited from December 1983 to February 1990. Mr. Graham also currently
serves as a director of The Oshawa Group Limited.
Mr. Lareau has been a partner in the law firm of Oppenheimer Wolff &
Donnelly for over 30 years. Oppenheimer Wolff & Donnelly has provided and is
expected to continue to provide legal services to Nash Finch. Mr. Lareau also
serves as a director of Merrill Corporation, Northern Instruments Corporation
and Ceridian Corporation, and as a trustee of the Mesabi Trust.
Mr. Mammel resigned in November 1991 as President and Chief Operating
Officer of Nash Finch, a position that he had held for more than five years, in
anticipation of his planned retirement which was effective January 1, 1992.
Mr. Rodysill retired in January 1994 as Senior Vice President, Store
Development and Construction of Nash Finch, a position he had held for more than
five years.
6
<PAGE>
INFORMATION ABOUT BOARD AND ITS COMMITTEES
Standing committees of the Board of Directors include the Executive
Committee, the Audit Committee, the Compensation Committee, the Nominating
Committee and the Stock Option Committee. The Executive Committee had appointed,
until May 11, 1993, an Executive Incentive Bonus and Deferred Compensation
Committee.
The Executive Committee has substantially all of the authority and power of
the Board of Directors in the management of the business and affairs of Nash
Finch, as provided by Delaware corporation law, although the Executive Committee
is at all times subject to the direction and control of the full Board of
Directors. The current members of the Executive Committee are Harold B. Finch,
Jr., Alfred N. Flaten, Jr., Robert F. Nash and Jerome O. Rodysill. In addition,
Norman R. Soland is a non-voting, advisory member of the committee. The
Executive Committee met 14 times during fiscal 1993.
The Audit Committee reviews and monitors accounting policies and control
procedures of Nash Finch, including recommending the engagement of independent
public accountants and reviewing the scope of the audit. The current members of
the Audit Committee are Richard A. Fisher, John H. Grunewald and Richard G.
Lareau. The Audit Committee met three times during fiscal 1993.
The Compensation Committee determines salaries and bonuses for executive
officers, selects the officer and key employee participants and determines the
compensation awards to be made to such participants under the Nash Finch
Executive Incentive Bonus and Deferred Compensation Plan, and considers new
executive compensation plans for recommendation to the Board of Directors. The
Compensation Committee will also administer the 1994 Plan if approved by the
stockholders at the Annual Meeting. The current members of the Compensation
Committee are Richard A. Fisher, Russell N. Mammel and Donald R. Miller. Harold
B. Finch, Jr., as Chief Executive Officer of Nash Finch, is a non-voting member
of the committee. The Compensation Committee met seven times during fiscal 1993.
The Nominating Committee considers and recommends to the Board of Directors
the size of the Board and nominees who meet the criteria for Board membership as
well as the procedures for identifying potential nominees. In addition, the
Nominating Committee recommends to the Board of Directors nominees for election
as corporate officers. The current members of the Nominating Committee are
Harold B. Finch, Jr., Richard A. Fisher, Richard G. Lareau and Donald R. Miller.
The Nominating Committee met two times during fiscal 1993. Stockholder
recommendations for director nominees may be considered, but there are no
established procedures for the submission of such recommendations to the
Nominating Committee for consideration.
The Stock Option Committee administers the Nash Finch 1988 Long-Term Stock
Incentive Plan (the "1988 Plan"). The current members of the Stock Option
Committee are Richard A. Fisher, Richard G. Lareau and Donald R. Miller. The
Stock Option Committee did not meet during fiscal 1993.
Prior to May 11, 1993, the Executive Incentive Bonus and Deferred
Compensation Committee recommended to the Executive Committee the compensation
awards to be made to officers and key employees under the Nash Finch Executive
Incentive Bonus and Deferred Compensation Plan. The former members of the
Executive Incentive Bonus and Deferred Compensation Committee were Harold B.
Finch, Jr., Richard A. Fisher and Donald R. Miller. The Executive Incentive
Bonus and Deferred Compensation Committee met one time during fiscal 1993.
7
<PAGE>
During 1993, the Board of Directors held four regularly scheduled meetings
(no special meetings were held). All of the directors attended 75% or more of
the aggregate meetings of the Board of Directors and all committees on which
they served.
DIRECTOR COMPENSATION
Directors who are full-time employees of Nash Finch receive no separate
compensation for their services as directors. Directors who are not full-time
employees of Nash Finch receive out-of-pocket traveling expenses incurred in
attending Board and committee meetings, and through February 28, 1994 received
compensation of $800 for each Board meeting attended, $500 for each committee
meeting attended (or, $300 if held on the same day as a Board meeting or by
telephone conference), and a retainer of $1,000 per month. Effective March 1,
1994, such directors receive $1000 for each Board meeting attended, $600 for
each committee meeting attended (or $400 if held on the same day as a Board
meeting or by telephone conference), and a retainer of $1000 per month.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation earned
during the fiscal years ending January 1, 1994, January 2, 1993 and December 28,
1991 by the Chief Executive Officer and the four most highly compensated
executive officers of Nash Finch whose salary and bonus exceeded $100,000 for
the fiscal year ended January 1, 1994.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND ----------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)(2)
- ----------------------------------------------------------- --------- --------- ------------ -------------------
<S> <C> <C> <C> <C>
Harold B. Finch, Jr. 1993 294,191 150,000 7,874
Chairman of the Board, 1992 203,287 210,000 8,860
Chief Executive Officer 1991 173,523 206,000 NA
and Director
Alfred N. Flaten, Jr. 1993 199,452 85,000 7,874
President, Chief 1992 127,054 125,000 8,180
Operating Officer and 1991 84,767 85,000 NA
Director
Jerome O. Rodysill, 1993 129,643 58,000 6,127
Senior Vice President, 1992 125,022 54,000 6,713
Store Development and 1991 116,161 48,500 NA
Construction and Director
David W. Bell, 1993 118,674 33,000 4,960
Vice President, Corporate 1992 113,841 30,000 3,326
Retail Operations 1991 105,709 27,000 NA
Norman R. Soland 1993 97,233 29,500 4,095
Vice President, 1992 94,529 25,500 4,508
Secretary and 1991 87,759 22,000 NA
General Counsel
<FN>
- ------------------------
(1) Cash bonuses for services rendered have been included as compensation for
the year earned, even though bonuses were actually paid in the following
year.
(2) "All Other Compensation" consists of contributions by Nash Finch in 1992
and 1993 to the Nash Finch Profit Sharing Plan.
</TABLE>
PENSION PLAN
Effective January 2, 1966, the Nash Finch Board of Directors amended the
Nash Finch Pension Plan (the "Pension Plan"). The Pension Plan, as amended,
applies to employees with the rank of manager or higher selected by the
Executive Committee and provides that such employees will be entitled, upon
retirement at age 65, to receive supplemental payments to the extent that
amounts received by such employees under Nash Finch's Profit Sharing Plan are
less than amounts such employees would have received under the Pension Plan
prior to such amendment. Payments to be made pursuant to the Pension Plan are
not subject to any deductions for Social Security payments or other offset
amounts.
The Pension Plan, as in effect before such amendment, provided that upon
retiring with at least 25 years of service after reaching the age of 65, a
participating employee was to receive, for the rest of his or her life, an
annual retirement benefit, payable quarterly, based on the average earnings of
such employee for the 10 years prior to retirement. Such earnings are of the
type included in the Annual Compensation column of the Summary Compensation
Table above. This annual benefit was to equal
9
<PAGE>
$1,000, plus, for employees with 10-year average earnings in excess of $10,000,
5% of the average 10-year earnings over $10,000 per year. Once an employee
becomes a participant in the Pension Plan, years of credited service for such an
employee do not affect benefits under the Pension Plan.
None of the executive officers named in the Summary Compensation Table are
eligible to receive benefits under the Pension Plan.
LONG-TERM INCENTIVE PLAN
The following table sets forth the number of stock equivalent ("phantom
stock") units allocated during the fiscal year ended January 1, 1994 to each of
the executive officers named in the Summary Compensation Table under the Nash
Finch Executive Bonus and Deferred Compensation Plan (the "Deferred Compensation
Plan"). Each phantom stock unit has a base value of $18.709.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF SHARES, OTHER PERIOD UNTIL
UNITS OR MATURATION OR PAYOUT
NAME OTHER RIGHTS (#)(1) (2)
- ------------------------------- ------------------- -----------------------
<S> <C> <C>
Harold B. Finch, Jr. 2,293 --
Alfred N. Flaten, Jr. 1,513 --
Jerome O. Rodysill 1,416 --
David W. Bell 695 --
Norman R. Soland 834 --
<FN>
- ------------------------
(1) The Deferred Compensation Plan provides additional long-term incentive
compensation to selected executive officers and other key employees.
Participants are selected annually by the Compensation Committee which
also determines the amounts to be allocated to participants for the year.
Normally, the Deferred Compensation Plan is effective only if the
consolidated net income of Nash Finch and its subsidiaries exceeds 6% of
the stockholders equity as shown on Nash Finch's current financial
statements, and then only 5% of such excess is available for allocation to
participants. The Compensation Committee may, however, in its discretion,
authorize any amount to be allocated under the Deferred Compensation Plan.
The amount allocated annually to each participant cannot exceed one-third
of the participant's annual base salary. The entire allotment to a
participant is contingently credited to the participant's account at the
end of each year. (Nash Finch does not fund or set aside any cash amounts
which are allocated to participants; instead, bookkeeping entries are
made). Allotments credited to each participant's account are converted to
share equivalents of Nash Finch Common Stock and each participant is
entitled to additional credits for dividends paid on such share
equivalents during each year. The dividend credits are also converted to
share equivalents. In addition, the value of each participant's account is
increased or decreased, whichever is applicable, by an amount equal to the
increase or decrease in fair market value of the share equivalents during
the year, provided that the participant is always entitled to the amounts
originally allocated regardless of any decrease in the market value of
share equivalents.
(2) Amounts contingently credited to the participant's account are payable to
the participant in cash upon termination of employment, except that
benefits may be totally or partially forfeited under certain
circumstances.
</TABLE>
10
<PAGE>
UNEXERCISED OPTIONS
The following table provides the number of aggregate unexercised options
held on January 1, 1994 for each of the executive officers named in the Summary
Compensation Table. No exercises or grants of options to the named executive
officers were made during the fiscal year ended January 1, 1994.
1993 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS
AT FY-END (#)
------------------------------
NAME EXERCISABLE (1) UNEXERCISABLE
- ----------------------------------- --------------- -------------
<S> <C> <C>
Harold B. Finch, Jr. -- --
Alfred N. Flaten, Jr. -- --
Jerome O. Rodysill -- --
David W. Bell 1,500 --
Norman R. Soland -- --
<FN>
- ------------------------
(1) The options were granted under the 1988 Plan. Pursuant to the terms of the
1988 Plan, such options are normally exercisable only on February 15 or
August 15 in any given year.
</TABLE>
CHANGE IN CONTROL AGREEMENTS
The Board of Directors has authorized Nash Finch to enter into change in
control agreements with certain executive officers and key employees of Nash
Finch and its subsidiaries. Pursuant to these agreements, certain payments and
benefits would be provided to such employees in the event their employment is
terminated under certain conditions, including a change in control of Nash
Finch.
If an employee is terminated by Nash Finch or a subsidiary within 24 months
of a change in control (or, in limited circumstances, prior to such a change in
control) other than by reason of death, disability, retirement or cause, or the
employee terminates for good reason, Nash Finch will pay or cause to be paid to
the employee a lump sum equal to the employee's highest monthly compensation (as
defined in the employee's change in control agreement) multiplied by a number of
months equal to either 12, 24 or 36 months and will maintain or cause to be
maintained benefit plans (including health, life, dental and disability) for the
employee and his or her dependents for 12, 24 or 36 months. Subject to certain
limitations, the multiple referred to above is 36 months for Mr. Finch and Mr.
Flaten, 24 months for Mr. Bell and Mr. Soland, and 24 months or 12 months for
all other designated employees.
Pursuant to the terms of the Deferred Compensation Plan, the following
occurs upon a change in control of Nash Finch: (i) an additional amount would be
allocated to the account of each participant equal to the amount allocated in
the previous year; (ii) forfeiture provisions of the Deferred Compensation Plan
would lapse; and (iii) the total balance of the participant's account would
become payable in full.
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REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW. The Compensation Committee of the Board of Directors is comprised
of directors who are not full-time employees of Nash Finch. The Chief Executive
Officer of Nash Finch, EX OFFICIO, is a non-voting member of the Compensation
Committee.
The Compensation Committee was established by the Board of Directors in May
1992, and overall responsibility for executive compensation is being
concentrated under its authority pursuant to delegation by the Board. As
described under "Election of Directors -- Information About Board and Its
Committees," the Compensation Committee determines annual salaries and bonuses
of executive officers, including the Chief Executive Officer; considers and
makes recommendations to the Board concerning new executive compensation plans;
since May 1993, administers the Deferred Compensation Plan; and will administer
the 1994 Plan if approved by the stockholders at the Annual Meeting.
As part of the Company's on-going efforts to ensure the continuing
effectiveness and appropriateness of its executive compensation program, the
program was reviewed in 1993 with the assistance of an outside consultant. The
review led to various changes in Nash Finch's policies regarding executive
compensation including clarification and restatement of the basic objectives of
the program, a more defined performance focus, and an increased emphasis on
performance-related stock incentives.
COMPENSATION PHILOSOPHY. The fundamental objective of Nash Finch's
executive compensation program is to support the achievement of the Company's
business objectives. As such, the Company's philosophy is that executive
compensation should be designed to achieve the following objectives:
- Enable the Company to attract and retain qualified key executives whose
skills and capabilities are needed to assure the continued growth and
success of Nash Finch in a highly competitive industry.
- Provide an incentive to executives by tying a meaningful portion of
compensation to the achievement of Company financial objectives.
- Align the interests of executives with those of Nash Finch stockholders by
providing a significant portion of compensation in Common Stock.
To maintain an appropriately competitive level of total compensation,
comparisons are made with the ranges of compensation paid to persons holding
comparable positions at other companies of similar size, with primary emphasis
on the food distribution industry. These comparisons, by necessity, extend
beyond the companies included in the peer group for the comparative performance
graph shown below, given the number and size of companies included in the
industry group.
COMPONENTS OF EXECUTIVE COMPENSATION. The principal components of executive
compensation include salaries, cash bonuses and longer-term incentive
compensation.
Salaries and cash bonuses for executive officers, including Mr. Finch and
the other executive officers named in the Summary Compensation Table, are
determined annually, taking into consideration the executive's level of
responsibility and experience, individual and corporate performance, and
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competitive compensation comparisons. While no specific criteria for measuring
individual and corporate performance are employed, each executive officer's
performance is evaluated by the Chief Executive Officer and reviewed by the
Compensation Committee. Similarly, in determining bonuses for executive
officers, the financial results of the Company are reviewed in light of various
objectives for the year, historical performance levels, external factors and
competitive considerations.
Longer-term incentive compensation consists of awards of phantom stock units
to certain executives under the Deferred Compensation Plan. Such awards are
intended primarily to serve as a means of retaining key executives by providing
supplemental retirement income. The potential value of such awards is linked to
stock price appreciation providing an additional long-term incentive to increase
stockholder value during an executive's career with Nash Finch. The Compensation
Committee administers the Deferred Compensation Plan and is responsible for
selecting the executive officers and other key employees for participation in
the plan and determining the amounts of compensation awards allocated to the
selected participants. Refer to "Executive Compensation and Certain Other
Benefits -- Long-Term Incentive Plan" for a description of the key terms of the
Deferred Compensation Plan.
It has also been Nash Finch's policy to encourage a broad range of employees
(including executive officers) to participate in stock ownership. For this
purpose, a number of stock option plans have been adopted over the years. The
size of individual stock option grants made under such plans have largely been
determined by the employee's position and ability to purchase shares, as
measured by his or her cash compensation level. The 1988 Plan, which will be
terminated if the 1994 Plan is approved by the stockholders, authorizes the
granting of incentive stock options and restricted stock awards to employees. No
stock options have been granted under the 1988 Plan since 1990 and no restricted
stock awards have been made.
A result of the 1993 review of the executive compensation program, and the
Compensation Committee's recommendations to the Board based thereon, is the
proposed 1994 Plan which is described in "Proposal to Adopt the 1994 Stock
Incentive Plan."
The 1994 Plan, among other things, authorizes the Compensation Committee to
award rights to executive officers and other key employees to receive shares of
Common Stock upon the achievement of established performance goals. Such awards
are referred to in the 1994 Plan as "Performance Units." Upon approval of the
1994 Plan, the Compensation Committee intends to implement Performance Unit
awards for 1994, although the awards have not yet been made.
Such Performance Units would have a maximum value at grant ranging from 60%
of a participant's 1994 base salary to 120% for the Chief Executive Officer. For
1994, the number of share units which could be earned (an equal number of share
units for each of three corporate performance objectives) would be determined on
the basis of the average closing sales prices for the Common Stock for the last
calendar quarter of 1993. The three performance categories, which the Board has
approved, are earnings per share (EPS) growth in 1994 compared with the highest
reported EPS for the preceding four years, average return on stockholders'
equity (ROE) for the three-year period beginning in 1994, and total stockholder
return (TSR) for the same three-year period. Minimum and maximum performance
goals have been determined by the Compensation Committee and approved by the
Board for each category. In no case will any portion of an award for a
performance category be earned unless the minimum for that category is exceeded.
An award for EPS growth would be earned
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based on performance in 1994 and paid out in 1995. Awards for ROE and TSR would,
to the extent earned, not be paid out until 1997. Awards paid out in Common
Stock will be restricted as to transferability for three years following the
issuance of such shares.
The Compensation Committee believes that such performance-based awards will
serve the purpose of more closely aligning executive and stockholder interests
in that the executives will benefit only if stockholder value is enhanced. Also,
for this purpose, the Compensation Committee has, in 1994, established stock
ownership guidelines for executive officers who will be encouraged, but not
required, to satisfy these guidelines within three to five years. The stock
ownership guideline for the Chief Executive Officer is five times annual base
salary.
CHIEF EXECUTIVE OFFICER COMPENSATION. For the 1993 fiscal year, Mr. Finch
received a salary of $294,191, a bonus of $150,000, and a grant of 2,293 phantom
stock units under the Deferred Compensation Plan. Mr. Finch's salary and bonus
were determined in accordance with the policies outlined above.
Richard A. Fisher
Russell N. Mammel
Donald R. Miller
Harold B. Finch, Jr. (EX OFFICIO)
Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Finch, the Chief Executive Officer of Nash Finch, is a non-voting member
of the Compensation Committee. Mr. Mammel, the retired President and Chief
Operating Officer of Nash Finch, is also a member of the Compensation Committee.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on Nash
Finch Common Stock for the last five fiscal years with the cumulative total
return over the same period of the S & P 500 Index and a peer group of companies
selected by Nash Finch (weighted according to the peer companies' market
capitalization at the beginning of each fiscal year). The comparison assumes the
investment of $100 in Nash Finch Common Stock, the S & P 500 Index and the peer
group at the end of fiscal 1988 and reinvestment of all dividends.
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[GRAPHIC]
The companies included in the peer group are Fleming Companies, Inc., Super
Food Services, Inc. and Supervalu, Inc. They were selected on the basis that,
like Nash Finch, each is predominately a full-line wholesale distributor of
grocery products having several distribution centers and with operations which
extend over a wide geographic area. The Compensation Committee has approved the
selection of these companies.
COMPLIANCE WITH FEDERAL TAX LEGISLATION
Federal tax legislation enacted in 1993 generally would preclude Nash Finch
and other public companies from taking a tax deduction for compensation over $1
million which is not "performance-based" and is paid, or otherwise taxable, to
executives named in the Summary Compensation Table and employed by Nash Finch at
the end of the applicable tax year.
No named executive is likely to earn over $1 million in 1994. The
Compensation Committee intends to monitor the executive compensation program
with respect to the present federal tax law.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934 requires Nash Finch's
directors and executive officers and all persons who beneficially own more than
10% of the outstanding shares of Nash Finch Common Stock to file with the SEC
reports of initial ownership and reports of changes in ownership of Nash Finch
Common Stock. Copies of such reports must also be furnished to Nash Finch. The
Company offers assistance to its directors and executive officers in complying
with Section 16(a), which includes preparing the reports and forwarding them to
the SEC for filing. During 1993, due to administrative oversight on the part of
Nash Finch, the initial reports of ownership of Gerald D. Maurice, an officer,
and Carole F. Bitter, a director, were filed 20 and six days late, respectively.
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To Nash Finch's knowledge, based upon a review of the copies of reports
furnished to Nash Finch and written representations, all other filing
requirements applicable to directors and executive officers were complied with
during the fiscal year ended January 1, 1994, and no reports of actual
transactions were filed late.
PROPOSAL TO ADOPT THE
1994 STOCK INCENTIVE PLAN
INTRODUCTION
On February 22, 1994, the Board of Directors of Nash Finch adopted the 1994
Plan, which is being submitted to Nash Finch's stockholders for their approval.
The purpose of the 1994 Plan is to advance the interests of Nash Finch and its
stockholders by enabling Nash Finch and its subsidiaries to attract and retain
persons of ability to perform services for Nash Finch and its subsidiaries by
providing an incentive to such individuals through equity participation in Nash
Finch and by rewarding such individuals who contribute to the achievement by
Nash Finch of its economic objectives. The maximum number of shares of Common
Stock that will be available for issuance under the 1994 Plan will be the sum of
400,000 shares of Common Stock, plus any shares of Common Stock that, as of the
date the 1994 Plan is approved by the Company's stockholders, are then available
for issuance under the 1988 Plan, which will be terminated as of such date. The
major features of the 1994 Plan are summarized below, which summary is qualified
in its entirety by reference to the actual text of the 1994 Plan, a copy of
which may be obtained from Nash Finch.
SUMMARY OF THE 1994 PLAN
GENERAL. The 1994 Plan provides for awards ("Incentive Awards") to
employees (including, without limitation, officers and directors who are also
employees) of Nash Finch or any subsidiary of: (i) options to purchase Common
Stock that qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") ("Incentive
Options"); (ii) options to purchase Common Stock that do not qualify as such
Incentive Options ("Non-Statutory Options"); (iii) awards of shares of Common
Stock that are subject to certain forfeiture and transferability restrictions
that lapse after specified employment or performance periods ("Restricted Stock
Awards"); and (iv) rights entitling the recipient to receive a payment from Nash
Finch, in the form of shares of Common Stock, cash, or a combination of both,
upon the achievement of established performance goals ("Performance Units").
Incentive Options and Non-Statutory Options are collectively referred to herein
as "Options," and Options, Restricted Stock Awards, and Performance Units are
collectively referred to herein as "Incentive Awards."
The 1994 Plan is administered by the Compensation Committee (the
"Committee"), which selects the participants to be granted Incentive Awards
under the 1994 Plan, determines the amount of the grants to the participants,
and prescribes discretionary terms and conditions of each grant not otherwise
fixed under the 1994 Plan. Eligible recipients under the 1994 Plan include all
full time, salaried employees (including, without limitation, officers and
directors who are also employees) of Nash Finch or any subsidiary of Nash Finch.
As of March 1, 1994, approximately 1,500 persons are eligible to participate in
the 1994 Plan.
The 1994 Plan will terminate on February 22, 2004, unless sooner terminated
by action of the Board of Directors. No Incentive Award will be granted after
termination of the 1994 Plan. The Board
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of Directors may amend the 1994 Plan in any respect that the Board deems to be
in the best interests of Nash Finch without stockholder approval, unless
stockholder approval is then required pursuant to Rule 16b-3 of the Exchange Act
or Section 422 of the Code. Currently, the maximum number of shares of Common
Stock reserved for issuance under the 1994 Plan is equal to the sum of 400,000
plus the number of shares of Common Stock that, as of the date the 1994 Plan is
approved by the Company's stockholders, are then available for issuance under
the 1988 Plan. As of March 1, 1994, 243,796 shares of Common Stock were
available for issuance under the 1988 Plan. In the event of any reorganization,
merger, recapitalization, stock dividend, stock split or similar change in the
corporate structure or shares of Nash Finch, appropriate adjustments will be
made to the number and kind of shares reserved under the 1994 Plan and under
outstanding Incentive Awards and to the exercise price of outstanding Options.
No right or interest in any Incentive Award may be assigned or transferred by a
participant, except by will or the laws of descent and distribution, or
subjected to any lien or otherwise encumbered.
OPTIONS. The exercise price for an Option must be not less than 100% of the
fair market value of the Common Stock on the day the Option is granted. In
determining the fair market value of the Common Stock, the Committee, as of the
date of grant, will use the mean between the high and low sales prices of the
Common Stock as reported on the National Association of Securities Dealers
Automated Quotation (NASDAQ) National Market System, or any exchange on which
the Common Stock is listed. On March 1, 1994, the mean between the high and low
sales prices for the Common Stock was $17.00.
Payment of an Option exercise price may be made either in cash or, in the
sole discretion of the Committee, by (i) delivery of a broker exercise notice
(pursuant to which the broker or dealer is instructed to sell enough shares or
loan the optionee enough money to pay the exercise price and to remit such sums
to Nash Finch), (ii) transfer from the participant to Nash Finch of previously
acquired shares of Common Stock having an aggregate fair market value on the
date of exercise equal to the payment required, (iii) a promissory note (on
terms acceptable to the Committee in its sole discretion), or (iv) a combination
of such methods. Options may not be transferred other than by will or the laws
of descent and distribution, and during the lifetime of an optionee may be
exercised only by the optionee. Options may be exercised in whole or in
installments, as determined by the Committee. Options will have a maximum term
fixed by the Committee, not to exceed 10 years from the date of grant. To the
extent that the aggregate fair market value (determined as of the date an
Incentive Option is granted) of the shares of Common Stock with respect to which
Incentive Options are exercisable for the first time by a participant during any
calendar year exceeds $100,000, such excess Incentive Options will be treated as
Non-Statutory Options.
RESTRICTED STOCK AWARDS. Restricted Stock Awards are grants to participants
of shares of Common Stock that are subject to restrictions and the possibility
of forfeiture for a period of time set by the Committee during which the
participant must remain continuously employed by or in the service of Nash Finch
or any of its subsidiaries. A participant will have all voting, dividend,
liquidation and other rights with respect to shares of Common Stock issued to
the participant as a Restricted Stock Award upon the participant becoming the
holder of record of such shares as if such participant were a holder of record
of shares of unrestricted Common Stock, except, unless the Committee determines
otherwise in its sole discretion, any dividends or distributions (including
regular quarterly cash dividends)
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paid with respect to shares of Common Stock subject to the unvested portion of a
Restricted Stock Award will be subject to the same restrictions as the shares to
which such dividends or distributions relate.
PERFORMANCE UNITS. Performance Units may be awarded on such terms and
conditions as the Committee may specify. Such conditions may include payment or
vesting restrictions which involve continued employment or service with Nash
Finch and satisfaction by Nash Finch or a specified business unit or subsidiary
of predetermined performance goals or criteria approved by the Committee at the
time the Performance Units are awarded. Upon satisfaction of applicable terms
and conditions, Performance Units will be payable in shares of Common Stock,
cash or some combination thereof in the Committee's sole discretion. The
Committee in its sole discretion, may credit a participant's Performance Units
for dividend equivalents representing dividends or distributions (including cash
dividends or distributions) paid with respect to shares of Common Stock during
the period such Performance Units are outstanding.
EFFECT OF TERMINATION OF EMPLOYMENT. If a participant ceases to be employed
by or render services to Nash Finch and all subsidiaries ("Termination of
Service"), all Incentive Awards held by the participant will terminate as set
forth below.
Upon Termination of Service due to death, disability or retirement (i) all
outstanding Options then held by the participant will become immediately
exercisable in full and will remain exercisable for a period of one year, but in
no event after the expiration date of the Option, and (ii) all outstanding
Restricted Stock Awards and/or Performance Units then held by the participant
will terminate, vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such award.
Upon Termination of Service for any reasons other than death, disability or
retirement, all rights of the participant under the 1994 Plan and any agreements
evidencing an Incentive Award will immediately terminate without notice of any
kind, and no Options then held by the participant will thereafter be
exercisable, all Restricted Stock Awards then held by the participant that have
not vested will be terminated and forfeited, and all Performance Units then held
by the participant will terminate, vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement evidencing such
Performance Units. The Committee, however, shall have the discretion to modify
the terms of Incentive Awards upon such a termination of employment.
Notwithstanding anything in the 1994 Plan to the contrary, in the event that
a participant materially breaches the terms of any confidentiality or
non-compete agreement entered into with Nash Finch or any subsidiary, whether
such breach occurs before or after termination of such participant's employment
or other service with Nash Finch or any subsidiary, the Committee in its sole
discretion may immediately terminate all rights of the participant under the
1994 Plan and any agreements evidencing an Incentive Award then held by the
participant without notice of any kind.
CHANGE IN CONTROL OF NASH FINCH. In the event a "change in control" of Nash
Finch occurs, then, if approved by the Committee in its sole discretion, (i) all
outstanding Options will become immediately exercisable in full and will remain
exercisable for the remainder of their terms, regardless of whether the
participant remains in the employ or service of Nash Finch or any subsidiary,
(ii) all outstanding Restricted Stock Awards will become immediately fully
vested and non-forfeitable, and (iii) all outstanding Performance Units vest
and/or continue to vest in the manner determined by the Committee and as set
forth in the agreement evidencing such Performance Units. In addition, the
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Committee, without the consent of any affected participant, may determine that
some or all participants holding outstanding Options will receive cash in an
amount equal to the excess of the fair market value immediately prior to the
effective date of such change in control over the exercise price per share of
the Options.
To the extent that such acceleration of the vesting of Incentive Awards
would constitute a "parachute payment" (as defined in the Code), then, pursuant
to the 1994 Plan, such acceleration will be modified to such extent that the
participant will not be subject to the excise tax imposed by Section 4999 of the
Code.
For purposes of the 1994 Plan, a "change in control" of Nash Finch will be
deemed to have occurred, among other things, upon: (i) a sale, lease, exchange
or other transfer, directly or indirectly, of substantially all of the assets of
Nash Finch (in one transaction or in a series of related transactions) to a
person or an entity that is not controlled by Nash Finch; (ii) the approval by
the stockholders of Nash Finch of any plan or proposal for the liquidation or
dissolution of Nash Finch; (iii) a merger or consolidation to which Nash Finch
is a party if the stockholders of Nash Finch immediately prior to the effective
date of such merger or consolidation have "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act), immediately following the effective date of
such merger or consolidation, of securities of the surviving corporation
representing (a) more than 50%, but not more than 80% of the combined voting
power of the surviving corporation's then outstanding securities ordinarily
having the right to vote at elections of directors, unless such merger or
consolidation has been approved in advance by the Incumbent Directors (as
defined in the 1994 Plan), or (b) 50% or less of the combined voting power of
the surviving corporation's then outstanding securities ordinarily having the
right to vote at elections of directors (regardless of any approval by the
Incumbent Directors); (iv) any person becomes, after the effective date of the
1994 Plan, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of (a) 20% or more, but not 50% or more, of the
combined voting power of Nash Finch's outstanding securities ordinarily having
the right to vote at elections of directors, unless the transaction resulting in
such ownership has been approved in advance by the Incumbent Directors, or (b)
50% or more of the combined voting power of Nash Finch's outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors); (v) the Incumbent Directors (as defined in
the 1994 Plan) cease for any reason to constitute at least a majority of the
Board; or (vi) a change in control of Nash Finch of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange Act,
whether or not Nash Finch is then subject to such reporting requirements.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. The description does not
include state or local income tax consequences. In addition, the description is
not intended to address specific tax consequences applicable to an individual
participant who receives an Incentive Award.
INCENTIVE OPTIONS. There will not be any federal income tax consequences to
either the participant or Nash Finch as a result of the grant to an employee of
an Incentive Option under the 1994 Plan. The exercise by a participant of an
Incentive Option also will not result in any federal income tax consequences to
Nash Finch or the participant, except that (i) an amount equal to the excess of
the fair market value of the shares acquired upon exercise of the Incentive
Option, determined at the time of exercise, over the amount paid for the shares
by the participant will be includable in the participant's
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alternative minimum taxable income for purposes of the alternative minimum tax,
and (ii) the participant may be subject to an additional excise tax if any
amounts are treated as excess parachute payments (see explanation below).
Special rules will apply if previously acquired shares of Common Stock are
permitted to be tendered in payment of an Option exercise price.
If the participant disposes of the Incentive Option shares acquired upon
exercise of the Incentive Option, the federal income tax consequences will
depend upon how long the participant has held the shares. If the participant
does not dispose of the shares within two years after the Incentive Option was
granted, nor within one year after the participant exercised the Incentive
Option and the shares were transferred to the participant, then the participant
will recognize a long-term capital gain or loss. The amount of the long-term
capital gain or loss will be equal to the difference between (i) the amount the
participant realized on disposition of the shares, and (ii) the Option price at
which the participant acquired the shares. Nash Finch is not entitled to any
compensation expense deduction under these circumstances.
If the participant does not satisfy both of the above holding period
requirements (a "disqualifying disposition"), then the participant will be
required to report as ordinary income, in the year the participant disposes of
the shares, the amount by which the lesser of (i) the fair market value of the
shares at the time of exercise of the Incentive Option (or, for directors,
officers or greater than 10 percent stockholders of Nash Finch, generally the
fair market value of the shares six months after the date of exercise, unless
such persons file an election under Section 83(b) of the Code within 30 days of
exercise), or (ii) the amount realized on the disposition of the shares, exceeds
the Option price for the shares. Nash Finch will be entitled to a compensation
expense deduction in an amount equal to the ordinary income includable in the
taxable income of the participant. This compensation income may be subject to
withholding. The remainder of the gain recognized on the disposition, if any, or
any loss recognized on the disposition, will be treated as long-term or
short-term capital gain or loss, depending on the holding period.
NON-STATUTORY OPTIONS. Neither the participant nor Nash Finch incurs any
federal income tax consequences as a result of the grant of a Non-Statutory
Option. Upon exercise of a Non-Statutory Option, a participant will recognize
ordinary income, subject to withholding, on the date of exercise in an amount
equal to the difference between (i) the fair market value of the shares
purchased, determined on the date of exercise, and (ii) the Option exercise
price paid for the shares. The participant may be subject to an additional
excise tax if any amounts are treated as excess parachute payments (see
explanation below). Special rules will apply if previously acquired shares of
Common Stock are permitted to be tendered in payment of an Option exercise
price.
At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of a Non-Statutory Option, any gain or loss will be
a capital gain or loss. Such capital gain or loss will be long-term capital gain
or loss if the sale or disposition occurs more than one year after the date of
exercise and short-term capital gain or loss if the sale or disposition occurs
one year or less after the date of exercise.
In general, Nash Finch will be entitled to a compensation expense deduction
in connection with the exercise of a Non-Statutory Option for any amounts
includable in the taxable income of the participant as ordinary income, provided
Nash Finch complies with any applicable withholding requirements.
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RESTRICTED STOCK AWARDS. With respect to shares issued pursuant to a
Restricted Stock Award that is not subject to a risk of forfeiture, a
participant will include as ordinary income in the year of receipt an amount
equal to the fair market value of the shares received on the date of receipt.
With respect to shares that are subject to a risk of forfeiture, a participant
may file an election under Section 83(b) of the Code, within thirty (30) days
after receipt, to include as ordinary income in the year of receipt an amount
equal to the fair market value of the shares received on the date of receipt
(determined as if the shares were not subject to any risk of forfeiture). If a
Section 83(b) election is made, the participant will not recognize any
additional income when the restrictions on the shares issued in connection with
the Restricted Stock Award lapse. Nash Finch will receive a corresponding tax
deduction for any amounts includable in the taxable income of the participant as
ordinary income.
A participant who does not make a Section 83(b) election within thirty (30)
days of the receipt of a Restricted Stock Award that is subject to a risk of
forfeiture will recognize ordinary income at the time of the lapse of the
restrictions in an amount equal to the then fair market value of the shares free
of restrictions. Nash Finch will receive a corresponding tax deduction for any
amounts includable in the taxable income of a participant as ordinary income.
PERFORMANCE UNITS. A participant who receives a Performance Unit will not
recognize any taxable income at the time of the grant. When a Performance Unit
is paid out, the participant will realize ordinary income in an amount equal to
the fair market value of any shares of Common Stock and cash received by the
participant. Provided that proper withholding is made, Nash Finch would be
entitled to a compensation expense deduction for any amounts includable by the
participants as ordinary income.
EXCISE TAX ON PARACHUTE PAYMENTS. The Code also imposes a 20% excise tax on
the recipient of "excess parachute payments," as defined in the Code and denies
tax deductibility to Nash Finch on excess parachute payments. Generally,
parachute payments are payments in the nature of compensation to employees of a
company who are officers, stockholders, or highly compensated individuals, which
payments are contingent upon a change in ownership or effective control of the
company, or in the ownership of a substantial portion of the assets of the
company. For example, acceleration of the exercisability of Options, or the
vesting of Restricted Stock Awards, upon a change in control of Nash Finch may
constitute parachute payments, and in certain cases, "excess parachute
payments."
INCENTIVE AWARDS UNDER THE 1994 PLAN
Neither the number nor types of future 1994 Plan awards to be granted or
allocated to particular participants or groups of participants is presently
determinable because the criteria for selecting such participants and
determining the amounts and types of awards have not been finalized by the
Committee, pending stockholder approval of the 1994 Plan. Awards which would
have been granted or allocated to particular participants had the 1994 Plan been
in effect in the last fiscal year are also not presently determinable for the
same reasons.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the stockholders vote FOR approval
and ratification of the 1994 Plan. The affirmative vote of a majority of the
total shares represented in person or by proxy and entitled to vote is required
for approval. Unless a contrary choice is specified, proxies solicited by the
Board of Directors will be voted FOR approval of the 1994 Plan.
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APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
selected KPMG Peat Marwick as independent auditors to audit the books, records
and accounts of Nash Finch for the fiscal year ending December 31, 1994.
Although not required, the Board of Directors desires stockholder approval of
this selection. If holders of the majority of the Common Stock present and
voting at the Annual Meeting do not concur, the Board of Directors will select
another independent auditor to perform the audit without stockholder approval.
A representative of KPMG Peat Marwick will attend the Annual Meeting and
will be available to respond to appropriate questions, or to make a statement if
he or she so desires.
The Board of Directors recommends the approval of the stockholders as to the
selection of KPMG Peat Marwick.
1995 STOCKHOLDER PROPOSALS
Any proposal of a Nash Finch stockholder intended to be presented at the
Annual Meeting of Stockholders in 1995 must be received by Nash Finch at its
principal executive office not later than November 30, 1994, for inclusion in
its proxy statement and form of proxy.
MISCELLANEOUS
The Board of Directors is not aware of any other matters which may be
presented to the stockholders for formal action at the Annual Meeting. If,
however, any other matters properly come before the Annual Meeting or any
adjournment or adjournments thereof, it is the intention of the persons named on
the proxy card to vote such proxies in accordance with their best judgment on
such matters.
The cost of soliciting proxies will be borne by Nash Finch. Directors,
officers and regular employees of Nash Finch may, without compensation other
than their regular compensation, solicit proxies by mail, telephone, telegram or
personal interview. Nash Finch may reimburse brokerage firms and others for
their expense in forwarding proxy materials to the beneficial owners of Nash
Finch Common Stock.
All stockholders who do not expect to attend the Annual Meeting, are urged
to execute and return the enclosed proxy card promptly.
BY ORDER OF THE BOARD OF DIRECTORS
NORMAN R. SOLAND
VICE PRESIDENT, SECRETARY
AND GENERAL COUNSEL
April 1, 1994
Minneapolis, Minnesota
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[LOGO] PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
NASH FINCH COMPANY The undersigned hereby appoints Harold
7600 FRANCE AVENUE SOUTH, P.O. BOX 355 B. Finch, Jr., Alfred N. Flaten, Jr. and
MINNEAPOLIS, MN 55440-0355 Robert F. Nash, and each of them, as
- -------------------------------------- Proxies, each with the power of
substitution, and hereby authorizes each
of them to represent and to vote, as
designated below, all the shares of
common stock of Nash Finch Company held
of record by the undersigned on March
21, 1994, at the Annual Meeting of
Stockholders to be held on May 10, 1994
or any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed WITHHOLD AUTHORITY to vote
below (except as for all
marked to the contrary nominees listed below / /
below) / /
(INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name)
Carole F. Bitter Russell N. Mammel Robert F. Nash
Harold B. Finch, Jr. Donald R. Miller
2. PROPOSAL TO ADOPT THE COMPANY'S 1994 STOCK
INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT
MARWICK AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 ABOVE.
(PLEASE SIGN ON REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 2 AND 3 AND TO GRANT AUTHORITY TO VOTE FOR ALL
NOMINEES NAMED IN PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED ____________________, 1994
________________________________
SIGNATURE
________________________________
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
NASH FINCH COMPANY
1994 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN.
The purpose of the Nash Finch Company 1994 Stock Incentive Plan (the
"Plan") is to advance the interests of Nash Finch Company (the "Company") and
its shareholders by enabling the Company and its Subsidiaries to attract and
retain persons of ability to perform services for the Company and its
Subsidiaries by providing an incentive to such individuals through equity
participation in the Company and by rewarding such individuals who contribute
to the achievement by the Company of its economic objectives.
2. DEFINITIONS.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "BROKER EXERCISE NOTICE" means a written notice pursuant to
which a Participant, upon exercise of an Option, irrevocably instructs a
broker or dealer to sell a sufficient number of shares or loan a sufficient
amount of money to pay all or a portion of the exercise price of the Option
and/or any related withholding tax obligations and remit such sums to the
Company and directs the Company to deliver stock certificates to be issued
upon such exercise directly to such broker or dealer.
2.3 "CHANGE IN CONTROL" means an event described in Section 11.1 of
the Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the group of individuals administering the
Plan, as provided in Section 3 of the Plan.
2.6 "COMMON STOCK" means the common stock of the Company, $1.66 2/3
par value per share, or the number and kind of shares of stock or other
securities into which such Common Stock may be changed in accordance with
Section 4.3 of the Plan.
2.7 "DISABILITY" means the disability of the Participant such as
would entitle the Participant to receive disability income benefits pursuant
to the long-term disability plan of the Company or Subsidiary then covering
the Participant or, if no such plan exists or is applicable to the
Participant, the permanent and total disability of the Participant within the
meaning of Section 22(e)(3) of the Code.
2.8 "ELIGIBLE RECIPIENTS" means all full-time, salaried employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Subsidiary.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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2.10 "FAIR MARKET VALUE" means, with respect to the Common Stock, as
of any date (or, if no shares were traded or quoted on such date, as of the
next preceding date on which there was such a trade or quote), the mean
between the reported high and low sale prices of the Common Stock as reported
on the National Association of Securities Dealers Automated Quotation (NASDAQ)
National Market System, or any exchange on which the Common Stock is listed.
2.11 "INCENTIVE AWARD" means an Option, Restricted Stock Award or
Performance Unit granted to an Eligible Recipient pursuant to the Plan.
2.12 "INCENTIVE STOCK OPTION" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.13 "NON-STATUTORY STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that
does not qualify as an Incentive Stock Option.
2.14 "OPTION" means an Incentive Stock Option or a Non-Statutory
Stock Option.
2.15 "PARTICIPANT" means an Eligible Recipient who receives one or
more Incentive Awards under the Plan.
2.16 "PERFORMANCE UNIT" means a right granted to an Eligible
Recipient pursuant to Section 8 of the Plan to receive a payment from the
Company, in the form of stock, cash or a combination of both, upon the
achievement of established performance goals.
2.17 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that
are already owned by the Participant or, with respect to any Incentive Award,
that are to be issued upon the grant, exercise or vesting of such Incentive
Award.
2.18 "RESTRICTED STOCK AWARD" means an award of Common Stock granted
to an Eligible Recipient pursuant to Section 7 of the Plan that is subject to
the restrictions on transferability and the risk of forfeiture imposed by the
provisions of such Section 7.
2.19 "RETIREMENT" means termination of employment or service pursuant
to and in accordance with the regular (or, if approved by the Board for
purposes of the Plan, early) retirement/pension plan or practice of the
Company or Subsidiary then covering the Participant.
2.20 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.21 "SUBSIDIARY" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.
2.22 "TAX DATE" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.
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3. PLAN ADMINISTRATION.
3.1 THE COMMITTEE. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee (the "Committee") consisting solely of not less
than two members of the Board who are "disinterested persons" within the
meaning of Rule 16b-3 under the Exchange Act. To the extent consistent with
corporate law, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however,
that only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act. Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be conclusive and
binding for all purposes and on all persons, and no member of the Committee
will be liable for any action or determination made in good faith with respect
to the Plan or any Incentive Award granted under the Plan.
3.2 AUTHORITY OF THE COMMITTEE.
(a) In accordance with and subject to the provisions of the
Plan, the Committee will have the authority to determine all provisions
of Incentive Awards as the Committee may deem necessary or desirable and
as consistent with the terms of the Plan, including, without limitation,
the following: (i) the Eligible Recipients to be selected as
Participants; (ii) the nature and extent of the Incentive Awards to be
made to each Participant (including the number of shares of Common Stock
to be subject to each Incentive Award, any exercise price, the manner in
which Incentive Awards will vest or become exercisable and whether
Incentive Awards will be granted in tandem with other Incentive Awards)
and the form of written agreement, if any, evidencing such Incentive
Award; (iii) the time or times when Incentive Awards will be granted;
(iv) the duration of each Incentive Award; and (v) the restrictions and
other conditions to which the payment or vesting of Incentive Awards may
be subject. In addition, the Committee will have the authority under
the Plan in its sole discretion to pay the economic value of any
Incentive Award in the form of Common Stock, cash, or any combination of
both.
(b) The Committee will have the authority under the Plan to
amend or modify the terms of any outstanding Incentive Award in any
manner, including, without limitation, the authority to modify the
number of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an Incentive
Award, accept the surrender of any outstanding Incentive Award or, to
the extent not previously exercised or vested, authorize the grant of
new Incentive Awards in substitution for surrendered Incentive Awards;
provided, however that the amended or modified terms are permitted by
the Plan as then in effect and that any Participant adversely affected
by such amended or modified terms has consented to such amendment or
modification. No amendment or modification to an Incentive Award,
however, whether pursuant to this Section 3.2 or any other provisions of
the Plan, will be deemed to be a regrant of such Incentive Award for
purposes of this Plan.
(c) In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
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<PAGE>
extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting principles or
practices, or (iv) any other similar change, in each case with respect
to the Company or any other entity whose performance is relevant to the
grant or vesting of an Incentive Award, the Committee (or, if the
Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) may, without the
consent of any affected Participant, amend or modify the vesting
criteria of any outstanding Incentive Award that is based in whole or in
part on the financial performance of the Company (or any Subsidiary or
division thereof) or such other entity so as equitably to reflect such
event, with the desired result that the criteria for evaluating such
financial performance of the Company or such other entity will be
substantially the same (in the sole discretion of the Committee or the
board of directors of the surviving corporation) following such event as
prior to such event; provided, however, that the amended or modified
terms are permitted by the Plan as then in effect.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of Common
Stock that will be available for issuance under the Plan will be the sum of
(a) 400,000 shares of Common Stock, and (b) any shares of Common Stock that,
as of the date the Plan is approved by the Company's stockholders, are then
available for issuance under the Company's 1988 Long-Term Stock Incentive
Plan, which shall be terminated upon stockholder approval of the Plan.
Notwithstanding the foregoing, no more than 300,000 shares of Common Stock may
be cumulatively available for issuance under the Plan pursuant to Incentive
Awards which are not Options, subject to adjustment as provided in Section 4.3
of the Plan. The maximum number of shares authorized and reserved may be
increased from time to time by approval of the Board and, if required pursuant
to Rule 16b-3 under the Exchange Act, Section 422 of the Code, or the rules of
any securities exchange or the NASD, the shareholders of the Company.
Notwithstanding any other provision of the Plan to the contrary, no
Participant in the Plan may be granted, during the term of the Plan, any
Options or other Incentive Awards with a value based solely on an increase in
the value of the Common Stock after the date of grant, relating to more than
an aggregate of 10% of the total number of shares of Common Stock reserved
under the Plan.
4.2 ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock that
are issued under the Plan or that are subject to outstanding Incentive Awards
will be applied to reduce the maximum number of shares of Common Stock
remaining available for issuance under the Plan. Any shares of Common Stock
that are subject to an Incentive Award that lapses, expires, is forfeited or
for any reason is terminated unexercised or unvested and any shares of Common
Stock that are subject to an Incentive Award that is settled or paid in cash
or any form other than shares of Common Stock will automatically again become
available for issuance under the Plan. Any shares of Common Stock that
constitute the forfeited portion of a Restricted Stock Award, however, will
not become available for further issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the
Committee (or, if the
4
<PAGE>
Company is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation) will make appropriate adjustment
(which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to outstanding
Incentive Awards.
5. PARTICIPATION.
Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected
to contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or
more Incentive Awards, singly or in combination or in tandem with other
Incentive Awards, as may be determined by the Committee in its sole
discretion. Incentive Awards will be deemed to be granted as of the date
specified in the grant resolution of the Committee, which date will be the
date of any related agreement with the Participant.
6. OPTIONS.
6.1 GRANT. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an
Option is to be considered an Incentive Stock Option or a Non-Statutory Stock
Option.
6.2 EXERCISE PRICE. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its
discretion at the time of the Option grant, provided that such price will not
be less than 100% of the Fair Market Value of one share of Common Stock on the
date of grant (110% of the Fair Market Value if, at the time an Incentive
Stock Option is granted, the Participant owns, directly or indirectly, more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation of the Company).
6.3 EXERCISABILITY AND DURATION. An Option will become exercisable
at such times and in such installments as may be determined by the Committee
in its sole discretion at the time of grant; provided, however, that no Option
may be exercisable after 10 years from its date of grant.
6.4 PAYMENT OF EXERCISE PRICE. The total purchase price of the
shares to be purchased upon exercise of an Option will be paid entirely in
cash (including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory
note (on terms acceptable to the Committee in its sole discretion) or by a
combination of such methods.
6.5 MANNER OF EXERCISE. An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained in
the Plan and in the agreement evidencing such Option, by delivery in person,
by facsimile or electronic transmission or through the mail of written notice
of exercise to the Company (Attention: Secretary) at its principal executive
office in Minneapolis, Minnesota and by paying in full the total exercise
price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.
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6.6 AGGREGATE LIMITATION OF STOCK SUBJECT TO INCENTIVE STOCK
OPTIONS. To the extent that the aggregate Fair Market Value (determined as
of the date an Incentive Stock Option is granted) of the shares of Common
Stock with respect to which incentive stock options (within the meaning of
Section 422 of the Code) are exercisable for the first time by a Participant
during any calendar year (under the Plan and any other incentive stock option
plans of the Company or any subsidiary or parent corporation of the Company)
exceeds $100,000 (or such other amount as may be prescribed by the Code from
time to time), such excess Options will be treated as Non-Statutory Stock
Options. The determination will be made by taking Incentive Stock Options
into account in the order in which they were granted. If such excess only
applies to a portion of an Incentive Stock Option, the Committee, in its
discretion, will designate which shares will be treated as shares to be
acquired upon exercise of an Incentive Stock Option.
7. RESTRICTED STOCK AWARDS.
7.1 GRANT. An Eligible Recipient may be granted one or more
Restricted Stock Awards under the Plan, and such Restricted Stock Awards will
be subject to such terms and conditions, consistent with the other provisions
of the Plan, as may be determined by the Committee in its sole discretion.
The Committee may impose such restrictions or conditions, not inconsistent
with the provisions of the Plan, to the vesting of such Restricted Stock
Awards as it deems appropriate, including, without limitation, that the
Participant remain in the continuous employ or service of the Company or a
Subsidiary for a certain period or that the Participant or the Company (or any
Subsidiary or division thereof) satisfy certain performance goals or criteria.
7.2 RIGHTS AS A SHAREHOLDER; TRANSFERABILITY. Except as provided in
Sections 7.1, 7.3 and 12.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 7
upon the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares of unrestricted Common Stock.
7.3 DIVIDENDS AND DISTRIBUTIONS. Unless the Committee determines
otherwise in its sole discretion (either in the agreement evidencing the
Restricted Stock Award at the time of grant or at any time after the grant of
the Restricted Stock Award), any dividends or distributions (including regular
quarterly cash dividends) paid with respect to shares of Common Stock subject
to the unvested portion of a Restricted Stock Award will be subject to the
same restrictions as the shares to which such dividends or distributions
relate. In the event the Committee determines not to pay such dividends or
distributions currently, the Committee will determine in its sole discretion
whether any interest will be paid on such dividends or distributions. In
addition, the Committee in its sole discretion may require such dividends and
distributions to be reinvested (and in such case the Participants consent to
such reinvestment) in shares of Common Stock that will be subject to the same
restrictions as the shares to which such dividends or distributions relate.
7.4 ENFORCEMENT OF RESTRICTIONS. To enforce the restrictions
referred to in this Section 7, the Committee may place a legend on the stock
certificates referring to such restrictions and may require the Participant,
until the restrictions have lapsed, to keep the stock certificates, together
with duly endorsed stock powers, in the custody of the Company or its transfer
agent or to maintain evidence of stock ownership, together with duly endorsed
stock powers, in a certificateless book-entry stock account with the Company's
transfer agent.
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8. PERFORMANCE UNITS.
8.1 GRANT. An Eligible Recipient may be granted one or more
Performance Units under the Plan, and such Performance Units will be subject
to such terms and conditions, consistent with the other provisions of the
Plan, as may be determined by the Committee in its sole discretion. The
Committee may impose such restrictions or conditions, not inconsistent with
the provisions of the Plan, to the vesting of such Performance Units as it
deems appropriate, including, without limitation, that the Participant remain
in the continuous employ or service of the Company or any Subsidiary for a
certain period or that the Participant or the Company (or any Subsidiary or
division thereof) satisfy certain performance goals or criteria. The
Committee will have the sole discretion to determine the form in which payment
of the economic value of vested Performance Units will be made to the
Participant (i.e., Common Stock, cash or any combination thereof), and to the
extent shares of Common Stock are issued, whether such shares will be subject
to any transferability restrictions.
8.2 DIVIDEND EQUIVALENTS. The Committee shall determine in its sole
discretion whether to credit a Participant's Performance Units for dividend
equivalents representing dividends or distributions (including cash dividends
as distributions) paid with respect to shares of Common Stock during the
period such Performance Units are outstanding.
9. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
9.1 TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. In the
event a Participant's employment or other service with the Company and all
Subsidiaries is terminated by reason of death, Disability or Retirement;
(a) All outstanding Options then held by the Participant will
become immediately exercisable in full and will remain exercisable for a
period of one year after such termination (but in no event after the
expiration date of any such Option);
(b) All outstanding Restricted Stock Awards and Performance
Units then held by the Participant will terminate, vest and/or continue
to vest in the manner determined by the Committee and set forth in the
agreement evidencing such Restricted Stock Awards and/or Performance
Units.
9.2 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR
RETIREMENT. In the event a Participant's employment or other service is
terminated with the Company and all Subsidiaries for any reason other than
death, Disability or Retirement, or a Participant is in the employ or service
of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company
(unless the Participant continues in the employ or service of the Company or
another Subsidiary), all rights of the Participant under the Plan and any
agreements evidencing an Incentive Award will immediately terminate without
notice of any kind, and no Options then held by the Participant will
thereafter be exercisable, all Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited, and all
Performance Units then held by the Participant will terminate, vest and/or
continue to vest in the manner determined by the Committee and set forth in
the agreement evidencing such Performance Units.
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9.3 MODIFICATION OF RIGHTS UPON TERMINATION. Notwithstanding the
other provisions of this Section 9, upon a Participant's termination of
employment or other service with the Company and all Subsidiaries, the
Committee may, in its sole discretion (which may be exercised at any time on
or after the date of grant, including following such termination), cause
Options then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of employment
or service and Restricted Stock Awards and Performance Units then held by such
Participant to vest and/or continue to vest or become free of transfer
restrictions, as the case may be, following such termination of employment or
service, in each case in the manner determined by the Committee; provided,
however, that no Option may remain exercisable beyond its expiration date.
9.4 BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS.
Notwithstanding anything in this Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or
non-compete agreement entered into with the Company or any Subsidiary, whether
such breach occurs before or after termination of such Participant's
employment or other service with the Company or any Subsidiary, the Committee
in its sole discretion may immediately terminate all rights of the Participant
under the Plan and any agreements evidencing an Incentive Award then held by
the Participant without notice of any kind.
9.5 DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the
Committee otherwise determines in its sole discretion, a Participant's
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the
Company or the Subsidiary for which the Participant provides employment or
other service.
10. PAYMENT OF WITHHOLDING TAXES.
10.1 GENERAL RULES. The Company is entitled to (a) withhold and
deduct from future wages of the Participant (or from other amounts that may be
due and owing to the Participant from the Company or a Subsidiary), or make
other arrangements for the collection of, all legally required amounts
necessary to satisfy any and all federal, state and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment
of dividends with respect to, an Incentive Award or a disqualifying
disposition of stock received upon exercise of an Incentive Stock Option, or
(b) require the Participant promptly to remit the amount of such withholding
to the Company before taking any action, including issuing any shares of
Common Stock, with respect to an Incentive Award.
10.2 SPECIAL RULES. The Committee may, in its sole discretion and
upon terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 10.1 of the Plan by
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a
promissory note (on terms acceptable to the Committee in its sole discretion),
or by a combination of such methods.
11. CHANGE IN CONTROL.
11.1 CHANGE IN CONTROL. For purposes of this Section 11.1, a "Change
in Control" of the Company will mean the following:
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(a) the sale, lease, exchange or other transfer, directly or
indirectly, of all or substantially all of the assets of the Company (in
one transaction or in a series of related transactions) to any Person
(as defined in Section 11.3 below).
(b) the approval by the shareholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company;
(c) a merger or consolidation to which the Company is a party if
the shareholders of the Company immediately prior to the effective date
of such merger or consolidation have "beneficial ownership" (as defined
in Rule 13d-3 under the Exchange Act), immediately following the
effective date of such merger or consolidation, of securities of the
surviving corporation representing (i) 50% or more, but not more than
80%, of the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at elections
of directors, unless such merger or consolidation has been approved in
advance by the Incumbent Directors (as defined in Section 11.2 below),
or (ii) less than 50% of the combined voting power of the surviving
corporation's then outstanding securities ordinarily having the right to
vote at elections of directors (regardless of any approval by the
Incumbent Directors);
(d) any person becomes after the effective date of the Plan the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of (i) 20% or more, but not 50% or more, of the
combined voting power of the Company's outstanding securities ordinarily
having the right to vote at elections of directors, unless the
transaction resulting in such ownership has been approved in advance by
the Incumbent Directors, or (ii) more than 50% of the combined voting
power of the Company's outstanding securities ordinarily having the
right to vote at elections of directors (regardless of any approval by
the Incumbent Directors);
(e) the Incumbent Directors cease for any reason to constitute
at least a majority of the Board; or
(f) a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is then subject to such reporting
requirements.
11.2 INCUMBENT DIRECTORS. For purposes of this Section 11,
"Incumbent Directors" of the Company means any individuals who are members of
the Board on the effective date of the Plan and any individual who
subsequently becomes a member of the Board whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors comprising the Board on the effective date of the
Plan (either by specific vote or by approval of the Company's proxy statement
in which such individual is named as a nominee for director without objection
to such nomination).
11.3 PERSON. For purposes of this Section 11, "Person" includes any
individual, corporation, partnership, group, association or other "person," as
such term is defined in Section 14(d) of the Exchange Act, other than (i) the
Company; (ii) any corporation at least a majority of whose securities having
ordinary voting power for the election of directors is owned, directly or
indirectly, by the Company; (iii) any other entity in which the Company, by
virtue of a direct or indirect ownership interest, has the right to elect a
majority of the members of the entity's governing
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body; or (iv) any benefit plan sponsored by the Company, a corporation
described in clause (ii) or an entity described in clause (iii).
11.4 ACCELERATION OF VESTING. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in Control of the Company
occurs, then, if approved by the Committee in its sole discretion either in
the agreement evidencing an Incentive Award at the time of grant or at any
time after the grant of an Incentive Award, (a) all outstanding Options then
held by the Participant will become immediately exercisable in full and will
remain exercisable for the remainder of their terms, regardless of whether the
Participant to whom such Options have been granted remains in the employ or
service of the Company or any Subsidiary; (b) all outstanding Restricted Stock
Awards then held by the Participant will become immediately fully vested and
non-forfeitable; and (c) all outstanding Performance Units then held by the
Participant will vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such Performance Units.
11.5 CASH PAYMENT FOR OPTIONS. If a Change in Control of the Company
occurs, then the Committee, in its sole discretion, either in an agreement
evidencing an Incentive Award at the time of grant or at any time after the
grant of an Incentive Award, and without the consent of any Participant
effected thereby, may determine that some or all Participants holding
outstanding Options will receive, with respect to some or all of the shares of
Common Stock subject to such Options, as of the effective date of any such
Change in Control of the Company, cash in an amount equal to the excess of the
Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of
such Options.
11.6 LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in Section 11.4 or 11.5 of the Plan to the contrary, if, with respect
to a Participant, the acceleration of the vesting of an Incentive Award as
provided in Section 11.4 or the payment of cash in exchange for all or part of
an Incentive Award as provided in Section 11.5 (which acceleration or payment
could be deemed a "payment" within the meaning of Section 280G(b)(2) of the
Code), together with any other payments which such Participant has the right
to receive from the Company or any corporation that 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 the Company is a member, would
constitute a "parachute payment" (as defined in Section 280G(b)(2) of the
Code), then the payments to such Participant pursuant to Section 11.4 or 11.5
will be reduced to the largest amount as will result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that if such Participant is subject to a separate agreement
with the Company or a Subsidiary which specifically provides that payments
attributable to one or more forms of employee stock incentives or to payments
made in lieu of employee stock incentives will not reduce any other payments
under such agreement, even if it would constitute an excess parachute payment,
or provides that the Participant will have the discretion to determine which
payments will be reduced in order to avoid an excess parachute payment, then
the limitations of this Section 11.6 will, to that extent, not apply.
12. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.
12.1 EMPLOYMENT OR SERVICE. Nothing in the Plan will interfere with
or limit in any way the right of the Company or any Subsidiary to terminate
the employment or service of any Eligible Recipient or Participant at any
time, nor confer upon any Eligible Recipient or Participant any right to
continue in the employ or service of the Company or any Subsidiary.
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12.2 RIGHTS AS A SHAREHOLDER. As a holder of Incentive Awards (other
than Restricted Stock Awards), a Participant will have no rights as a
shareholder unless and until such Incentive Awards are exercised for, or the
Incentive Awards are paid in the form of, shares of Common Stock and the
Participant becomes the holder of record of such shares. Except as otherwise
provided in the Plan, no adjustment will be made for dividends or
distributions with respect to such Incentive Awards as to which there is a
record date preceding the date the Participant becomes the holder of record of
such shares, except as the Committee may determine in its discretion.
12.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will
or the laws of descent and distribution or as otherwise expressly permitted by
the Plan, no right or interest of any Participant in an Incentive Award prior
to the exercise or vesting of such Incentive Award will be assignable or
transferable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. A Participant will, however, be entitled to
designate a beneficiary to receive an Incentive Award upon such Participant's
death, and in the event of a Participant's death, payment of any amounts due
under the Plan will be made to, and exercise of any Options (to the extent
permitted pursuant to Section 9 of the Plan) may be made by, the Participant's
legal representatives, heirs and legatees.
12.4 NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
13. SECURITIES LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue
any shares of Common Stock under this Plan, and a Participant may not sell,
assign, transfer or otherwise dispose of shares of Common Stock issued
pursuant to Incentive Awards granted under the Plan, unless (a) there is in
effect with respect to such shares a registration statement under the
Securities Act and any applicable state securities laws or an exemption from
such registration under the Securities Act and applicable state securities
laws, and (b) there has been obtained any other consent, approval or permit
from any other regulatory body which the Committee, in its sole discretion,
deems necessary or advisable. The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other
restrictions.
14. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the Plan from time to time in such respects as the
Board may deem advisable in order that Incentive Awards under the Plan will
conform to any change in applicable laws or regulations or in any other
respect the Board may deem to be in the best interests of the Company;
provided, however, that no amendments to the Plan will be effective without
approval of the shareholders of the Company if shareholder approval of the
amendment is then required pursuant to Rule 16b-3 under the Exchange Act,
Section 422 or 162(m) of the Code or the rules of the National Association of
Securities Dealers, Inc. No termination, suspension or amendment of the Plan
may adversely affect any outstanding Incentive Award without the consent of
the affected Participant; provided,
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however, that this sentence will not impair the right of the Committee to take
whatever action it deems appropriate under Sections 3.2(c), 4.3 and 11 of the
Plan.
15. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan is effective as of February 22, 1994, the date it was adopted
by the Board. The Plan will terminate at midnight on February 22, 2004, and
may be terminated prior to such time to by Board action, and no Incentive
Award will be granted after such termination. Incentive Awards outstanding
upon termination of the Plan may continue to be exercised, or become free of
restrictions, in accordance with their terms.
16. MISCELLANEOUS
16.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of Minnesota.
16.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure
to the benefit of the successors and permitted assigns of the Company and the
Participants.
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