PERFORMANCE UNIT AWARD AGREEMENT

Exhibit 10.3

PERFORMANCE UNIT AWARD AGREEMENT

Full Name of Employee: Alec C. Covington

Vesting Schedule:

      THIS AGREEMENT is entered into and effective as of May 1, 2006 (the “Date of Grant”), by and between Nash-Finch Company (the “Company”) and you, Alec C. Covington.

     In accordance with a Letter Agreement between you and the Company dated March 16, 2006, you are to receive an award of Performance Units on the terms and conditions contained in this Agreement and the Nash Finch Company 2000 Stock Incentive Plan, as amended (the “Plan”). Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.

     The parties hereto agree as follows:

1. Grant of Performance Units . Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to you the number of Performance Units specified at the beginning of this Agreement (the “Award”). The Performance Units subject to this Award will be reflected in a book account (the “Account”) maintained by the Company, and will be settled in shares of Common Stock.

2. Normal Vesting . Subject to Section 3, on each vesting date specified in the Vesting Schedule at the beginning of this Agreement, the number of Performance Units corresponding to that date in such Schedule will vest if the Company’s Consolidated EBITDA for the four consecutive fiscal quarter period ended on or before such vesting date exceeds the Company’s Consolidated EBITDA for its 2005 fiscal year (as such fiscal 2005 Consolidated EBITDA amount may be equitably adjusted by the Board in its discretion to take into account acquisitions or divestitures that occur after the date of this Agreement). Upon the vesting of any Performance Units, such Units will no longer be subject to forfeiture as provided in Section 5 and will be settled as provided in Section 4.

3. Accelerated Vesting . Performance Units then outstanding will vest immediately and in full upon a Change in Control if you have been continuously employed by the Company through the date immediately prior to the occurrence of the Change in Control.

4. Settlement of Vested Performance Units . As soon as administratively practicable following any vesting date, the Company shall distribute to you, in full settlement of all Performance Units in your Account that vested on such vesting date, one share of Common Stock for each Performance Unit. For purposes of such settlement, the number of Performance Units will be rounded to the nearest whole Performance Unit, with any fractional Performance Unit less than 0.5 disregarded.

5. Forfeiture . If the Performance Criterion specified in Section 2 is not satisfied as of any scheduled vesting date, then the Performance Units scheduled to vest on that date will be terminated and forfeited. In addition, if your employment with the Company ends for any reason other than (i) death, (ii) Disability, (iii) termination by the Company without Cause, or (iv) termination by you for Good Reason, then all Performance Units then credited to your Account that have not yet vested will be terminated and forfeited.

6. Dividends and Other Distributions .

      6.1 Dividends Payable Other than in Common Stock. If the payment date for a dividend declared by the Board and payable in cash or in property other than cash or Common Stock occurs at any time during which you have an outstanding balance of Performance Units in your Account, you will be granted additional Performance Units pursuant to this Section 6.1. As of such dividend payment date, you will have credited to your Account that number of additional Performance Units determined according to the following formula:

      Dividend value per share x Number of Performance Units

For purposes of this formula:

      6.2 Dividends in Common Stock. If the payment date for a dividend declared by the Company’s Board and payable in Common Stock occurs at any time during which you have an outstanding balance of Performance Units in your Account, you will be granted additional Performance Units pursuant to this Section 6.2. As of such dividend payment date, you will have credited to your Account that number of additional Performance Units determined by multiplying the aggregate number of outstanding Performance Units credited to your Account as of the applicable dividend record date by the number of shares of Common Stock payable as a dividend on each outstanding share of Common Stock in connection with such dividend declaration.

      6.3 Treatment of Additional Performance Units. Any additional Performance Units granted under Sections 6.1 or 6.2 are subject to the terms and conditions of this Agreement and the Plan, and specifically will vest and be settled, or forfeited, to the extent and at the time that the underlying Performance Units to which such additional Performance Units relate are subject to vesting, settlement or forfeiture hereunder.

      6.4 Adjustments to Awards. If any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock split, combination of shares, rights offering or divestiture (including a spin-off) or any other similar change in the corporate structure or shares of the Company occurs, the Board, in order to prevent dilution or enlargement of your rights, will make appropriate adjustment (which determination will be conclusive) in the number of Performance Units credited to your Account and/or as to the number and kind of securities or other property (including cash) subject to the Performance Units; provided, however, that any such securities or other property distributable with respect to the Performance Units shall be, unless otherwise determined by the Board, distributed to you in the manner described in Section 4 and shall, together with the Performance Units, otherwise be subject to the provi