-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EjvkjJYNHsc6X7yFni5NAdnvYs4I0UT7O4V2T8r3oDbtk1pjpKmIa9wjguen2pCB SEkoxTEcNJevwtPjT0F0Ug== 0000912057-96-022369.txt : 19961010 0000912057-96-022369.hdr.sgml : 19961010 ACCESSION NUMBER: 0000912057-96-022369 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19961009 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SUPER FOOD SERVICES INC CENTRAL INDEX KEY: 0000095504 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 362407235 STATE OF INCORPORATION: DE FISCAL YEAR END: 0827 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-13346 FILM NUMBER: 96641162 BUSINESS ADDRESS: STREET 1: 3233 NEWMARK DR CITY: DAYTON STATE: OH ZIP: 45342 BUSINESS PHONE: 5134397500 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NASH FINCH CO CENTRAL INDEX KEY: 0000069671 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410431960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 7600 FRANCE AVE STREET 2: PO BOX 355 CITY: SOUTH MINNEAPOLIS STATE: MN ZIP: 55435-0355 BUSINESS PHONE: 6128320534 FORMER COMPANY: FORMER CONFORMED NAME: NASH CO DATE OF NAME CHANGE: 19710617 SC 14D1 1 SC 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ------------------ SUPER FOOD SERVICES, INC. (Name of Subject Company) NFC ACQUISITION CORPORATION NASH-FINCH COMPANY (Bidders) COMMON SHARES, PAR VALUE $1.00 PER SHARE (Title of Class of Securities) 867884 10 8 (CUSIP Number of Class of Securities) NORMAN R. SOLAND, ESQ. NASH-FINCH COMPANY 7600 FRANCE AVENUE SOUTH MINNEAPOLIS, MINNESOTA 55440 (612) 844-1153 (Name, Address and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of Bidders) Copies to: MARK A. KIMBALL, ESQ. OPPENHEIMER WOLFF & DONNELLY 3400 PLAZA VII BUILDING 45 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402 (612) 344-9272 OCTOBER 8, 1996 (Date of Event which Requires Filing of Statement on Schedule 13D) ------------------------ CALCULATION OF REGISTRATION FEE
TRANSACTION VALUATION (1) AMOUNT OF FILING FEE (2) $174,248,272 $34,850
(1) Determined in accordance with Rule 0-11(d) of the Securities Exchange Act of 1934, as amended. This Transaction Valuation assumes, solely for purposes of calculating the filing fee for this Schedule 14D-1, the purchase of 11,241,824 shares of the common shares, par value $1.00 per share (together with the associated preferred share purchase rights, the "Shares"), of Super Food Services, Inc. at $15.50 per Share, net to seller in cash. Such number of Shares represents all of the Shares outstanding as of October 8, 1996 plus the number of shares that may be issued upon the exercise of options and stock purchase rights outstanding as of such date. (2) 1/50 of 1% of Transaction Valuation. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Filing Party: Form or Registration No.: Date Filed:
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 867884 10 8 1. NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: NFC ACQUISITION CORPORATION 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:* (A) / / (B) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS: BK, AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 577,491* 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES: / / 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7): Approximately 5.2%* 10. TYPE OF REPORTING PERSON: CO
* SEE EXPLANATORY NOTE ON PAGE 4. 2 CUSIP NO. 867884 10 8 1. NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: NASH-FINCH COMPANY 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:* (A) / / (B) / / 3. SEC USE ONLY 4. SOURCE OF FUNDS: BK 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 577,491* 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES: / / 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7): Approximately 5.2%* 10. TYPE OF REPORTING PERSON: CO
* SEE EXPLANATORY NOTE ON PAGE 4. 3 EXPLANATORY NOTE This Tender Offer Statement on Schedule 14D-1 relates to an offer by NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), to purchase all of the outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), at $15.50 per share, net to seller in cash without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively (collectively, the "Offer"). The Offer is made pursuant to the Agreement and Plan of Merger dated as of October 8, 1996 among Parent, the Purchaser and the Company (the "Merger Agreement"), a copy of which is attached hereto as Exhibit (c)(1). Parent and the Purchaser and certain of the officers and directors of the Company, including Jack Twyman, the Chairman and Chief Executive Officer, who are stockholders of the Company (the "Tendering Stockholders") have entered into a Stockholder Agreement, dated as of October 8, 1996 (the "Stockholder Agreement"), pursuant to which, upon the terms and conditions set forth therein, the Tendering Stockholders agreed to tender (and not withdraw, subject to certain exceptions) pursuant to the Offer to Purchase and before the Expiration Date (as defined in the Offer to Purchase) all of the Shares owned of record or beneficially by such Tendering Stockholders on the date of the Stockholder Agreement, together with any Shares thereafter acquired by any such Tendering Stockholders prior to the termination of the Stockholder Agreement. The Tendering Stockholders own in the aggregate 577,491 Shares, which represent approximately 5.2% of all Shares outstanding on October 8, 1996. The number of Shares subject to the Stockholder Agreement is reflected in rows 7 and 9 of the tables above. The Stockholder Agreement will remain in effect until the earlier of the following: (i) the date the Merger Agreement is terminated and (ii) the Effective Date (as defined in the Offer to Purchase). The Stockholder Agreement is more fully described in Section 11 ("Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement") of the Offer to Purchase. Neither the Purchaser nor Parent will have any voting or dispositive power with respect to the Shares which are the subject of the Stockholder Agreement until acceptance and payment for such Shares is made pursuant to the Offer to Purchase, and the Purchaser and Parent expressly disclaim beneficial ownership of such Shares. This Tender Offer Statement on Schedule 14D-1 shall also constitute a Schedule 13D with respect to the Stockholder Agreement. A copy of the Stockholder Agreement is filed as Exhibit (c)(2) hereto. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Super Food Services, Inc., a Delaware corporation, and the address of its principal executive office is 3233 Newmark Drive, Dayton, Ohio 45342. (b) The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Market Prices of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) The information set forth in the Introduction, Section 9 ("Certain and (g) Information Concerning the Purchaser and Parent") and Schedule A of the Offer to Purchase is incorporated herein by reference. (e)-(f) The information set forth in Section 9 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. 4 ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section 10 ("Background of the Offer"), Section 11 ("Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement") and Section 13 ("Certain Conditions of the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 12 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in the Introduction, Section 10 ("Background of the Offer"), Section 11 ("Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement") and Section 13 ("Certain Conditions of the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. (f)-(g) The information set forth in Section 7 ("Certain Effects of the Offer") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Company"), Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section 10 ("Background of the Offer") and Section 11 ("Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section 10 ("Background of the Offer"), Section 11 ("Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement") and Section 13 ("Certain Conditions of the Offer and the Merger") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 17 ("Certain Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) None.
5 (b)-(c) The information set forth in Section 2 ("Acceptance of and Payment for Shares") and Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Certain Effects of the Offer") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the related Letter of Transmittal, the Merger Agreement and the Stockholder Agreement, copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2), respectively, is incorporated herein in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated October 9, 1996. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Text of Press Release dated October 8, 1996. (a)(7) Text of Press Release dated October 9, 1996. (a)(8) Form of Summary Advertisement dated October 9, 1996. (a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b)(1) Form of Credit Agreement among Parent, the Purchaser, Harris Trust and Savings Bank as Administrative Agent, and Bank of Montreal and PNC Bank, N.A. as Co-Syndication Agents. (c)(1) Agreement and Plan of Merger dated as of October 8, 1996 among Parent, the Purchaser and the Company. (c)(2) Stockholder Agreement dated as of October 8, 1996 among Parent, the Purchaser and the Tendering Stockholders. (c)(3) Confidentiality Agreement dated February 29, 1996 between the Company and Parent. (d)-(f) Not applicable. 6 SIGNATURES After due inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Dated: October 9, 1996 NASH-FINCH COMPANY By: /s/ Alfred N. Flaten Alfred N. Flaten PRESIDENT AND CHIEF EXECUTIVE OFFICER NFC ACQUISITION CORPORATION By: /s/ Alfred N. Flaten Alfred N. Flaten PRESIDENT
7
EXHIBIT NUMBER DESCRIPTION - --------- ---------------------------------------------------------------------------------------- (a)(1) Offer to Purchase dated October 9, 1996. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Text of Press Release dated October 8, 1996. (a)(7) Text of Press Release dated October 9, 1996. (a)(8) Form of Summary Advertisement dated October 9, 1996. (a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b)(1) Form of Credit Agreement among Parent, Purchaser, Harris Trust and Savings Bank as Administrative Agent, and Bank of Montreal and PNC Bank, N.A. as Co-Syndication Agents. (c)(1) Agreement and Plan of Merger dated as of October 8, 1996 among Parent, the Purchaser and the Company. (c)(2) Stockholder Agreement dated as of October 8, 1996 among Parent, the Purchaser and the Tendering Stockholders. (c)(3) Confidentiality Agreement dated February 29, 1996 between the Company and Parent.
8 EX-99.(A)(1) 2 OFFER TO PURCHASE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. AT $15.50 NET PER SHARE BY NFC ACQUISITION CORPORATION A WHOLLY OWNED SUBSIDIARY OF NASH-FINCH COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF SUPER FOOD SERVICES, INC. HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF SUPER FOOD SERVICES, INC. AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS HEREINAFTER DEFINED) PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED) A NUMBER OF SHARES OF SUPER FOOD SERVICES, INC. WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY NASH-FINCH COMPANY, NFC ACQUISITION CORPORATION AND/OR OTHER SUBSIDIARIES OF NASH-FINCH COMPANY, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS. THE PURCHASER ESTIMATES THAT APPROXIMATELY 5,620,913 SHARES WILL NEED TO BE VALIDLY TENDERED (AND NOT WITHDRAWN) TO SATISFY THIS MINIMUM CONDITION (AS HEREINAFTER DEFINED). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1, 13 AND 16. NASH-FINCH COMPANY HAS ENTERED INTO A STOCKHOLDER AGREEMENT WITH THE DIRECTORS AND CERTAIN OFFICERS OF SUPER FOOD SERVICES, INC., INCLUDING JACK TWYMAN, THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF SUPER FOOD SERVICES, INC., PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH PERSONS HAVE AGREED (SUBJECT TO CERTAIN EXCEPTIONS) TO TENDER IN THE OFFER ALL SHARES OWNED BY THEM, WHICH CONSTITUTE APPROXIMATELY 5.2% OF ALL OUTSTANDING SHARES. ------------------------ IMPORTANT ANY STOCKHOLDER DESIRING TO TENDER ALL OR A PORTION OF SUCH STOCKHOLDER'S SHARES (AS HEREINAFTER DEFINED) SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND MAIL OR DELIVER THE LETTER OF TRANSMITTAL TOGETHER WITH THE CERTIFICATE(S) EVIDENCING SUCH SHARES, AND ANY OTHER REQUIRED DOCUMENTS, TO THE DEPOSITARY OR TENDER SUCH SHARES PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 4, OR (2) REQUEST HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR HIM. A STOCKHOLDER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH STOCKHOLDER DESIRES TO TENDER SUCH SHARES. A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES REPRESENTING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURE FOR GUARANTEED DELIVERY SET FORTH IN SECTION 4. QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION AGENT OR TO THE DEALER MANAGER AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND OTHER RELATED MATERIALS MAY BE DIRECTED TO THE INFORMATION AGENT, THE DEALER MANAGER, OR TO BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES. ------------------------ The Dealer Manager for the Offer is: PIPER JAFFRAY INC. TABLE OF CONTENTS
SECTION PAGE - ----------------------------------------------------------------------------------------------------------- ----- INTRODUCTION............................................................................................... 1 1. Terms of the Offer; Expiration Date.................................................................... 3 2. Acceptance of and Payment for Shares................................................................... 3 3. Withdrawal Rights...................................................................................... 4 4. Procedures for Accepting the Offer and Tendering Shares................................................ 5 5. Certain Income Tax Consequences........................................................................ 8 6. Market Prices of Shares; Dividends..................................................................... 8 7. Certain Effects of the Offer........................................................................... 9 8. Certain Information Concerning the Company............................................................. 10 9. Certain Information Concerning the Purchaser and Parent................................................ 11 10. Background of the Offer................................................................................ 13 11. Purpose of the Offer and Merger; Plans for the Company; the Merger Agreement and Stockholder Agreement..................................................................... 16 12. Source and Amount of Funds............................................................................. 21 13. Certain Conditions of the Offer........................................................................ 22 14. Dividend and Distributions............................................................................. 24 15. Certain Legal Matters.................................................................................. 24 16. Extension of Tender Period, Termination and Amendments................................................. 27 17. Certain Fees and Expenses.............................................................................. 28 18. Miscellaneous.......................................................................................... 28 Schedule A -- Directors and Executive Officers of Parent and the Purchaser................................. A-1
i TO THE HOLDERS OF COMMON STOCK OF SUPER FOOD SERVICES, INC.: INTRODUCTION NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), hereby offers to purchase all outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, unless the context otherwise requires, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), at $15.50 per Share, net to the seller in cash, without any interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares pursuant to the Offer. The Purchaser will pay charges and reimbursable expenses incurred in connection with the Offer by Piper Jaffray Inc., which is acting as the Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), Norwest Bank Minnesota, N.A., which is acting as the Depositary (the "Depositary") and D.F King & Co., Inc., which is acting as the Information Agent (the "Information Agent"). See Section 17. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED) A NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL OF ALL SHARES OUTSTANDING AT THE TIME OF PURCHASE ON A FULLY DILUTED BASIS (INCLUDING ALL SHARES ISSUABLE UPON EXERCISE OF OPTIONS (DEFINED BELOW) OR OTHER STOCK PURCHASE RIGHTS WHICH ARE OUTSTANDING AT THE TIME OF PURCHASE, WHETHER OR NOT SUCH OPTIONS OR OTHER STOCK PURCHASE RIGHTS ARE EXERCISABLE OR FULLY VESTED ("FULLY DILUTED SHARES")) (THE "MINIMUM CONDITION"). SEE SECTION 13. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 8, 1996, by and among the Company, Parent and the Purchaser (the "Merger Agreement"). The Merger Agreement provides, among other things, that as soon as practicable after the consummation of the Offer and the satisfaction of certain conditions, the Purchaser will be merged with and into the Company (the "Merger") and the Company will become a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each then outstanding Share (other than Shares held by Parent, the Purchaser or any of their subsidiaries, or in the treasury of the Company or by any subsidiary of the Company, if any, all of which will be canceled, and other than Shares ("Dissenting Shares") held by stockholders who properly exercise and perfect appraisal rights under the General Corporation Law of the State of Delaware ("DGCL")), will be converted into the right to receive $15.50 in cash, or such higher price per Share as shall have been paid in the Offer. The Merger Agreement is more fully described in Section 11. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ON OCTOBER 8, 1996, LAZARD FRERES & CO. LLC ("LAZARD FRERES"), THE COMPANY'S FINANCIAL ADVISOR, DELIVERED A WRITTEN OPINION TO THE BOARD OF DIRECTORS OF THE COMPANY THAT, BASED UPON AND SUBJECT TO VARIOUS CONSIDERATIONS AND ASSUMPTIONS SET FORTH THEREIN, THE PROPOSED $15.50 PER SHARE CASH CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION WITH THE OFFER AND THE MERGER IS FAIR TO THE STOCKHOLDERS OF THE COMPANY FROM A FINANCIAL POINT OF VIEW. A COPY OF THE OPINION RENDERED BY LAZARD FRERES TO THE BOARD OF DIRECTORS OF THE COMPANY, SETTING FORTH THE PROCEDURES FOLLOWED, THE MATTERS CONSIDERED, THE SCOPE OF THE REVIEW UNDERTAKEN AND THE ASSUMPTIONS MADE BY LAZARD FRERES IN ARRIVING AT ITS OPINION, IS ATTACHED AS AN EXHIBIT TO THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 THAT IS BEING MAILED TO THE COMPANY'S STOCKHOLDERS HEREWITH. The consummation of the Merger is subject to the satisfaction or waiver of a number of conditions, including, if required by law, the approval and adoption of the Merger Agreement by the stockholders of the Company. If the Minimum Condition is satisfied, the Purchaser will have sufficient voting power under the DGCL to effect the Merger without the concurrence of any other stockholder of the Company. Under the Merger Agreement, Parent and the Purchaser have agreed to vote all Shares acquired in the Offer in favor of the Merger. If at least 90% of the outstanding Shares are purchased in the Offer, the Purchaser will be able to effect a short-form merger under Section 253 of the DGCL without prior notice to, or any action by, any other stockholder of the Company. See Section 11. According to the Company, as of October 8, 1996, there were 10,997,448 Shares issued and outstanding and 197,277 Shares subject to issuance upon the exercise of outstanding options to purchase shares of Common Stock (the "Options") granted under the Company's 1978 Stock Option Plan and 1986 Stock Option Plan (together, the "Option Plans"). In addition, according to the Company, up to 47,099 Shares may be issued under the Company's Employee Stock Purchase Plan (the "Stock Purchase Plan"). Accordingly, 244,376 Shares issuable upon the exercise of such Options or reserved for issuance under the Stock Purchase Plan are included in the Fully Diluted Shares. According to the Company, 180,272 of such Shares are issuable pursuant to Options with an exercise price of less than $15.50 per Share. Based on the foregoing, and assuming the number of Fully Diluted Shares would be 11,241,824, the Purchaser would need to purchase 5,620,913 Shares for the Minimum Condition to be satisfied. The Purchaser reserves the right (but is not obligated), subject to the rules and regulations of the Securities and Exchange Commission (the "Commission"), to waive or amend the Minimum Condition and to purchase pursuant to the Offer fewer than the number of Shares necessary to satisfy the Minimum Condition. The Merger Agreement requires the Company's consent to a waiver of the Minimum Condition. See Section 1. As of the date of this Offer to Purchase, the Company's Series A Preferred Share Purchase Rights (the "Rights"), issued pursuant to the Rights Agreement, dated as of January 27, 1989, as amended, between the Company and Chase Manhattan Bank, N.A., as Rights Agent (the "Rights Agreement"), are evidenced by the certificates representing Shares. The Company has informed Parent, however, that the Rights will not become exercisable as a result of the Offer or the Merger, or as a result of the transactions contemplated thereby, because the Company's Directors, after receiving advice from a nationally recognized investment banking firm selected by the Board of Directors, has determined that the acquisition of the Shares by the Purchaser is at a price and on terms that are fair to the Company's stockholders and is otherwise in the best interests of the Company and its stockholders, and has unanimously approved the Offer, the Merger Agreement, the acquisition of the Shares and the Merger so that the Rights will not become exercisable as a result of the Offer or the Merger. The Company has further represented in the Merger Agreement that the Rights Agreement has been amended to provide that neither Parent nor the Purchaser will be deemed to be an Acquiring Person or a Beneficial Owner (as such terms are defined in the Rights Agreement). Pursuant to the Merger Agreement, the Company has agreed, immediately prior to the consummation of the purchase of Shares pursuant to the Offer, if requested by Parent, to redeem all of the outstanding Rights. Should the Rights be so redeemed, record holders of Rights will be entitled only to the payment of the redemption price therefor ($0.02 per Right). Unless the Rights are so redeemed, by tendering Shares pursuant to the Offer, a stockholder will also be tendering the associated Rights. Therefore, acceptance for payment of, and payment for, Shares by the Purchaser will also constitute the concurrent purchase of such Rights; accordingly, no additional or separate consideration will be paid for Rights so purchased. See Section 3. Simultaneously with entering into the Merger Agreement, Parent and the Purchaser entered into a Stockholder Agreement (the "Stockholder Agreement") with the directors and certain officers of the Company (the "Tendering Stockholders"), including Jack Twyman, the Chairman of the Board and Chief Executive Officer. Pursuant to the Stockholder Agreement, each Tendering Stockholder has agreed to tender pursuant to the Offer and before the Expiration Date all of the Shares owned of record or beneficially by such Tendering Stockholder on the date of the Stockholder Agreement, together with any Shares acquired by any such Tendering Stockholder prior to the termination of the Stockholder Agreement. As of the date hereof, the Tendering Stockholders beneficially owned 577,491 Shares, or approximately 5.2% of all outstanding Shares. 2 The Merger Agreement and the Stockholder Agreement are more fully described in Section 11 of this Offer to Purchase. Stockholders are encouraged to read that Section carefully, together with all other terms and conditions of the Offer, before deciding whether to tender their Shares. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING. ANY SUCH SOLICITATION WOULD BE MADE ONLY PURSUANT TO SEPARATE PROXY OR SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the conditions set forth in the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and will pay for any and all Shares validly tendered on or prior to the Expiration Date and not withdrawn in accordance with Section 3 of this Offer to Purchase. The term "Expiration Date" means 12:00 midnight, New York City time, on Wednesday, November 6, 1996, unless the Purchaser, in its sole discretion, shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. See Section 16. The Offer is subject to certain conditions set forth in Section 13, including satisfaction of the Minimum Condition and the expiration or termination of the waiting period applicable to the Purchaser's acquisition of Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If any condition to the Purchaser's obligation to purchase shares is not satisfied prior to the payment for any such Shares, the Purchaser may (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth in Section 3, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn, or (iv) delay acceptance for payment of or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions of the Offer. The Merger Agreement provides that, unless previously approved by the Company, and subject to certain rights of the Purchaser to extend the Offer, the Purchaser will not reduce the price to be paid per Share pursuant to the Offer, change the form of consideration to be paid in the Offer or the Merger, increase or waive the Minimum Condition, change the Expiration Date, or amend the terms of the Offer (including any of the conditions set forth in Section 13) in a manner that is materially adverse to the holders of Shares. For a description of the Purchaser's right to extend the period of time during which the Offer is open, and to amend, delay or terminate the Offer, see Section 16. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE OF AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will purchase, by accepting for payment, and will pay for, any and all Shares 3 validly tendered and not withdrawn following the later of (i) the expiration or termination of all waiting periods under the HSR Act that are applicable to the purchase of Shares pursuant to the Offer, and (ii) the Expiration Date. In addition, the Purchaser expressly reserves the right, in its sole discretion, to delay the acceptance of or payment for Shares in order to comply, in whole or in part, with any applicable law. See Section 15. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares or timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's account at The Depository Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 4, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment (and thereby purchased) tendered Shares as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. Payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payments to tendering stockholders. The Purchaser will not, under any circumstances, pay any interest on the purchase price, regardless of any delay in making such payment. If any tendered Shares are not purchased pursuant to the Offer, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of book-entry transfer within a Book-Entry Transfer Facility, such Shares will be credited to an account maintained within such Book-Entry Transfer Facility), as promptly as practicable after the expiration or termination of the Offer. The Purchaser will pay all stock transfer taxes, if any, payable with respect to the transfer to it of Shares purchased pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if unpurchased Shares are to be registered in the name of any person other than the registered holder (in the circumstances permitted by the Offer), or if tendered certificates are registered in the name of any person other than the person signing any Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of such payment or transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. The Purchaser expressly reserves the right to transfer or assign to Parent or to one or more of Parent's direct or indirect wholly owned subsidiaries the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but no such transfer or assignment will relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. If, prior to the Expiration Date, the Purchaser shall decide, in its sole discretion, to increase the consideration offered to stockholders pursuant to the Offer, such increased consideration shall be paid to all holders of Shares accepted for payment and paid for pursuant to the Offer. 3. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will be irrevocable, except that Shares tendered may be withdrawn at any time prior to the Expiration Date and, unless previously accepted for payment, may also be withdrawn after December 7, 1996. If the Purchaser is delayed in its acceptance or purchase of or payment for Shares or is unable to purchase or pay for Shares for any reason, then, without prejudice to the Purchaser's rights under Sections 1, 13 and 16, tendered Shares may be retained by the Depositary on behalf of the Purchaser and may not be withdrawn except as permitted by this Section 3 and subject to Rule 14e-1(c) under the Exchange Act. See Section 16. 4 For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses specified on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and, if certificates representing such Shares have been delivered or otherwise identified to the Depositary, the name(s) in which such certificate(s) is (are) registered, if different from the name of the person tendering such Shares. If certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must also submit the serial numbers shown on the particular certificates evidencing such Shares and the signature on the notice of withdrawal must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. ("NASD"), a commercial bank or trust company having an office, branch or agency in the United States or any other institution that is a member of the Medallion Signature Guaranty Program (each being referred to herein as an "Eligible Institution"). If Shares have been tendered pursuant to the procedure for book-entry tender as set forth in Section 4, the notice of withdrawal must specify the name and account number(s) of the account(s) at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. None of Parent, the Purchaser, the Dealer Manager, the Depositary or the Information Agent will be obligated to give notice of any defects or irregularities in any notice of withdrawal, nor shall any of them incur any liability for failure to give any such notice. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. Withdrawals of Shares tendered may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Withdrawn Shares, however, may be retendered by following one of the procedures described in Section 4 at any time prior to the Expiration Date. 4. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. VALID TENDER: In order for a holder of Shares to validly tender Shares pursuant to the Offer, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), together with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase, on or prior to the Expiration Date. Either (i) the certificates for such Shares must be delivered to the Depositary or (ii) such Shares must be tendered pursuant to the procedure for book-entry transfer set forth below and a Book-Entry Confirmation must be received by the Depositary (including an Agent's Message (as defined below), if the tendering stockholder has not delivered a Letter of Transmittal), in each case on or prior to the Expiration Date. Delivery of documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. Alternatively, the tendering stockholder may comply with the guaranteed delivery procedure set forth below. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from a participant in the system established by such Book-Entry Transfer Facility tendering the Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such Letter of Transmittal against such participant. Unless the Rights are redeemed prior to the expiration of the Offer, holders of Shares are also required to tender one Right for each Share tendered to effect a valid tender of such Share. Until the Rights have separated from the Shares, a tender of Shares pursuant to the Offer will constitute a tender of the associated Rights evidenced by the certificates for such Shares. If Rights certificates have been distributed to holders of Shares prior to the date of tender pursuant to the Offer, Rights certificates 5 representing a number of Rights equal to the number of Shares being tendered must be delivered to the Depositary in order for such Shares to be validly tendered. If the Rights have separated from the Shares, but the Rights certificates have not been distributed prior to the time Shares are tendered pursuant to the Offer, a tender of Shares constitutes an agreement by the tendering stockholder to deliver Rights certificates representing a number of Rights equal to the number of Shares tendered to the Depositary within three New York Stock Exchange ("NYSE") trading days after the date Rights certificates are distributed. The Purchaser reserves the right to require that it receive such Rights certificates prior to accepting Shares for payment. In all cases, payment for Shares tendered and purchased pursuant to the Offer will be made only after timely receipt by the Depositary of, among other things, Rights certificates, if such Rights certificates have been distributed to holders of Shares. If Rights certificates are distributed, the Purchaser will deliver to holders of Shares supplemental materials for use in connection with the tendering of Rights certificates. Should the Rights be redeemed, the $.02 per Right redemption price would be payable to the tendering stockholder with respect to Rights associated with Shares accepted for payment pursuant to the Offer BOOK-ENTRY TRANSFER: The Depositary will establish an account with respect to the Shares at each Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in a Book-Entry Transfer Facility's system may make book-entry transfer of the Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedure for such transfer. Even if delivery of Shares is to be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed facsimile thereof) along with any required signature guarantees and any other required documents, or an Agent's Message, must be transmitted to and received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase on or prior to the Expiration Date, or the stockholder must comply with the guaranteed delivery procedure set forth below. SIGNATURE GUARANTEES. If the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and payment is to be made directly to such registered holder, or if Shares are tendered for the account of an Eligible Institution, no signature guarantee is required. In all other cases, signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. If certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not accepted for payment or not tendered are to be returned to a person other than the registered holder, then certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or the names of the registered owner or owners appear on certificates, with the signature(s) on the certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such holder's certificates are not immediately available, or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tenders are made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser is received by the Depositary as provided below by the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer (or a Book-Entry Confirmation), together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) with any required signature guarantee and any other documents 6 required by the Letter of Transmittal, or an Agent's Message, are received by the Depositary within three NYSE trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand, or may be transmitted by facsimile transmission, or by mail, to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. In all cases, payment for Shares tendered and purchased pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a timely Book-Entry Confirmation), a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by the Letter of Transmittal. OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth above, a tendering stockholder irrevocably appoints designees of the Purchaser as his proxies, in the manner set forth in the Letter of Transmittal, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and purchased by the Purchaser (and any and all other Shares and other securities issued or issuable in respect thereof on or after October 9, 1996) prior to the time of any stockholder vote or other action. All such proxies shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment. Upon such appointment, all prior proxies given by such stockholder with respect to such purchased Shares or other securities will be revoked and no subsequent proxies may be given. The designees of the Purchaser will, with respect to such Shares and other securities, be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent or otherwise. The Purchaser reserves the right to require that, in order for Shares to be validly tendered, immediately upon the acceptance for payment of such Shares, the Purchaser be able to exercise full voting and other rights of a record and beneficial holder, including rights in respect of acting by written consent, with respect to such Shares (and any and all other securities as set forth above). THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS TO BE BY MAIL, INSURED REGISTERED MAIL, RETURN RECEIPT REQUESTED IS RECOMMENDED. AMPLE TIME SHOULD BE ALLOWED FOR SUCH DOCUMENTS TO REACH THE DEPOSITARY. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 4, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. BACK-UP FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. To prevent such backup federal income tax withholding, each such stockholder must provide the Depositary with his correct taxpayer identification number and certify that such stockholder is not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. DETERMINATION OF VALIDITY. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser and Parent, in their sole discretion, whose determination will be final and binding. The Purchaser and Parent reserve the absolute right to reject any or all tenders determined by them not to be in proper form or the acceptance of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser and Parent also reserve the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Shares or any particular stockholder. No tender of Shares will be deemed to have been validly made until all defects and irregularities relating thereto have been cured or waived. None of Parent, the Purchaser, the Dealer Manager, the Depositary or the Information Agent will be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. The Purchaser's and Parent's interpretation of the terms and 7 conditions of the Offer (including the Letter of Transmittal and instructions thereto) will be final and binding. 5. CERTAIN INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer or for Shares pursuant to the Merger will be taxable for federal income tax purposes and may be taxable under applicable state, local, foreign and other tax laws. The tax consequences of such receipt may vary depending upon, among other things, the particular circumstances of the stockholder. In general, a stockholder will recognize gain or loss equal to the difference between the amount of cash received and his tax basis for his Shares. Such gain or loss will generally be capital gain or loss provided that such stockholder held his Shares as a capital asset, and will be long-term capital gain or loss if, on the date of sale, such Shares were held for more than one year. Otherwise, such gain or loss will be short-term capital gain or loss. The foregoing may not be applicable to stockholders who acquired their Shares pursuant to the exercise of employee stock options or otherwise as compensation or who are not citizens or residents of the United States or who are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended (the "Code") (such as life insurance companies, tax exempt entities and regulated investment companies). THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISORS TO DETERMINE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO SUCH STOCKHOLDER, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS. 6. MARKET PRICES OF SHARES; DIVIDENDS. The Shares are traded on the NYSE under the symbol "SFS." The following table sets forth, for the fiscal periods shown, the range of high and low sales prices for the Shares as listed on the NYSE for such periods, in each case as reported by published financial sources, and the cash dividend paid by the Company for each such quarter.
QUARTERLY HIGH LOW DIVIDEND -------- -------- --------- YEAR ENDED AUGUST 27, 1994 1st Quarter (12 weeks).......................... $ 13 $ 101/4 $ .09 2nd Quarter (12 weeks).......................... $ 137/8 $ 125/8 $ .09 3rd Quarter (12 weeks).......................... $ 143/8 $ 113/4 $ .09 4th Quarter (16 weeks).......................... $ 14 $ 101/2 $ .09 YEAR ENDED AUGUST 26, 1995 1st Quarter (12 weeks).......................... $ 121/4 $ 103/8 $ .095 2nd Quarter (12 weeks).......................... $ 121/4 $ 101/4 $ .095 3rd Quarter (12 weeks).......................... $ 115/8 $ 101/4 $ .095 4th Quarter (16 weeks).......................... $ 137/8 $ 101/2 $ .095 YEAR ENDING AUGUST 31, 1996 1st Quarter (12 weeks).......................... $ 121/4 $ 14 $ .095 2nd Quarter (12 weeks).......................... $ 113/4 $ 133/4 $ .10 3rd Quarter (12 weeks).......................... $ 11 $ 13 $ .10 4th Quarter (17 weeks).......................... $ 10 $ 123/4 $ .10
On October 7, 1996, the last full day of trading prior to the announcement of the Purchaser's intention to make the Offer, the last reported sale price for the Shares, as reported on the NYSE, was $11.25 per Share, according to published sources. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET PRICES FOR THE SHARES. 8 7. CERTAIN EFFECTS OF THE OFFER. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may also be expected to reduce the number of holders of Shares. Such reductions could adversely affect the liquidity and market value of the remaining Shares held by the public, if any. STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NYSE for continued listing. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of record holders of at least 100 Shares were to fall below 1,200, the number of publicly held Shares (exclusive of management or other concentrated holdings) were to fall below 600,000 or the aggregate market value of publicly held Shares were to not exceed $5 million. According to the Company, as of October 8, 1996, there were 10,997,448 Shares outstanding. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NYSE for continued listing and the Shares are no longer listed, the market for Shares could be adversely affected. If the NYSE were to delist the Shares, it is possible that the Shares would continue to trade on other securities exchanges or in the over-the-counter market and that price quotations would be reported by such exchanges or through the Nasdaq Stock Market or other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. EXCHANGE ACT REGISTRATION. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Securities and Exchange Commission (the "Commission") if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of Shares. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and the Commission and would make certain provisions of the Exchange Act (such as the short-swing profit recovery provisions of Section 16(b) and the requirement of furnishing a proxy or information statement in connection with stockholders' meetings pursuant to Section 14(a) or (c) and the related requirement of an annual report) no longer applicable to the Company. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended (the "Securities Act"), may be impaired or, with respect to certain persons, eliminated. If, as a result of purchases pursuant to the Offer or otherwise, the Company is no longer required to maintain registration of the Shares under the Exchange Act, the Purchaser intends to cause the Company to apply for termination of such registration. MARGIN REGULATIONS. The Shares are presently "margin securities" under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such securities for the purpose of buying, carrying or trading in securities ("Purpose Loans"). In the event that the Shares were no longer listed on the NYSE (which depends on factors such as the number of holders of the Shares and the number and market value of publicly-held Shares (see "Stock Quotation" above)), it is possible the Shares may no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations and, therefore, could no longer be used as collateral for Purpose Loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute "margin securities." RULE 13E-3. The Commission has adopted Rule 13e-3 under the Exchange Act, which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or other transactions following the purchase of Shares pursuant to the Offer in which the 9 Purchaser seeks to acquire the remaining shares not held by it. However, Rule 13e-3 would be inapplicable if (i) the Shares are deregistered under the Exchange Act prior to the Merger or other transactions or (ii) the Merger or another business combination is consummated within one year after the purchase of the Shares pursuant to the Offer and the amount paid per Share for each class of Share in the Merger or other business combination is at least equal to the amount paid per Share for such class of Shares in the Offer. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the fairness of the proposed transaction and the consideration offered to minority stockholders in such transaction be filed with the Commission and disclosed to stockholders prior to the consummation of the transaction. 8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Delaware corporation with its principal executive offices located at 3233 Newmark Drive, Dayton, Ohio 45342, telephone (513) 439-7500. According to information filed by the Company with the Commission, the Company is primarily engaged in the wholesale distribution of groceries. Set forth below is a summary of certain selected financial information with respect to the Company and its subsidiaries for the fiscal years ended on August 26, 1995, August 27, 1994 and August 28, 1993 and for the thirty-six weeks ended May 4, 1996 and May 6, 1995, which has been excerpted or derived from the audited consolidated financial statements contained in the Company's Annual Reports on Form 10-K for the fiscal years ended on August 26, 1995, August 27, 1994 and August 28, 1993, and from unaudited consolidated financial statements contained in the Company's Quarterly Report on Form 10-Q for the thirty-six weeks ended May 4, 1996. More comprehensive financial information is included in such reports and other documents filed by the Company with the Commission, and the following summary is qualified in its entirety by reference to such documents and all of the financial statements and related notes contained therein. SUPER FOOD SERVICES, INC. SELECTED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
36 WEEKS ENDED FISCAL YEAR ENDED ---------------------- ---------------------------------------- MAY 4, MAY 6, AUGUST 26, AUGUST 27, AUGUST 28, 1996 1995 1995 1994 1993 ---------- ---------- ------------ ------------ ------------ (UNAUDITED) INCOME STATEMENT DATA: Sales and other income....................... $ 815,512 $ 792,439 $ 1,154,955 $ 1,130,095 $ 1,165,520 Total costs and expenses..................... 804,421 782,330 1,140,144 1,115,844 1,150,362 Income before income taxes................... 11,091 10,109 14,811 14,251 15,158 Net income................................... 6,846 6,170 9,065 8,827 9,216 Earnings per share........................... $ .62 $ .56 $ .83 $ .81 $ .85 Average shares outstanding................... 10,983 10,949 10,949 10,943 10,893 BALANCE SHEET DATA: Total current assets......................... $ 174,262 $ 175,211 $ 157,325 $ 160,480 $ 157,858 Total assets................................. 274,259 276,298 256,899 259,344 248,238 Total current liabilities.................... 71,556 80,783 57,333 67,048 54,988 Long-term debt............................... 35,000 35,405 35,000 31,602 34,867 Total stockholders' equity................... 141,893 136,024 137,878 132,973 127,641
The information concerning the Company contained in this Offer to Purchase or incorporated herein by reference has been taken from or based upon publicly available documents and records on file with the Commission and other public sources or was provided by the Company. Although the Purchaser has no 10 knowledge that would indicate that any statements contained herein based on such documents and records are untrue, neither Parent nor the Purchaser can take responsibility for the accuracy or completeness of the information contained in such documents and records, or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information which are unknown to Parent or the Purchaser. The Company is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's business, principal physical properties, capital structure, material pending legal proceedings, operating results, financial condition, the Company's directors and officers, their remuneration, stock options and restricted stock granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters, is required to be disclosed in proxy statements and annual reports distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information may be inspected at the Commission's public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection at the following regional offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and copies may be obtained, by mail, for prescribed rates from the principal office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. 9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser is a newly incorporated Delaware corporation and a wholly owned subsidiary of Parent. To date, the Purchaser has engaged in no activities other than those in connection with the Offer. The principal executive offices of the Purchaser and Parent are located at 7600 France Avenue South, Edina, Minnesota 55435, telephone (612) 832-0534. The name, business address, citizenship, present principal employment or occupation and em-ployment history for the past five years of each of the directors and executive officers of the Purchaser and Parent are set forth in Schedule A to this Offer to Purchase. Parent, a Delaware corporation, was organized in 1921 as the successor to a business founded in 1885. Parent is one of the largest food wholesalers in the United States, serving approximately 1,400 affiliated and other independent retail supermarkets, other retail stores and outlets, and institutional accounts, such as military base commissaries, restaurants, schools and hospitals, as of December 1995. Parent also owns and operates 113 of its own supermarkets and warehouse stores, as of December 1995. Except as set forth in this paragraph or elsewhere in this Offer to Purchase, neither the Purchaser nor Parent nor, to the best of their knowledge, any of the persons listed in Schedule A hereto nor any associate or majority owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire any equity securities of the Company, and neither the Purchaser nor Parent nor, to the best of their knowledge, any of the persons or entities referred to above, nor any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in such equity securities during the past 60 days. Except as set forth in this Offer to Purchase, neither the Purchaser nor Parent nor, to the best of the knowledge of Parent and the Purchaser, any of the persons listed in Schedule A hereto, has any contract, arrangement, understanding or relationship (whether or not legally enforceable) with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any of such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions which have occurred since August 29, 1993, between Parent, the Purchaser, or any of Parent's other subsidiaries or, to the best of the knowledge of Parent and the Purchaser, any of the persons listed in Schedule A hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning: a merger, consolidation or acquisition; a tender offer or other acquisition of securities; an 11 election of directors; or a sale or other transfer of a material amount of assets. Except as described in this Offer to Purchase, neither the Purchaser nor Parent nor, to the best of the knowledge of Parent and the Purchaser, any of the persons listed in Schedule A hereto, has since August 29, 1993 had any transaction with the Company or any of its executive officers, directors or affiliates which would require disclosure under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, during the last five years, neither the Purchaser nor Parent nor, to the best knowledge of Parent and the Purchaser, have any of the persons listed on Schedule A (i) been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding been or become subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. Until immediately prior to the time the Purchaser purchases the Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer. Because the Purchaser is a newly formed corporation and has minimal assets and capitalization, no meaningful financial information regarding the Purchaser is available. Parent is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning Parent's business, principal physical properties, capital structure, material pending legal proceedings, operating results, financial condition, directors and executive officers, their remuneration, stock options granted to them, the principal holders of Parent's securities and any material interest of such persons in transactions with Parent and other matters is required to be disclosed in proxy statements and annual reports distributed to Parent's stockholders and filed with the Commission. Such reports, proxy statements and other information may be examined, and copies may be obtained from the Commission in the same manner set forth in Section 8 with respect to information concerning the Company. Set forth below is a summary of certain selected financial information of Parent and its subsidiaries for the fiscal years ended December 30, 1995, December 31, 1994 and January 1, 1994 and for the 24 week periods ended June 15, 1996 and June 17, 1995, which has been excerpted or derived from the audited consolidated financial statements contained in Parent's Annual Report on Form 10-K for the fiscal years ended December 30, 1995 and December 31, 1994 and from unaudited financial information contained in the Company's Quarterly Report on Form 10-Q for the quarter ended June 15, 1996. More comprehensive financial information is included in such reports and other documents filed by Parent with the Commission, and the following summary is qualified in its entirety by reference to such documents and all of the financial statements and related notes contained therein. 12 NASH-FINCH COMPANY SELECTED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
24 WEEKS ENDED FISCAL YEAR ENDED -------------------------- ---------------------------------------- JUNE 15, JUNE 17, DECEMBER 30, DECEMBER 31, JANUARY 1, 1996 1995 1995 1994 1994 ------------ ------------ ------------ ------------ ------------ (UNAUDITED) INCOME STATEMENT DATA: Total revenues.......................... $ 1,419,736 $ 1,300,112 $2,888,836 $2,832,000 $ 2,723,535 Cost of sales........................... 1,228,460 1,109,894 2,469,841 2,410,292 2,325,249 Selling, general and administrative and other operating expenses.............. 155,521 156,709 350,201 352,683 332,349 Interest expense........................ 6,003 5,585 10,793 11,384 10,114 Earnings before income taxes............ 14,952 14,354 28,595 25,810 26,678 Net earnings............................ 8,896 8,541 17,414 15,480 15,874 Earnings per share...................... $ 0.82 $ 0.79 $ 1.60 $ 1.42 $ 1.46 Weighted average number of common shares outstanding........................... 10,905 10,875 10,875 10,873 10,872 BALANCE SHEET DATA (AT END OF PERIOD): Total current assets.................... $ 360,127 $ 309,189 $ 311,690 $ 309,522 $ 294,925 Total assets............................ 616,509 524,648 514,260 531,604 521,654 Total current liabilities............... 234,998 210,586 207,688 220,065 215,021 Long-term debt.......................... 141,378 83,583 71,030 85,289 89,811 Total stockholders' equity.............. 220,403 210,902 215,313 206,269 199,264
10. BACKGROUND OF THE OFFER: On January 16, 1996, Mr. Alfred N. Flaten, the President and Chief Executive Officer of Parent, was approached by Dr. Thomas S. Haggai, a member of the Board of Directors of the Company, to determine whether Parent was interested in exploring the possibility of acquiring the Company. Mr. Flaten responded that Parent was interested in exploring such a transaction. On January 22, 1996, Mr. Jack Twyman, the Chairman of the Board and Chief Executive Officer of the Company, telephoned Mr. Flaten to introduce himself, and the parties began to discuss the possibilities of a business combination between Parent and the Company. On February 12, 1996, Mr. Flaten informed members of an ad hoc committee of the Board of Directors of Parent of his conversations with Dr. Haggai and Mr. Twyman concerning a possible acquisition of the Company. On February 14, 1996, Mr. Flaten met with representatives of KPMG Peat Marwick to discuss various possible acquisition candidates for Parent, including the Company. On February 29, 1996, Parent and the Company executed a Confidentiality Agreement pursuant to which, among other things, Parent agreed to maintain the confidentiality of certain information to be provided by the Company. In addition, Parent agreed for a period of two years not to acquire or make any offer to acquire any securities or property of the Company without the approval of the Board of Directors of the Company. Following the execution of the Confidentiality Agreement, Messrs. Flaten and Twyman spoke briefly concerning the possible benefits of a business combination between Parent and the Company and Mr. Twyman indicated that the Company would forward various confidential information concerning 13 the Company to Parent for evaluative purposes. From approximately the middle of March through early April 1996, representatives of Parent received and reviewed confidential information concerning the Company and requested additional information from the Company. On April 9, 1996, at a meeting of the Board of Directors of Parent, the Board discussed briefly the topic of a possible acquisition of the Company, but no action of any kind was taken in connection therewith. Throughout April and early May 1996, senior management of Parent continued to receive, review and evaluate information concerning the Company and potential synergies that may arise from a business combination between Parent and the Company. On May 7, 1996, Mr. David Collins, the Director of Financial Planning of Parent, met with representatives of senior management of the Company, including Mr. Twyman, Mr. John Demos, the Vice Chairman of the Board, Secretary and General Counsel of the Company, and Mr. Robert F. Koogler, the Senior Vice President--Finance, Treasurer and Assistant Secretary of the Company to discuss in detail various aspects of the confidential information that had been provided to Parent and to discuss operations of the Company. At a meeting of the Board of Directors of Parent on May 14, 1996, Mr. Flaten advised the Board concerning the preliminary discussions and financial analyses that had been undertaken by the senior management of Parent. Mr. Flaten was instructed by the Board of Directors of Parent to determine the valuation of the Company and to engage independent financial advisors to assist Parent in analyzing the value of the Company to Parent. On May 16, 1996, members of senior management of Parent, including Mr. Flaten, Mr. Collins, Mr. John R. Scherer, the Vice President and Chief Financial Officer of Parent, and Mr. Norman R. Soland, the Vice President, Secretary and General Counsel of Parent, met in Chicago, Illinois with Messrs. Twyman, Demos and Koogler concerning Parent's continuing due diligence and financial analyses concerning the possible business combination between Parent and the Company. In early June 1996, Parent interviewed various independent financial advisory firms and a market survey firm to conduct a survey and market study of the Company's customer base. In July 1996, KPMG Peat Marwick ("KPMG") was engaged by Parent to conduct a due diligence investigation of the Company and to advise Parent concerning the valuation of the Company and Piper Jaffray Inc. ("Piper Jaffray"), a nationally-recognized investment banking firm, was engaged by Parent to provide various investment banking services, including, if requested, the delivery of a fairness opinion with respect to a proposed transaction with the Company. On July 24 and 25, 1996 representatives of KPMG conducted due diligence investigations at the offices of the Company's independent auditors in Cincinnati, Ohio and met with Messrs. Koogler and Demos concerning due diligence matters. Also on July 25, 1996, Mr. Flaten and Mr. Twyman had extensive discussions regarding various due diligence matters. On July 30, 1996, representatives of KPMG, representatives of Piper Jaffray and Mr. Collins met at the offices of the Company's independent auditors in Cincinnati to discuss various due diligence matters. Throughout August and early September 1996, representatives of Parent and representatives of the Company continued to discuss various due diligence matters and potential synergies that might arise from a business combination. In addition, senior management of Parent had various meetings with representatives of KPMG and Piper Jaffray concerning the results of the due diligence investigations and various financial and valuation analyses conducted by KPMG and Piper Jaffray. On September 4, 1996, members of senior management of Parent together with representatives of KPMG and Piper Jaffray met with members of senior management of the Company. Representatives of Lazard Freres also attended the meeting. At this meeting, representatives of Parent made a presentation to the Company concerning the various financial and valuation analyses undertaken by Parent, the conclusion of which was that a price of $15.10 per Share was considered by Parent to be fair to the respective parties. Mr. Twyman responded that he believed a price of approximately $16.00 per Share was fair to the 14 respective parties. In addition to these preliminary valuation discussions, the parties discussed various other aspects of a possible business combination, including timing, structure, potential synergies arising from a combination, employee benefit and severance arrangements and management following the combination. On September 16, 1996, members of senior management of Parent and Mr. Twyman met with representatives of various financial institutions concerning the arranging of financing for the possible acquisition of the Company by Parent. Also on September 16, 1996, Messrs. Flaten and Soland and Parent's legal advisors met with Messrs. Twyman and Demos and the Company's legal advisors concerning various aspects of a possible business combination, including timing, structure, employee benefits and severance issues, continuing due diligence and financing. On September 19, 1996, Mr. Flaten and Mr. Twyman met and discussed various aspects of the possible acquisition, including pricing, the structure of the transaction, various employee benefits and severance issues and various due diligence matters. On September 24, 1996, at a meeting of the Board of Directors of Parent, the possible acquisition of the Company by Parent was discussed at length, including the status of the discussions between the respective companies and the status of the financing arrangements. The Board of Directors of Parent authorized Mr. Flaten to continue discussions concerning the acquisition within the range of prices that had been established as a result of the previous discussions between the principals of the respective companies. Over the next several days, Mr. Flaten and Mr. Twyman had various conversations concerning various aspects of the acquisition, including pricing, lock-up arrangements and break-up fees and expenses. As a result of these discussions, Mr. Flaten and Mr. Twyman each agreed to recommend to their respective Boards of Directors that the respective companies enter into an Agreement and Plan of Merger providing for the acquisition of all outstanding Shares at a price of $15.50 per Share. On October 2, 1996, the Board of Directors of the Company met and representatives of senior management of the Company, its legal advisors and Lazard Freres made various presentations concerning the proposed transaction and the status of the negotiations. The Board of Directors of the Company authorized Mr. Twyman to continue negotiations with Parent. Throughout the first week in October, representatives of the respective companies and their legal advisors continued to negotiate the terms of the proposed Agreement and Plan of Merger. On the morning of October 8, 1996, after completion of the negotiations concerning the proposed Agreement and Plan of Merger, the Board of Directors of the Company held a special meeting to review, with the advice and assistance of the Company's legal advisors and Lazard Freres, the proposed Agreement and Plan of Merger and the transactions contemplated thereby, including the Offer and the Merger. At the meeting, counsel to the Company reviewed the terms of the Merger Agreement and Lazard Freres presented an update of its financial analyses and rendered to the Board its written opinion that, based upon and subject to various considerations and assumptions set forth therein, the cash consideration of $15.50 per Share to be received by the holders of the Shares pursuant to the Merger Agreement is fair from a financial point of view to such stockholders. Following a number of questions from, and discussion among the directors, the Company's Board of Directors unanimously (i) approved the Merger Agreement and the transactions contemplated thereby and authorized the execution and delivery thereof, (ii) determined that the Offer and the Merger, taken together, are fair to, and in the best interests of, the Company and its stockholders, and (iii) recommended that the Company's stockholders accept the Offer and tender their Shares to Purchaser. Simultaneously with the meeting of the Board of Directors of the Company on October 8, 1996, the Board of Directors of Parent held a special meeting to review, with the advice and assistance of Parent's 15 financial and legal advisors, the proposed Agreement and Plan of Merger and the transactions contemplated thereby, including the Offer and the Merger. At such meeting, Parent's management, financial advisors and legal advisors made presentations to the Board concerning the transaction and Parent's financial advisor, Piper Jaffray, provided its written opinion to the effect that the consideration to be paid by Parent pursuant to the Merger Agreement is fair to Parent from a financial point of view. Following a number of questions from, and discussion among the Directors, Parent's Board of Directors unanimously approved the Merger Agreement and the transactions contemplated thereby, and authorized the execution and delivery thereof. Immediately following the respective meetings of the Board of Directors of the Company and Parent, the Agreement and Plan of Merger was executed and delivered by the Company, Parent and Purchaser, and the Company and Parent issued a joint press release concerning the Offer and the Merger Agreement. 11. PURPOSE OF THE OFFER AND MERGER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT AND STOCKHOLDER AGREEMENT. The purpose of the Offer, the Merger and the Merger Agreement is for Parent to acquire control of, and the entire equity interest in, the Company. The Offer is intended to increase the likelihood that such acquisition will be effected and to permit Parent to acquire control of the Company at the earliest practicable date. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. Except as indicated in this Offer to Purchase, the Purchaser has no present plans or proposals which relate or would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations, or sale or transfer of assets, involving the Company or any of its subsidiaries, or any material changes in the Company or any of its subsidiaries, or any material changes in the Company's corporate structure, capitalization or business or the composition of its management or personnel. Following completion of the Merger, Jack Twyman, Chairman of the Board and Chief Executive Officer of the Company, and John Demos, Vice Chairman of the Board, Secretary and General Counsel, will leave the Company, although Mr. Twyman is expected to assist Parent in the integration of the operations of the Company. THE MERGER AGREEMENT. The Merger Agreement provides for the commencement of the Offer as promptly as practicable, and in any event within five business days, after the first public announcement of the Purchaser's intention to make the Offer. The obligations of Parent to cause the Purchaser to commence the Offer and the obligation of Parent and the Purchaser to consummate the Offer and accept for payment or pay for any Shares tendered pursuant to the Offer is subject only to the satisfaction of certain conditions, including the Minimum Condition, which are described in Section 13. The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement and the DGCL, as soon as practicable after consummation of the Offer, the Purchaser and the Company will be merged. At the Effective Time each Share outstanding immediately prior to the Effective Time (other than Shares held by Parent, the Purchaser or any of their subsidiaries or in the treasury of the Company or by any subsidiary of the Company, all of which will be canceled, and other than Dissenting Shares) will be converted into the right to receive $15.50 net in cash per Share or such higher price as shall have been paid in the Offer. The Company is permitted to make adjustments to all outstanding Options, whether such Options are currently exercisable or fully vested, to provide that each such Option will be exercisable in full prior to the Effective Time. In addition, the Company will have the right, at any time prior to the Effective Time, to pay to each holder of an Option an amount equal to the difference between $15.50 and the exercise price of such Option, if it is lower than $15.50, in exchange for the surrender and cancellation of such Option. Prior to the Effective Time, the Company may elect to accelerate the exercisability or vesting of the Options, and the Board of Directors of the Company has indicated that it intends to do so. At the Effective Time, any Options not exercised in full or surrendered for cancellation will terminate. 16 The Merger Agreement provides that the Stock Purchase Agreement will be amended to provide that each participant in the Stock Purchase Plan will receive, in lieu of such participant's account balance, the amount determined by dividing the account balance by $11.10 (the purchase price for Shares subscribed for under the Stock Purchase Plan), and multiplying the result by $15.50. The Merger Agreement contains representations and warranties by the Company regarding, among other things, its organization, its capitalization, its authority relative to the Merger Agreement, consents and approvals necessary for the Offer and the Merger, the absence of certain changes in its business, its publicly filed reports and certain employee matters, and by each of Parent and the Purchaser regarding, among other things, its organization, its authority relative to the Merger Agreement and the Offer, and consents and approvals necessary for the Offer and the Merger. The Company has also represented in the Merger Agreement that the Company's Board of Directors, after receiving advice from a nationally recognized investment banking firm selected by the Board of Directors, has determined that the acquisition of the Shares by the Purchaser is at a price and on terms that are fair to the Company's stockholders and is otherwise in the best interests of the Company and its stockholders and has unanimously approved the Offer, the Merger Agreement, the acquisition of the Shares and the Merger so that the Rights issued pursuant to the Rights Agreement will not become exercisable as a result of the Offer or the Merger. The Company has further represented in the Merger Agreement that the Rights Agreement has been amended to provide that neither Parent nor the Purchaser will be deemed to be an Acquiring Person or a Beneficial Owner (as such terms are defined in the Rights Agreement). In the Merger Agreement, the Company has agreed, if Parent so requests, to redeem the Rights in accordance with the terms of the Rights Agreement immediately prior to the acceptance for payment of Shares pursuant to the Offer. The Company has also agreed that, from and after the date of the Merger Agreement, the Company will not (i) take or fail to take any action which would permit the Rights to become nonredeemable by the Company, (ii) except as otherwise provided in the Merger Agreement, redeem the Rights, (iii) except as otherwise required to permit the commencement or consummation of the Offer or consummation of the Merger, amend the Rights Agreement, or (iv) approve any transaction, offer or agreement (other than an Approved Offer, as defined below) with any party other than Parent and the Purchaser under the Rights Agreement such that the Rights would not become exercisable as a result of such transaction, offer or agreement. The obligations of the parties to effect the Merger are subject to the satisfaction or waiver, where permissible, of the following conditions: (i) the Merger Agreement, the Merger and the transactions contemplated by the Merger Agreement shall have been approved and adopted by the requisite vote of the holders of the Shares, if such vote is required by applicable law in order to consummate the Merger; (ii) no statute, rule, regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits, restrains, enjoins or restricts consummation of the Merger; and (iii) any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated. The Company has agreed that, prior to the Effective Time, the Company and its subsidiaries will each conduct its operations according to its ordinary and usual course of business and consistent with past practice and the Company will use reasonable efforts to preserve intact in all material respects the business organization of the Company, use reasonable efforts to keep available the services of its current officers and key employees, and use reasonable efforts to preserve in all material respects the good will of those having advantageous business relationships with it and its subsidiaries, and the Company will not, without the prior written consent of Parent, (i) issue, sell or pledge, or authorize or propose the issuance, sale or pledge of (A) additional shares of capital stock of any class (including the Shares), or securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or other convertible securities, or grant or accelerate any right to convert or exchange any securities of the Company for Shares, other than (1) Shares issuable pursuant to the terms of Options outstanding on October 8, 1996 or Shares issuable pursuant to the Stock Purchase Plan, or (2) the issuance of shares of capital stock to the Company 17 by a wholly owned subsidiary of the Company, or (B) any other securities in respect of, in lieu of or in substitution for Shares outstanding on October 8, 1996; (ii) purchase or otherwise acquire, or propose to purchase or otherwise acquire, any of its outstanding securities (including the Shares); (iii) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or distribution on any shares of capital stock of the Company; (iv) make any acquisition of a material amount of assets (by merger, consolidation or acquisition of stock or assets) or securities, any disposition of a material amount of assets or securities or any material change in its capitalization, or enter into a material contract or release or relinquish any material contract rights not in the ordinary course of business (except as otherwise permitted pursuant to the Merger Agreement); (v) intentionally incur any liability or obligation (absolute, accrued, contingent or otherwise) other than in the ordinary and usual course of business and either consistent with past practice or in the reasonable business judgment of the officers of the Company (including borrowing in the ordinary course pursuant to existing loan agreements or debt instruments) or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual or entity in any case in an amount material to the Company and its subsidiaries, taken as a whole; (vi) propose or adopt any amendments to the Certificate of Incorporation or Bylaws of the Company; (vii) make any change in accounting methods, principles or practices; (viii) other than as contemplated or permitted by the Merger Agreement, (A) enter into any new employment agreements with any officers, directors or key employees or grant any material increases in the compensation or benefits to officers, directors and key employees other than increases in the ordinary course of business and consistent with past practice, (B) pay or agree to pay any pension, retirement allowance or other employee benefit not required or permitted by any existing plan, agreement or arrangement to any such director, officer or key employee in amounts material to the Company and its subsidiaries, taken as a whole, (C) commit itself (other than pursuant to any collective bargaining agreement) to any additional pension, profit-sharing, bonus, extra compensation, incentive, defined compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or to any employment or consulting agreement with or for the benefit of any director, officer or key employee, whether past or present, in amounts material to the Company and its subsidiaries, taken as a whole, or (D) except as required by applicable law, amend in any material respect any such plan, agreement or arrangement; or (ix) agree in writing or otherwise to take any of the foregoing actions or any action which would make any representation or warranty in the Merger Agreement untrue or incorrect. The Company has also agreed that neither the Company, its subsidiaries, nor any of their respective officers, directors, employees, financial advisors, counsel, representatives, agents and affiliates will, directly or indirectly, encourage, solicit, initiate, or, subject to the fiduciary duties of the Board of Directors, officers or stockholders of the Company under applicable law as advised by outside counsel, enter into any agreement with respect to, or participate in discussions or negotiations with, or provide any confidential information to, any person other than Parent, Purchaser or their affiliates (a "Third Party") concerning any tender offer (including a self-tender offer), exchange offer, merger, sale of substantial assets, sale of securities or similar transactions involving the Company or any of its material subsidiaries or divisions (each proposal, announcement or transaction being referred to as an "Acquisition Proposal"). The Company has agreed to promptly inform Parent of any offer which it may receive in respect of an Acquisition Proposal (including the terms thereof and the identity of the Third Party making such offer). The Company's Board of Directors may, however, approve, accept and recommend to its stockholders an Acquisition Proposal if (i) the Board of Directors determines in good faith, in exercising its fiduciary duties under applicable law and after consultation with its outside counsel and financial advisors, that the Acquisition Proposal would be more favorable to the Company's stockholders from a financial point of view than the Offer (such other offer, an "Approved Offer") and (ii) Parent does not make, within five business days of Parent's receiving notice of such Third-Party offer, an offer which the Company's Board of Directors, after consultation with its financial advisors, determines is superior to such Third-Party offer. 18 Parent has agreed that all rights to indemnification or exculpation now existing in favor of the directors, officers, employees and agents of the Company as provided in the Company's Certificate of Incorporation or Bylaws or otherwise in effect on the date of the Merger Agreement shall survive the Merger and continue in full force and effect for a period of six years after the Effective Time. Parent has also agreed to maintain in effect for a period of five years after the Effective Time the current policies of directors' and officers' liability insurance maintained by the Company (provided that Parent may substitute policies of at least the same coverage amounts containing terms and conditions which are no less advantageous) in the amount of $15,000,000 in the first year after the Effective Time, and $10,000,000 for years two through five after the Effective Time, subject to an agreed upon maximum on the premiums that Parent shall be obligated to pay. The Merger Agreement provides that, if required by applicable law, the Company will call a meeting of its stockholders for the purpose of voting upon the Merger Agreement and the Merger. In connection therewith, except as otherwise expressly permitted by the Merger Agreement, the Company will, through its Board of Directors, recommend to its stockholders approval of such matters and take all reasonable actions to solicit such approval, including without limitation preparing and filing a proxy statement under the Exchange Act. Subject to the terms and conditions of the Merger Agreement, and to the fiduciary duties of the Company's Board of Directors, each of the parties has also agreed to use its reasonable efforts to take, or cause to be taken, all appropriate actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Parent has agreed to maintain, until the later of 45 days after the purchase of the Shares pursuant to the Offer or December 31, 1996, for the benefit of the officers and employees of the Company employee benefits at least comparable in the aggregate to those provided under the Company's benefit plans. To the extend practicable and appropriate, Parent has agreed to continue existing Company benefit plans during such period. Thereafter, such officers and employees will be entitled to participate in the benefit plans maintained by Parent for its similarly situated employees, upon the same terms and conditions that apply to such employees of Parent. Parent has also agreed to honor all existing employment, severance, consulting or other compensation agreements or arrangements and benefit contracts between the Company and any officer, director or employee of the Company. Each employee of the Company as of the Effective Time will, for purposes of determining eligibility and vesting under any benefit plan of Parent, be given credit for all service with the Company prior to the Effective Time. The Merger Agreement provides that, promptly upon the acceptance for payment of and payment by the Purchaser in accordance with the Offer for, Shares satisfying the Minimum Condition, and from time to time thereafter, the Purchaser will be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give the Purchaser representation on the Board of Directors equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors multiplied by the percentage that such number of Shares so accepted for payment and paid for or owned by Parent or the Purchaser bears to the total number of Shares outstanding; provided, however that at all times prior to the Merger there shall be at least three members of the Board of Directors of the Company selected by the current members of such Board. In the Merger Agreement, the Company has agreed to cause the Purchaser's designees to be elected to the Company's Board of Directors (including mailing to the Company's shareholders the information required by Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder) and to increase the number of the Company's directors or to exercise its best efforts to secure the resignations of current directors, as may be directed by Parent and required to implement the foregoing. 19 TERMINATION. The Merger Agreement may be terminated at any time prior to the Effective Time, whether prior to or after approval by the stockholders of the Company: (a) by mutual written consent of the Boards of Directors of Parent, the Purchaser and the Company; (b) by either the Company or Parent (i) if (1) the Offer terminates or expires in accordance with its terms or if Parent terminates the Offer as the result of the occurrence of any of the conditions described in Annex I to the Merger Agreement, or (2) Purchaser shall not have purchased any Shares pursuant to the Offer on or before December 31, 1996 (provided, however, that the right to terminate the Merger Agreement shall not be available to any party whose failure to fulfill any of its obligations thereunder or whose misrepresentation thereunder results in the cause for such termination); (ii) if the Merger shall not have been consummated on or before six months after the date of the Merger Agreement, unless the failure to consummate the Merger is the result of a material breach of the Merger Agreement by the party seeking to terminate it; or (iii) if any court of competent jurisdiction or any other governmental body shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; (c) by the Company if (i) the Offer has not been timely commenced in accordance with Section 1.1 of the Merger Agreement; or (ii) Parent or Purchaser fails to perform in any material respect any of its respective obligations under the Merger Agreement; (d) by Parent or Purchaser if the Company fails to perform in any material respect any of its obligations under the Merger Agreement; or (e) by the Company if the Board of Directors of the Company has accepted an Approved Offer in accordance with Section 6.2 of the Merger Agreement. EXPENSES UPON TERMINATION. If neither Purchaser nor Parent is in material breach of any of its obligations under the Merger Agreement and, prior to acceptance of Shares for payment pursuant to the Offer or the payment therefor, the Merger Agreement is terminated (i) as a result of a material misrepresentation by the Company, withdrawal or modification by the Board of Directors of the Company of its recommendation of the Offer or the commencement of a tender offer or acquisition of 20% or more of the Shares by another party; or (ii) by Parent as a result of a breach by the Company; or (iii) by the Company if it accepts an Approved Offer; then the Company shall reimburse Parent for all reasonable out-of-pocket expenses and fees incurred by Parent in good faith in connection with the the Merger Agreement and the financing thereof, subject to a maximum reimbursement of $5,000,000. TERMINATION FEES. If neither Purchaser nor Parent is in material breach of any of its obligations under the Merger Agreement and, prior to acceptance of Shares for payment pursuant to the Offer or the payment therefor, the Merger Agreement is terminated (i) as a result of a material misrepresentation by the Company, withdrawal or modification by the Board of Directors of the Company of its recommendation of the Offer or the announcement or commencement of a tender offer or acquisition of 20% or more of the Shares by another party or; (ii) by Parent as a result of a breach by the Company; or (iii) by the Company if it accepts an Approved Offer; and either prior to such termination or within twelve (12) months thereafter, any person A) acquires the Company by merger or otherwise; (B) acquires more than 50% in value of the total assets of the Company and its subsidiaries taken as a whole; or (C) acquires beneficial ownership of securities representing more than 50% of the outstanding voting securities of the Company; or the Board of Directors of the Company accepts, approves or recommends any third party acquisition; or the Board of Directors of the Company shall have withdrawn or modified in any material respect its recommendation of the Offer; then the Company shall pay Parent a termination fee of $6,500,000 in addition to the payment of expenses described above. STOCKHOLDER AGREEMENT. Parent and the Tendering Stockholders have entered into the Stockholder Agreement, which provides that, not later than the fifth business day after commencement of the Offer, each Tendering Stockholder will tender all Shares beneficially owned by such Tendering Stockholder. Parent's obligation under the Stockholder Agreement to accept for payment and pay for Shares in the Offer, including the Shares beneficially owned by such Tendering Stockholders, is subject to the terms and conditions of the Offer. If the Merger Agreement is terminated, the Offer is terminated without the purchase of Shares thereunder or the Minimum Condition is not satisfied (other than by waiver) upon 20 termination of the Offer, the Shares tendered pursuant to the Stockholder Agreement by each Tendering Stockholder shall be returned to such Stockholder. During the term of the Stockholder Agreement, and except as otherwise provided therein or with the prior written consent of Parent, each tendering Stockholder may not (i) sell, pledge or otherwise dispose of any of its Shares, (ii) deposit its Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to such Shares, or (iv) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect sale, assignment, transfer or other disposition of such Shares. The Stockholder Agreement requires each tendering Stockholder to abide by the terms of the non-solicitation provisions of the Merger Agreement summarized in "The Merger Agreement" set forth above in this Section 11. The Stockholder Agreement will terminate upon the earlier to occur of: (i) the termination of the Merger Agreement, and (ii) December 31, 1996. The preceding descriptions of the terms and provisions of the Merger Agreement and the Stockholder Agreement are qualified in their entirety by reference to the texts of such agreements, which are exhibits to the Tender Offer Statement on Schedule 14D-1 filed by the Purchaser and Parent with the Commission and which is available for inspection and copying at the principal office of the Commission in the manner set forth in Section 9. AMENDMENT OF EMPLOYMENT AGREEMENTS. Mr. Twyman originally executed an employment agreement with the Company in 1976. That agreement was amended in 1981, at which time the Company also entered in an employment agreement with John Demos. Prior to the execution and delivery of the Merger Agreement, the Company entered into amendments to these employment agreements which provide for acceleration of the benefits that would have been payable to Mr. Twyman and Mr. Demos through the end of the stated termination dates of those agreements (March 2, 1999 for Mr. Twyman and March 2, 1998 for Mr. Demos) so that, effective upon the acquisition by Purchaser of any shares pursuant to the Offer or, if no Shares are purchased pursuant to the Offer prior to the Merger, the date that the Merger is completed (such effective date being referred to as the "Payment Date"), the Company shall pay to the respective employees the sum of: (i) the amount of all unpaid salary and benefits accrued under the Employment Agreement through the Payment Date that has not previously been paid, and (ii) an amount equal to his full base salary for the period from the Payment Date through the date the Employment Agreement would have otherwise terminated, determined without discount. Based on an assumed Payment Date of November 15, 1996, the amount payable to Mr. Twyman would be approximately $1,206,042, and the amount payable to Mr. Demos would be approximately $263,336. Upon such payments, the Employment Agreements will terminate with no further liability or obligation of either party thereunder. In the event that the Merger Agreement is terminated for any reason prior to the Payment Date, the amendments of the Employment Agreements described above will terminate and be of no further force or effect. 12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to purchase all presently outstanding Shares pursuant to the Offer and the Merger and to pay related fees and expenses is estimated to be approximately $180,000,000 million. Such funds will be obtained by the Purchaser or provided by Parent or one or more of its subsidiaries to the Purchaser from available cash on hand and pursuant to a $500 million credit facility (the "Credit Facility") to be provided by a syndicate of banks (the "Banks") for whom Harris Trust and Savings Bank acts as administrative agent (the "Administrative Agent") and Bank of Montreal and PNC Bank, National Association, act as co-syndication agents. The Credit Facility will be a $500 million senior unsecured revolving facility maturing five (5) years from the date of the closing thereof, with a mandatory commitment reduction, through subsequent debt issues or otherwise, to $400 million by December 31, 1998. The Credit Facility contains a sublimit of $25 million for the issuance of standby and commercial letters of credit. Any outstanding letters of credit will reduce funds availability on a dollar-for-dollar basis. Loans will be provided under the Credit Facility to Parent, which 21 can advance proceeds of such loans to the Purchaser and/or any other domestic subsidiary of Parent (the Parent, in such capacity, being hereinafter referred to as the "Borrower"). Each loan under the Credit Facility will bear interest, at the Borrower's option from time to time, at a rate equal to either the "Base Rate" or the "LIBOR Rate." The "Base Rate" for any day will mean the greater of (i) the rate of interest announced by the Administrative Agent as its prime commercial rate for such day or (ii) the "Federal Funds Effective Rate" in effect on such day plus one half of one percent plus the Base Rate Margin, calculated on an actual day/365-day basis and payable quarterly in arrears. "LIBOR Rate" generally will mean the reserve adjusted LIBOR plus a LIBOR Margin, fixed for interest periods of one, two, three or six months, calculated on an actual day/360-day basis and payable on the last day of the applicable interest period (but in any case, at least quarterly). LIBOR is defined, generally, as the London Interbank Offered Rate reflected in the Telerate Service of the British Banker's Association, or if such rate is unavailable, the rate at which deposits of U.S. dollars are quoted two business days before commencement of the applicable interest period. The LIBOR Margin ranges from .200% to .700% based on the ratings assigned to the Parent's senior unsecured non-credit enhanced long-term indebtedness ("Parent's Debt Ratings"). The Borrower may also request that the Administrative Agent solicit competitive bids from the Banks through an auction for short term borrowings priced either (i) at a margin above or below LIBOR or (ii) at an absolute interest rate. The Credit Facility will also provide for customary provisions relating to yield protection, availability and capital adequacy. The Credit Facility will provide for the payment by Parent of certain fees including a (i) facility fee at a rate ranging from .100% to .300% per annum based on the Parent's Debt Ratings, (ii) certain structuring, underwriting and administrative fees and (iii) certain letter of credit fees ranging from .200% to .700% per annum (based on the Parent's Debt Ratings) applied to the face amount of each letter of credit, a letter of credit fronting fee of one-tenth of 1% of the face amount of each standby letter of credit and customary fees in connection with commercial letters of credit and standby letters of credit. The Credit Facility will have customary conditions to borrowing, representations and warranties, covenants and events of default. Without limiting the generality of the foregoing, the Banks' obligation to fund shall be conditioned upon the satisfaction of the Minimum Condition. The subsidiaries of Parent (including the Purchaser and, upon consummation of the Offer or the Merger, the Company and its subsidiaries) will unconditionally guarantee the indebtedness, obligations and liabilities of the Borrower under the Credit Facility. The commitment of the Banks under the Credit Facility will expire five (5) years from the date of its commencement. It is anticipated that borrowings under the Credit Facility will be repaid from funds generated internally by Parent and its subsidiaries (including the Company) and from other sources, which may include debt or other bank financings. 13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer and in addition to (and not in limitation of) Parent's right to extend and amend the Offer (subject to the terms of the Merger Agreement), Parent shall not be required to accept for payment or pay for, subject to Rule 14e-l(c) of the Exchange Act, any Shares not theretofore accepted for payment or paid for and may terminate or amend the Offer (subject to the terms of the Merger Agreement) as to such Shares if (i) the Minimum Condition shall not have been satisfied or (ii) at any time on or after the date of commencement of the Offer and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exist or shall occur and remain in effect: (a) there shall have occurred (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (ii) a formal declaration of war or national or international calamity directly or indirectly involving the United States, (iii) any limitation (whether or not mandatory) by any United States governmental authority on the extension of credit by banks or other financial institutions that materially affects the extension 22 of credit by banks or other lending institutions, or (iv) in the case of any of the foregoing existing at the time of commencement of the Offer, a material acceleration or worsening thereof; or (b) there shall have been any action taken, or any statute, rule, regulation, judgment, order or injunction promulgated, entered, enforced, enacted issued or deemed applicable to the Offer or the Merger by any court, government or governmental authority or agency, domestic or foreign, which (i) prohibits Parent's ownership or operation of all or a material portion of its or the Company's (or any of their respective subsidiaries') business or assets, or compels Parent to dispose of or hold separate all or a material portion of its or the Company's (or any of their respective subsidiaries') business or assets as a result of the Offer or the Merger, (ii) prohibits, or makes illegal the acceptance for payment or payment for Shares or the consummation of the Offer or the Merger, or (iii) imposes material limitations on the ability of Parent or Purchaser effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Purchaser on all matters properly presented to the Company's stockholders; provided, however, that with respect to any action, ruling or order taken or made by any court, government or governmental authority or agency that is preliminary, until such action, ruling or order becomes final, Parent may not terminate the Offer, but shall extend the expiration of the Offer and shall postpone acceptance for payment or purchase of, or payment for, any Shares pursuant to this paragraph (b); further provided, however, that in no event shall Parent be obligated to attempt to cause any such decree, order or injunction to be vacated or reversed or to extend the Offer beyond December 31, 1996; or (c) the Merger Agreement shall have been terminated in accordance with its terms; or (d) any of the representations and warranties of the Company set forth in the Merger Agreement were inaccurate when made or became inaccurate at any time thereafter (other than (i) any misrepresentations that, in the aggregate, do not have a material adverse effect on the Company or (ii) any misrepresentations that the Company cures within five (5) business days after notice thereof is given by Parent (except that no cure period shall be provided for a breach by the Company which, by its nature, cannot be cured)) or the Company shall have failed in any material respect to perform any material obligation or covenant required by the Merger Agreement to be performed or complied with by it which failure would have a material adverse effect on the Company; or (e) the Board of Directors of the Company shall have withdrawn or modified in any material respect its recommendation of the Offer; provided, however, that this condition shall not be deemed to exist, and Purchaser shall have no right to terminate the Offer or not accept for payment or pay for Shares, if as a result of the Company's receipt of a proposal for the acquisition of all or a material portion of the business or assets of the Company or the Shares, the Company withdraws, modifies or amends its approval or recommendation of the Offer, the Merger or the Merger Agreement by reason of taking and disclosing to the Company's stockholders a position contemplated by Rule 14e-2(a)(2) or (3) promulgated under the Exchange Act with respect to such proposal, the Offer, the Merger or the Merger Agreement and if within five (5) business days of taking and disclosing to its stockholders the aforementioned position, the Company publicly reconfirms its recommendation of the Offer, the Merger and the Merger Agreement; or (f) the waiting period (and any extension thereof) applicable to the consummation of the Offer under the HSR Act shall not have expired or been terminated; provided, however, that (i) until such HSR Act waiting periods expire or terminate, Parent may not terminate the Offer (but shall extend the expiration of the Offer and shall postpone acceptance for payment or purchase of, or payment for, any Shares pursuant to this paragraph (f)); further provided, however, that in no event shall Parent be obligated to extend the Offer beyond December 31, 1996 and (ii) unless Parent theretofore shall have terminated the Offer in accordance with the terms of the Merger Agreement, Parent shall continue to seek to resolve any action or proceeding in accordance with the provisions of the Merger Agreement; or 23 (g) (i) a tender or exchange offer for 20% or more of the Shares shall have been publicly proposed to be made by another person or shall have been publicly disclosed, (ii) a tender or exchange offer for 20% or more of the Shares shall have been made by another person or (iii) Parent shall have learned that any person, entity or "group" (as that term is used in Section 13(d)(3) of the Exchange Act), shall beneficially own (as that term is used in Section 13(d)(3) of the Exchange Act), or shall have acquired, 20% or more of the Shares, or shall have been granted any option or right, condition or otherwise, to acquire 20% or more of the Shares; which, in the reasonable judgment of Parent, in any case, and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment, purchase of, or payment for Shares. The foregoing conditions are for the sole benefit of Parent and may be asserted by Parent regardless of the circumstances giving rise to any such condition and may be waived by Parent, in whole or in part, at any time and from time to time, in the sole discretion of Parent. The failure by Parent at any time to exercise any of the foregoing rights will not be deemed a waiver of any right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Shares not theretofore accepted for payment shall forthwith be returned by the Depositary to the tendering stockholders. 14. DIVIDEND AND DISTRIBUTIONS. If, on or after October 8, 1996, the Company should (i) split, combine or otherwise change the Shares or the Company's capitalization, (ii) issue or sell any additional securities of the Company or otherwise cause an increase in the number of outstanding securities of the Company (except for Shares issuable upon the exercise of employee stock options outstanding on the date of the Merger Agreement), (iii) acquire currently outstanding Shares or otherwise cause a reduction in the number of outstanding Shares, or (iv) disclose that it has taken any such action, then, without prejudice to Purchaser's rights under Sections 1 and 13, the Purchaser may, in its sole discretion, make such adjustments as it deems appropriate to reflect such split, combination or other change in the purchase price and the other terms of the Offer or the Merger (including, without limitation, the number and type of securities offered to be purchased, the amounts payable therefor and the fees payable hereunder). If, on or after October 8, 1996, the Company should declare or pay any cash or stock dividend or other distribution or issue any rights with respect to the Shares, payable or distributable to stockholders of record on a date prior to the transfer to the name of the Purchaser or its nominee or transferee on the Company's stock transfer records of the Shares accepted for payment pursuant to the Offer, then, without prejudice to the Purchaser's rights under Sections 1 and 13 and without limiting the rights of the Purchaser described in the preceding paragraph of this Section 14, any such dividend, distribution or right to be received by the tendering stockholders will be received and held by the tendering stockholder for the account of the Purchaser and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for the account of Purchaser, accompanied by appropriate documentation and transfer. Pending such remittance, the Purchaser will be entitled to all rights and privileges as owner of any such dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 15. CERTAIN LEGAL MATTERS. Except as set forth in this Section 15, based on a review of publicly available filings by the Company with the Commission and other information concerning the Company provided to Parent, the Purchaser is not aware of any license or other regulatory permit which appears to be material to the business of the Company and that might be adversely affected by the Purchaser's acquisition of Shares pursuant to the Offer (and the indirect acquisition of the stock of the Company's subsidiaries), or of any approval or other action by any domestic or foreign governmental or administrative agency that would be required prior to the acquisition of Shares by the Purchaser pursuant to the Offer. Should any such approval or other action be required, it is the Purchaser's present intention that such 24 additional approval or action would be sought. While the Purchaser does not presently intend to delay the purchase of Shares tendered pursuant to the Offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, could be obtained without substantial conditions or that adverse consequences might not result to the Company's or Parent's business, or that certain parts of the Company's or Parent's business might not be required to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action or in the event that such approvals were not obtained or such actions were not taken. The Purchaser's obligation to purchase and pay for Shares is subject to certain conditions relating to the legal matters discussed in this Section 15. See Section 13. ANTITRUST. Under the HSR Act, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the Federal Trade Commission ("FTC") and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer and the Merger Agreement is subject to such requirements. On or about October 9, 1996, Parent expects to file with the Antitrust Division and the FTC a Notification and Report Form with respect to the Offer and the Merger. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated prior to the expiration of a 15-calendar day waiting period following the filing by Parent, unless earlier terminated. Accordingly, the Parent expects the waiting period applicable to the Offer will expire at 11:59 p.m., New York City time, on or about October 24, 1996, unless Parent receives a request from either the FTC or the Antitrust Division for additional information or documentary material, or the Antitrust Division and the FTC terminate the waiting period prior thereto. If, within such 15-day waiting period either the Antitrust Division or the FTC requests additional information or material from Parent concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act. Thereafter, the waiting period could be extended only by court order or with the consent of the Purchaser. The additional 10-calendar-day waiting period may be terminated sooner by the FTC or the Antitrust Division. In practice, complying with a request for additional information or material can take a significant amount of time. In addition, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. Although the Company may be required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer and the Merger, neither the Company's failure to make such filings nor a request made to the Company from the Antitrust Division or the FTC for additional information or documentary material will extend the Offer period with respect to the purchase of Shares pursuant to the Offer and the Merger Agreement. The Purchaser will not accept for payment Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. See Section 13. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, at the discretion of the Purchaser, be extended and, in any event, the purchase of and payment for Shares will be deferred until ten days after the request is substantially complied with by Parent, unless the ten-day extended period expires on or before the date when the initial waiting period would otherwise have expired or unless the waiting period is sooner terminated by the FTC and the Antitrust Division. See Section 2. Unless the Offer is extended, any extension of the waiting period will not give rise to any additional withdrawal rights. See Section 3. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the acquisition of Shares by the Purchaser pursuant to the Offer and the Merger. At 25 any time before or after the Purchaser's purchase of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as either deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer and the Merger or seeking divestiture of Shares purchased thereunder or the divestiture of assets of the Company, the Purchaser, Parent or any of their respective subsidiaries or affiliates. Private parties as well as state attorneys general may also bring legal actions under the antitrust laws under certain circumstances. If any such action by the FTC, the Antitrust Division or any other person should be instituted, the Purchaser could decline to accept for payment any Shares tendered. See Section 13 for certain conditions to the Offer. Based upon an examination of information relating to the businesses in which Parent and the Company are engaged, Parent believes that the consummation of the Offer would not violate any antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. The Merger would not require an additional filing under the HSR Act if the Purchaser owns 50% or more of the outstanding Shares at the time of the Merger or if the Merger occurs within one year after the HSR Act waiting period applicable to the Offer expires or is terminated. STATE TAKEOVER LAWS. The Company is incorporated under the laws of the State of Delaware. Section 203 of the DGCL (the "Business Combinations Statute") generally prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" (defined generally as any person that directly or indirectly owns 15% or more of the outstanding voting stock of the subject corporation) for a period of three years after the date of the transaction in which the person became an interested stockholder, unless certain exceptions apply, including that a majority of disinterested directors approved in advance the transaction in which the interested stockholder became an interested stockholder. The Board of Directors of the Company has unanimously approved the acquisition of Shares pursuant to the Offer and the Merger Agreement so that Section 203 of the DGCL is not applicable to the transactions contemplated by the Merger Agreement. The foregoing is a summary of the provisions of the DGCL which are applicable to the Offer, does not purport to be complete and is qualified in its entirety by reference to the provisions of the DGCL. A number of states have adopted takeover laws which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, security holders, principal executive offices or principal places of business therein. To the extent that certain provisions of certain of these state takeover statutes purport to apply to the Offer or the Merger, the Purchaser believes that such laws conflict with federal law and constitute an unconstitutional burden on interstate commerce. In 1982, the Supreme Court of the United States, in EDGAR V. MITE CORP., held that the Illinois Business Takeovers Statute, which as a matter of state securities law made takeovers of corporations meeting certain requirements more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In 1987, however, in CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court of the United States held that the State of Indiana could, as a matter of corporate law and, in particular, those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated therein. Subsequently, a number of federal courts ruled that various state takeover statutes were unconstitutional insofar as they apply to corporations incorporated outside the state of enactment. Except as described herein, the Purchaser does not know whether the Offer is subject to any state takeover statutes and neither Parent nor the Purchaser has attempted to comply with any state takeover statutes in connection with the Offer other than as indicated below. Should any person seek to apply any such statute to the Offer, Parent and the Purchaser reserve the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any 26 action taken in connection herewith is intended as a waiver of that right. In the event that any additional state takeover statute is found applicable to the Offer and an appropriate court does not determine that such laws are inapplicable or invalid as applied to the Offer, the Purchaser may be required to file certain information with, or receive approvals from, the relevant state authorities, or the Purchaser might be unable to purchase and accept for payment or pay for Shares tendered pursuant to the Offer or be delayed in continuing or-consummating the Offer. In the circumstances described above, the Purchaser may not be obligated to accept for purchase and payment or pay for any Shares tendered. Although the Company is a Delaware corporation, its principal place of business is in Ohio. Section 1707.041 of the Ohio Securities Law requires that no control bid for any securities of a "subject company" shall be made pursuant to a tender offer until the offeror files certain information with the Ohio Division of Securities. As defined in the statute, "subject company" means an issuer (i) that has its principal place of business or principal executive office in Ohio or owns or controls assets within Ohio having a fair market value of at least $1 million, and (ii) more than 10% of whose beneficial or record equity security holders reside in Ohio. Because the Company falls within the description of a "subject company" it has filed a Form 041 with the Ohio Division of Securities providing the requisite information. The Company also has facilities in Michigan and Kentucky. The laws of these states, however, do not require comparable filings by foreign corporations in control bid acquisitions. SUPER-MAJORITY VOTING PROVISION. The Board of Directors of the Company has also taken actions to exempt the Company from the super-majority stockholder vote provision of Article Sixth of the Company's Certificate of Incorporation, which requires that the affirmative vote of the holders of at least 70% of the total voting power of all outstanding shares must approve any merger of the Company unless such merger has been approved by at least two-thirds of the then authorized number of directors. 16. EXTENSION OF TENDER PERIOD, TERMINATION AND AMENDMENTS. The Merger Agreement provides that the Offer may not be amended to reduce the price to be paid per Share, change the form of consideration to be paid in the Offer or the Merger, increase or waive the Minimum Condition, extend the Expiration Date, or amend the terms of the Offer in a manner that is materially adverse to the holders of the Shares. Subject to such restrictions, the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period during which the Offer is open by giving oral or written notice of such extension to the Depositary. If the Purchaser shall decide, in its sole discretion, to increase the consideration offered in the Offer to holders of Shares or make any other material change in the terms of the Offer (including the Minimum Condition) or the information concerning the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information. With respect to a change in price or a change in percentage of securities sought, a minimum 10-business day period from the date of announcement thereof is required to allow for adequate dissemination to stockholders and investor response. If, prior to the Expiration Date, the Purchaser should decide to increase the price per Share being offered in the Offer, such increase will be applicable to all stockholders whose Shares are accepted for payment pursuant to the Offer. As used in this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the Exchange Act. The Purchaser also expressly reserves the right (i) to delay payment for any Shares, regardless of whether such Shares were theretofore accepted for payment, or to terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted or paid for, upon the occurrence of any of the conditions specified in Section 13 by giving oral notice thereof to the Depositary; and (ii) subject to the restrictions set forth in the Merger Agreement, at any time or from time to time, to amend the Offer in any respect. See Section 13. Any extension, delay, termination, waiver or amendment of the Offer will be followed, as soon as practicable, by public announcement thereof, and such announcement in the case of 27 an extension will be made in accordance with Rule 14e-1(d) no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to either the Dow Jones or Reuters News Services and making any appropriate filings with the Commission. If the Purchaser extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its purchase of or payment for Shares or is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 3. However, the ability of the Purchaser to delay the payment for Shares which the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of the Offer. 17. CERTAIN FEES AND EXPENSES. Piper Jaffray Inc. is acting as Dealer Manager for the Offer and as financial advisor to Parent in connection with the transactions described in this Offer to Purchase. Pursuant to an engagement letter dated July 19, 1996 and a Dealer Manager Agreement dated as of October 8, 1996, Parent has agreed to pay Piper Jaffray an aggregate amount of $900,000 upon consummation of an acquistion of the Company. Of this amount, Parent has paid Piper Jaffray a cash retainer of $75,000 and has agreed to pay Piper Jaffray an additional cash retainer of $25,000 if Parent is still in discussions with the Company in regards to a transaction with the Company as of October 17, 1996 and a cash fee of $500,000 upon the rendering of its fairness opinion to the Board of Directors of Parent. Parent has further agreed to pay Piper Jaffray the remaining $300,000 as a cash success fee upon the consummation by Parent of an acquisition of the Company. In the event Parent does not consummate an acquisition of the Company but receives any form of gain, compensation or non-expense reimbursement in connection with its attempt to complete an acquisition of the Company, Parent has agreed to pay Piper Jaffray 10% of any such gain, compensation or reimbursement, not to exceed $150,000. In addition, Parent has agreed to reimburse Piper Jaffray for its reasonable out-of-pocket expenses, including fees and disbursements of Piper Jaffray's legal counsel, whether or not an acquisition of the Company is consummated, and has agreed to indemnify Piper Jaffray against certain liabilities and expenses in connection with its engagement. The Purchaser has retained D.F. King & Co. to act as Information Agent and Norwest Bank Minnesota, N.A. to act as Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward material relating to the Offer to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer in addition to reimbursement of reasonable out-of-pocket expenses. The Purchaser has agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer including certain liabilities under the federal securities laws. Neither Parent nor the Purchaser will pay any fees or commissions to any broker, dealer or other person (other than the above-described fees to Piper Jaffray) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. 18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction in which the making of the Offer is not in compliance with applicable law. If the Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, the Purchaser will make a good faith 28 effort to comply with any such law. If, after good faith effort, the Purchaser cannot comply with any such law, the Offer will not be made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or by one or more registered brokers or dealers licensed under the laws of such jurisdiction. Parent and the Purchaser have filed with the Commission a Tender Offer Statement on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. Such Tender Offer Statement and any amendments thereto, including exhibits, may be obtained in the manner described in Section 8 with respect to information concerning the Company, except that such information will not be available at the regional offices of the Commission. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NFC ACQUISITION CORPORATION 29 DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER 1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The names, ages, present principal occupation or employment and five-year employment history of each director and executive officer of Parent are set forth below. Unless otherwise indicated, all persons have held their current occupation or employment for at least the last five years. The business address of each such person is 7600 France Avenue South, Edina, Minnesota 55435. All persons listed below are citizens of the United States of America.
YEAR FIRST ELECTED OR APPOINTED AS AN PRESENT PRINCIPAL OCCUPATION EXECUTIVE OFFICER OR EMPLOYMENT; FIVE-YEAR NAME AND AGE OR DIRECTOR EMPLOYMENT HISTORY - ------------------------------- ------------------- ------------------------------------------------------------- EXECUTIVE OFFICERS: Alfred N. Flaten (61) 1991 President and Chief Executive Officer. Mr. Flaten was elected Chief Executive Officer in November 1994. His election as President and Chief Operating Officer was effective in November 1991. He had been elected Executive Vice President, Sales and Operations of Nash Finch in February 1991. William T. Bishop (56) 1994 Senior Vice President, Sales and Logistics. Mr. Bishop was elected as Senior Vice President, Sales and Logistics effective in December 1994 after joining the Company in the same month. He was previously employed by Scrivner, Inc., a wholesale and retail food distribution company located in Oklahoma City, Oklahoma, serving as its President and Chief Operating Officer from 1987 to 1994. Norman R. Soland (55) 1986 Vice President, Secretary and General Counsel. Clarence T. Walters (59) 1988 Vice President, Management Information Systems. Charles F. Ramsbacher (54) 1991 Vice President, Marketing. Steven L. Lumsden (51) 1992 Vice President, Warehouse and Transportation. Mr. Lumsden was elected Vice President, Warehouse and Transportation in May 1992. He previously served as Director, Warehouse and Transportation from May 1990 to May 1992. Gerald D. Maurice (63) 1993 Vice President, Store Development. Mr. Maurice was elected Vice President, Store Development in May 1993. He previously served as operating Vice President, Central Division for more than five years.
A-1 John R. Scherer (46) 1994 Vice President and Chief Financial Officer. Mr. Scherer was appointed as Chief Financial Officer in November 1995. His election as Vice President was effective in December 1994, and he served as Vice President, Planning and Financial Services from December 1994 to November 1995. He previously served as Director of Strategic Planning and Financial Services from April 1994 to December 1994, and Director of Planning and Budgets from January 1988 through April 1994. Charles M. Seiler (48) 1995 Vice President, Corporate Retail Operations. Mr. Seiler was elected as Vice President, Corporate Retail Operations effective in October 1994. He previously served as operating Vice President, Iowa Division from May 1993 to October 1994 and Iowa Division Manager from June 1991 to May 1993. Edgar F. Timberlake (49) 1995 Vice President, Human Resources. Mr. Timberlake was elected as Vice President, Human Resources in November 1995. He previously served as Director of Human Resources from January 1993, and Director of Training and Management Development from February 1988 to January 1993. David J. Richards (48) 1996 Vice President, Corporate Retail Stores. Mr. Richards was elected Vice President, Corporate Retail Stores in July 1996, having previously served as operating Vice President, Southeast Division from December 1994 to July 1996. He was previously employed by Scrivner, Inc., serving as Senior Vice President, Store Development from July 1992 to August 1994 and as Executive Vice President, Retail Operations from January 1991 to July 1992. William E. May, Jr. (48) 1996 Vice President, Strategic Technology Programs and Marketing Services. Mr May was elected as Vice President, Strategic Technology Programs and Marketing Services in July 1996. Previously, he was employed by Spartan Stores in Grand Rapids, Michigan, having served as Senior Vice President, Distribution, Procurement, MIS and Customer Service from July 1988 to June 1996. John M. McCurry (47) 1996 Vice President, Independent Store Operations. Mr. McCurry was elected Vice President, Independent Store Operations in May 1996. He previously served as Director, Independent Store Operations from August 1993 to May 1996, as Director of Grocery and Marketing from April 1993 to August 1993 and as Distribution Center Manager, Sioux Falls, South Dakota from January 1991 to April 1993. Lawrence A. Wojtasiak (51) 1990 Controller.
A-2 Suzanne S. Allen (32) 1996 Treasurer. Ms. Allen was elected as Treasurer effective as of January 1996. She previously served as Assistant Treasurer from May 1995, Treasury Manager from January 1993 to May 1995, and Treasury Assistant from September 1987 to January 1993. DIRECTORS: Carole F. Bitter (50) 1993 President and Chief Executive Officer of Harold Friedman, Inc., an operator of retail supermarkets located in Butler, Pennsylvania. Richard A. Fisher (66) 1984 Retired Vice President -- Finance and Treasurer of Network Systems Corporation, a manufacturer of data communications system located in Brooklyn Park, Minnesota. 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. Alfred E. Flaten (61) 1990 President and Chief Operating Officer of Parent. Allister P. Graham (60) 1992 Chairman and Chief Executive Officer of the Oshawa Group Limited, a food and pharmaceutical distributor in Toronto Canada. John H. Grunewald (60) 1992 Executive Vice President, Finance and Administration, Polaris Industries, Inc., a manufacturer of recreational equipment located in Plymouth, Minnesota. Mr. Grunewald has served as Executive Vice President, Finance and Administration of Polaris Industries 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. Richard G. Lareau (68) 1984 Partner, Oppenheimer Wolff & Donnelly, a law firm located in Minneapolis, Minnesota. Mr. Lareau has been a partner in the law firm of Oppenheimer Wolff & Donnelly for over 30 years. Russell N. Mammel (70) 1974 Retired President and Chief Operating Officer of Parent. 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. Don E. Marsh (58) 1995 Chairman of the Board, President and Chief Executive Officer of Marsh Supermarkets, Inc., a supermarket and convenience store chain operator located in Indianapolis, Indiana. Donald R. Miller (69) 1978 Management Consultant.
A-3 Robert F. Nash (62) 1968 Retired Vice President and Treasurer of Parent. Mr. Nash retired in January 1996 as Vice President & Treasurer of Nash Finch, a position he had held for more than five years. Jerome O. Rodysill (67) 1974 Retired Senior Vice President of Parent. 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.
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The names, ages, present principal occupation or employment with the Purchaser of each of the directors and executive officers of the Purchaser are set forth below. The business address of each such person is 7600 France Avenue South, Edina, Minnesota 55435. All persons listed below are citizens of the United States of America. For information regarding the five-year employment history of such persons, see "Directors and Executive Officers of Parent."
YEAR FIRST ELECTED OR APPOINTED AS AN PRESENT PRINCIPAL OCCUPATION EXECUTIVE OFFICER OR EMPLOYMENT WITH PURCHASER; NAME (AGE) OR DIRECTOR FIVE-YEAR EMPLOYMENT HISTORY - ---------------------------------------------- ------------------- ---------------------------------------------- Alfred N. Flaten (61) 1996 President and a Director. Norman R. Soland (55) 1996 Secretary and a Director. John R. Scherer (45) 1996 Treasurer and a Director.
A-4 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank or other nominee to the Depositary at one of its addresses set forth below. THE DEPOSITARY FOR THE OFFER IS: NORWEST BANK MINNESOTA, N.A. --------------------- BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION: Norwest Shareowner Services Norwest Shareowner Services (For Eligible Institutions P.O. Box 64858 161 North Concord Exchange Only) St. Paul, MN 55164-0858 Stock Transfer Department (612) 450-4163 South St. Paul, MN 55075 Confirm Facsimile By Telephone: (612) 450-4108
BY HAND: Norwest Shareowner Services Norwest Trust Company of New York 161 North Concord Exchange OR 3 New York Plaza 2nd Floor 15th Floor South St. Paul, MN 55075 New York, NY 10004
Any questions or requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations listed below. You may also contact your broker, dealer, commercial bank or trust company or nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (212) 269-5550 (collect) or Call Toll Free: 1-800-859-8509 THE DEALER MANAGER FOR THE OFFER IS: PIPER JAFFRAY INC. 222 South Ninth Street Minneapolis, Minnesota 55402 Call Toll Free: 1-800-333-6000, Ext. 6373 EX-99.(A)(2) 3 LOT LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 9, 1996 BY NFC ACQUISITION CORPORATION A WHOLLY OWNED SUBSIDIARY OF NASH-FINCH COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: NORWEST BANK MINNESOTA, N.A. BY OVERNIGHT COURIER: BY MAIL: FACSIMILE TRANSMISSION Norwest Shareowner Services Norwest Shareowner Services (For Eligible Institutions Only) 161 North Concord Exchange P.O. Box 64858 (612) 450-4163 Stock Transfer Department St. Paul, MN 55164-0858 Confirm Facsimile by Telephone: South St. Paul, MN 55075 (612) 450-4108
BY HAND: Norwest Shareowner Services Norwest Trust Company of New York 161 North Concord Exchange OR 3 New York Plaza 2nd Floor 15th Floor South St. Paul, MN 55075 New York, NY 10004
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 4 of the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to the accounts maintained by Norwest Bank Minnesota, N.A., as Depositary (the "Depositary"), at The Depository Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and collectively the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 4 of the Offer to Purchase. Holders of Shares whose certificates for Shares are not immediately available, or who are unable to deliver their Shares or confirmation of the book-entry tender of their Shares into the Depositary's account at a Book-Entry Transfer Facility ("Book Entry Confirmation") and all other documents required by this Letter of Transmittal to the Depositary on or prior to the Expiration Date (as defined in the Offer to Purchase), must tender their Shares according to the guaranteed delivery procedure set forth in Section 4 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): NAME OF TENDERING INSTITUTION ............................................ CHECK BOX OF BOOK-ENTRY TRANSFER FACILITY: / / THE DEPOSITORY TRUST COMPANY / / PHILADELPHIA DEPOSITORY TRUST COMPANY ACCOUNT NUMBER ............................................................ TRANSACTION CODE NUMBER ................................................... / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. NAME(S) OF REGISTERED OWNER(S) ............................................ DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY ........................ NAME OF INSTITUTION WHICH GUARANTEED DELIVERY ............................. IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX OF BOOK-ENTRY TRANSFER FACILITY: / / THE DEPOSITORY TRUST COMPANY / / PHILADELPHIA DEPOSITORY TRUST COMPANY ACCOUNT NUMBER ............................................................ TRANSACTION CODE NUMBER ................................................... DESCRIPTION OF TENDERED SHARES
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNERS(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE SHARE CERTIFICATE(S) AND SHARE(S) TENDERED CERTIFICATES) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) TOTAL NUMBER OF CERTIFICATE SHARES REPRESENTED NUMBER OF NUMBER(S)* BY CERTIFICATE(S)* SHARES TENDERED** Total Shares * Need not be completed by stockholders delivering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), the above-described shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, unless the context otherwise requires, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares at a price of $15.50 per Share, net to the seller in cash, without any interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and in this Letter of Transmittal (which together constitute the "Offer"), receipt of which are hereby acknowledged. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to Parent or one or more of its other direct or indirect wholly owned subsidiaries the right to purchase all or any portion of the Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment for the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares and other securities and property issued or issuable or distributed or distributable in respect thereof on or after October 9, 1996 and prior to the transfer to the name of the Purchaser or nominee or transferee of the Purchaser on the Company's stock transfer records of the Shares tendered herewith (collectively, a "Distribution")), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distribution) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to: (i) deliver certificates for such Shares (and any Distribution), or transfer ownership of such Shares (and any Distribution) on the account books maintained by a Book-Entry Transfer Facility, together in any such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase); (ii) present such Shares (and any Distribution) for transfer on the books of the Company; and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distribution), all in accordance with the terms and subject to the conditions of the Offer. The preferred share purchase rights (the "Rights") are presently evidenced by the certificates for Shares and a tender by a stockholder of his Shares will also constitute a tender of the associated Rights unless the Rights are redeemed. If the Rights are redeemed, the $.02 per Right redemption price will be paid to the tendering stockholder. If separate Rights certificates have been distributed to stockholders prior to the date of tender pursuant to the Offer, Rights certificates representing a number of Rights equal to the number of Shares being tendered must be delivered to the Depositary in order for the Shares to be validly tendered. If stockholders are entitled to receive Rights certificates but Rights certificates have not been distributed prior to the time Shares are tendered pursuant to the Offer, a tender of Shares constitutes an agreement by the tendering stockholder to deliver to the Depositary, within three New York Stock Exchange trading days of the date Rights certificates are distributed, Rights certificates representing a number of Rights equal to the number of Shares tendered pursuant to the Offer. The Purchaser reserves the right to require that it receive such Rights certificates, if any have been issued, prior to accepting Shares for payment. In all cases, payment for Shares tendered and purchased pursuant to the Offer will be made only after timely receipt by the Depositary of, among other things, Rights certificates, if such certificates have been distributed to stockholders. The undersigned hereby irrevocably appoints the Purchaser, its officers and its designees, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney-in-fact and proxy or the substitute for any such attorney-in-fact and proxy shall in the sole discretion of each such attorney-in-fact and proxy or his substitutes deem proper, and otherwise act (including pursuant to written consent) with respect to all of the Shares tendered hereby (and any Distribution) which have been accepted for payment by the Purchaser prior to the time of such vote or other action and which the undersigned is entitled to vote at any meeting of stockholders (whether annual or special and whether or not an adjourned meeting), or consent in lieu of any such meeting, or otherwise. This Proxy is irrevocable and coupled with an interest and is granted in consideration of, and is effective upon, the acceptance for payment of such shares by the Purchaser in accordance with the terms of the offer. Such acceptance for payment shall revoke, without further action, any other power of attorney and/ or proxy given by the undersigned at any time with respect to such shares (and any distribution) and no subsequent power of attorney or proxy may be given (and if given will not be effective) with respect thereto by the undersigned. The undersigned understands that the Purchaser expressly reserves the right to require that, in order for Shares to be validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares (and any Distribution), the Purchaser is able to exercise full voting rights and other rights of a record and beneficial holder thereof, including rights in respect of acting by written consent with respect to such Shares (and any Distribution) or voting at any meeting of stockholders. The undersigned hereby represents and warrants that: (i) the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any Distribution) and (ii) when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary, the Purchaser or Parent to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distribution). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser the whole of any dividend, distribution, interest payment or right issued to the undersigned on or after October 9, 1996, in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer. Pending such remittance, the Purchaser shall be entitled to all rights and privileges as owner of any such dividend, distribution, interest payment or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that the tender of Shares pursuant to any of the procedures described in Section 4 of the Offer to Purchase and in the instructions hereto will constitute the tendering stockholder's acceptance of the terms and conditions of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered (and any Distribution), as specified in this Letter of Transmittal. The Purchaser's acceptance for payment of Shares pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or any certificates for Shares not tendered or accepted for payment in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature. In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of, and deliver said check and/or return such certificates to, the person or persons so indicated. The undersigned recognizes that the Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be issued in the name of someone other than the undersigned. Issue / / check / / certificates to: Name ...................................................................... (Please Print) Address ...................................................................... ...................................................................... (Include Zip Code) ...................................................................... (Taxpayer Identification or Social Security Number) (See Substitute Form W-9) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown above. Mail / / check / / certificates to: Name ...................................................................... (Please Print) Address ...................................................................... ...................................................................... (Include Zip Code) IMPORTANT SIGN HERE (COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE) ............................................................................. ............................................................................. Signature(s) of Owner(s) Dated: ................................................................ , 1966 (Must be signed by registered owner(s) exactly as name(s) appear(s) on certificate(s) for Shares or on a security position listing or by person(s) authorized to become registered owner(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s) ...................................................................... ............................................................................. (Please Print) Capacity (full title) ........................................................ Address ...................................................................... ............................................................................. ............................................................................. (Include Zip Code) Area Code and Telephone Numbers .............................................. Taxpayer Identification or Social Security No. .................................................... (See Substitute Form W-9) GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5) Name ......................................................................... (Please Print) Authorized Signature ......................................................... Name of Firm ................................................................. Address ...................................................................... ............................................................................. (including Zip Code) Area Code and Telephone Number ............................................... Dated: ................................................................ , 1966 TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS (SEE INSTRUCTION 9) PAYER'S NAME: NORWEST BANK MINNESOTA, N.A. SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT ------------------------------ FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number OR ------------------------------ Employer Identification Number DEPARTMENT OF THE TREASURY, PART 2 -- Certification -- Under Penalties of PART 3 -- INTERNAL REVENUE SERVICE Perjury, I certify that: PAYER'S REQUEST FOR (1) The number shown on this form is my correct Awaiting TAXPAYER Taxpayer Identification Number (or I am waiting TIN / / IDENTIFICATION NUMBER (TIN) fora number to be issued to me and have checked the box in Part 3) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). SIGNATURE --------------------------------------------- DATE -------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number by the time of payment, 31% of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days. --------------------------------------------------------- ---------------------------------------------------------, 1996 Signature Date INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Shares are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Signature Guarantee Program (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by stockholders either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 4 of the Offer to Purchase. Certificates for tendered Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal prior to the Expiration Date. Stockholders whose certificates are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 4 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange ("NYSE") trading days after the date of execution of such Notice of Guaranteed Delivery. If certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. The method of delivery of certificates for shares and all other required documents, including delivery through any book-entry transfer facility, is at the option and risk of the tendering stockholder. Delivery will be deemed made only when actually received by the depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased (unless you are tendering all of the Shares you own). All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate number(s) and/or the number of Shares and any other required information should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER.) If fewer than all of the Shares evidenced by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such a case, new Share certificate(s) for the Shares that were evidenced by your old Share certificate(s), but were not tendered by you, will be sent to you (unless otherwise provided in the appropriate box on this Letter of Transmittal) as soon as practicable after the Expiration Date. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares not tendered or not purchased are to be issued in the name of a person other than the registered holder(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificate(s) for such Shares. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificate(s) for Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder(s), if a transfer tax is imposed for any reason other than the sale or transfer of Shares to Purchaser pursuant to the Offer, or if tendered certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or an exemption therefrom, is submitted. Except as otherwise provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificate(s) listed in this Letter of Transmittal. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal, or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at any of the Book-Entry Transfer Facilities as such stockholder may designate under "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for tenders of Shares which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. No tender of Shares will be deemed to have been properly made until all defects and irregularities relating thereto have been cured or waived. The Purchaser's interpretation of the terms and conditions of the Offer in this regard will be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, on Substitute Form W-9 below. Failure to provide the information on the form may subject the tendering stockholder or other payee to a $50 penalty. In addition, payments that are made to such stockholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% federal income tax withholding on the payment of the purchase price. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the stockholder must submit a Form W-8, signed under penalties of perjury, attesting that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the Substitute Form W-9 certifying (i) that the TIN provided on the Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and (ii) that (a) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of a failure to report all interest or dividends or (b) the Internal Revenue Service has notified such stockholder that such stockholder is no longer subject to backup withholding. The box in part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number in order to avoid backup withholding. Notwithstanding that the box in part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, if the stockholder or other payee does not provide a properly certified TIN to the Depositary within 60 days, the Depositary will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Depositary. The stockholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust companies. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate evidencing Shares has been lost, destroyed or stolen, the stockholder should promptly notify ChaseMellon Securities Trust Company, c/o ChaseMellon Shareholder Services, LLC, 85 Challenger Road, Overpeck Centre, Ridgefield Park, New Jersey 07660, Attention: Lost Securities Department, at 1-800-313-9450. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW: THE DEPOSITARY FOR THE OFFER IS: NORWEST BANK MINNESOTA, N.A. ------------------------ BY MAIL: BY OVERNIGHT COURIER: FACSIMILE TRANSMISSION Norwest Shareowner Services Norwest Shareowner Services (FOR ELIGIBLE INSTITUTIONS ONLY) P.O. Box 64858 161 North Concord Exchange (612) 450-4163 St. Paul, MN 55164-0858 Stock Transfer Department CONFIRM FACSIMILE BY TELEPHONE: South St. Paul, MN 55075 (612) 450-4108
BY HAND: Norwest Shareowner Services Norwest Trust Company of New York 161 North Concord Exchange OR 3 New York Plaza 2nd Floor 15th Floor South St. Paul, MN 55075 New York, NY 10004
------------------------------ Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of the Offer to Purchase, this Letter of Transmittal and other tender offer materials may be obtained from the Information Agent or the Dealer Manager as set forth below, and will be furnished promptly at the Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (212) 269-5550 (call collect) or Call Toll Free: 1-800-859-8509 THE DEALER MANAGER FOR THE OFFER IS: PIPER JAFFRAY INC. 222 South Ninth Street Minneapolis, MN 55402 Call Toll Free: 1-800-333-6000, Ext. 6373 EX-99.(A)(3) 4 NOTICE OF GUARANTEED NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates representing shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware Corporation (the "Company"), are not immediately available or time will not permit all required documents to reach Norwest Bank Minnesota, N.A. (the "Depositary") on or prior to the Expiration Date (as defined in the Offer to Purchase), or the procedures for delivery by book entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution. See Section 4 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: NORWEST BANK MINNESOTA, N.A. ------------------------ BY OVERNIGHT COURIER: BY MAIL: FACSIMILE TRANSMISSION Norwest Shareowner Services Norwest Shareowner Services (For Eligible Institutions Only) 161 North Concord Exchange P.O. Box 64858 (612) 450-4163 Stock Transfer Department St. Paul, MN 55164-0858 Confirm Facsimile by Telephone: South St. Paul, MN 55075 (612) 450-4108
BY HAND: Norwest Shareowner Services Norwest Trust Company of New York 161 North Concord Exchange 3 New York Plaza 2nd Floor OR 15th Floor South St. Paul, MN 55075 New York, NY 10004
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 9, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedure set forth in Section 4 of the Offer to Purchase. Number of Shares --------------------------- Name(s) of Record Holder(s) ----------------- -------------------------------------------- (Please Print) Certificate No(s). (if available): Address(es): - ---------------- --------------------------------- - -------------------------------------------- -------------------------------------------- (Zip Code) Area Code and Telephone Number(s): --------------------------------------------
(If Share(s) will be tendered by book entry transfer, check one box) / / The Depository Trust Company / / Philadelphia Depository Trust Company Account Number ---------------------------- Signature(s): -------------------------------- Dated: -------------------------------------- --------------------------------------------
THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Association's Medallion Signature Guaranty Program (each an "Eligible Institution"), hereby (a) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended and (b) guarantees to deliver to the Depositary, at one of its addresses set forth above, either the certificates representing all tendered shares, in proper form for transfer, a Book-Confirmation (as defined in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of book-entry delivery of Shares, an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal (unless an Agent's Message is utilized) and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: ------------------------------ -------------------------------------------- (AUTHORIZED SIGNATURE) Address: ------------------------------------ Name -------------------------------------- (PLEASE TYPE OR PRINT) - -------------------------------------------- Title: --------------------------------------- (Zip Code) Area Code and Telephone Number: ---------------------- Date: ---------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 LTR OF BROKERS OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. AT $15.50 NET PER SHARE BY NFC ACQUISITION CORPORATION A WHOLLY OWNED SUBSIDIARY OF NASH-FINCH COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. October 9, 1996 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), to act as financial advisor and Dealer Manager in connection with the Purchaser's offer to purchase all outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), at $15.50 per Share, net to the seller in cash, without any interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"). Please furnish copies of the enclosed materials to those of your clients for whom you hold shares registered in your name or in the name of your nominee. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase dated October 9, 1996; 2. Letter of Transmittal, for your use to tender Shares and for the information of your clients; 3. Notice of Guaranteed Delivery for Shares to be used to accept the Offer if certificates for Shares and all other documents are not immediately available or cannot be delivered to Norwest Bank Minnesota, N.A. (the "Depositary") by the Expiration Date (as defined in the Offer to Purchase) or if the procedures for book-entry transfer cannot be completed by the Expiration Date; 4. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Guidelines of the Internal Revenue Service for certification of Taxpayer Identification Number on Substitute Form W-9; 6. Return envelope addressed to the Depositary; and 7. The letter to stockholders of the Company from the Chairman of the Board and Chief Executive Officer of the Company accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. YOUR PROMPT ACTION IS REQUESTED, WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date a number of Shares which, together with the Shares beneficially owned by Parent, the Purchaser and/or other subsidiaries of Parent, represents at least a majority of the total number of Shares then outstanding on a fully diluted basis, and (ii) the expiration of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. The Offer is also subject to other terms and conditions contained in the Offer to Purchase. See the Introduction and Sections 1, 13 and 16. In order to accept the Offer, a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer of Shares, and any other required documents should be sent to the Depositary, and either certificates representing tendered Shares should be delivered to the Depositary, or Shares should be tendered by book entry transfer into the Depositary's account maintained at one of the Book Entry Transfer Facilities (as defined in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager, as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for reasonable expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of the Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. Very truly yours, PIPER JAFFRAY INC. Minneapolis, MN NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, ANY AFFILIATE OF THE FOREGOING, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 LTR OF CLIENTS OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. AT $15.50 NET PER SHARE BY NFC ACQUISITION CORPORATION A WHOLLY OWNED SUBSIDIARY OF NASH-FINCH COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. October 9, 1996 To Our Clients: Enclosed for your consideration are the Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer") and other materials relating to the Offer by NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), to purchase all outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), at $15.50 per Share, net to the seller in cash, without any interest, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates for such Shares are not immediately available, or who cannot deliver their certificate and all other required documents to Norwest Bank Minnesota, N.A. (the "Depositary") on or prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 4 of the Offer to Purchase. WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $15.50 per Share, net to you in cash, without any interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Offer is being made for all outstanding Shares 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday, November 6, 1996, unless the Offer is extended. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 5. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date, a number of Shares which, together with the Shares beneficially owned by Parent, the Purchaser and/or other subsidiaries of Parent, represents at least a majority of the total number of Shares then outstanding on a fully diluted basis, and (ii) the expiration of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. The Offer is also subject to other terms and conditions contained in the Offer to Purchase. See the Introduction and Sections 1, 13 and 16. 6. The Board of Directors of the Company has unanimously approved the Offer, the Merger (as defined in the Offer to Purchase) and the Merger Agreement (as defined in the Offer to Purchase), has determined that the terms of the Offer and the Merger contemplated thereby are fair to and in the best interests of the stockholders of the Company and recommends that the stockholders accept the Offer and tender their Shares pursuant to the Offer. 7. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for tendered Shares or timely confirmation of the book-entry transfer of such Shares into the account maintained by the Depositary at The Depository Trust Company or the Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities"), pursuant to the procedures set forth in Section 4 of the Offer to Purchase, (b) the Letter of Transmittal or a facsimile thereof, properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when certificates for or confirmations of book- entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility are actually received by the Depositary. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Purchaser by Piper Jaffray Inc., the Dealer Manager for the Offer, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of your Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth below. An envelope to return your instructions to us is enclosed. PLEASE FORWARD YOUR INSTRUCTIONS TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION DATE. The enclosed Letter of Transmittal is furnished to you as an example and should not be used to tender Shares. IF YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET FORTH BELOW. INSTRUCTIONS WITH RESPECT TO: OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. BY NFC ACQUISITION CORPORATION A WHOLLY OWNED SUBSIDIARY OF NASH-FINCH COMPANY The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by NFC Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation, to purchase all outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware corporation, at a purchase price of $15.50 per Share, net to the Seller in cash, without any interest, upon the terms and subject to the conditions set forth in the Offer to Purchase. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to Be Tendered: ____________________________________ Shares* SIGN HERE Signature(s):___________________________________________________________________ Signature(s): __________________________________________________________________ (Print Name(s)): _______________________________________________________________ (Print Address(es)): ___________________________________________________________ (Area Code and Telephone Number(s)): ___________________________________________ (Taxpayer Identification or Social Security Number(s)): ________________________ Dated: ___________, 1996 - ------------------------ *Unless otherwise indicated, it will be assumed that you instruct us to tender all Shares held by us for your account. EX-99.(A)(6) 7 PRESS RELEASE-OCT. 8 CONTACT: Norman R. Soland (612) 844-1153 DATE: October 8, 1996 FOR IMMEDIATE RELEASE - --------------------- NASH-FINCH COMPANY AND SUPER FOOD SERVICES, INC. ENTER INTO MERGER AGREEMENT Minneapolis, October 8 -- Nash Finch Company (Nasdaq: NAFC), the fourth largest public grocery wholesaler, and Super Food Services, Inc. (NYSE: SFS) today announced that they have entered into a definitive merger agreement. The agreement calls for Nash Finch to acquire Super Food in a tender offer. The acquisition has been approved by the boards of directors of both companies. Under the terms of the agreement, Nash Finch will initiate a cash tender offer for all of the outstanding shares of Super Food common stock for $15.50 per share, to be followed by a merger in which any Super Food shares remaining will be exchanged for the same cash price. Super Food has approximately 11.2 million fully diluted shares outstanding, and the tender offer is conditional, among other things, upon there being validly tendered and not withdrawn shares representing at least a majority of such fully diluted shares outstanding and upon expiration of the Hart-Scott-Rodino waiting periods. "This acquisition positions Nash Finch as a bigger player in the consolidating grocery business. The merger of Super Food, with fiscal 1995 sales of approximately $1.2 billion, and Nash Finch, with 1995 sales of approximately $2.9 billion, will create the third largest public grocery wholesaler in the United States. We currently expect 1997 sales of the combined companies to be approximately $4.5 billion. We also expect the acquisition to be accretive to earnings for calendar year 1997," said Al Flaten, Nash Finch president and chief executive officer. "There is no significant geographic overlap of operations. Super Food has significant market presence in Ohio, Michigan and Kentucky, while Nash Finch has especially strong operations in the Midwest and Southeast market areas. With Super Food's strengths in general merchandising and distribution of gourmet foods and Nash Finch's strengths in retail operations, produce marketing, technology and buying, we will be significantly enhancing our operational and marketing opportunities. We welcome Super Food's employees and customers to the Nash Finch family." "We are very pleased to be joining Nash Finch," stated Jack Twyman, chairman and chief executive officer of Super Food. "Both companies have very similar cultures and very strong customer bases. Moreover, the merger will enable us to provide an enhanced level of service for all of our customers." Flaten will continue to serve as president of the merged company, while Twyman will remain with the company to assist with the transition. This release contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially based on factors such as the results of operations of the two companies, the ability of Nash Finch to integrate successfully the operations of Super Food, the ability of Nash Finch to achieve the synergies expected to result from the acquisition, general economic conditions and other risk factors. Super Food Services, based in Dayton, Ohio is a wholesale grocery, distributor, supplying a complete line of food and non-food products to more than 850 retail stores in six states. Nash Finch is one of the largest food wholesalers in the country, supplying products to affiliated and independent supermarkets, other independent retailers and military bases in approximately 30 states. The Company also owns and operates approximately 110 supermarkets, warehouse stores and mass merchandise stores in 16 states, and a produce marketing subsidiary in California. # # # EX-99.(A)(7) 8 PRESS RELEASE-OCT. 9 CONTACT: Norman R. Soland (612) 844-1153 DATE: October 9, 1996 FOR IMMEDIATE RELEASE - --------------------- NASH-FINCH COMPANY BEGINS CASH TENDER OFFER FOR SUPER FOOD SERVICES, INC. Minneapolis, October 9 -- Nash Finch Company (Nasdaq: NAFC) today announced that it has commenced its cash tender offer to purchase all of the outstanding shares of the common stock of Super Food Services, Inc. for $15.50 per share. Unless extended, the offer is scheduled to expire at midnight, New York City time, on Wednesday, November 6, 1996. As announced yesterday, Nash Finch and Super Food entered into a merger agreement, pursuant to which Nash Finch is making the tender offer. The tender offer is conditional, among other things, upon there being validly tendered and not withdrawn prior to the expiration of the tender offer, a number of shares that represents at least a majority of the total outstanding shares of Super Food common stock on a fully diluted basis and upon the expiration of the Hart-Scott-Rodino waiting periods. Shares not acquired in the tender offer will, subject to the terms of the merger agreement, be exchanged in a subsequent merger for the same cash price paid in the tender offer. Super Food Services, based in Dayton, Ohio, is a wholesale grocery distributor, supplying a complete line of food and non-food products to more than 850 retail stores in six states. Nash Finch is one of the largest food wholesalers in the country, supplying products to affiliated and independent supermarkets, other independent retailers and military bases in approximately 30 states. The Company also owns and operates approximately 110 supermarkets, warehouse stores and mass merchandise stores in 16 states, and a produce marketing subsidiary in California. EX-99.(A)(8) 9 FORM OF SUMMARY AD THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES (AS DEFINED BELOW). THE OFFER (AS DEFINED BELOW) IS MADE SOLELY BY THE OFFER TO PURCHASE DATED OCTOBER 9, 1996, AND THE RELATED LETTER OF TRANSMITTAL, AND IS BEING MADE TO ALL HOLDERS OF SHARES. THE PURCHASER (AS DEFINED BELOW) IS NOT AWARE OF ANY STATE WHERE THE MAKING OF THE OFFER IS PROHIBITED BY ADMINISTRATIVE OR JUDICIAL ACTION PURSUANT TO ANY VALID STATE STATUTE. IF THE PURCHASER BECOMES AWARE OF ANY VALID STATE STATUTE PROHIBITING THE MAKING OF THE OFFER OR THE ACCEPTANCE OF SHARES PURSUANT THERETO, THE PURCHASER WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH STATE STATUTE. IF AFTER SUCH GOOD FAITH EFFORT, THE PURCHASER CANNOT COMPLY WITH SUCH STATE STATUTE, THE OFFER WILL NOT BE MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) THE HOLDERS OF SHARES IN SUCH STATE. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE PURCHASER BY PIPER JAFFRAY INC. OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON SHARES OF SUPER FOOD SERVICES, INC. at $15.50 Net Per Share by NFC ACQUISITION CORPORATION a wholly owned subsidiary of NASH-FINCH COMPANY NFC Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Nash-Finch Company, a Delaware corporation ("Parent"), is offering to purchase all outstanding shares of the Common Shares, par value $1.00 per share, including the associated preferred share purchase rights (collectively, the "Shares"), of Super Food Services, Inc., a Delaware corporation (the "Company"), at $15.50 per Share, net to the seller in cash, without any interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 9, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"). Following the Offer, the Purchaser intends to effect the Merger described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 1996, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) A NUMBER OF SHARES OF THE COMPANY WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY PARENT, THE PURCHASER AND/OR OTHER SUBSIDIARIES OF PARENT, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE PURCHASER ESTIMATES THAT APPROXIMATELY 5,620,913 SHARES WILL NEED TO BE VALIDLY TENDERED (AND NOT WITHDRAWN) TO SATISFY THE MINIMUM CONDITION. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of October 8, 1996 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions set forth therein, the Purchaser has agreed to make the Offer and purchase all Shares validly tendered and not withdrawn following the later of (i) the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to the Offer and (ii) the Expiration Date. After the completion of the Offer, the Purchaser will be merged with and into the Company (the "Merger") and each Share then outstanding (other than Shares held by Parent, the Purchaser or any subsidiary of Parent or the Purchaser, or in the treasury of the Company or any subsidiary of Company, all of which will be cancelled, and other than Shares held by stockholders who properly exercise and perfect appraisal rights under the Delaware General Corporation Law) will be converted upon effectiveness of the Merger (the "Effective Time") into the right to receive $15.50 in cash, without any interest. Following the consummation of the Merger, the Company will continue as the surviving corporation and will be a wholly owned subsidiary of Parent. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Simultaneously with entering into the Merger Agreement, Parent and the Purchaser entered into a Stockholder Agreement (the "Stockholder Agreement") with the directors and certain officers of the Company, including Jack Twyman, the Chairman of the Board and Chief Executive Officer, who are stockholders of the Company (the "Tendering Stockholders"). Pursuant to the Stockholder Agreement, each Tendering Stockholder has agreed to tender (and not withdraw) pursuant to the Offer and before the Expiration Date all of the Shares owned of record or beneficially by such Tendering Stockholder (subject to certain exceptions) on the date of the Stockholder Agreement, together with any Shares acquired by any such Tendering Stockholder prior to the termination of the Stockholder Agreement. As of the date hereof, the Tendering Stockholders beneficially own 577,491 Shares, or approximately 5.2% of all outstanding Shares. The Offer is subject to certain conditions set forth in the Offer to Purchase. If any such condition is not satisfied prior to the time of payment for any Shares, the Purchaser may (i) terminate the Offer and return all tendered shares to tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth below, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn, or (iv) delay acceptance for payment of or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions of the Offer. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment (and thereby purchased) tendered Shares as, if and when the Purchaser gives oral or written notice to the Depositary (Norwest Bank Minnesota, N.A.) of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. Payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payments to tendering stockholders. The Purchaser will not, under any circumstances, pay interest on the purchase price, regardless of any delay in making such payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing the Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and (iii) any other documents required by the Letter of Transmittal. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which the Offer is open (but subject to the terms and conditions of the Merger Agreement) by giving oral or written notice of such extension to the Depositary. Any such extension will be followed, as soon as practicable, by public announcement thereof, no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Tenders of Shares made pursuant to the Offer will be irrevocable, except that Shares tendered may be withdrawn at any time prior to the Expiration Date and, unless previously accepted for payment, may also be withdrawn after December 7, 1996. If the Purchaser is delayed in its acceptance or purchase of or payment for Shares or is unable to purchase or pay for Shares for any reason, then, without prejudice to the Purchaser's rights, tendered Shares may be retained by the Depositary on behalf of the Purchaser and may not be withdrawn except as described in the Offer to Purchase. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses specified on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and, if certificates representing such Shares have been delivered or otherwise identified to the Depositary, the name(s) in which such certificate(s) is (are) registered, if different from the name of the person tendering such Shares. If certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the tendering stockholder must also submit the serial numbers shown on the particular certificates evidencing such Shares and the signature on the notice of withdrawal must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office, branch or agency in the United States or any other institution that is a member of the Medallion Signature Guaranty Program (each being referred to herein as an "Eligible Institution"). If Shares have been tendered pursuant to the procedure for book-entry tender set forth in the Offer to Purchase, the notice of withdrawal must specify the name and account number(s) of the account(s) at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and locations as set forth below, and copies will be furnished promptly at the Purchaser's expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 (212) 269-5550 (call collect) or Call Toll Free: 1-800-848-3402 THE DEALER MANAGER FOR THE OFFER IS: PIPER JAFFRAY INC. 222 South Ninth Street Minneapolis, Minnesota 55402 Call Toll Free: 1-800-333-6000, Ext. 6373 October 9, 1996 EX-99.(A)(9) 10 W-D GUIDELINES GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.-- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
-------------------------------------------- -------------------------------------------- GIVE THE GIVE THE EMPLOYER SOCIAL SECURITY IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------- ----------------------------------------------------- 1. An individual's The individual 9. A valid trust, The legal entity 2. account The actual owner of estate, or pension (Do not furnish the Two or more the account or, if trust identifying number individuals (joint combined funds, any of the personal account) one of the representative or individuals(1) trustee unless the legal entity itself is not designated in the account title.)(5) 3. Husband and wife The actual owner of 10. Corporate account The corporation (joint account) the account or, if 11. Religious, The corporation joint funds, either charitable, or person(1) educational organization account 4. Custodian account of The minor(2) 12. Partnership account The partnership a minor (Uniform Gift held in the name of to Minors Act) the business 5. Adult and minor The adult or, if 13. Association, club or The organization (Joint account) the minor is the other tax-exempt only contributor, organization the minor(1) 6. Account in the name The ward, minor, or 14. A broker or The broker or of guardian or incompetent registered nominee nominee committee for a person(3) designated ward, minor, or incompetent person 7. a. The usual The revocable grantor-trustee(1) savings trust 15. Account with the The public entity account (grantor Department of is also trustee) Agriculture in the name of a public entity (such as a State or b. So-called trust The actual owner(1) local government, account that is not a school district, or legal or valid prison) that receives trust under State agricultural program law payments 8. Sole proprietorship The owner(4) account - ----------------------------------------------------- -----------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. - Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payers trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt- interest dividends under section 852). - Payments described in section 6049(b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments, other than interest, dividends and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. - If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. - If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. - Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(B)(1) 11 FORM OF CREDIT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Credit Agreement Dated as of OCTOBER 8, 1996 Among NASH-FINCH COMPANY, THE BANKS SIGNATORY HERETO, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent and BANK OF MONTREAL and PNC BANK, NATIONAL ASSOCIATION, as Syndication Agents - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS SECTION HEADING PAGE SECTION 1. THE COMMITTED FACILITIES. . . . . . . . . . . . . . . . . . . 1 Section 1.1. The Loan Commitments . . . . . . . . . . . . . . . . . . 1 Section 1.2. Letters of Credit. . . . . . . . . . . . . . . . . . . . 1 Section 1.3. Applicable Interest Rates. . . . . . . . . . . . . . . . 4 (a) Base Rate Loans . . . . . . . . . . . . . . . . . . 4 (b) Eurodollar Loans. . . . . . . . . . . . . . . . . . 5 (c) Applicable Margin . . . . . . . . . . . . . . . . . 6 (d) Rate Determinations . . . . . . . . . . . . . . . . 7 Section 1.4. Minimum Borrowing Amount . . . . . . . . . . . . . . . . 7 Section 1.5. Manner of Borrowing Committed Loans. . . . . . . . . . . 7 (a) Notice to the Administrative Agent. . . . . . . . . 7 (b) Notice to the Banks . . . . . . . . . . . . . . . . 8 (c) Borrower's Failure to Notify. . . . . . . . . . . . 8 (d) Disbursement of Committed Loans . . . . . . . . . . 8 Section 1.6. The Swing Line . . . . . . . . . . . . . . . . . . . . . 8 (a) Swing Loans . . . . . . . . . . . . . . . . . . . . 8 (b) Minimum Borrowing Amount. . . . . . . . . . . . . . 9 (c) Interest on Swing Loans . . . . . . . . . . . . . . 9 (d) Requests for Swing Loans. . . . . . . . . . . . . . 9 (e) Refunding Loans . . . . . . . . . . . . . . . . . . 9 (f) Participations. . . . . . . . . . . . . . . . . . . 10 SECTION 2. THE COMPETITIVE BID FACILITY . . . . . . . . . . . . . . . . 10 Section 2.1. The Bid Loans. . . . . . . . . . . . . . . . . . . . . . 10 Section 2.2. Requests for Bid Loans . . . . . . . . . . . . . . . . . 11 (a) Requests and Confirmations. . . . . . . . . . . . . 11 (b) Invitation to Bid . . . . . . . . . . . . . . . . . 11 (c) Bids. . . . . . . . . . . . . . . . . . . . . . . . 11 Section 2.3. Notice of Bids; Advice of Rate . . . . . . . . . . . . . 12 Section 2.4. Acceptance or Rejection of Bids. . . . . . . . . . . . . 12 Section 2.5. Notice of Acceptance or Rejection of Bids. . . . . . . . 13 (a) Notice to Banks Making Bids . . . . . . . . . . . . 13 (b) Disbursement of Bid Loans . . . . . . . . . . . . . 13 (c) Notice to the Banks . . . . . . . . . . . . . . . . 14 Section 2.6. Interest on Bid Loans. . . . . . . . . . . . . . . . . . 14 Section 2.7. Telephonic Notice. . . . . . . . . . . . . . . . . . . . 14 SECTION 3. GENERAL PROVISIONS APPLICABLE TO ALL LOANS. . . . . . . . . . 14 Section 3.1. Interest Periods . . . . . . . . . . . . . . . . . . . . 14 Section 3.2. Maturity of Loans. . . . . . . . . . . . . . . . . . . . 15 -i- Section 3.3. Voluntary Prepayments. . . . . . . . . . . . . . . . . . 15 (a) Committed Loans . . . . . . . . . . . . . . . . . . 15 (b) Fixed Rate Loans. . . . . . . . . . . . . . . . . . 16 (c) Reborrowings. . . . . . . . . . . . . . . . . . . . 16 Section 3.4. Default Rate . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.5. The Notes. . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.6. Commitment Reductions and Terminations . . . . . . . . . 17 (a) Voluntary . . . . . . . . . . . . . . . . . . . . . 17 (b) Upon Incurrence of Indebtedness or Securitization . 17 (c) Unused Credit . . . . . . . . . . . . . . . . . . . 17 (d) Scheduled Mandatory Reduction . . . . . . . . . . . 18 (e) Termination Date. . . . . . . . . . . . . . . . . . 18 (f) Effect of Termination or Reduction. . . . . . . . . 18 Section 3.7. Mandatory Prepayments. . . . . . . . . . . . . . . . . . 18 (a) Out of Proceeds of Indebtedness or Securitization . 18 (b) Upon Change of Control. . . . . . . . . . . . . . . 18 (c) Upon Termination of or Reduction in Commitments . . 19 Section 3.8. Funding Indemnity. . . . . . . . . . . . . . . . . . . . 19 Section 3.9. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 19 SECTION 4. FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 4.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . 20 Section 4.2. Letter of Credit Fees. . . . . . . . . . . . . . . . . . 20 Section 4.3. Bid Loan Fee . . . . . . . . . . . . . . . . . . . . . . 21 Section 4.4. Agents' Fees . . . . . . . . . . . . . . . . . . . . . . 21 Section 4.5. Fee Calculations . . . . . . . . . . . . . . . . . . . . 21 SECTION 5. PLACE AND APPLICATION OF PAYMENTS . . . . . . . . . . . . . . 21 Section 5.1. Place and Application of Payments. . . . . . . . . . . . 21 SECTION 6. DEFINITIONS; INTERPRETATION . . . . . . . . . . . . . . . . . 22 Section 6.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . 22 Section 6.2. Interpretation . . . . . . . . . . . . . . . . . . . . . 34 SECTION 7. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 34 Section 7.1. Corporate Organization and Authority . . . . . . . . . . 35 Section 7.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 35 Section 7.3. Corporate Authority and Validity of Obligations. . . . . 35 Section 7.4. Financial Statements . . . . . . . . . . . . . . . . . . 36 Section 7.5. Material Adverse Change. . . . . . . . . . . . . . . . . 36 Section 7.6. No Litigation; No Labor Controversies. . . . . . . . . . 36 Section 7.7. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 7.8. Approvals. . . . . . . . . . . . . . . . . . . . . . . . 37 Section 7.9. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 37 -ii- Section 7.10. Government Regulation. . . . . . . . . . . . . . . . . . 38 Section 7.11. Margin Stock . . . . . . . . . . . . . . . . . . . . . . 38 Section 7.12. Licenses and Authorizations; Compliance with Laws. . . . 38 Section 7.13. Ownership of Property; Liens . . . . . . . . . . . . . . 38 Section 7.14. No Burdensome Restrictions; Compliance with Agreements . 39 Section 7.15. Tender Offer . . . . . . . . . . . . . . . . . . . . . . 39 Section 7.16. Merger Agreement . . . . . . . . . . . . . . . . . . . . 39 Section 7.17. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 40 (a) Loan. . . . . . . . . . . . . . . . . . . . . . . . 40 (b) Acquisition . . . . . . . . . . . . . . . . . . . . 40 (c) Generally . . . . . . . . . . . . . . . . . . . . . 40 SECTION 8. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 40 Section 8.1. Initial Borrowing. . . . . . . . . . . . . . . . . . . . 41 Section 8.2. All Credit . . . . . . . . . . . . . . . . . . . . . . . 41 Section 8.3. Additional Conditions to Loans other than Refunding Borrowings . . . . . . . . . . . . . . . . . . . . . . . 42 Section 8.4. Initial Tender Credit. . . . . . . . . . . . . . . . . . 42 Section 8.5. Initial Merger Credit. . . . . . . . . . . . . . . . . . 44 Section 8.6. Debt Refinancing Credit. . . . . . . . . . . . . . . . . 44 SECTION 9. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 45 Section 9.1. Corporate Existence; Subsidiaries. . . . . . . . . . . . 45 Section 9.2. Maintenance. . . . . . . . . . . . . . . . . . . . . . . 45 Section 9.3. Taxes and Assessments. . . . . . . . . . . . . . . . . . 46 Section 9.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 46 Section 9.5. Financial Reports. . . . . . . . . . . . . . . . . . . . 46 Section 9.6. Inspection . . . . . . . . . . . . . . . . . . . . . . . 48 Section 9.7. Current Ratio. . . . . . . . . . . . . . . . . . . . . . 48 Section 9.8. Tangible Net Worth . . . . . . . . . . . . . . . . . . . 48 Section 9.9. Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 48 Section 9.10. Interest Coverage Ratio. . . . . . . . . . . . . . . . . 49 Section 9.11. Long-Term Debt . . . . . . . . . . . . . . . . . . . . . 49 Section 9.12. Limits on Aggregate Indebtedness . . . . . . . . . . . . 49 (a) Interim Limit on Borrower . . . . . . . . . . . . . 49 (b) Permanent Limit on Subsidiaries . . . . . . . . . . 49 Section 9.13. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 9.14. Investments, Acquisitions, Loans, Advances and Guaranties . . . . . . . . . . . . . . . . . . . . . 50 Section 9.15. Mergers, Consolidations and Sales. . . . . . . . . . . . 52 Section 9.16. Maintenance of Subsidiaries. . . . . . . . . . . . . . . 53 Section 9.17. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 9.18. Compliance with Laws . . . . . . . . . . . . . . . . . . 54 Section 9.19. Change in the Nature of Business . . . . . . . . . . . . 54 Section 9.20. Use of Loan Proceeds . . . . . . . . . . . . . . . . . . 54 -iii- Section 10. Events of Default and Remedies . . . . . . . . . . . . . 54 Section 10.1. Events of Default. . . . . . . . . . . . . . . . . . . . 54 Section 10.2. Non-Bankruptcy Defaults. . . . . . . . . . . . . . . . . 56 Section 10.3. Bankruptcy Defaults. . . . . . . . . . . . . . . . . . . 57 Section 10.4. Collateral for Undrawn Letters of Credit . . . . . . . . 57 Section 10.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 58 Section 10.6. Notice of Default. . . . . . . . . . . . . . . . . . . . 58 SECTION 11. CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . 58 Section 11.1. Change of Law. . . . . . . . . . . . . . . . . . . . . . 58 Section 11.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR . . . . . . . . . . . 58 Section 11.3. Increased Cost and Reduced Return. . . . . . . . . . . . 59 Section 11.4. Lending Offices. . . . . . . . . . . . . . . . . . . . . 60 Section 11.5. Discretion of Bank as to Manner of Funding . . . . . . . 60 SECTION 12. THE AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 12.1. Appointment and Authorization. . . . . . . . . . . . . . 61 Section 12.2. Agent and Affiliates . . . . . . . . . . . . . . . . . . 61 Section 12.3. Action by Agent. . . . . . . . . . . . . . . . . . . . . 61 Section 12.4. Consultation with Experts. . . . . . . . . . . . . . . . 61 Section 12.5. Liability of Agent . . . . . . . . . . . . . . . . . . . 62 Section 12.6. Indemnification. . . . . . . . . . . . . . . . . . . . . 62 Section 12.7. Credit Decision. . . . . . . . . . . . . . . . . . . . . 62 Section 12.8. Resignation of Agent and Successor Agent . . . . . . . . 62 Section 12.9. Payments . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 12.10. Syndication Agents . . . . . . . . . . . . . . . . . . . 63 SECTION 13. THE GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . . 63 Section 13.1. The Guarantees . . . . . . . . . . . . . . . . . . . . . 63 Section 13.2. Guarantee Unconditional. . . . . . . . . . . . . . . . . 64 Section 13.3. Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances . . . . . . . . . 65 Section 13.4. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 13.5. Limit on Recovery. . . . . . . . . . . . . . . . . . . . 65 Section 13.6. Stay of Acceleration . . . . . . . . . . . . . . . . . . 65 SECTION 14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 14.1. Withholding Taxes. . . . . . . . . . . . . . . . . . . . 66 Section 14.2. No Waiver of Rights. . . . . . . . . . . . . . . . . . . 67 Section 14.3. Non-Business Day . . . . . . . . . . . . . . . . . . . . 67 Section 14.4. Documentary Taxes. . . . . . . . . . . . . . . . . . . . 67 Section 14.5. Survival of Representations. . . . . . . . . . . . . . . 67 -iv- Section 14.6. Survival of Indemnities. . . . . . . . . . . . . . . . . 68 Section 14.7. Sharing of Set-Off . . . . . . . . . . . . . . . . . . . 68 Section 14.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 14.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . 69 Section 14.10. Successors and Assigns . . . . . . . . . . . . . . . . . 69 Section 14.11. Participants . . . . . . . . . . . . . . . . . . . . . . 69 Section 14.12. Assignment Agreements. . . . . . . . . . . . . . . . . . 69 Section 14.13. Amendments . . . . . . . . . . . . . . . . . . . . . . . 70 Section 14.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 14.15. Legal Fees, Other Costs and Indemnification. . . . . . . 71 Section 14.16. Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 14.17. Entire Agreement . . . . . . . . . . . . . . . . . . . . 72 Section 14.18. Governing Law. . . . . . . . . . . . . . . . . . . . . . 72 Section 14.19. Submission to Jurisdiction; Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 72 Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 Exhibit A-1 Committed Note Exhibit A-2 Swing Line Note Exhibit B Bid Note Exhibit C Bid Loan Request Confirmation Exhibit D Invitation to Bid Exhibit E Confirmation of Bid Exhibit F Notice of Acceptance of Bid Exhibit G Notice of Payment Request Exhibit H Compliance Certificate Exhibit I Subsidiary Guarantee Agreement Exhibit J Employee Benefit Plans Exhibit K Form of Opinion of Counsel Exhibit L Existing NF Revolver Debt Exhibit M Existing NF Term Debt Exhibit N Existing Super Food Debt Schedule 7.2 Subsidiaries -v- CREDIT AGREEMENT To each of the Banks signatory hereto Ladies and Gentlemen: The undersigned, Nash-Finch Company, a Delaware corporation (the "BORROWER"), applies to you for your several commitments, subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, to make available credit accommodations to be divided into a committed facility for loans and letters of credit, a committed facility for loans from one of you and a discretionary bid facility for loans, all as more fully hereinafter set forth. Each of you is hereinafter referred to as a "BANK", all of you are hereinafter referred to collectively as the "BANKS" and Harris Trust and Savings Bank ("HARRIS BANK") in its capacity as agent hereunder is hereinafter referred to as the "ADMINISTRATIVE AGENT", and Bank of Montreal and PNC Bank, National Association ("PNC BANK"), in their capacity as co-syndication agents hereunder are hereinafter referred to collectively as the "SYNDICATION AGENTS". SECTION 1. THE COMMITTED FACILITIES. SECTION 1.1. THE LOAN COMMITMENTS. Subject to the terms and conditions hereof, each Bank, by its acceptance hereof, severally agrees to make a loan or loans (individually a "COMMITTED LOAN" and collectively "COMMITTED LOANS") to the Borrower from time to time on a revolving basis in the amount of its commitment to make Committed Loans set forth on the applicable signature page hereof (its "COMMITMENT" and cumulatively for all the Banks the "COMMITMENTS") (subject to any reductions thereof pursuant to the terms hereof) prior to the Termination Date. The sum of the aggregate principal amount of outstanding Loans (whether Committed Loans, Swing Loans or Bid Loans) and L/C Obligations shall not exceed the Commitments then in effect. Each Borrowing of Committed Loans shall be made ratably from the Banks in proportion to their respective Percentages. As provided in Section 1.5(a) hereof, the Borrower may elect that each Borrowing of Committed Loans be made available by means of (i) Eurodollar Loans or (ii) Base Rate Loans, or any combination thereof. Each Borrowing of Committed Loans may be repaid and the principal amount thereof reborrowed prior to the Termination Date, subject to all reductions in the Commitments and all other terms and conditions hereof. SECTION 1.2. LETTERS OF CREDIT. (a) GENERAL TERMS. Subject to the terms and conditions hereof, as part of the credit available under the Commitments, the Administrative Agent shall from time to time issue standby or commercial letters of credit (each a "LETTER OF CREDIT") for the Borrower's account (whether or not also for the account of any Subsidiary as well) five (5) calendar days prior to the Termination Date, in an aggregate undrawn face amount up to the amount of the L/C Commitment, provided that the aggregate L/C Obligations at any time outstanding shall not exceed the difference between the Commitments in effect at such time and the aggregate principal amount of Loans (whether Committed Loans, Swing Loans or Bid Loans) then outstanding. Each Letter of Credit shall be issued by the Administrative Agent, but each Bank shall be obligated to reimburse the Administrative Agent for its Percentage of the amount of each drawing thereunder and, accordingly, the undrawn face amount of each Letter of Credit shall constitute usage of the Commitment of each Bank PRO RATA in accordance with each Bank's Percentage. (b) TERM. Each Letter of Credit issued hereunder shall expire not later than the earlier of (i) one year from the date issued (or if the same has a longer expiry date or no expiry date, shall be cancelable not later than one year from the date of issuance and, if the same can be renewed, shall be cancelable not later than one year from each renewal or extension, as the case may be) or (ii) five (5) calendar days prior to the Termination Date. (c) GENERAL CHARACTERISTICS. Each Letter of Credit issued hereunder shall be payable in U.S. Dollars, shall conform to the general requirements of the Administrative Agent for the issuance of standby or commercial letters of credit, as the case may be, as to form and substance, and shall be a letter of credit which the Administrative Agent may lawfully issue. (d) APPLICATIONS. At the time the Borrower requests any Letter of Credit to be issued (or prior to the first issuance of a Letter of Credit, in the case of a continuing application), the Borrower shall execute and deliver to the Administrative Agent an application for such Letter of Credit in the form customarily prescribed by the Administrative Agent for a Letter of Credit of the type of Letter of Credit, whether standby or commercial, requested (individually an "APPLICATION" and collectively the "APPLICATIONS"). Notwithstanding anything contained in any Application to the contrary, (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 4.2 hereof, (ii) except upon the occurrence and during the continuance of an Event of Default, the Administrative Agent will not call for the funding by the Borrower of any amount under a Letter of Credit, or any other form of collateral security for the Borrower's obligations in connection with such Letter of Credit, before being presented with a drawing thereunder, and (iii) if the Administrative Agent is not timely reimbursed in accordance with Section 1.2(e) hereof (whether out of the proceeds of a Loan, including a Committed Loan made pursuant to Section 1.5(c) hereof or otherwise) for the amount of any drawing under a Letter of Credit on the date such drawing is paid, the Borrower's obligation to reimburse the Administrative Agent for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of 2% PLUS the Applicable Margin for Base Rate Loans PLUS the Base Rate from time to time in effect. Notwithstanding anything contained in any Application to the contrary, if the Administrative Agent issues any Letter of Credit with an expiration date that is automatically extended unless the Administrative Agent gives notice that the expiration date will not so extend beyond its then scheduled expiration date, the Administrative Agent will give such notice of non-renewal before the time necessary to prevent such automatic extension if before such required notice date (i) the expiration date of such Letter of Credit if so extended would be subsequent to the date which is five (5) calendar days prior to the Termination Date, (ii) the Commitments have been terminated, or (iii) a Default or Event of Default exists and the Required Banks have given the -2- Administrative Agent instructions not to so permit the extension of the expiration date of such Letter of Credit. Notwithstanding anything contained in any Application to the contrary, the Administrative Agent agrees to issue amendments to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of the Borrower subject to the conditions of Section 8 and the other terms of this Section 1.2. (e) THE REIMBURSEMENT OBLIGATIONS. Subject to Section 1.2(d) hereof, the obligation of the Borrower to reimburse the Administrative Agent for all drawings under a Letter of Credit (a "REIMBURSEMENT OBLIGATION") shall be governed by the Application related to such Letter of Credit, except that reimbursement of a drawing paid shall be made by no later than 11:00 a.m. (Chicago time) on the date when a drawing is paid in immediately available funds at the Administrative Agent's principal office in Chicago, Illinois; any payment of a Reimbursement Obligation received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. If the Borrower does not make any such reimbursement payment on the date due and the Participating Banks fund their participations therein in the manner set forth in Section 1.2(f) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 1.2(f) below. (f) THE PARTICIPATING INTERESTS. Each Bank (other than the Bank then acting as Administrative Agent in issuing Letters of Credit), by its acceptance hereof, severally agrees to purchase from the Administrative Agent, and the Administrative Agent hereby agrees to sell to each such Bank (a "PARTICIPATING BANK"), an undivided percentage participating interest (a "PARTICIPATING INTEREST"), to the extent of its Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the Administrative Agent. Upon any failure by the Borrower to pay any Reimbursement Obligation at the time required on the date the related drawing is paid, as set forth in Section 1.2(e) above, or if the Administrative Agent is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Bank shall, not later than the Business Day it receives a certificate in the form of Exhibit G hereto from the Administrative Agent to such effect, if such certificate is received before 1:00 p.m. (Chicago time), or not later than the following Business Day, if such certificate is received after such time, pay to the Administrative Agent an amount equal to such Participating Bank's Percentage of such unpaid or recaptured Reimbursement Obligation, such payment to be made in lawful money in the United States, in immediately available funds at the Administrative Agent's principal office in Chicago, Illinois, together with interest on such amount accrued from the date the related payment was made by the Administrative Agent to the date of such payment by such Participating Bank at a rate per annum equal to (i) from the date the related payment was made by the Administrative Agent to the date two (2) Business Days after payment by such Participating Bank is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the Base Rate in effect for each such day. Each such Participating Bank shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation -3- and of interest paid thereon, with the Administrative Agent retaining its Percentage as a Bank hereunder. The several obligations of the Participating Banks to the Administrative Agent under this Section 1.2 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be subject to any set- off, counterclaim or defense to payment which any Participating Bank may have or have had against the Borrower, the Administrative Agent, any other Bank or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Commitment of any Bank, and each payment by a Participating Bank under this Section 1.2 shall be made without any offset, abatement, withholding or reduction whatsoever. The Administrative Agent shall be entitled to offset amounts received for the account of a Bank under this Agreement against unpaid amounts due from such Bank to the Administrative Agent hereunder (whether as fundings of participations, indemnities or otherwise), but shall not be entitled to offset against amounts owed to the Administrative Agent by any Bank arising outside this Agreement. (g) OUTSTANDING AMOUNT OF LETTERS OF CREDIT. For all purposes of this Agreement, Letters of Credit shall be deemed outstanding as of any time in an amount equal to the aggregate undrawn amount then available thereunder plus all unpaid Reimbursement Obligations then outstanding. For such purposes, the undrawn amount available under a Letter of Credit shall be the maximum amount which can be drawn thereunder under any circumstances and over any period of time. (h) INDEMNIFICATION. The Participating Banks shall, to the extent of their respective Percentages, indemnify the Administrative Agent (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Administrative Agent's gross negligence or willful misconduct) that the Administrative Agent may suffer or incur in connection with any Letter of Credit. The obligations of the Participating Banks under this Section 1.2(h) and all other parts of this Section 1.2 shall survive termination of this Agreement and of all other L/C Documents. SECTION 1.3. APPLICABLE INTEREST RATES. (a) BASE RATE LOANS. Each Base Rate Loan made by a Bank shall bear interest (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is made until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin PLUS the Base Rate from time to time in effect, payable on the last day of the applicable Interest Period and at maturity (whether by acceleration or otherwise). "BASE RATE" means for any day the greater of: -4- (i) the rate of interest announced by the Administrative Agent from time to time as its prime commercial rate, or equivalent, as in effect on such day, with any change in the Base Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate; and (ii) the sum of (x) the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers on such day, as set forth opposite the caption "FEDERAL FUND (EFFECTIVE)" in the daily statistical release designated as "COMPOSITE 3:30 P.M. QUOTATIONS FOR U.S. GOVERNMENT SECURITIES", or any successor publication, published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, PROVIDED THAT (i) if such day is not a Business Day, the rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on any such next succeeding Business Day, the rate for such day shall be the average of the rates quoted to the Agent by two or more New York or Chicago Federal funds brokers on such day for such transactions as determined by the Agent, PLUS (y) 1/2 of 1% (0.50%). (b) EURODOLLAR LOANS. Each Eurodollar Loan made by a Bank shall bear interest (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is made until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin PLUS the Adjusted LIBOR, payable on the last day of the applicable Interest Period and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than three months, on each day occurring every three months after the date such Loan is made. "ADJUSTED LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per annum determined in accordance with the following formula: LIBOR ------------------------------------ Adjusted LIBOR = 100% - Eurodollar Reserve Percentage "LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rate of interest per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two Business Days before the beginning of such Interest Period by at least two major banks in the London interbank eurodollar market for a period equal to such Interest Period and in an amount equal or comparable to the applicable Eurodollar Loan scheduled to be outstanding from the Administrative Agent during such Interest Period. Each determination of LIBOR made by the Administrative Agent shall be conclusive and binding on the Borrower and the Banks absent manifest error. -5- "LIBOR INDEX RATE" means, for any Interest Period, the rate per annum for deposits in U.S. Dollars for a period equal to such Interest Period which appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the date two Business Days before the commencement of such Interest Period. "TELERATE PAGE 3750" means the display designated as "Page 3750" on the Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Banker's Association Interest Settlement Rates for U.S. Dollar deposits). "EURODOLLAR RESERVE PERCENTAGE" means, for any Borrowing of Eurodollar Loans, the daily average for the applicable Interest Period of the maximum rate at which reserves (including, without limitation, any supplemental, marginal and emergency reserves) are imposed during such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) under Regulation D on "EUROCURRENCY LIABILITIES", as defined in such Board's Regulation D (or in respect of any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any category of extension of credit or other assets that include loans by non-United States offices of any Bank to United States residents), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the Eurodollar Loans shall be deemed to be "EUROCURRENCY LIABILITIES" as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. (c) APPLICABLE MARGIN. With respect to Committed Loans and the facility fee payable under Section 4.1 hereof, the "Applicable Margin" shall mean the rate specified for such Obligation below, subject to adjustment as hereinafter provided:
Applicable Applicable Margin Margin Applicable When Following For Base Rate For Eurodollar Margin Status Exists Loans Is: Loans Is: For Facility Fee Is: Level I Status 0% .200% .100% Level II Status 0% .250% .125% Level III Status 0% .300% .175% Level IV Status 0% .450% .200% Level V Status 0% .700% .300%
-6- PROVIDED, HOWEVER, that all of the foregoing is subject to the following: (i) changes in the Applicable Margin resulting from a change in the S&P Rating or Moody's Rating shall become effective five (5) Business Days after the Administrative Agent is notified of the relevant change by the Borrower (the Borrower hereby agreeing to notify the Administrative Agent of any such change promptly upon the same becoming effective) or any Bank; (ii) if a Single Rating Status determined solely by reference to the S&P Rating (the "S&P ONLY STATUS") is more than one status level apart from the Single Rating Status then determined solely by reference to the Moody's Rating (the "MOODY'S ONLY STATUS"), then, notwithstanding anything herein to the contrary, the Applicable Margin shall be the average of the Applicable Margins for, respectively, the S&P Only Status and the Moody's Only Status, as reasonably determined by the Administrative Agent; (iii) the initial Applicable Margin in effect on the date hereof shall be the Applicable Margin for Level II Status; and (iv) if and so long as any Event of Default has occurred and is continuing hereunder, notwithstanding anything herein to the contrary, upon notice to the Borrower by the Administrative Agent at the request of the Required Banks, the Applicable Margin shall be the Applicable Margin for Level V Status. (d) RATE DETERMINATIONS. The Administrative Agent shall determine each interest rate applicable to the Committed Loans and its determination shall be conclusive and binding except in the case of manifest error or willful misconduct. SECTION 1.4. MINIMUM BORROWING AMOUNT. Each Borrowing of Eurodollar Loans shall be in an amount not less than $10,000,000, or any larger amount that is an integral multiple of $1,000,000. Each Borrowing of Base Rate Loans shall be in an amount not less than $5,000,000, or any larger amount that is an integral multiple of $1,000,000. SECTION 1.5. MANNER OF BORROWING COMMITTED LOANS. (a) NOTICE TO THE ADMINISTRATIVE AGENT. In order to borrow any Committed Loans, the Borrower shall give telephonic or telecopy notice to the Administrative Agent (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing) by no later than (i) 11:00 a.m. (Chicago time) on the date at least three (3) Business Days prior to the date of each requested Borrowing of Eurodollar Loans and (ii) 11:00 a.m. (Chicago time) on the date of any requested Borrowing of Base Rate Loans. Each such notice shall specify the date of the requested Borrowing (which shall be a Business Day), the amount of the requested Borrowing, the type of Loans to comprise such Borrowing, and, if such Borrowing is to be comprised of Eurodollar Loans, the Interest Period applicable thereto. The Borrower agrees that the Administrative Agent may rely on any such telephonic or telecopy notice given by any person who identifies himself or herself -7- as being an Authorized Representative of the Borrower without the necessity of independent investigation and, in the event any telephonic notice conflicts with the written confirmation, such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon. (b) NOTICE TO THE BANKS. The Administrative Agent shall give prompt telephonic or telecopy notice to each Bank of any notice from the Borrower received pursuant to Section 1.5(a) above and, if such notice requests the Banks to make Eurodollar Loans, the Administrative Agent shall give notice to the Borrower and each of the Banks by like means of the interest rate applicable thereto promptly after the Administrative Agent has made such determination. (c) BORROWER'S FAILURE TO NOTIFY. In the event the Borrower fails to give notice pursuant to Section 1.5(a) above of the reborrowing of the principal amount of any maturing Borrowing of Committed Loans and has not notified the Administrative Agent by 11:00 a.m. (Chicago time) on the day such Borrowing matures that it intends to repay such Borrowing, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on such day in the amount of the maturing Borrowing of Committed Loans, subject to Section 8.2 hereof. In the event the Borrower fails to give notice pursuant to Section 1.5(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 11:00 a.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on such day in the amount of the Reimbursement Obligation then due, subject to Section 8 hereof, which Borrowing shall be applied to pay the Reimbursement Obligation then due. (d) DISBURSEMENT OF COMMITTED LOANS. Not later than 1:00 p.m. (Chicago time) on the date of any Borrowing, each Bank shall make available its Committed Loan in funds immediately available in Chicago, Illinois at the principal office of the Administrative Agent, except to the extent such Borrowing is a reborrowing, in whole or in part, of the principal amount of a maturing Borrowing of Committed Loans (a "REFUNDING BORROWING"), in which case each Bank shall record the Committed Loan made by it as a part of such Refunding Borrowing on its books and records or on a schedule to its Committed Loan Note, as provided in Section 3.5(c) hereof, and shall effect the repayment, in whole or in part, as appropriate, of its maturing Committed Loan through the proceeds of such new Committed Loan. Subject to Section 8 hereof, the Administrative Agent shall make the proceeds of each non-Refunding Borrowing available to the Borrower at the Administrative Agent's principal office in Chicago, Illinois. SECTION 1.6. THE SWING LINE. (a) SWING LOANS. Subject to all of the terms and conditions hereof, Harris Bank agrees to make loans in U.S. Dollars to the Borrower under the Swing Line ("SWING LOANS") which shall not in the aggregate at any time outstanding exceed the lesser of (i) the Swing Line Commitment or (ii) the difference between (x) the Commitments in effect at such time and (y) the Loans and L/C Obligations outstanding at the time of computation. The Swing -8- Line Commitment shall be available to the Borrower and may be availed of by the Borrower from time to time and borrowings thereunder may be repaid and used again during the period ending on the Termination Date. Without regard to the face principal amount of the Swing Line Note, the actual principal amount at any time outstanding and owing by the Borrower on account of the Swing Line Note on any date during the period ending on the Termination Date shall be the sum of all Swing Loans then or theretofor made thereon through such date less all payments actually received thereon through such date. (b) MINIMUM BORROWING AMOUNT. Each Swing Loan shall be in an amount not less than $250,000. (c) INTEREST ON SWING LOANS. Each Swing Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed) for the Interest Period selected therefor at the Harris Bank's Quoted Rate for such Interest Period, PROVIDED that if any Swing Loan is not paid when due (whether by lapse of time, acceleration or otherwise) such Swing Loan shall bear interest whether before or after judgment, until payment in full thereof through the end of the Interest Period then applicable thereto at the rate set forth in Section 3.4 hereof. Interest on each Swing Loan shall be due and payable on the last day of each Interest Period applicable thereto, and interest after maturity (whether by lapse of time, acceleration or otherwise) shall be due and payable upon demand. (d) REQUESTS FOR SWING LOANS. The Borrower shall give Harris Bank prior notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on the date upon which the Borrower requests that any Swing Loan be made, of the amount and date of such Swing Loan and the Interest Period selected therefor. Within thirty (30) minutes after receiving such notice, Harris Bank shall quote an interest rate determined in its discretion to the Borrower at which Harris Bank would be willing to make such Swing Loan available to the Borrower for such Interest Period (the rate so quoted for a given Interest Period being herein referred to as "HARRIS BANK'S QUOTED RATE"). The Borrower acknowledges and agrees that the interest rate quote is given for immediate and irrevocable acceptance, and if the Borrower does not so immediately accept Harris Bank's Quoted Rate for the full amount requested by the Borrower for such Swing Loan, the Harris Bank's Quoted Rate shall be deemed immediately withdrawn and such Swing Loan shall not be made. Subject to all of the terms and conditions hereof, the proceeds of such Swing Loan shall be made available to the Borrower on the date so requested at the offices of the Administrative Agent in Chicago, Illinois. Anything contained in the foregoing to the contrary notwithstanding (i) the obligation of Harris Bank to make Swing Loans shall be subject to all of the terms and conditions of this Agreement and (ii) Harris Bank shall not be obligated to make more than one Swing Loan during any one day. (e) REFUNDING LOANS. In its sole and absolute discretion, Harris Bank may at any time, on behalf of the Borrower (which hereby irrevocably authorizes Harris Bank to act on its behalf for such purpose), request each Bank to make a Committed Loan in an amount equal to such Bank's Percentage of the amount of the Swing Loans outstanding on the date such notice is given. Unless any of the conditions of Section 8.2 are not fulfilled on such -9- date, each Bank shall make the proceeds of its requested Committed Loan available to Harris Bank, in immediately available funds, at the principal office of Harris Bank in Chicago, Illinois, before 12:00 Noon (Chicago time) on the Business Day following the day such notice is given. The proceeds of such Committed Loans shall be immediately applied to repay the outstanding Swing Loans. (f) PARTICIPATIONS. If any Bank refuses or otherwise fails to make a Committed Loan when requested by Harris Bank pursuant to Section 1.6(e) above (because the conditions in Section 8.2 are not satisfied or otherwise), such Bank will, by the time and in the manner such Committed Loan was to have been funded to Harris Bank, purchase from Harris Bank an undivided participating interest in the outstanding Swing Loans in an amount equal to its Percentage of the aggregate principal amount of Swing Loans that were to have been repaid with such Committed Loans. Each Bank that so purchases a participation in a Swing Loan shall thereafter be entitled to receive its Commitment Percentage of each payment of principal received on the Swing Loan and of interest received thereon accruing from the date such Bank funded to Harris Bank its participation in such Loan. The obligation of the Banks to Harris Bank shall be absolute and unconditional and shall not be affected or impaired by any Default or Event of Default which may then be continuing hereunder. SECTION 2. THE COMPETITIVE BID FACILITY. SECTION 2.1. THE BID LOANS. The Borrower may request the Banks to offer to make uncommitted loans (each a "BID LOAN" and collectively the "BID LOANS") in the manner set forth in this Section 2 and in amounts such that (i) the aggregate principal amount of all outstanding Loans (whether Committed Loans, Swing Loans or Bid Loans) and L/C Obligations shall not exceed the Commitments then in effect and (ii) no Bid Loan shall be made if, at the time thereof or after giving effect thereto, the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2. Each Bank may offer to make Bid Loans in any amount (whether greater than, equal to, or less than its Commitment), subject to the (a) limitations that (i) the aggregate principal amount of all Loans (whether Committed Loans, Swing Loans or Bid Loans) and L/C Obligations outstanding at any time shall not at any time exceed the Commitments then in effect and (ii) no Bid Loan shall be made if, at the time thereof or after giving effect thereto, the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect and (b) the other conditions of this Agreement. Bid Loans may either bear interest at a stated rate per annum ("STATED RATE BID LOANS") or at a margin above or below the applicable Adjusted LIBOR ("EURODOLLAR BID LOANS"); PROVIDED that there may be no more than six (6) different Interest Periods for both Stated Rate Bid Loans and Eurodollar Bid Loans outstanding at the same time. -10- SECTION 2.2. REQUESTS FOR BID LOANS. (a) REQUESTS AND CONFIRMATIONS. In order to request a Borrowing of Bid Loans (a "BID LOAN REQUEST"), the Borrower shall give telephonic notice to the Administrative Agent no later than (i) in the case of a request for one or more Eurodollar Bid Loans, 11:00 a.m. (Chicago time) on the date at least five (5) Business Days before the proposed date of such borrowing, which must be a Business Day (the "BORROWING DATE"), and (ii) in the case of a request for one or more Stated Rate Bid Loans, 11:00 a.m. (Chicago time) on the date at least one (1) Business Day before the proposed Borrowing Date, in each case followed on the same day by a duly completed Bid Loan Request Confirmation, delivered by telecopier or other means of facsimile communication, substantially in the form of Exhibit C hereto or otherwise containing the information required by this Section (a "BID LOAN REQUEST CONFIRMATION"), to be received by the Administrative Agent no later than 11:30 a.m. (Chicago time) on such day. Bid Loan Request Confirmations that do not conform substantially to the format of Exhibit C or otherwise contain the information required by this Section 2.2 may be rejected by the Administrative Agent, and the Administrative Agent shall give telephonic notice to the Borrower of such rejection promptly after it determines (which determination shall be conclusive) that the Bid Loan Request Confirmation does not substantially conform to the format of Exhibit C or otherwise contain the information required by this Section 2.2. Requests for Bid Loans shall in each case refer to this Agreement and specify (i) the proposed Borrowing Date (which must be a Business Day), (ii) the aggregate principal amount thereof (which shall not be less than $5,000,000 and shall be an integral multiple of $1,000,000, except as provided in Section 2.4(ii) hereof) and (iii) up to three (3) Interest Periods with respect to the entire amount specified in such Bid Loan Request (and, if so desired by the Borrower, specifying the maximum amount the Borrower would borrow for any specific Interest Period), which in the case of Stated Rate Bid Loans shall be 1 to 180 days after the Borrowing Date and in the case of Eurodollar Bid Loans shall be 1, 2, 3, 4, 5, or 6 months after the Borrowing Date, but with no maturity to extend beyond the Termination Date. (b) INVITATION TO BID. Upon receipt by the Administrative Agent of a Bid Loan Request Confirmation that conforms substantially to the format of Exhibit C hereto or otherwise contains the information required by this Section 2.2, the Administrative Agent shall, by telephone (no later than 1:00 p.m. (Chicago time) on the same day the Administrative Agent receives a Bid Loan Request Confirmation), promptly confirmed by a telecopy or other form of facsimile communication in the form of Exhibit D hereto, invite each Bank to bid, on the terms and conditions of this Agreement, to make Bid Loans pursuant to the Bid Loan Request. (c) BIDS. Each Bank may, in its sole discretion, offer to make a Bid Loan or Loans (a "BID") to the Borrower responsive to the Bid Loan Request. Each Bid by a Bank must be received by the Administrative Agent by telephone not later than (i) 9:00 a.m. (Chicago time) on the proposed Borrowing Date in the case of a Bid for a Stated Rate Loan and (ii) 11:00 a.m. (Chicago time) four (4) Business Days prior to the proposed Borrowing Date in the case of a Bid for a Eurodollar Loan, in each case promptly confirmed in writing by a duly completed Confirmation of Bid delivered by telecopier or other means of -11- facsimile communication substantially in the form of Exhibit E hereto or otherwise containing the information required by this subsection (c) (a "CONFIRMATION OF BID"), to be received by the Administrative Agent on the same day; PROVIDED, HOWEVER, that any Bid made by the Administrative Agent must be made by telephone to the Borrower by no later than fifteen minutes prior to the time that Bids from the other Banks are required to be received. Each Bid and each Confirmation of Bid shall refer to this Agreement and specify (i) the principal amount (which shall not be less than $5,000,000 and shall be an integral multiple of $1,000,000) of each Bid Loan that the Bank is willing to make to the Borrower and the type of Bid Loan (i.e., Stated Rate Bid Loan or Eurodollar Bid Loan), (ii) the interest rate (which shall be computed on the basis of a 360 day year and actual days elapsed for a period equal to the Interest Period applicable thereto) or spread above or below the applicable Adjusted LIBOR, in each case at which the Bank is prepared to make each Bid Loan and (iii) the Interest Period applicable to each such offered Bid Loan. The Administrative Agent shall reject any Bid if such Bid (i) does not specify all of the information specified in the immediately preceding sentence, (ii) contains any qualifying, conditional, or similar language, (iii) proposes terms other than or in addition to those set forth in the Bid Loan Request to which it responds, or (iv) is received by the Administrative Agent later than the time required for such Bid Loan. Any Bid submitted by a Bank pursuant to this Section 2.2 shall be irrevocable and shall be promptly confirmed by a telecopy or other form of facsimile communication in the form of Exhibit E; PROVIDED THAT in all events the telephone Bid received by the Administrative Agent shall be binding on the relevant Bank and shall not be altered, modified, or in any other manner affected by any inconsistent terms contained in, or terms missing from, the Bank's Confirmation of Bid. Each offer contained in a Bid to make a Bid Loan in a certain amount, at a certain interest rate, and for a certain Interest Period is referred to herein as an "OFFER". SECTION 2.3 NOTICE OF BIDS; ADVICE OF RATE. The Administrative Agent shall give telephonic notice to the Borrower of the number of Bids made, the interest rate(s) and Interest Period(s) applicable to each Bid, the maximum principal amount bid at each interest rate for each Interest Period, and the identity of the Bank making such Bid, such notice to be given by (i) 10:00 a.m. (Chicago time) on the Borrowing Date in the case of Bid Loan Requests for Stated Rate Bid Loans or (ii) 1:00 p.m. (Chicago time) four (4) Business Days before the proposed Borrowing Date in the case of Bid Loan Requests for Eurodollar Bid Loans. SECTION 2.4. ACCEPTANCE OR REJECTION OF BIDS. The Borrower may in its sole and absolute discretion, subject only to the provisions of this Section 2.4, irrevocably accept or reject, in whole or in part, any Offer contained in a Bid. The Borrower shall give telephonic notice to the Administrative Agent of whether and to what extent it has decided to accept or reject any or all of the Offers contained in the Bids made in response to a Bid Loan Request to be received by the Administrative Agent by no later than 10:30 a.m. (Chicago time) (i) on the proposed Borrowing Date, in the case of Stated Rate Bid Loans or (ii) three (3) Business Days before the proposed Borrowing Date, in the case of Eurodollar Bid Loans, which notice shall be promptly confirmed by a telecopy or other form of facsimile communication; PROVIDED, HOWEVER, that in the event any Offers are accepted (i) the Borrower shall accept Offers for any of the Interest Periods specified by the Borrower in its -12- Bid Loan Request Confirmation solely on the basis of ascending interest rates or spreads, as the case may be, for each such Interest Period, (ii) if the Borrower accepts an Offer for a Bid Loan at a particular interest rate for a particular Interest Period but declines to borrow, or is in such event restricted by any other condition hereof from borrowing, the maximum principal amount of Bid Loans in respect of which Offers at such particular interest rate for such particular Interest Period have been made, then the Borrower shall accept a PRO RATA portion of each such Offer at such rate and for such Interest Period, based as nearly as possible on the ratio of the maximum aggregate principal amounts of Bid Loans for which each such Offer was made by each Bank (PROVIDED THAT, if the available principal amount of Bid Loans to be so allocated is not sufficient to enable Bid Loans to be so allocated to each relevant Bank in integral multiples of $1,000,000, then the Administrative Agent may round allocations up or down in integral multiples not less than $500,000 as it shall deem appropriate), (iii) the aggregate principal amount of all Offers accepted by the Borrower shall not exceed the maximum amount contained in the related Bid Loan Request Confirmation, (iv) no Offer of a Bid Loan shall be accepted in a principal amount less than $5,000,000 and thereafter in integral multiples of $1,000,000, except as provided in the immediately preceding clause (ii) and (v) no offer of a Bid Loan shall be accepted if, at the time thereof or after giving effect thereto, (x) the aggregate principal amount of all outstanding Loans (whether Committed Loans, Swing Loans or Bid Loans) and L/C Obligations would exceed the Commitments then in effect or (y) the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect. Any telephone notice given by the Borrower pursuant to this Section 2.4 shall be irrevocable and shall not be altered, modified, or in any other manner affected by any inconsistent terms contained in, or terms missing from, any written confirmation of such notice. SECTION 2.5. NOTICE OF ACCEPTANCE OR REJECTION OF BIDS. (a) NOTICE TO BANKS MAKING BIDS. The Administrative Agent shall give telephonic notice to each Bank whether any of the Offers contained in its Bid has been accepted (and if so, in what amount, at what interest rate or spread, as applicable, and for what Interest Period) no later than 11:00 a.m. (Chicago time) (i) on the proposed Borrowing Date in the case of Stated Rate Bid Loans and (ii) three (3) Business Days before the proposed Borrowing Date in the case of Eurodollar Bid Loans, and each successful bidder will thereupon become bound, subject to Section 8 and the other applicable conditions hereof, to make the Bid Loan(s) in respect of which its Bid has been accepted. As soon as practicable thereafter the Administrative Agent shall send written notice substantially in the form of Exhibit F hereto to each such successful bidder; PROVIDED, HOWEVER, that failure to give such notice shall not affect the obligation of such successful bidder to disburse its Bid Loans as herein required. (b) DISBURSEMENT OF BID LOANS. Not later than 12:00 noon (Chicago time) on the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to make a Bid Loan(s) in accordance with Section 2.5(a) shall make available to the Administrative Agent the principal amount of each such Bid Loan in immediately available funds at the Administrative Agent's principal office in Chicago, Illinois. The Administrative Agent shall -13- promptly thereafter make available to the Borrower like funds as received from each Bank, at such office of the Administrative Agent in Chicago, Illinois. (c) NOTICE TO THE BANKS. As soon as practicable after each Borrowing Date for Bid Loans, the Administrative Agent shall notify each Bank of the aggregate amount of Bid Loans advanced pursuant to a Bid Loan Request on such Borrowing Date, the Interest Period(s) therefor, and the lowest and highest interest rates or spreads, as applicable, at which Bid Loans were made for each Interest Period. SECTION 2.6. INTEREST ON BID LOANS. The Borrower shall pay interest on the unpaid principal amount of each Stated Rate Bid Loan from the applicable Borrowing Date to the maturity thereof at the rate of interest applicable to such Stated Rate Bid Loan as determined pursuant to the above provisions (calculated on the basis of a 360 day year and the actual number of days elapsed) payable on the last day of the Interest Period applicable to such Stated Rate Bid Loan and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than 90 days, on each day occurring every 90 days after the date such Loan is made. Each Eurodollar Bid Loan made by a Bank shall bear interest, which interest shall be payable, as provided in Section 1.3(b) hereof. SECTION 2.7. TELEPHONIC NOTICE. Each Bank's telephonic notice to the Administrative Agent of its Bid pursuant to Section 2.2(c), and the Borrower's telephonic acceptance of any Offer contained in a Bid pursuant to Section 2.4, shall be irrevocable and binding on such Bank and the Borrower and shall not be altered, modified, or in any other manner affected by any inconsistent terms contained in, or missing from, any telecopy or other confirmation of such telephonic notice. It is understood and agreed by the parties hereto that the Administrative Agent shall be entitled to act, or to fail to act, hereunder in reliance on its records of any telephonic notices provided for herein and that the Administrative Agent shall not incur any liability to any Person in so doing if its records conflict with any telecopy or other confirmation of a telephone notice or otherwise, provided that the Administrative Agent has acted, or failed to act, in good faith. SECTION 3. GENERAL PROVISIONS APPLICABLE TO ALL LOANS. SECTION 3.1. INTEREST PERIODS. As provided in Section 1.5 hereof in the case of Committed Loans, in Section 1.6(d) hereof in the case of Swing Loans and in Section 2.2 hereof in the case of Bid Loans, at the time of each request for the Borrowing of Loans hereunder, the Borrower shall select an Interest Period applicable to such Loans from among the available options. The term "INTEREST PERIOD" means the period commencing on the date a Borrowing of Loans is made and ending, (a) in the case of Base Rate Loans, on the last day of the calendar quarter in which such Loan is made (I.E. the first to occur of March 31, June 30, September 30, and December 31 following the date such Borrowing is made); (b) in the case of Eurodollar Loans, the date, as the Borrower may select, 1, 2, 3 or 6 months thereafter; (c) in the case of Stated Rate Bid Loans, on the date, as the Borrower may select, 1 to 180 days thereafter; (d) in the case of Eurodollar Bid Loans, on the date, as the Borrower may select, 1, 2, 3, 4, 5, or 6 months thereafter; and (e) in the case of Swing -14- Loans, on the date, as the Borrower may select, 1-7 days thereafter; PROVIDED, HOWEVER, that: (a) any Interest Period for a Borrowing of Base Rate Loans commencing less than 90 days before the Termination Date shall end on the Termination Date; (b) with respect to any Borrowing of Fixed Rate Loans, the Borrower may not select an Interest Period that extends beyond the Termination Date; (c) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, PROVIDED THAT, in the case of an Interest Period for a Borrowing of Eurodollar Loans or Eurodollar Bid Loans, if such extension would cause the last day of such Interest Period to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; (d) for purposes of determining the Interest Period for a Borrowing of Eurodollar Loans or Eurodollar Bid Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; PROVIDED, HOWEVER, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end; and (e) prior to February 8, 1997, (i) neither any Eurodollar Loan nor any Eurodollar Bid Loan shall have an Interest Period in excess of one month and (ii) no Stated Rate Bid Loan shall have an Interest Period in excess of 30 days. SECTION 3.2. MATURITY OF LOANS. Each Loan shall mature and become due and payable by the Borrower on the last day of the Interest Period applicable thereto. SECTION 3.3. VOLUNTARY PREPAYMENTS. (a) COMMITTED LOANS. The Borrower shall have the privilege of prepaying without premium or penalty any Borrowing of Base Rate Loans in whole or in part (but, if in part, then in an amount not less than $1,000,000 and in integral multiples of $1,000,000 and in an amount such that the minimum amount required for a Borrowing of Base Rate Loans pursuant to Section 1.4 hereof remains outstanding) at any time upon prior notice to the Administrative Agent (which shall advise each Bank thereof promptly thereafter), such prepayment to be made by the payment of the principal amount to be prepaid and accrued interest thereon to the date fixed for prepayment. The Borrower may prepay any Borrowing of Eurodollar Loans in whole or in part (but, if in part, then in an amount not less than $1,000,000 and in integral multiples of $1,000,000 and in an amount such that the minimum amount required for a Borrowing of Eurodollar Loans pursuant to Section 1.4 hereof remains outstanding) at any time upon one (1) Business Day prior notice to the Administrative Agent (which shall advise each Bank thereof promptly thereafter), such prepayment to be made by the payment of the principal amount to be -15- prepaid and accrued interest thereon to the date fixed for prepayment together with any compensation required by Section 3.8 hereof. (b) FIXED RATE LOANS. The Borrower may not voluntarily prepay any Bid Loan or any Swing Loan in each case before its maturity. (c) REBORROWINGS. Any amount paid or prepaid before the Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again. SECTION 3.4. DEFAULT RATE. If any payment of principal on any Loan is not made when due (whether by acceleration or otherwise), such Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed or, if based on the Base Rate, on the basis of a year of 365 or 366 days, as applicable, and the actual number of days elapsed) from the date such payment was due until paid in full, payable on demand, at a rate per annum equal to: (a) with respect to any Base Rate Loan, the sum of two percent (2%) PLUS the Base Rate from time to time in effect PLUS the Applicable Margin; and (b) with respect to any Fixed Rate Loan, the sum of two percent (2%) PLUS the rate of interest in effect thereon at the time of such default (including the effect of any increase to Level V Status as a result of such default) until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of two percent (2%) PLUS the Base Rate from time to time in effect PLUS the Applicable Margin for Base Rate Loans. SECTION 3.5. THE NOTES. (a) All Committed Loans made to the Borrower by a Bank shall be evidenced by a promissory note of the Borrower (individually a "COMMITTED LOAN NOTE" and collectively the "COMMITTED LOAN NOTES"), each such Committed Loan Note to be payable to the order of the applicable Bank in the principal amount of its Commitment and otherwise in the form of Exhibit A-1 hereto. (b) All Swing Loans made to the Borrower by Harris Bank shall be evidenced by a promissory note of the Borrower (the "SWING NOTE"), the Swing Note to be payable to Harris Bank's order in the principal amount of its Swing Line Commitment and otherwise in the form of Exhibit A-2 hereto. (c) All Bid Loans made to the Borrower by a Bank shall be evidenced by a promissory note of the Borrower in the form of Exhibit B hereto (individually a "BID NOTE" and collectively the "BID NOTES"), each such Bid Note to be in the form of Exhibit B hereto. (d) Each Bank shall record on its books and records or on a schedule to the appropriate Note the amount of each Loan made by it to the Borrower, the Interest Period thereof, all payments of principal and interest and the principal balance from time to time outstanding thereon, the type of such Loan, and, in respect of any Fixed Rate Loan, the -16- Interest Period and the interest rate applicable thereto; PROVIDED THAT prior to the transfer of any Note such information relating to any outstanding Loans made by such Bank shall be recorded on the back of such Note or on a schedule to such Note. The record thereof, whether shown on such books and records of a Bank or on a schedule to any Note, shall be PRIMA FACIE evidence as to all such matters; PROVIDED, HOWEVER, that the failure of any Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Loans made to it hereunder together with accrued interest thereon. At the request of any Bank and upon such Bank tendering to the Borrower the Note to be replaced, the Borrower shall furnish a new Note to such Bank to replace any outstanding Note (which will be exchanged for such new Note) and at such time the first notation appearing on a schedule on the reverse side of, or attached to, such new Note shall set forth the aggregate unpaid principal amount of all Loans, if any, then outstanding thereon. SECTION 3.6. COMMITMENT REDUCTIONS AND TERMINATIONS. (a) VOLUNTARY. The Borrower shall have the right at any time and from time to time, upon five (5) Business Days' prior written notice to the Administrative Agent, to terminate without premium or penalty, in whole or in part, the Commitments, any partial termination to be in an amount not less than $10,000,000 or any larger amount that is an integral multiple of $1,000,000, and to reduce ratably each Bank's Commitment; PROVIDED THAT the Commitments may not be reduced to an amount less than the aggregate principal amount of Loans and L/C Obligations then outstanding. Any reduction of the Commitments to a level below the Swing Line Commitment shall effect a concurrent reduction in the Swing Line Commitment so as to equal the total Commitments after giving effect to such reduction. (b) UPON INCURRENCE OF INDEBTEDNESS OR SECURITIZATION. On the date of receipt thereof by the Borrower or any of its Subsidiaries, the Commitments shall reduce by an amount equal to (i) 100% of the gross proceeds (net of reasonable costs directly incurred and payable as a result thereof) of the incurrence after the date hereof of indebtedness for borrowed money by the Borrower or any Subsidiary (other than (x) the Loans hereunder and (y) other such indebtedness for borrowed money to the extent the aggregate amount of such other indebtedness incurred in any one calendar year does not exceed $5,000,000 and incurred after the date hereof on a cumulative basis does not exceed $10,000,000) or (ii) 50% of the gross proceeds (net of costs directly incurred and payable as a result thereof) of the sale in a securitization or similar transaction after the date hereof of accounts receivable by the Borrower or any Subsidiary; PROVIDED, HOWEVER, that the Commitments shall not be reduced below $350,000,000 as a result of this clause (b). (c) UNUSED CREDIT. On April 8, 1997, the Commitments shall reduce by an amount equal to the lesser of (i) $300,000,000 or (ii) the sum of: (a) the principal amount then outstanding (or if a revolving credit facility, then the maximum principal amount of credit then available) on (i) the Existing Super Food Debt and (ii) the Existing NF Term Debt; plus -17- (b) the excess (if any) of (i) $180,000,000 over (ii) the aggregate cumulative principal amount of Acquisition Credit (excluding Refunding Borrowings) extended on or prior to such date. (d) SCHEDULED MANDATORY REDUCTION. On December 31, 1998, the Commitments shall be reduced to $400,000,000 in the aggregate, unless sooner terminated or reduced in part to such level pursuant to the above provisions of this Section 3.6. (e) TERMINATION DATE. Notwithstanding anything herein to the contrary, on the Termination Date, the Commitments and the Swing Line Commitment shall in each case be reduced to $0. (f) EFFECT OF TERMINATION OR REDUCTION. Any termination or reduction of the Commitments or the Swing Line Commitment pursuant to this Section 3.6 may not be reinstated. Each such partial termination or reduction of the Commitments shall reduce ratably each Bank's Commitment. SECTION 3.7. MANDATORY PREPAYMENTS. (a) OUT OF PROCEEDS OF INDEBTEDNESS OR SECURITIZATION. On the date of receipt thereof by the Borrower or any of its Subsidiaries, the Borrower shall prepay the Loans and (in the manner contemplated by Section 10.4 hereof) the L/C Obligations by an amount equal to 100% of the gross proceeds (net of reasonable costs directly incurred and payable as a result thereof) of (i) the incurrence after the date hereof of indebtedness for borrowed money by the Borrower or any Subsidiary (other than (x) the Loans hereunder and (y) other such indebtedness for borrowed money to the extent the aggregate amount of such other indebtedness incurred in any one calendar year does not exceed $5,000,000 and incurred after the date hereof on a cumulative basis does not exceed $10,000,000) or (ii) the sale in any securitization or similar transaction after the date hereof of accounts receivable by the Borrower or any Subsidiary. Notwithstanding anything in this Section 3.7(a) to the contrary, the Borrower shall not be required to make any prepayment of any Fixed Rate Loan pursuant to this Section 3.7(a) until the last day of the Interest Period with respect thereto SO LONG AS an amount equal to the principal amount of such Fixed Rate Loan is deposited by the Borrower in a segregated cash collateral account with the Administrative Agent for the ratable benefit of the Banks to be held in such account on terms reasonably satisfactory to the Administrative Agent. The amount held on deposit in such account shall if and when requested by the Borrower be invested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, or other investments mutually satisfactory to the Borrower and the Administrative Agent. On the last day of such Interest Period, the amount held in such account shall be applied so as to make such prepayment, and except during the continuance of any Event of Default, any balance remaining on deposit in such account after such application shall be remitted to the Borrower. (b) UPON CHANGE OF CONTROL. If, within thirty (30) days after receiving notice under Section 9.5 of a Change of Control, the Required Banks notify the Borrower that they require prepayment of the Notes, on the date set forth in such notice (which date shall be no -18- earlier than (x) five (5) days after such notice is given or (y) the day on which the Borrower repays any other Debt before its original scheduled due date, whichever day is earlier), the Borrower shall pay in full all Obligations then outstanding, including the prepayment of L/C Obligations in the manner contemplated by Section 10.4 hereof, and the Commitments and Swing Line Commitment shall terminate in full. (c) UPON TERMINATION OF OR REDUCTION IN COMMITMENTS. Except to the extent the second sentence of Section 3.7(a) provides otherwise, the Borrower shall, on the date the Commitments or Swing Line Commitment are terminated or reduced in whole or in part pursuant to Section 3.6 above, prepay the Notes by the amount, if any, necessary to reduce the aggregate principal amount of Loans and L/C Obligations to the amount to which the Commitments or Swing Line Commitment in each case have been reduced, such prepayment to be accompanied by accrued interest thereon to the date of prepayment together with any compensation due the Banks under Section 3.8 hereof (with any prepayment of L/C Obligations to be made in the manner contemplated by Section 10.4 hereof). SECTION 3.8. FUNDING INDEMNITY. In the event any Bank shall incur any loss, cost or expense (including, without limitation, any loss of profit, and any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Bank to fund or maintain any Fixed Rate Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Bank) as a result of: (a) any payment or prepayment of a Fixed Rate Loan on a date other than the last day of its Interest Period for any reason, whether before or after default, and whether or not such payment is required by any provisions of this Agreement, or (b) any failure (because of a failure to meet the conditions of Section 8 or otherwise) by the Borrower to borrow a Fixed Rate Loan on the date specified in a notice given pursuant to Section 1.5, 1.6(d) or 2.4 hereof, then, upon the demand of such Bank, the Borrower shall pay to such Bank such amount as will reimburse such Bank for such loss, cost or expense. If any Bank makes such a claim for compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a certificate executed by an officer of such Bank setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate if reasonably calculated shall be conclusive. SECTION 3.9. USE OF PROCEEDS. The proceeds of the Loans and Letters of Credit shall only be used to (i) purchase of Super Food Shares tendered pursuant to the Tender Offer and to pay Transaction Costs related to the Tender Offer (each Loan and Letter of Credit, in each case to the extent used for such purposes, being hereinafter referred to as "TENDER CREDIT") and (ii) make cash payments in respect of the Super Food Shares which are converted into a right to receive cash (including as a result of the exercise of appraisal rights) in connection with the Merger and to pay Transaction Costs related to the Merger (each Loan and Letter of Credit, in each case to the extent used for such purposes, being -19- hereinafter referred to as "MERGER CREDIT") and (iii) repay each and any issue of the Existing Super Food Debt (each separate issue to the extent repaid, must be repaid in full, not in part) and to pay Transaction Costs related to such repayment (each Loan or Letter of Credit, in each case to the extent used for such purposes, being hereinafter referred to as "SUPER FOOD DEBT REFINANCING CREDIT") (the Tender Credit, Merger Credit and Super Food Debt Refinancing Credit being hereinafter referred to collectively as "ACQUISITION CREDIT") and (iv) repay each and any issue of the Existing NF Revolver Debt (each separate issue to the extent repaid, must be repaid in full, not in part) and to pay Transaction Costs related to such repayment (each Loan or Letter of Credit, in each case to the extent used for such purposes, being hereinafter referred to as "NF REVOLVER REFINANCING CREDIT") and (v) repay each and any issue of the Existing NF Term Debt (each separate issue to the extent repaid, must be repaid in full, not in part) and to pay Transaction Costs related to such repayment (each Loan or Letter of Credit, in each case to the extent used for such purposes, being hereinafter referred to as "NF TERM REFINANCING CREDIT") (Super Food Debt Refinancing Credit, NF Revolver Refinancing Credit and NF Term Refinancing Credit being hereinafter referred to collectively as "REFINANCING CREDIT") and (vi) to provide working capital for the Borrower and its Subsidiaries (each Loan or Letter of Credit, in each case to the extent used for such purposes, being hereinafter referred to as "WORKING CAPITAL CREDIT"); PROVIDED, HOWEVER, that not more than $240,000,000 in aggregate cumulative principal amount of the Loans and Letters of Credit shall constitute Acquisition Credit. SECTION 4. FEES. SECTION 4.1. FACILITY FEE. The Borrower shall pay to the Administrative Agent for the ratable account of the Banks a facility fee at the rate equal to the Applicable Margin (as then determined and computed) on the average daily amount of the Commitments hereunder (whether used or unused), payable in arrears on the last day of each March, June, September, and December, commencing with the first of such dates after the date hereof, and on the Termination Date. SECTION 4.2. LETTER OF CREDIT FEES. On the date of issuance or extension, or increase in the amount, of any standby Letter of Credit pursuant to Section 1.2 hereof, the Borrower shall pay to the Administrative Agent for its own account an issuance fee equal to 1/10 of 1% (0.10%) of the face amount of (or of the increase in the face amount of) such standby Letter of Credit. In addition, the Borrower shall pay to the Administrative Agent for its own account (i) the Administrative Agent's standard issuance fee for each commercial Letter of Credit and (ii) the Administrative Agent's standard drawing, negotiation, amendment, and other administrative fees for each Letter of Credit (such standard fees referred to in the preceding clauses (i) and (ii) may be established by the Administrative Agent from time to time). Quarterly in arrears, on the last day of each calendar quarter, commencing on the first of such dates after the date hereof, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Banks in accordance with their Percentages, a letter of credit fee at a rate per annum equal to the Applicable Margin for Eurodollar Loans in effect during each day of such quarter applied to the daily average face amount of Letters of Credit outstanding during such quarter. -20- SECTION 4.3. BID LOAN FEE. The Borrower shall pay to the Administrative Agent for its own account an administrative fee for each Bid Loan Request by the Borrower, such fee to be in the amount agreed to in a letter exchanged between the Borrower and the Agents dated October 4, 1996 and to be payable no later than 3:00 p.m. (Chicago time) on the date each such Bid Loan Request is received and to be deemed fully earned whether or not any Bid Loan is made pursuant to such Bid Loan Request. SECTION 4.4. AGENTS' FEES. The Borrower shall pay to the Agents the fees agreed to in a letter exchanged between them dated October 4, 1996. SECTION 4.5. FEE CALCULATIONS. All fees payable under Sections 4.1 and 4.2 hereof shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. SECTION 5. PLACE AND APPLICATION OF PAYMENTS. SECTION 5.1. PLACE AND APPLICATION OF PAYMENTS. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other amounts payable by the Borrower under this Agreement, shall be made to the Administrative Agent by no later than 12:00 noon (Chicago time) at the principal office of the Administrative Agent in Chicago, Illinois (or such other location in the State of Illinois as the Administrative Agent may designate to the Borrower). Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. All such payments shall be made in U.S. Dollars, in immediately available funds at the place of payment. All such payments shall be made, in all cases, without set-off or counterclaim and, subject to Section 14.1 hereof, without reduction for, and free from, any and all present or future taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions or conditions of any nature imposed by any government or any political subdivision or taxing authority thereof (but excluding any taxes imposed or measured by the net income of any Bank). The Administrative Agent will promptly thereafter (and in any case before the close of business on the day the Administrative Agent receives such funds, if timely received by the Administrative Agent) cause to be distributed like funds relating to the payment of principal or interest on Committed Loans or fees ratably to the Banks and like funds relating to the payment of any other amount payable to any Bank to such Bank, in each case to be applied in accordance with the terms of this Agreement. If the Administrative Agent fails to distribute such payments to any Bank by such times, the Administrative Agent shall pay to such Bank interest on the amount not paid in respect of each day during the period commencing on the date such payment was received by the Administrative Agent (or the following Business Day in the case of payments received after 12:00 noon (Chicago time)) and ending on but excluding the date the Administrative Agent pays such amount at a rate per annum equal to the effective rate charged to the Administrative Agent for overnight federal funds transactions with member banks of the federal reserve system for each day as determined by the Administrative Agent (or in the case of a day which is not a Business Day, then for the preceding day). -21- Anything contained herein to the contrary notwithstanding, all payments and collections received in respect of the indebtedness evidenced by the Notes and Applications received, in each instance, by the Administrative Agent or any of the Banks after the occurrence of an Event of Default shall be remitted to the Administrative Agent and distributed as follows: (a) first, to the payment of any reasonable outstanding costs and expenses incurred by the Administrative Agent in protecting, preserving or enforcing rights under this Agreement, the Notes and the Applications and in any event including all reasonable costs and expenses of a character which the Borrower has agreed to pay under Section 14.15 hereof (such funds to be retained by the Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Banks, in which event such amounts shall be remitted to the Banks to reimburse them for payments theretofore made to the Administrative Agent); (b) second, to the payment of any outstanding interest or other fees or indemnification amounts due under the Notes, the Applications or this Agreement other than for principal, ratably as among the Administrative Agent and the Banks in accord with the amount of such interest and other fees or amounts owing each; (c) third, to the payment of the principal of the Notes, any liabilities in respect of Reimbursement Obligations and to the Administrative Agent to be held as collateral security for any undrawn Letters of Credit (until the Administrative Agent is holding an amount of cash equal to the then outstanding amount of all such Letters of Credit), the aggregate amount paid to or held as collateral security for the Banks to be allocated pro rata as among the Banks in accord with the then respective aggregate unpaid principal balances of the Notes and the Letters of Credit; (d) fourth, to the Administrative Agent and the Banks ratably in accord with the amounts of other Obligations owing to each of them (other than those described above) unless and until all such indebtedness, obligations and liabilities have been fully paid and satisfied; and (e) fifth, to the Borrower or whoever may be lawfully entitled thereto. . SECTION 6.1. DEFINITIONS. The following terms when used herein have the following meanings: "ACQUISITION" shall mean (x) the Tender Offer and (y) the Merger. "ACQUISITION CREDIT" is defined in Section 3.9 hereof. "ACQUISITION PERIOD" means the period commencing on the date of the initial extension of Tender Credit and concluding with the Merger. -22- "ADJUSTED LIBOR" is defined in Section 1.3(b) hereof. "ADMINISTRATIVE AGENT" means Harris Trust and Savings Bank and any successor pursuant to Section 12.8 hereof. "AFFILIATE" shall mean any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Borrower, (ii) which beneficially owns or holds 5% or more of any class of the Voting Stock of the Borrower or (iii) 5% or more of the Voting Stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by the Borrower or a Subsidiary. The term "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. "AGENTS" mean the Administrative Agent and the Syndication Agents. "APPLICABLE MARGIN" is defined in Section 1.3(c) hereof. "APPLICATION" is defined in Section 1.2(d) hereof. "AUTHORIZED REPRESENTATIVE" means those persons shown on the list of officers provided by the Borrower pursuant to Section 8.1(d) hereof or on any update of any such list provided by the Borrower to the Administrative Agent, or any further or different officer(s) or employee(s) of the Borrower so named by any Authorized Representative of the Borrower in a written notice to the Administrative Agent. "BANK" means each bank signatory hereto and its successors, and any assignee of a Bank pursuant to Section 14.12 hereof. "BASE RATE" is defined in Section 1.3(a) hereof. "BASE RATE LOAN" means a Loan bearing interest at the rate specified in Section 1.3(a) hereof. "BID" is defined in Section 2.2(c) hereof. "BID LOAN" is defined in Section 2.1 hereof. "BID LOAN LIMIT" shall mean an amount (x) equal to the Commitments if and so long as Level I Status, Level II Status or Level III Status exist, (y) equal to 50% of the Commitments if and so long as Level IV Status exists and (z) equal to $0 at all other times. "BID LOAN REQUEST" is defined in Section 2.2(a) hereof. "BID LOAN REQUEST CONFIRMATION" is defined in Section 2.2(a) hereof. -23- "BID NOTE" is defined in Section 3.5(b) hereof. "BORROWER" is defined in the introductory paragraph of this Agreement. "BORROWING" means the total of Loans of a single type made by one or more Banks on a single date and for a single Interest Period. Borrowings of Committed Loans are made and maintained ratably from each of the Banks according to their Percentages. Borrowings of Bid Loans are made from a Bank or Banks in accordance with the procedures of Section 2 hereof. Borrowings of Swing Loans are made from Harris Bank in accordance with the procedures of Section 1.6 hereof. "BORROWING DATE" is defined in Section 2.2(a) hereof. "BUSINESS DAY" means (a) any day other than a Saturday or Sunday on which (x) banks are not authorized or required to close in Chicago, Illinois or New York, New York and (y) the Federal Reserve Bank for such cities is generally open for transaction of its business and (b) if the applicable Business Day relates to the borrowing or payment of a Eurodollar Loan, any day satisfying the criteria set forth in the immediately preceding clause (a) on which banks are dealing in United States Dollar deposits in the interbank market in London, England and Nassau, Bahamas. "CAPITAL LEASE" means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee. "CAPITALIZED LEASE OBLIGATIONS" means, for any Person, the amount of such Person's liabilities under Capitalized Leases determined at any date in accordance with GAAP. "CERCLA" is defined in Section 7.12(b) hereof. "CHANGE OF CONTROL" means the occurrence of any of the following circumstances: (a) any Person or two or more Persons acting in concert acquire beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934), directly or indirectly, of Securities of the Borrower (or other Securities convertible into such Securities) representing 25% or more of the combined voting power of all Securities of the Borrower entitled to vote in the election of directors; or (b) during any period of up to 12 consecutive months, whether commencing before or after the date hereof, the membership of the Board of Directors of the Borrower changes for any reason (other than by reason of death, disability, or scheduled retirement) so that the majority of the Board of Directors is made up of Persons who were not directors at the beginning of such 12 month period. "CODE" means the Internal Revenue Code of 1986, as amended. -24- "COMMITMENTS" is defined in Section 1.1 hereof. "COMMITTED LOANS" in defined in Section 1.1 hereof. "COMMITTED LOAN NOTE" is defined in Section 3.5(a) hereof. "COMPLIANCE CERTIFICATE" means a certificate in the form of Exhibit H hereto. "CONFIRMATION OF BID" is defined in Section 2.2(c) hereof. "CONSOLIDATED NET INCOME" means, for any period, the net income (or net loss) of the Borrower and its Subsidiaries for such period computed on a consolidated basis in accordance with GAAP, but in any event excluding any extraordinary profits and losses and also excluding any taxes on such profits and any tax credits on account of such losses. "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its Property is bound. "CONTROLLED GROUP" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Code. "CREDIT EVENT" means the advancing of any Loan, including any Refunding Borrowing, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit. "CURRENT MATURITIES" shall mean, as applied to any Person as at any date of determination, all payments of principal due under the terms of Indebtedness of such Person within twelve calendar months after that date. "CURRENT RATIO" means, at any time the same is to be determined, the ratio of current assets of the Borrower and its Subsidiaries to current liabilities of the Borrower and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP consistently applied, but in any event excluding the Loans from current liabilities for such purposes. "DCGL" shall mean the Delaware General Corporation Law. "DEBT" means, for any Person, any Indebtedness of such Person only of the types described in clauses (i) through (v) of the definition of such term. "DEBT REFINANCING CREDIT" is defined in Section 3.9 hereof. "DEFAULT" means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. -25- "EBIT" means, for any period, Consolidated Net Income for such period PLUS all amounts deducted in arriving at such Consolidated Net Income amount for such period for Interest Expense and for federal, state and local income tax expense. "EBITDA" means, for any period, Consolidated Net Income for such period PLUS all amounts deducted in arriving at such Consolidated Net Income amount for such period for Interest Expense and for federal, state and local income tax expense and for amortization of intangibles and for depreciation of property, plant and equipment in accordance with GAAP. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA AFFILIATE" shall mean with respect to any Person, any (i) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Person, (ii) partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code) with such Person, and (iii) member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as such Person, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above. "EURODOLLAR BID LOANS" is defined in Section 2.1 hereof. "EURODOLLAR LOAN" means a Loan bearing interest at the rate specified in Section 1.3(b) hereof. "EURODOLLAR RESERVE PERCENTAGE" is defined in Section 1.3(b) hereof. "EVENT OF DEFAULT" means any of the events or circumstances specified in Section 10.1 hereof. "EXISTING DEBT" means the Existing NF Revolver Debt, the Existing NF Term Debt and the Existing Super Food Debt. "EXISTING NF REVOLVER DEBT" means the revolving credit facilities currently available to the Borrower and its Subsidiaries listed on Exhibit L attached hereto. "EXISTING NF TERM DEBT" means the term credit facilities currently available to the Borrower and its Subsidiaries listed on Exhibit M attached hereto. "EXISTING SUPER FOOD DEBT" means the revolving and term credit facilities currently available to Super Food and its subsidiaries listed on Exhibit N attached hereto. "FACILITY FEE" means the fee payable by the Borrower to the Banks under Section 4.1 hereof. -26- "FEDERAL FUNDS RATE" shall mean the Federal funds rate described in clause (ii) (x) of the definition of Base Rate. "FIXED RATE LOAN" means Eurodollar Loans, Swing Loans and Bid Loans. "FOREIGN SUBSIDIARY" shall mean (i) each Subsidiary of the Borrower which is organized under the laws of a jurisdiction other than the United States of America or any State thereof and (ii) each Subsidiary of the Borrower of which a majority of the revenues, earnings or total assets (determined on a consolidated basis with that Subsidiary's subsidiaries) are located or derived from operations outside of the United States of America. "GAAP" means generally accepted accounting principles as in effect from time to time, applied by the Borrower and its Subsidiaries on a basis consistent with the preparation of the Borrower's most recent financial statements furnished to the Banks pursuant to Section 7.4(a) hereof. "GUARANTOR" means each Subsidiary of the Borrower that executes and delivers to the Administrative Agent a Subsidiary Guarantee Agreement in the form of Exhibit I hereto along with the accompanying closing documents required by Sections 8.1 or 9.1 hereof, as applicable. "GUARANTY" by any Person means (a) all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person to guarantee or otherwise indemnify in respect of, or to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, or to assure an obligee against failure to make payment in respect of, Debt of others and (b) without duplication, all obligations of such Person arising out of letters of credit (except to the extent such letters of credit back up indebtedness that constitutes Debt of such Person). For the purpose of all computations made under this Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the maximum aggregate amount of such obligation or, if the Guaranty is limited to less than the full amount of such obligation, the maximum aggregate potential liability under the terms of the Guaranty. "HARRIS BANK" is defined in the introductory paragraph hereof. "INDEBTEDNESS" means and includes, for any Person, all obligations of such Person, without duplication, which are required by GAAP to be shown as liabilities on its balance sheet, and in any event shall include all of the following whether or not so shown as liabilities (i) obligations of such Person for borrowed money, (ii) obligations of such Person representing the deferred purchase price of property or services other than accounts payable arising in the ordinary course of business on terms customary in the trade, (iii) obligations of such Person evidenced by notes, acceptances, or other instruments of such Person (iv) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (v) Capitalized Lease Obligations of such Person and (vi) obligations for which such Person is obligated pursuant to a Guaranty. -27- "INTEREST COVERAGE RATIO" means, for any period of four consecutive fiscal quarters of the Borrower ending with the most recently completed such fiscal quarter, the ratio of EBIT to Interest Expense for such period; PROVIDED, HOWEVER, that (a) the Interest Coverage Ratio as of the fiscal quarter of the Borrower ending on or about March 22, 1997 shall mean the ratio of (x) the quotient which results by dividing (i) EBIT for the fiscal quarter of the Borrower then ended by (ii) 0.17 to (y) the quotient which results by dividing (i) Interest Expense for the same one fiscal quarter by (ii) 0.25; (b) the Interest Coverage Ratio as of the fiscal quarter of the Borrower ending on or about June 14, 1997 shall mean the ratio of (x) the quotient which results by dividing (i) EBIT for the two fiscal quarters of the Borrower then ended by (ii) 0.43 to (y) the quotient which results by dividing (i) Interest Expense for the same two fiscal quarters by (ii) 0.50; and (c) the Interest Coverage Ratio as of the fiscal quarter of the Borrower ending on or about October 4, 1997 shall mean the ratio of (x) the quotient which results by dividing (i) EBIT for the three fiscal quarters of the Borrower then ended by (ii) 0.75 to (y) the quotient which results by dividing (i) Interest Expense for the same three fiscal quarters by (ii) 0.75. "INTEREST EXPENSE" means, for any period, the sum of all interest charges (including imputed interest charges with respect to Capitalized Lease Obligations and all amortization of debt discount and expense) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. "INTEREST PERIOD" is defined in Section 3.1 hereof. "INVESTMENTS" is defined in Section 9.14 hereof. "L/C COMMITMENT" means $25,000,000. "L/C DOCUMENTS" means the Letters of Credit, any draft or other document presented in connection with a drawing thereunder, the Applications and this Agreement. "L/C OBLIGATIONS" means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. "LENDING OFFICE" is defined in Section 11.4 hereof. "LETTER OF CREDIT" is defined in Section 1.2(a) hereof. "LEVERAGE RATIO" means, as of any time the same is to be determined, the ratio of Total Funded Debt at such time to EBITDA for the four most recently completed fiscal quarters of the Borrower; PROVIDED, HOWEVER, that: -28- (a) the Leverage Ratio as of the close of the fiscal quarter of the Borrower ending on or about March 22, 1997 shall mean the ratio of (x) Total Funded Debt at such time to (y) the quotient which results by dividing (i) EBITDA for the fiscal quarter of the Borrower then ended by (ii) 0.17; (b) the Leverage Ratio as of the close of the fiscal quarter of the Borrower ending on or about June 14, 1997 shall mean the ratio of (x) Total Funded Debt at such time to (y) the quotient which results by dividing (i) EBITDA for the two fiscal quarters of the Borrower then ended by (ii) 0.43; and (c) the Leverage Ratio as of the close of the fiscal quarter of the Borrower ending on or about October 4, 1997 shall mean the ratio of (x) Total Funded Debt at such time to (y) the quotient which results by dividing (i) EBITDA for the three fiscal quarters of the Borrower then ended by (ii) 0.75. "LEVEL I STATUS" means the S&P Rating is at least BBB+ or higher OR the Moody's Rating is at least Baa1 or higher. "LEVEL II STATUS" means Level I Status does not exist, but the S&P Rating is at least BBB or higher OR the Moody's Rating is at least Baa2 or higher. "LEVEL III STATUS" means neither Level I Status nor Level II Status exists, but the S&P Rating is at least BBB- or higher OR the Moody's Rating is at least Baa3 or higher. "LEVEL IV STATUS" means none of Level I Status, Level II Status, and Level III Status exist, but the S&P Rating is at least BB+ OR the Moody's Rating is at least Ba1 or higher. "LEVEL V STATUS" means none of Level I Status, Level II Status, Level III Status, and Level IV Status exist. "LIBOR" is defined in Section 1.3(b) hereof. "LIEN" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, including, but not limited to, the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale, security agreement or trust receipt, or a lease, consignment or bailment for security purposes. The term "LIEN" shall also include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property. For the purposes of this definition, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention of title shall constitute a "LIEN." However, the term "LIEN" shall not include the sole act of selling accounts receivable, whether with or without recourse, in a securitization or similar financing transaction. -29- "LOAN" means and includes Committed Loans, Swing Loans and Bid Loans, and each of them singly, and the term "TYPE" of Loan refers to its status as a Committed Loan, Swing Loan or Bid Loan or, if a Committed Loan, to its status as a Base Rate Loan or Eurodollar Loan or, if a Bid Loan, to its status as a Stated Rate Bid Loan or Eurodollar Bid Loan. "LOAN DOCUMENTS" means this Agreement, the Notes, the Applications, the Letters of Credit, and each Subsidiary Guarantee Agreement delivered to the Administrative Agent pursuant to Sections 8.1 or 9.1 hereof, as applicable. "LONG-TERM DEBT" shall mean all Total Funded Debt having a final maturity of one or more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin), including all payments in respect thereof that are required to be made within one year from the date of any determination of Long-Term Debt. "MATERIAL PLAN" is defined in Section 10.1(f) hereof. "MERGER" means the merger of NF Acquisition with and into Super Food, with Super Food being the corporation surviving such merger on the terms and conditions set forth in the Merger Agreement. "MERGER AGREEMENT" means that certain Agreement and Plan of Merger, dated as of October 8, 1996 between NF Acquisition, the Borrower and Super Food and delivered to the Banks on or prior to the date hereof. "MERGER CREDIT" is defined in Section 3.9 hereof. "MOODY'S RATING" means the rating assigned by Moody's Investors Service, Inc., to the outstanding senior unsecured non-credit enhanced long-term indebtedness of the Borrower. Any reference in this Agreement to any specific rating is a reference to such rating as currently defined by Moody's Investors Service, Inc., and shall be deemed to refer to the equivalent rating if such rating system changes. "NF ACQUISITION" means NFC Acquisition Corporation, a Delaware corporation. "NOTE" means and includes the Committed Loan Notes, the Swing Note and the Bid Notes and each individually, unless the context in which such term is used shall otherwise require. "OFFER" is defined in Section 2.2(c) hereof. "OFFER TO PURCHASE" shall mean the Offer to Purchase dated October 9, 1996 issued in connection with the Tender Offer and set forth in Exhibit (a)(1) to Schedule 14D-1 to the Tender Offer Statement, such offer to be in the form of the October 8, 1996 12:19 a.m. (Chicago time) draft thereof heretofore submitted by the Borrower to the Agents. -30- "OBLIGATIONS" means all fees payable hereunder, all obligations of the Borrower to pay principal or interest on Loans and Reimbursement Obligations, and all other payment obligations of the Borrower arising under or in relation to any Loan Document. "PARTICIPATING BANK" is defined in Section 1.2(f) hereof. "PBGC" is defined in Section 7.9 hereof. "PERCENTAGE" means, for each Bank, the percentage of the Commitments represented by such Bank's Commitment or, if the Commitments have been terminated, the percentage held by such Bank (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all outstanding Obligations. "PERSON" shall mean an individual, partnership, corporation, limited liability company, trust or unincorporated organization, and a government or agency or political subdivision thereof. "PLAN" means, with respect to the Borrower and each Subsidiary at any time, an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group of which the Borrower or such Subsidiary is a part or (ii) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group of which the Borrower or such Subsidiary is a part is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. "PNC BANK" is defined in the introductory paragraph hereof. "PROPERTY" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. "PROXY MATERIALS" shall mean all Proxy Materials, information statements or similar materials sent or to be sent by Super Food to its stockholders in connection with the Merger. "REFUNDING BORROWING" is defined in Section 1.5(d) hereof. "REIMBURSEMENT OBLIGATION" is defined in Section 1.2(e) hereof. "REQUIRED BANKS" means, as of the date of determination thereof, Banks holding at least 51% of the Percentages. "SECURITY" has the same meaning as in Section 2(l) of the Securities Act of 1933, as amended. "SEC" means the Securities and Exchange Commission. -31- "SET-OFF" is defined in Section 14.7 hereof. "SHAREHOLDER'S EQUITY" means, as of any date the same is to be determined, the total shareholder's equity (including capital stock, additional paid-in-capital and retained earnings after deducting treasury stock, but excluding minority interests in Subsidiaries) which would appear on a balance sheet of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. "SINGLE RATING STATUS" means the Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status, as the case may be, but with each of the foregoing determined solely with respect to the S&P Rating or solely with respect to the Moody's Rating. "S&P RATING" means the rating assigned by Standard & Poors Ratings Services Group, a division of The McGraw-Hill Companies, Inc., to the outstanding senior unsecured non-credit enhanced long-term indebtedness of the Borrower. Any reference in this Agreement to any specific rating is a reference to such rating as currently defined by Standard & Poors Ratings Services Group, a division of The McGraw-Hill Companies, Inc., and shall be deemed to refer to the equivalent rating if such rating system changes. "STATED RATE BID LOANS" is defined in Section 2.1 hereof. "SUBSIDIARY GUARANTEE AGREEMENT" means a letter to the Administrative Agent in the form of Exhibit I hereto executed by a Subsidiary whereby it acknowledges it is party hereto as a Guarantor under Section 13 hereof. The term "SUBSIDIARY" means, as to any particular parent corporation, any corporation of which more than 50% (by number of votes) of the Voting Stock shall be owned by such parent corporation and/or one or more corporations which are themselves subsidiaries of such parent corporation. The term "SUBSIDIARY" shall mean a subsidiary of the Borrower. "SUPER FOOD" shall mean Super Food Services, Inc., a Delaware corporation. "SUPER FOOD SHARES" shall mean the common stock, par value $1.00 per share, of Super Food. "SWING LINE COMMITMENT" means the commitment of Harris to make Swing Loans in the amount set forth opposite its signature hereto under the heading "Swing Line Commitment". "SWING NOTE" is defined in Section 3.5(b) hereof. "SWING LOANS" is defined in Section 1.6(a) hereof. "SYNDICATION AGENTS" is defined in the introductory paragraph hereof and includes any successor thereto pursuant to Section 12.8 hereof. -32- "TANGIBLE NET WORTH" means, as of any time the same is to be determined, the Shareholders' Equity less the sum of (i) the aggregate book value of all assets which would be classified as intangible assets under GAAP, including, without limitation, goodwill, patents, trademarks, trade names, copyrights, franchises and deferred charges (including, without limitation, unamortized debt discount and expense, organization costs and deferred research and development expense) and similar assets and (ii) the write-up of assets above cost. "TENDER CREDIT" is defined in Section 3.9 hereof. "TENDER OFFER" means the offer to purchase for cash outstanding Super Food shares pursuant to the Tender Offer Materials. "TENDER OFFER MATERIALS" means the Tender Offer Statement on Schedule 14D-1 and on Schedule 13D to be filed by NF Acquisition with the SEC pursuant to Sections 14(d)(1) and 13(e) of the Exchange Act on October 9, 1996 in the form of the October 8, 1996 12:14 a.m. (Chicago time) draft thereof heretofore submitted by the Borrower to the Agents, together with all exhibits thereto, including the form of the Offer to Purchase, and any amendments or supplements thereto. "TENDERED SUPER FOOD SHARES" means all of the Super Food Shares tendered to and purchased by NF Acquisition pursuant to the Tender Offer. "TERMINATION DATE" means October 8, 2001, or such earlier date on which the Commitments are terminated in whole pursuant to Sections 3.6, 3.7, 10.2 or 10.3 hereof. "TOTAL ASSETS" shall mean as of the date of any determination thereof, the total amount of all assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP. "TOTAL FUNDED DEBT" means all Debt of the Borrower and its Subsidiaries determined without duplication on a consolidated basis. "TRANSACTION COSTS" means the fees, costs and expenses payable by the Borrower pursuant hereto and other fees, costs and expenses (other than the purchase price of the Tendered Super Food Shares) payable by the Borrower or any Subsidiary in connection with the Tender Offer, the Merger, this Agreement or the refinancing of the Existing Debt. "UNFUNDED VESTED LIABILITIES" means, with respect to any Plan, which is not a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, at any time, the amount (if any) by which the present value of all vested nonforfeitable accrued benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan using the assumptions used in the valuation prepared as of such date for purposes of Code Section 412, but only to the extent -33- that such excess represents a potential liability of a member of the Controlled Group to the PBGC or such Plan under Title IV of ERISA. "VOTING STOCK" shall mean Securities of any class or classes the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). "WEIGHTED AVERAGE LIFE TO MATURITY" means for any Long-Term Debt (the "RELEVANT DEBT") as at the time of determination thereof, the number of years obtained by dividing the then Remaining Dollar Years of the Relevant Debt by the then outstanding principal amount of the Relevant Debt. For purposes hereof, the term "REMAINING DOLLAR YEARS" of the Relevant Debt means the amount obtained by (i) multiplying the amount of each then remaining required payment or redemption (including the repayment at final maturity), by the number of years (calculated at the nearest one-twelfth) which will elapse between the date of determination of the Weighted Average Life to Maturity of the Relevant Debt and the date of that required payment and (ii) totaling all of the products obtained in this clause (i). "WELFARE PLAN" means a "welfare plan" as defined in Section 3(1) of ERISA. "WHOLLY-OWNED" when used in connection with any Subsidiary shall mean a Subsidiary of which all of the issued and outstanding shares of stock (except shares required as directors' qualifying shares) shall be owned by the Borrower and/or one or more of its Wholly-owned Subsidiaries. "WORKING CAPITAL CREDIT" is defined in Section 3.9 hereof. SECTION 6.2. INTERPRETATION. The foregoing definitions shall be equally applicable to both the singular and plural forms of the terms defined. All references to times of day herein shall be references to Chicago, Illinois time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP consistently applied, except where such principles are inconsistent with the specific provisions of this Agreement. SECTION 7. REPRESENTATIONS AND WARRANTIES. The Borrower hereby (x) represents and warrants to each Bank as to itself and (y) where the following representations and warranties apply to Subsidiaries, represents and warrants to each Bank as to each of the Borrower's Subsidiaries and (z) where the following representations and warranties apply to Super Food and its subsidiaries, during the Acquisition Period and so long thereafter and to the extent that Super Food and each of its subsidiaries constitute Subsidiaries, represents and warrants as to Super Food and such subsidiaries (it being understood and agreed that notwithstanding anything herein to the -34- contrary, prior to the Acquisition Period, the Borrower makes no representations or warranties with respect to Super Food and its subsidiaries), as follows: SECTION 7.1. CORPORATE ORGANIZATION AND AUTHORITY. Each of the Borrower and Super Food is duly organized and existing in good standing under the laws of the State of Delaware; has all necessary corporate power to carry on its present business; and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary and in which the failure to be so licensed or qualified would materially and adversely affect its business, operations, Properties, condition (financial or otherwise) or prospects. SECTION 7.2. SUBSIDIARIES. Schedule 7.2 (as updated from time to time pursuant to Sections 9.5(a)(viii) and 9.16) hereto identifies each Subsidiary, the jurisdiction of its incorporation or organization, as the case may be, the percentage of issued and outstanding shares of each class of its capital stock or other equity interests owned by the Borrower and the Subsidiaries and, if such percentage is not 100% (excluding directors' qualifying shares as required by law), a description of each class of its authorized capital stock and other equity interests and the number of shares of each class issued and outstanding. Each Subsidiary of the Borrower and each subsidiary of Super Food is duly incorporated and existing in good standing as a corporation under the laws of the jurisdiction of its incorporation, has all necessary corporate power to carry on its present business, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary and in which the failure to be so licensed or qualified would materially and adversely affect its business, operations, Properties, condition (financial or otherwise) or prospects. All of the issued and outstanding shares of capital stock of each Subsidiary of the Borrower and each subsidiary of Super Food are validly issued and outstanding and fully paid and nonassessable. All such shares owned by the Borrower are owned beneficially, and of record, free of any Lien. SECTION 7.3. CORPORATE AUTHORITY AND VALIDITY OF OBLIGATIONS. The Borrower has full right and authority to enter into this Agreement and the other Loan Documents to which it is a party, to make the borrowings herein provided for, to issue its Notes in evidence thereof, to apply for the issuance of the Letters of Credit, and to perform all of its obligations under the Loan Documents to which it is a party. On and after commencement of the Acquisition Period, each of NF Acquisition and Super Food has full right and authority to consummate the Acquisition. Each Guarantor has full right and authority to enter into its Subsidiary Guarantee Agreement and to perform all of its obligations thereunder. Each Loan Document to which the Borrower or any Guarantor is a party has been duly authorized, executed and delivered by the Borrower or such Guarantor, as the case may be, and constitutes valid and binding obligations of such Person enforceable in accordance with its terms, subject to general principles of equity and bankruptcy, reorganization, insolvency and similar laws of general application to enforcement of creditors' rights. No Loan Document, nor the performance or observance by the Borrower or any Guarantor of any of the matters or things therein provided for, contravenes any -35- provision of law or any charter or by-law provision of the Borrower or any Guarantor or (individually or in the aggregate) any material Contractual Obligation of or affecting the Borrower or any Guarantor or any of their respective Properties or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of the Borrower or any Guarantor. SECTION 7.4. FINANCIAL STATEMENTS. (a) The audit report of the Borrower for the year ended December 30, 1995, including a consolidated balance sheet as of December 30, 1995, and a consolidated statement of profit and loss for the 12 months ended said date, certified by Ernst & Young L.L.P., and the interim consolidated and consolidating balance sheets of the Borrower and the Subsidiaries as at June 15, 1996, and consolidated and consolidating statements of profit and loss for the respective six (6) accounting periods then ended prepared by the Borrower and heretofore furnished to the Banks, all as heretofore presented to the Banks, fairly present the financial condition of the Borrower and the Subsidiaries as at said dates and the results of operations for the periods covered thereby. As of the date hereof, the Borrower and the Subsidiaries have no known contingent liabilities which are material to the Borrower or any Subsidiary other than as indicated on the financial statements accompanying said audit report. As of the date hereof, the Existing NF Term Debt does not aggregate more than the amount reflected in such interim June 15, 1996 balance sheet. (b) The audit report of Super Food for the year ended August 26, 1995, including a consolidated balance sheet as of August 26, 1995, and a consolidated statement of profit and loss for the 12 months ended said date, certified by Arthur Andersen L.L.P., and the interim consolidated and consolidating balance sheets of Super Food and its subsidiaries as at May 4, 1996, and consolidated and consolidating statements of profit and loss for the thirty-six (36) weeks then ended prepared by Super Food and heretofore furnished to the Banks, all as heretofore presented to the Banks, fairly present the financial condition of Super Food and its subsidiaries as at said dates and the results of operations for the periods covered thereby. As of the date hereof, Super Food and its subsidiaries have no known contingent liabilities which are material to Super Food or any of its subsidiaries other than as indicated on the financial statements accompanying said audit report. As of the commencement of the Acquisition Period, the Existing Super Food Debt does not aggregate more than $95,000,000. SECTION 7.5. MATERIAL ADVERSE CHANGE. Since May 4, 1996, there have been no material adverse changes in the business, operations, Properties, condition (financial or otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole or Super Food and its subsidiaries taken as a whole. SECTION 7.6 NO LITIGATION; NO LABOR CONTROVERIES. (a) There is no litigation or governmental proceeding pending, or to the knowledge of the Borrower or any Guarantor threatened, against the Borrower or any Subsidiary, or Super Food or any of its subsidiaries, in each case which would (individually or in the aggregate) reasonably be expected to have a material adverse effect on the business, operations, Properties, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole -36- or Super Food and its subsidiaries taken as a whole or which would reasonably be expected to prevent or unduly delay the Merger or the consummation of the Tender Offer. (b) There are no labor controversies pending or, to the knowledge of the Borrower threatened, against the Borrower or any Subsidiary or Super Food or any of its subsidiaries which could (insofar as the Borrower may reasonably foresee) materially adversely affect the business, operations, Properties, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or Super Food and its subsidiaries taken as a whole. SECTION 7.7. TAXES. The Borrower and its Subsidiaries, and Super Food and its subsidiaries, have filed all United States federal tax returns, and all other tax returns, required to be filed and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and for which adequate reserves have been provided. No notices of tax liens have been filed and no claims are being asserted concerning any such taxes, which liens or claims are material to the financial condition of the Borrower and its Subsidiaries on a consolidated basis taken as a whole or the financial condition of Super Food and its subsidiaries on a consolidated basis taken as a whole. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries, or Super Food and its subsidiaries, for any taxes or other governmental charges are adequate. SECTION 7.8. APPROVALS. No authorization, consent, license, or exemption from, or filing or registration with, any court or governmental department, agency or instrumentality, nor any approval or consent of the stockholders of the Borrower or any Subsidiary or from any other Person, is necessary to the valid execution, delivery or performance by the Borrower or any Subsidiary of any Loan Document to which it is a party or (after commencement of the Acquisition Period) is necessary to the consummation of the Acquisition, except for (i) such thereof as have been obtained and are in full force and effect and (ii) after commencement of the Acquisition Period but in no event on or after the initial extension of Merger Credit, approval of the Merger by holders of a majority of the outstanding Super Food Shares (or if NF Acquisition purchases more than 90% of the outstanding Super Food Shares in the Tender Offer, the approval of the Board of Directors of NF Acquisition pursuant to Section 253 of the DGCL). SECTION 7.9. ERISA. The Borrower and its ERISA Affiliates, and Super Food and its ERISA Affiliates, are in compliance in all material respects with ERISA and provisions of the Code pertaining to the Plans to the extent applicable to them and have received no notice to the contrary from the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation ("PBGC"). As of the most recent annual valuation date for each Plan (other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA), the amount of Unfunded Vested Liabilities does not exceed $1,000,000. Neither the Borrower, Super Food nor any of their respective ERISA Affiliates has (i) failed to make a required contribution or payment of a "MULTIEMPLOYER PLAN" (as defined in Section 4001(a)(3) of ERISA) or (ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a multiemployer plan. Neither the Borrower, Super -37- Food nor any of their respective ERISA Affiliates maintains or contributes to any Welfare Plan (other than a multiemployer plan as defined in Section 3(37) of ERISA) which provides benefits to employees after termination of employment (other than as required under Section 601 of ERISA or any comparable applicable state law) which could result in a material obligation to pay money, except for such plans, if any, as are listed in Exhibit J hereto. SECTION 7.10. GOVERNMENT REGULATION. Neither the Borrower nor any Subsidiary, and neither Super Food nor any of its subsidiaries, is an "INVESTMENT COMPANY" nor a company "CONTROLLED" by an "INVESTMENT COMPANY ORGANIZED OR OTHERWISE CREATED UNDER THE LAWS OF THE UNITED STATES OR OF A STATE" within the meaning of the Investment Company Act of 1940, as amended, or a "HOLDING COMPANY", or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", or an "AFFILIATE" of a "HOLDING COMPANY" or of a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 7.11. MARGIN STOCK. Neither the Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock ("MARGIN STOCK" to have the same meaning herein as in Regulation U of the Board of Governors of the Federal Reserve System). The Borrower will not use the proceeds of any Loan or Letter of Credit in a manner that violates any provision of Regulation U or X of the Board of Governors of the Federal Reserve System. SECTION 7.12. LICENSES AND AUTHORIZATIONS; COMPLIANCE WITH LAWS. (a) The Borrower and each of its Subsidiaries, and Super Food and each of its subsidiaries, have all necessary material licenses, permits and governmental authorizations to own and operate its Properties and to carry on its business as currently conducted and contemplated. (b) To the best of the Borrower's knowledge, the Borrower and each of its Subsidiaries, and Super Food and each of its subsidiaries, are in compliance in all material respects with all applicable state and federal environmental, health and safety statutes and regulations, including, without limitation, regulations promulgated under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 ET SEQ. and, to the best knowledge of the Borrower, have not acquired, incurred or assumed, directly or indirectly, any material contingent liability in connection with the release of any toxic or hazardous waste or substance into the environment. Neither the Borrower nor any Subsidiary, and neither Super Food nor any of its subsidiaries, is the subject of any evaluation under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Specified Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 ET SEQ ("CERCLA") which would be reasonably expected to reflect noncompliance with such statutes and regulations, the compliance with which would reasonably be expected to have a material adverse effect on the business, operations, Properties, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or Super Food and its subsidiaries taken as a whole. SECTION 7.13. OWNERSHIP OF PROPERTY; LIENS. As of the date hereof, the Borrower and the Subsidiaries have good and defensible title to their respective assets as reflected on the -38- consolidated interim balance sheet of the Borrower and the Subsidiaries dated as of June 15, 1996 (except for sales by the Borrower and such Subsidiaries in the ordinary course of their respective businesses), subject to no Liens or encumbrances other than such thereof as are permitted by Section 9.13 hereof. SECTION 7.14. NO BURDENSOME RESTRICTIONS; COMPLIANCE WITH AGREEMENTS. (a) Neither the Borrower nor any Subsidiary is (i) party or subject to any law, regulation, rule or order, or any Contractual Obligation that (individually or in the aggregate) materially adversely affects, or (insofar as the Borrower may reasonably foresee) may so affect, the business, operations, Property, condition (financial or otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole or (ii) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party, which default materially adversely affects, or (insofar as the Borrower may reasonably foresee) may so affect, the business, operations, Property or financial or other condition of the Borrower and the Subsidiaries taken as a whole or (on and after the date of the initial extension of Tender Credit) Super Food and its subsidiaries taken as a whole. (b) On and after commencement of the Tender Offer, none of the Merger, the Tender Offer or the transactions contemplated thereby violates any material applicable law or regulation in any material respect. SECTION 7.15. TENDER OFFER. On and after commencement of the Tender Offer, the Tender Offer has been made and conducted in all material respects with all applicable provisions of law, including without limitation the provisions of Section 14(d) and 14(e) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, and applicable state securities laws. SECTION 7.16. MERGER AGREEMENT. On and after commencement of the Tender Offer, the Borrower has delivered to the Banks true, correct and complete copies of the Merger Agreement and of all exhibits and schedules delivered to Super Food by NF Acquisition or by Super Food to NF Acquisition pursuant to the Merger Agreement. Each of the representations and warranties given by NF Acquisition and Super Food in the Merger Agreement was true and correct in all material respects as of the date of the Merger Agreement. -39- SECTION 7.17. DISCLOSURE. (a) LOAN. All information heretofore furnished by the Borrower to the Administrative Agent or any Bank for purposes of or in connection with the Loan Documents or any transaction contemplated thereby is, and all such information hereafter furnished by the Borrower to the Administrative Agent or any Bank will be, true and accurate in all material respects and not misleading on the date as of which such information is stated or certified. (b) ACQUISITION. On and after commencement of the Acquisition Period, taken as a whole, the representations and warranties of the Borrower and Super Food and their respective subsidiaries contained in the Merger Agreement, the Tender Offer Materials, Proxy Materials and any other document, certificate or written statement furnished to the Banks by or on behalf of any such Person for use in connection with the Acquisition do not contain any untrue statement of a material fact or omit to state a material fact (known to any such Person in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not misleading. Any reaffirmation of the foregoing sentence is subject to any change in the facts and conditions on which such representations and warranties are based, which changes are required, contemplated or permitted under this Agreement; PROVIDED, HOWEVER, that in all cases, taken as a whole, representations and warranties of any such Person contained in the Merger Agreement, the Tender Offer Materials, the Proxy Materials and any other document, certificate or written statement furnished to the Banks by or on behalf of any such Person for use in connection with the Acquisition did not contain at the time made any untrue statement of a material fact or omit at the time made to state a material fact (known to any such Person in the case of any document not furnished by it) necessary in order to make the statement contained herein or therein not misleading. (c) GENERALLY. The projections and pro forma financial information contained in the materials referred to above in this Section are based upon good faith estimates and assumptions believed by the Borrower to be reasonable at the time made, it being recognized by the Banks that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. Except as otherwise disclosed in writing to the Banks, there is no fact known to any such Person (other than matters of a general economic nature) which materially and adversely affects the business, operations, property, assets or condition (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole or (on and after the date of the initial extension of Tender Credit) Super Food and its subsidiaries, in each case which has not been disclosed herein or in such other documents (including the Merger Agreement), certificates and statements furnished to the Banks for use in connection with the transactions contemplated hereby. Section 8. Conditions Precedent. The obligation of each Bank to make any Loan, or of the Administrative Agent to issue, extend the expiration date (including by not giving notice of non-renewal) of or -40- increase the amount of any Letter of Credit, shall be subject to the following conditions precedent: SECTION 8.1. INITIAL BORROWING. Prior to the initial Credit Event: (a) The Administrative Agent shall have received the favorable written opinion of counsel to the Borrower, in substantially the form of Exhibit K hereto, and otherwise in form and substance satisfactory to the Agents and the Required Banks; (b) The Administrative Agent shall have received (i) certified copies of resolutions of the Board of Directors of the Borrower and NF Acquisition authorizing the execution, delivery and performance of, and indicating the authorized signers of, the Loan Documents to which it is a party and all other documents relating thereto and the specimen signatures of such signers and (ii) copies of the Articles of Incorporation and by-laws for the Borrower and each Guarantor certified by its Secretary or other appropriate officer, together with a certificate of good standing certified by the appropriate governmental officer in the jurisdiction of its incorporation; (c) The Administrative Agent shall have received a Subsidiary Guaranty Agreement from NF Acquisition; (d) The Administrative Agent shall have received from the Borrower a list of its Authorized Representatives; (e) The proceeds of such initial Credit Events shall be used to pay in full all Existing NF Revolver Debt and effect a cancellation of all the Borrower's obligations thereunder; and (f) A certificate, signed by an Authorized Representative of the Borrower, stating that on the date hereof no Default or Event of Default has occurred and is continuing. SECTION 8.2. ALL CREDIT. As of the time of each Credit Event hereunder (including the initial Credit Event): (a) In the case of a Borrowing of Committed Loans, the Administrative Agent shall have received for each Bank such Bank's duly executed Committed Loan Note of the Borrower dated the date of the initial Committed Loan by such Bank and otherwise in compliance with the provisions of Section 3.5 hereof and the notice required by Section 1.5(a) hereof (including any deemed notice under Section 1.5(c)); in the case of a Borrowing of a Bid Loan, the Administrative Agent shall have received for each Bank a Bid Note duly executed by the Borrower dated the date of the initial Bid Loan and otherwise in compliance with the provisions of Section 3.5 hereof and the notice required by Section 2.2 hereof; in the case of a Swing Loan, the Administrative Agent shall have received the Swing Line Note dated the date of the initial Swing Loan and otherwise in compliance with the provisions of Section 3.5 -41- hereof and the notice required by Section 1.6(d) hereof; in the case of the issuance of any Letter of Credit, the Administrative Agent shall have received a duly completed Application for such Letter of Credit; and, in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Administrative Agent; (b) Each of the representations and warranties of the Borrower set forth in Section 7 (other than Section 7.5) hereof shall be true and correct as of said time, except to the extent that any such representation or warranty relates solely to an earlier date; (c) The Borrower shall be in full compliance with all of the terms and conditions hereof, and no Default or Event of Default shall have occurred and be continuing or would occur as a result of making such Borrowing; (d) After giving effect to the Borrowing, (i) the aggregate principal amount of all Loans (whether Committed Loans, Swing Loans or Bid Loans) and L/C Obligations outstanding hereunder shall not exceed the Commitments, (ii) the aggregate principal amount of Swing Loans outstanding hereunder shall not exceed the lesser of the unused Commitments or the Swing Line Commitment and (iii) the aggregate principal amount of all Bid Loans outstanding hereunder shall not exceed the lesser of the unused Commitments or the Bid Loan Limit; and (e) Such Borrowing shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to any Bank (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect. Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in paragraphs (b), (c), and (d) of this Section 8.2. SECTION 8.3. ADDITIONAL CONDITIONS TO LOANS OTHER THAN REFUNDING BORROWINGS. In addition to the conditions set forth in Sections 8.1 and 8.2 hereof, as of the time of each Borrowing other than a Refunding Borrowing, the representations and warranties set forth in Section 7.5 hereof shall be true as of said time (except that the date referenced therein shall be deemed a reference to the date as of which the most recent financial statements furnished to the Banks pursuant to Section 9.5 were prepared), and the request for such Borrowing, as referred to in Section 8.2(a), shall be and constitute a representation and warranty as to such matters specified in Section 7.5 hereof (except that the date referenced therein shall be deemed a reference to the date as of which the most recent financial statements furnished to the Banks pursuant to Section 9.5 were prepared). SECTION 8.4. INITIAL TENDER CREDIT. As of the time of each Credit Event (including, if applicable, the initial Credit Event) constituting an extension of Tender Credit: -42- (a) The Administrative Agent shall have received a Subsidiary Guaranty Agreement from NF Acquisition, together with the related documentation (including legal opinion) required by Section 9.1 hereof; (b) There shall have been delivered to the Banks true, correct and complete copies of the Tender Offer Materials, which shall be in form and substance reasonably satisfactory to the Agents and the Required Banks; (c) Copies of all Proxy Materials (if any) shall have been delivered to the Banks, and such Proxy Materials shall be satisfactory in form and substance to the Agents and the Required Banks; (d) There shall have been delivered to the Banks a true, correct and complete copy of the Merger Agreement, which shall have been duly authorized, executed and delivered by each party thereto and otherwise be in form and substance reasonably satisfactory to the Agents and the Required Banks; (e) Each of the conditions to purchase contained in the Merger Agreement (except for the consummation of the Tender Offer) shall have been satisfied (and not waived) to the satisfaction of the Agents and the Required Banks; (f) The Tender Offer shall be consummated substantially in accordance with the terms thereof, and the Tendered Super Food Shares which would be purchased concurrently with the receipt of proceeds of such initial Tender Credit shall represent, in the aggregate, more than fifty percent (50%) of the outstanding Super Food Common Stock on a fully diluted basis, and the Borrower shall have delivered an officers' certificate to such effect in form and substance satisfactory to the Agents and the Required Banks; (g) There shall have been no material changes to the Offer to Purchase, except for a change in the Offer's price per share for the Super Food Shares which would not reasonably be expected to require the Borrower to need more credit for the Acquisition than is permitted hereunder; (h) No injunction, preliminary injunction or temporary restraining order shall exist which prohibits the extension of credit hereunder or the consummation of the Tender Offer or the Merger, and no litigation or similar proceedings shall exist with respect to the Tender Offer or the Merger of the transactions described herein which, if adversely determined, would, in the reasonable judgment of any Bank, have a material adverse effect on the consolidated financial condition or results of operations of the Borrower and its Subsidiaries taken as a whole or Super Food and its subsidiaries taken as a whole or which would reasonably be expected to prevent or unduly delay the Merger or the consummation of the Tender Offer; (i) The Merger shall not be subject to any restrictions of Section 203 of the DGCL or any successor statute and shall not be governed by any other statute, rule or -43- regulation of Delaware or any other state restricting in any material respect the ability of the Borrower or any of its affiliates to consummate the Acquisition on the terms and conditions set forth herein which has not been complied with; and (j) The Borrower shall have provided evidence satisfactory to the Agents and the Required Banks that the proceeds of the Tender Credit shall have been irrevocably committed to the purchase of the Tendered Super Food Shares and the payment of Transaction Costs related to the Tender Offer. SECTION 8.5. INITIAL MERGER CREDIT. As of the time of each Credit Event (including, if applicable, the initial Credit Event) constituting an extension of Merger Credit: (a) The Administrative Agent shall have received a Subsidiary Guarantee Agreement from Super Food and each of its subsidiaries, together with the related documentation (including legal opinion) required by Section 9.1 hereof; (b) NF Acquisition shall have merged with and into Super Food in compliance with the Merger Agreement and all applicable laws; (c) Copies of all Proxy Materials (if any) shall have been delivered to the Banks, and such Proxy Materials shall be reasonably satisfactory in form and substance to the Agents and the Required Banks; (d) No injunction, preliminary injunction or temporary restraining order shall exist which prohibits the extension of credit hereunder or the consummation of the Merger, and no litigation or similar proceedings shall exist with respect to the Merger of the transactions described herein which, if adversely determined, would, in the reasonable judgment of any Bank, have a material adverse effect on the consolidated financial condition or results of operations of the Borrower and its Subsidiaries; and (e) The Borrower shall have provided evidence reasonably satisfactory to the Agents and the Required Banks that the proceeds of the Merger Credit shall have been irrevocably committed to make cash payments in respect of the Super Food Shares converted into rights to receive cash (including as a result of the exercise of appraisal rights) in connection with the Merger and to pay Transaction Costs related to the Merger. SECTION 8.6. DEBT REFINANCING CREDIT. As of the time of each Credit Event hereunder (including, if applicable, the Initial Credit Event) constituting an extension of Debt Refunding Credit: (a) There shall have been delivered to the Administrative Agent a payoff letter from each holder of the Existing Debt being repaid (or a duly appointed trustee or agent for such holder) in which each such party agrees to cancel all loan and other agreements governing such Existing Debt (or that all such loan and other agreements -44- shall automatically be canceled) and to return to the Borrower all promissory notes and other evidences of such Existing Debt, in each case upon receipt of the payoff amount stated in such letter, which payoff letter shall otherwise be in form and substance reasonably satisfactory to the Agents and Required Banks; (b) The Borrower shall have provided evidence reasonably satisfactory to the Agents and the Required Banks that the proceeds of the Debt Refinancing Credit shall have been irrevocably committed to the repayment of the relevant Existing Debt and to the payment of Transaction Costs related to the repayment of the such Existing Debt; and (c) In the case of any Super Food Debt Refinancing Credit, the conditions precedent to availability of the Acquisition Credit shall have been satisfied. SECTION 9. COVENANTS. The Borrower agrees that, so long as any Note or L/C Obligation is outstanding hereunder or any credit is available to or in use by the Borrower hereunder, except to the extent compliance in any case or cases is waived in writing by the Required Banks: SECTION 9.1 CORPORATE EXISTENCE; SUBSIDIARIES. The Borrower shall, and shall cause each of its Subsidiaries to, preserve and maintain its corporate existence, subject to the provisions of Section 9.15 hereof. As a condition to establishing or acquiring any Subsidiary, unless the Required Banks otherwise agree, the Borrower shall (i) cause such Subsidiary to execute a Subsidiary Guarantee Agreement, (ii) cause such Subsidiary to deliver documentation (including a legal opinion) similar to that described in Section 8.1(a) through (c) relating to the authorization for, execution and delivery of, and validity of such Subsidiary's obligations as a Guarantor hereunder and under the Subsidiary Guarantee Agreement in form and substance satisfactory to the Required Banks and (iii) deliver an updated Schedule 7.2 to reflect the new Subsidiary. Notwithstanding the foregoing, no such Subsidiary Guarantee Agreement or related documentation (including a legal opinion) shall be required for any Subsidiary (other than NF Acquisition) until November 30, 1996; FURTHER PROVIDED, HOWEVER, that a Subsidiary Guarantee Agreement and such related documentation (including a legal opinion) must be provided for Super Food and each of its subsidiaries no later than five (5) Business Days following the earlier of the consummation of the Tender Offer or the initial extension of Tender Credit. SECTION 9.2. MAINTENANCE. The Borrower will maintain, preserve and keep its plants, properties and equipment deemed by it necessary to the proper conduct of its business in reasonably good repair, working order and condition and will from time to time make all reasonably necessary repairs, renewals, replacements, additions and betterments thereto so that at all times such plants, properties and equipment shall be reasonably preserved and maintained, and the Borrower will cause each of its Subsidiaries to do so in respect of Property owned or used by it; PROVIDED, HOWEVER, that nothing in this Section 9.2 shall prevent the Borrower or a Subsidiary from discontinuing the operation or maintenance of -45- any such Properties if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its business or the business of its Subsidiary and not disadvantageous to the Banks or the holders of the Notes. SECTION 9.3. TAXES AND ASSESSMENTs. The Borrower shall duly pay and discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes, rates, assessments, fees and governmental charges upon or against it or its Properties, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves are provided therefor. SECTION 9.4. INSURANCE. The Borrower shall insure and keep insured, and shall cause each Subsidiary to insure and keep insured, with good and responsible insurance companies, all insurable Property owned by it which is of a character usually insured by Persons similarly situated and operating like Properties against loss or damage from such hazards and risks, and in such amounts, as are insured by Persons similarly situated and operating like Properties; and the Borrower shall insure, and shall cause each Subsidiary to insure, such other hazards and risks (including employers' and public liability risks) with good and responsible insurance companies as and to the extent usually insured by Persons similarly situated and conducting similar businesses. The Borrower shall upon request furnish to the Administrative Agent and any Bank a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section. SECTION 9.5. FINANCIAL REPORTS. The Borrower shall, and shall cause each Subsidiary to, maintain a standard system of accounting in accordance with GAAP and shall furnish to the Administrative Agent, each Bank and each of their duly authorized representatives such information respecting the business and financial condition of the Borrower and its Subsidiaries as the Administrative Agent or such Bank may reasonably request; and without any request, shall furnish to the Banks: (a) as soon as available, and in any event within sixty (60) days after the close of each quarterly accounting period of the Borrower, a copy of the consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the last day of such period and the consolidated and consolidating statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the fiscal quarter and for the fiscal year-to-date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by the Borrower in accordance with GAAP and certified to by its President or chief financial officer; (b) as soon as available, and in any event within ninety (90) days after the close of each annual accounting period of the Borrower, a copy of the consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the last day of the period then ended and the consolidated and consolidating statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the period then ended, and accompanying notes thereto, each in reasonable detail showing in -46- comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion thereon of Ernst & Young L.L.P. or another firm of independent public accountants of recognized national standing (except for qualifications related to changes in accounting principles or practices reflecting a change in GAAP and required or approved by such firm), selected by the Borrower and satisfactory to the Required Banks, to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (c) promptly after receipt thereof, any additional written reports, management letters or other detailed information contained in writing concerning significant aspects of the Borrower's or any Subsidiary's operations and financial affairs given to it by its independent public accountants; (d) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports which the Borrower sends to its shareholders, and copies of all other regular, periodic and special reports and all registration statements which the Borrower files with the SEC or any successor thereto, or with any national securities exchange; (e) as soon as available, and in any event within ninety (90) days after to the end of each fiscal year of the Borrower, a copy of the Borrower's consolidated and consolidating business plan for the following fiscal year, such business plan to show the Borrower's projected consolidated and consolidating revenues, expenses, and balance sheet on month-by-month basis, such business plan to be in reasonable detail prepared by the Borrower and in form reasonably satisfactory to the Required Banks; and (f) promptly after knowledge thereof shall have come to the attention of any responsible officer of the Borrower, written notice of (i) any Change of Control and (ii) any threatened or pending litigation or governmental proceeding or labor controversy against the Borrower or any Subsidiary which would reasonably be expected to (x) adversely effect the financial condition, Properties, business or operations of the Borrower or any Subsidiary or (during the Acquisition Period) Super Food or any of its subsidiaries or (y) prevent or unduly delay the Merger or the consummation of the Tender Offer or (iii) the occurrence of any Default or Event of Default hereunder. Each of the financial statements furnished to the Banks pursuant to subsections (a) and (b) of this Section shall be accompanied by a written certificate in the form attached hereto as Exhibit H signed by the President or chief financial officer of the Borrower to the effect -47- that to the best of such officer's knowledge and belief no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Borrower to remedy the same. Such certificate shall also set forth the calculations supporting such statements in respect of Sections 9.7, 9.8, 9.9, 9.10 and 9.11 of this Agreement. SECTION 9.6. INSPECTION. The Borrower shall, and shall cause each Subsidiary to, permit the Administrative Agent, each Bank and each of their duly authorized representatives and agents to visit and inspect any of the Properties, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, its officers, employees and independent public accountants (and by this provision the Borrower hereby authorizes such accountants to discuss with the Administrative Agent and such Banks the finances and affairs of the Borrower and of each Subsidiary) at such reasonable times and reasonable intervals as the Administrative Agent or any such Bank may designate. SECTION 9.7. CURRENT RATIO. The Borrower shall not at any time permit the Current Ratio to be less than 1.25 to 1.0. SECTION 9.8. TANGIBLE NET WORTH. The Borrower shall not at any time permit Tangible Net Worth to be less than the Minimum Required Amount. For purposes hereof, the term "MINIMUM REQUIRED AMOUNT" shall mean (a) $125,000,000 through March 22, 1997 and (b) shall increase (but never decrease) on a cumulative basis as of March 23, 1997 and as of the last day of each fiscal quarter of the Borrower thereafter, by an amount equal to 50% of Consolidated Net Income for the fiscal quarter of the Borrower then ended (if positive for such quarter). SECTION 9.9. LEVERAGE RATIO. The Borrower shall not, as of the close of any fiscal quarter of the Borrower set forth below, permit the Leverage Ratio to be more than the amount set forth to the right of such quarter: As Of Close Of Each Fiscal Quarter: Leverage Ratio Shall From and Including To and Including Not be More Than: ------------------ ---------------- -------------------- 1st fiscal quarter of 3rd fiscal quarter of 4.00 to 1 fiscal year 1997 fiscal year 1997 4th fiscal quarter of 1st fiscal quarter of 3.75 to 1 fiscal year 1997 fiscal year 1998 2d fiscal quarter 1st fiscal quarter of 3.50 to 1 of fiscal year 1998 fiscal year 1999 -48- 2d fiscal quarter of 1st fiscal quarter of 3.25 to 1 fiscal year 1999 2000 fiscal year 2d fiscal quarter of each fiscal quarter 3.00 to 1 fiscal year 2000 thereafter SECTION 9.10. INTEREST COVERAGE RATIO. The Borrower shall not, as of the close of any fiscal quarter of the Borrower set forth below, permit the Interest Coverage Ratio to be less than the amount set forth to the right of such period: As Of Close Of Each Fiscal Quarter: Interest Coverage Ratio From and Including To and Including Shall Not be Less Than: ------------------ ---------------- ----------------------- 1st fiscal quarter of 3rd fiscal quarter of 1.50 to 1 fiscal year 1997 fiscal year 1997 4th fiscal quarter of 3rd fiscal quarter of 1.75 to 1 fiscal year 1997 fiscal year 1998 4th fiscal quarter 3rd fiscal quarter of 2.25 to 1 of fiscal year 1998 fiscal year 1999 4th fiscal quarter of each fiscal quarter 2.50 to 1 fiscal year 1999 thereafter SECTION 9.11. LONG-TERM DEBT. The Borrower shall not, and shall not permit any Subsidiary to, issue, incur, assume, create or have outstanding any Long-Term Debt with a Weighted Average Life to Maturity of less than seven years. SECTION 9.12. LIMITS ON AGGREGATE INDEBTEDNESS. (a) INTERIM LIMIT ON BORROWER. The Borrower shall not permit its Total Funded Debt to aggregate more than $475,000,000 at any time prior to March 22, 1997. (b) PERMANENT LIMIT ON SUBSIDIARIES. The Borrower shall not permit any Subsidiary to issue, incur, assume, create or have outstanding any Indebtedness; PROVIDED, HOWEVER, that the foregoing shall not restrict nor operate to prevent Indebtedness of the Subsidiaries (excluding intercompany Indebtedness owed to the Borrower or any other Subsidiary) aggregating not more than 12% of the Total Assets prior to April 8, 1997 and 5% of Total Assets thereafter. SECTION 9.13. LIENS. The Borrower shall not, nor shall it permit any Subsidiary to, create, incur or permit to exist any Lien of any kind on any Property owned by -49- the Borrower or any Subsidiary; PROVIDED, HOWEVER, that the foregoing shall not apply to nor operate to prevent: (a) Liens arising by statute in connection with worker's compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, statutory obligations or other similar charges, good faith cash deposits in connection with tenders, contracts or leases to which the Borrower or any Subsidiary is a party or other cash deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves have been established therefor; (b) mechanics', workmen's, materialmen's, landlords', carriers', or other similar Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest; (c) the pledge of assets for the purpose of securing an appeal, stay or discharge in the course of any legal proceeding, provided that the aggregate amount of liabilities of the Borrower and its Subsidiaries secured by a pledge of assets permitted under this subsection, including interest and penalties thereon, if any, shall not be in excess of $15,000,000 at any one time outstanding; (d) Liens on any Property existing at the time of acquisition thereof by the Borrower or any Subsidiary and not created in contemplation of such acquisition provided (i) such Lien is and will remain confined to the same Property subject thereto at the time such Property is acquired and (ii) such Lien secures only the obligations secured thereby at the time such Property is acquired; (e) minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties which are necessary for the conduct of the activities of the Borrower and any Subsidiary of the Borrower or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Borrower or any Subsidiary of the Borrower; and (f) Liens not otherwise permitted under this Section 9.13 on Property (other than (i) shares of capital stock in any Subsidiary and (ii) accounts receivable, inventory and similar working capital assets) securing Indebtedness in an aggregate principal amount not exceeding 5% of the Total Assets. SECTION 9.14. INVESTMENTS, ACQUISITIONS, LOANS, ADVANCES AND GUARANTIES. The Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly, make, retain -50- or have outstanding any investments (whether through purchase of stock or obligations or otherwise) in, or loans or advances (other than for travel advances and other similar cash advances made to employees and sales representatives in the ordinary course of business) to, any other Person, or acquire all or any substantial part of the assets or business of any other Person or division thereof, or be or become liable on any Guaranty, or subordinate any claim or demand it may have to the claim or demand of any other Person (cumulatively, all of the foregoing, being "INVESTMENTS"); PROVIDED, HOWEVER, that the foregoing shall not apply to nor operate to prevent: (a) investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one year of the date of issuance thereof; (b) investments in commercial paper rated at least P-1 by Moody's Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation maturing within 270 days of the date of issuance thereof; (c) investments in certificates of deposit issued by any United States commercial bank having capital and surplus of not less than $100,000,000 which have a maturity of one year or less or in banker's acceptances endorsed by any Bank or other such commercial bank and maturing within six months of the date of acceptance; (d) investments in repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System; (e) investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c) and (d) above; (f) ownership of stock, obligations or securities received in settlement of debts (created in the ordinary course of business) owing to the Borrower or any Subsidiary; (g) endorsement of items for deposit or collection of commercial paper received in the ordinary course of business; (h) acquisitions of all or substantially all of the assets or business of any other Person engaged in the same or similar business as the Borrower, or of a division of a Person engaged in such a business, or of all or substantially all the Voting Stock of a Person, so long as (i) no Default or Event of Default exists or would exist after giving effect to such acquisition, (ii) the Board of Directors or other governing body of such -51- Person whose Property or Voting Stock is being so acquired has approved the terms of such acquisition, (iii) the Borrower can demonstrate that on a PRO FORMA basis after giving effect to such acquisition it will continue to comply through the term of this Agreement with all the terms and conditions of the Loan Documents and (iv) the Borrower has provided to the Banks such financial and other information regarding the Person whose Property or Voting Stock is being so acquired, including historical financial statements, and a description of such Person, as the Administrative Agent or the Required Banks have reasonably requested; (i) Investments in Subsidiaries, and Investments by the Subsidiaries in the Borrower, provided in each case that Investments in Foreign Subsidiaries at no time aggregate more than $25,000,000; (j) loans and advances to customers of the Borrower and its Subsidiaries for use by such customers in the ordinary course of their respective businesses provided that (i) except for such loans and advances are outstanding to Super Food and its subsidiaries on the first date they become Subsidiaries hereunder, all such loans and advances have been made in accordance with the Borrower's loan policy as in effect as of the date hereof and (ii) the aggregate principal amount outstanding on such loans does not exceed the Maximum Permitted Amount (the "MAXIMUM PERMITTED AMOUNT" to mean $125,000,000 through January 3, 1998 and shall increase by $10,000,000 as of January 4, 1998 and by an additional $10,000,000 as of the first day of each fiscal year of the Borrower thereafter); (k) the Letters of Credit; (l) the Subsidiary Guarantee Agreements; and (m) investments, loans, advances and Guarantees not otherwise permitted by this Section aggregating not more than $100,000,000 at any one time outstanding. In determining the amount of investments, acquisitions, loans, advances and Guarantees permitted under this Section, investments and acquisitions shall always be taken at the original cost thereof (regardless of any subsequent appreciation or depreciation therein), loans and advances shall be taken at the principal amount thereof then remaining unpaid, and Guarantees shall be taken at the amount of obligations guaranteed thereby. Notwithstanding anything herein to the contrary, unless and until a Subsidiary Guarantee Agreement from a given Subsidiary and the related documentation (including opinion of counsel) to be required by Section 9.1 hereof is furnished to the Agent, no Investments shall be made in such Subsidiary after the date hereof by the Borrower or any other Subsidiary except in the ordinary course of business to provide such Subsidiary ordinary and necessary working capital. SECTION 9.15. MERGERS, CONSOLIDATIONS AND SALES. The Borrower shall not, nor shall it permit any Subsidiary to, be a party to any merger or consolidation, or sell, transfer, lease -52- or otherwise dispose of all or any substantial part of its Property, including any disposition of Property as part of a sale and leaseback transaction, or in any event sell or discount (with or without recourse) any of its notes or accounts receivable; PROVIDED, HOWEVER, that this Section shall not apply to nor prohibit: (a) the Merger; (b) any merger or consolidation so long as the Borrower is the surviving corporation and, at the time of such merger or consolidation and immediately after giving effect thereto, no Default or Event of Default shall occur or be continuing; (c) any merger or consolidation of a Subsidiary with or into the Borrower (so long as the Borrower is the surviving entity) or any other Subsidiary (so long as a Wholly-owned Subsidiary is the surviving entity) so long as, at the time of such merger or consolidation or immediately after giving effect thereto, no Default or Event of Default shall occur or be continuing; (d) the sale, lease, transfer or other disposition by any Subsidiary of all or any portion of its assets to the Borrower or any other Subsidiary; (e) the sale of accounts receivable by the Borrower and its Subsidiaries in the ordinary course of business to Persons other than Affiliates provided that such sale is part of a securitization or similar financing transaction and the aggregate face amount of such accounts receivables sold and outstanding at any one time does not exceed $75,000,000; (f) the sale by the Borrower or any Subsidiary of (i) assets no longer used or useful in the conduct of their respective businesses or (ii) inventory in the ordinary course of their respective businesses; and (g) sales, transfers, leases or other dispositions of Property not otherwise permitted by this Section provided the aggregate amount thereof during any calendar year does not exceed 15% of Total Assets as of the first day of such year and further provided that if the same aggregate more than 5% of Total Assets as of such day, an amount of the proceeds thereof in excess of such 5% level are used to purchase assets used or to be used in the ordinary course of the business of the Borrower and its Subsidiaries. SECTION 9.16. MAINTENANCE OF SUBSIDIARIES. The Borrower shall not assign, sell or transfer, or permit any Subsidiary to issue, assign, sell or transfer, any shares of capital stock of a Subsidiary; PROVIDED that the foregoing shall not operate to prevent: (a) the transfer of shares of capital stock of any Subsidiary as consideration to the transferor in any acquisition permitted by Section 9.14(h) hereof; and -53- (b) the issuance, sale and transfer to any Person of any shares of capital stock of a Subsidiary solely for the purpose of qualifying, and to the extent legally necessary to qualify, such Person as a director of such Subsidiary. SECTION 9.17. ERISA. The Borrower shall, and shall cause each Subsidiary to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed would reasonably be expected to result in the imposition of a Lien against any of its Properties. The Borrower shall, and shall cause each Subsidiary to, promptly notify the Administrative Agent and each Bank of (i) the occurrence of any reportable event (as defined in ERISA) with respect to a Plan (other than such a reportable event described in ERISA Section 4043(c) for which the 30-day notice requirement is waived provided that the loss of qualification of a Plan and the failure to meet the minimum funding standards of Section 412 of the Code or Section 302 of ERISA shall require notification regardless of whether notice of such event is waived), (ii) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its intention to terminate or withdraw from any Plan, and (iv) the occurrence of any event with respect to any Plan which would reasonably be expected to result in the incurrence by the Borrower or any Subsidiary of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement Welfare Plan benefit (other than such a benefit provided pursuant to a multiemployer plan). SECTION 9.18. COMPLIANCE WITH LAWS. The Borrower shall, and shall cause each Subsidiary to, comply in all respects with the requirements of all federal, state and local laws, rules, regulations, ordinances and orders applicable to or pertaining to their Properties or business operations, non-compliance with which could have a material adverse effect on the financial condition, Properties, business or operations of the Borrower or any Subsidiary or could result in a Lien upon any of their Property. SECTION 9.19. CHANGE IN THE NATURE OF BUSINESS. The Borrower shall not, and shall not permit any Subsidiary to, engage in any business or activity if as a result the general nature of the business of the Borrower or any Subsidiary would be changed in any material respect from the general nature of the business engaged in by the Borrower or such Subsidiary on the date of this Agreement. SECTION 9.20. USE OF LOAN PROCEEDS. The Borrower will use all credit under this Agreement solely for purposes permitted by Section 3.9 hereof. SECTION 10. EVENTS OF DEFAULT AND REMEDIES. SECTION 10.1. EVENTS OF DEFAULT. Any one or more of the following shall constitute an Event of Default: (a) (i) default in the payment when due of any principal on any Note or any Loan evidenced thereby or any Reimbursement Obligation, whether at the stated maturity thereof or at any other time provided in any Loan Document; or (ii) default -54- for a period of three (3) days in the payment when due of interest on any Note or any Loan evidenced thereby or any Reimbursement Obligation or in the payment when due of any fee or other Obligation; (b) default by the Borrower in the observance or performance of any covenant set forth in Section 9 hereof; (c) default by the Borrower in the observance or performance of any other provision hereof or of any other Loan Document not mentioned in (a) or (b) above, which is not remedied within thirty (30) days after notice thereof to the Borrower by the Administrative Agent; (d) any representation or warranty made herein by the Borrower, or in any statement or certificate furnished pursuant hereto or pursuant to any other Loan Document by the Borrower or any Subsidiary, or in connection with any Loan made or Letter of Credit issued hereunder, proves untrue in any material respect as of the date of the issuance or making thereof; (e) the Borrower or any Subsidiary shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $15,000,000 (other than any judgment for which a financially sound and reputable insurer has admitted liability), which is not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution thereon; (f) the Borrower or any other member of its Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of $1,000,000 which it shall be liable to pay to the PBGC or to a Plan under Title IV of ERISA in each case except and to the extent such liability is being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest; or notice of intent to terminate a Plan or Plans (other than a multiemployer plan as defined in Section 3(37) of ERISA) having aggregate Unfunded Vested Liabilities in excess of $5,000,000 (collectively, a "MATERIAL PLAN") shall be filed under Title IV of ERISA by the Borrower or any other member of its Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan; or a proceeding shall be instituted by a fiduciary of any Plan against the Borrower or any member of its Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter and such proceeding would reasonably be expected to result in liabilities in excess of $1,000,000; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; (g) (A) default shall occur in the payment when due (subject to any applicable grace period) of any indebtedness for borrowed money aggregating in excess of $10,000,000 which was incurred, assumed or guaranteed by the Borrower or any Subsidiary, or (B) default or the happening of any event shall occur under any -55- indenture, agreement or other instrument under which any indebtedness for borrowed money aggregating in excess of $10,000,000 was incurred, assumed or guaranteed by the Borrower or any Subsidiary if the effect of such default is to accelerate, or permit the acceleration of, the maturity of such indebtedness or any mandatory unscheduled prepayment, purchase or funding thereof; (h) any Subsidiary obligated on any guarantee of any Obligations shall purport to disavow, revoke, repudiate or terminate such guarantee; (i) the Merger shall not be consummated by April 8, 1997 or shall be rescinded subsequent to the consummation thereof or the Merger Agreement shall be terminated (provided this clause (i) shall have no effect unless any Acquisition Credit shall have been extended); (j) the Borrower or any Subsidiary shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i)-(v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 10.1(k) hereof; or (k) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any Subsidiary or any substantial part of any of their Property, or a proceeding described in Section 10.1(j)(v) shall be instituted against the Borrower or any Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days. SECTION 10.2. NON-BANKRUPTCY DEFAULTS. When any Event of Default other than those described in Sections 10.1(j) or (k) has occurred and is continuing, the Administrative Agent shall, by notice to the Borrower, (a) if so directed by the Required Banks, terminate the remaining Commitments and Swing Line Commitment of the Banks hereunder on the date stated in such notice (which may be the date thereof); and (b) if so directed by the Banks holding Notes evidencing more than 51% of the aggregate principal amount of all Loans and credit risk with respect to Letters of Credit then outstanding, (1) declare the principal of and the accrued interest on all outstanding Notes to be forthwith due and payable and thereupon all of said Notes, including both principal and interest, and all fees, charges, commissions and other Obligations payable hereunder, shall be and become immediately due and payable without further demand, presentment, protest or notice of any kind, (2) demand -56- that the Borrower immediately pay to the Administrative Agent, subject to Section 10.4 below, the full amount then available for drawing under each or any Letter of Credit, and the Borrower agrees to immediately make such payment and acknowledges and agrees that the Banks would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Administrative Agent, for the benefit of the Banks, shall have the right to require the Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit, and (3) enforce any and all rights and remedies available to it under the Loan Documents or applicable law. The Administrative Agent, after giving notice to the Borrower pursuant to Section 10.1(c) or this Section 10.2, shall also promptly send a copy of such notice to the other Banks, but the failure to do so shall not impair or annul the effect of such notice. SECTION 10.3. BANKRUPTCY DEFAULTS. When any Event of Default described in subsections (j) or (k) of Section 10.1 hereof has occurred and is continuing, then all outstanding Notes, including both principal and interest, and all fees, charges, commissions and other Obligations payable hereunder, shall immediately become due and payable without presentment, demand, protest or notice of any kind, and the obligation of the Banks to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower shall immediately pay to the Administrative Agent, subject to Section 10.4 below, the full amount then available for drawing under all outstanding Letters of Credit, the Borrower acknowledging that the Banks would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Banks, and the Administrative Agent on their behalf, shall have the right to require the Borrower to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit. SECTION 10.4. COLLATERAL FOR UNDRAWN LETTERS OF CREDIT. (a) If the prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 3.7 or under Section 10.2 or 10.3 above, the Borrower shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below. (b) All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative Agent in a separate collateral account (such account, and the credit balances, properties and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the "ACCOUNT") as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the Administrative Agent, and to the payment of the unpaid balance of any Loans and all other Obligations. The Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent and the Banks. If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, PROVIDED that the -57- Administrative Agent is irrevocably authorized to sell investments held in the Account when and as required to make payments out of the Account for application to amounts due and owing from the Borrower to the Administrative Agent or Banks; PROVIDED, HOWEVER, that if (i) the Borrower shall have made payment of all such obligations referred to in subsection (a) above, (ii) all relevant preference or other disgorgement periods relating to the receipt of such payments have passed, and (iii) no Letters of Credit, Commitments, Swing Line Commitment, Loans or other Obligations remain outstanding hereunder, then the Administrative Agent shall repay to the Borrower any remaining amounts held in the Account. SECTION 10.5. EXPENSES. The Borrower agrees to pay to the Administrative Agent and each Bank, or any other holder of any Note outstanding hereunder, all costs and expenses incurred or paid by the Administrative Agent and such Bank or any such holder, including reasonable attorneys' fees (which may include allocated costs of in-house counsel) and court costs, in connection with any Default or Event of Default by the Borrower hereunder or in connection with the enforcement of any of the terms hereof or of any of the Loan Documents. SECTION 10.6. NOTICE OF DEFAULT. The Administrative Agent shall give notice to the Borrower under Section 10.1(c) hereof promptly upon being requested to do so by any Bank. SECTION 11. CHANGE IN CIRCUMSTANCES. SECTION 11.1. CHANGE OF LAW. Notwithstanding any other provisions of this Agreement or any Note, if at any time after the date hereof any change in applicable law or regulation or in the interpretation or administration thereof makes it unlawful for any Bank to make or continue to maintain Eurodollar Loans or Eurodollar Bid Loans or to give effect to its obligations as contemplated hereby, such Bank shall promptly give notice thereof to the Borrower, with a copy to the Administrative Agent, and such Bank's obligations to make or maintain Eurodollar Loans or Eurodollar Bid Loans under this Agreement shall terminate until it is no longer unlawful for such Bank to make or maintain such Eurodollar Loans or Eurodollar Bid Loans. The Borrower shall prepay on demand the outstanding principal amount of any such affected Eurodollar Loans or Eurodollar Bid Loans, together with all interest accrued thereon and all other amounts then due and payable to such Bank under this Agreement; PROVIDED, HOWEVER, subject to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected Eurodollar Loan or Eurodollar Bid Loan from such Bank by means of a Base Rate Loan from such Bank that shall not be made ratably by the Banks but only from such affected Bank and payments whereon shall be made contemporaneously with payments on the relevant Borrowing of Eurodollar Loans or Eurodollar Bid Loans. SECTION 11.2. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR INADEQUACY OF, LIBOR. If on or prior to the first day of any Interest Period for any Borrowing of Eurodollar Loans or Eurodollar Bid Loans: -58- (a) the Administrative Agent determines that deposits in United States Dollars in the applicable amounts are not being offered to it in the off-shore U.S. Dollar market for such Interest Period, or that by reason of circumstances affecting the off-shore U.S. Dollar market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or (b) any Bank shall advise the Administrative Agent that LIBOR as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Bank of funding its Eurodollar Loans or Loan or Eurodollar Bid Loans or Loan, as applicable, for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon, until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks or of the relevant Bank to make such Eurodollar Loans or Eurodollar Bid Loans shall be suspended. SECTION 11.3. INCREASED COST AND REDUCED RETURN. (a) If on or after (x) the date hereof, in the case of any obligation to make Committed Loans, or (y) the date of the related Bid, in the case of any Bid Loan, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) shall subject any Bank (or its Lending Office) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank (or its Lending Office) of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Fixed Rate Loans (except for changes in the rate of tax on the overall net income of such Bank or its Lending Office imposed by the jurisdiction in which such Bank's principal executive office or Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirements (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, such as, for example, a change in official reserve requirements, but excluding with respect to any Eurodollar Loan or Eurodollar Bid Loan, any such requirement to the extent included in the Eurodollar Reserve Percentage used in computing the Adjusted LIBOR for such Loan) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Lending Office) or shall impose on any Bank (or its Lending Office) or on the interbank market any other condition affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans; -59- and the result of any of the foregoing is to increase the cost to such Bank (or its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall promptly pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall determine that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change in any existing law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Bank (or any of its branches) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Bank or any Person controlling such Bank as a consequence of such Bank's obligations hereunder or for the credit which is the subject matter hereof to a level below that which such Bank could have achieved but for such adoption, change or compliance (taking into consideration the policies of such Bank or any Person controlling such Bank with respect to liquidity and capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within fifteen (15) days after demand by such Bank, the Borrower shall pay to the Administrative Agent for the account of such Bank such additional amount or amounts reasonably determined by such Bank as will compensate such Bank for such reduction. (c) Each Bank that determines to seek compensation under this Section 11.3 shall notify the Borrower and the Agent of the circumstances that entitle the Bank to such compensation pursuant to this Section 11.3 and will designate a different Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section 11.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use reasonable averaging and attribution methods. SECTION 11.4. LENDING OFFICES. Each Bank may, at its option, elect to make its Loans hereunder at the branch, office or affiliate specified on the appropriate signature page hereof (each a "LENDING OFFICE") for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a notice to the Borrower and the Administrative Agent. SECTION 11.5. DISCRETION OF BANK AS TO MANNER OF FUNDING. Notwithstanding any other provision of this Agreement, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if each Bank had actually funded and maintained each Eurodollar Loan or Eurodollar Bid -60- Loan through the purchase of deposits in the relevant market having a maturity corresponding to such Loan's Interest Period and bearing an interest rate equal to LIBOR for such Interest Period. SECTION 12. THE AGENTS SECTION 12.1. APPOINTMENT AND AUTHORIZATION. (a) Each Bank hereby irrevocably appoints Harris Trust and Savings Bank as Administrative Agent for the Banks under the Loan Documents and hereby authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto. (b) The Administrative Agent hereby irrevocably appoints Bank of Montreal and PNC Bank each as a Syndication Agent for the Banks under the Loan Documents and hereby authorizes each such Syndication Agent to take such action as a Syndication Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to such Syndication Agent by the terms thereof, together with such powers as are reasonably incidental thereto. SECTION 12.2. AGENT AND AFFILIATES. Each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Bank and may exercise or refrain from exercising the same as though it were not an Agent, and each Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not an Agent under the Loan Documents. The terms Bank and Banks as used in the Loan Documents, unless the context otherwise clearly requires, include each Agent in its individual capacity as a Bank. SECTION 12.3. ACTION BY AGENT. Except for action expressly required of any Agent hereunder, each Agent shall in all cases be fully justified in failing or refusing to act hereunder unless such Agent shall be indemnified to its reasonable satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. In all cases in which this Agreement does not require an Agent to take certain actions, such Agent shall be fully justified in using its discretion in failing to take or in taking any action hereunder. Without limiting the generality of the foregoing, no Agent shall be required to take any action with respect to any Event of Default, except as expressly provided in Section 10.2. Each Agent shall be acting as an independent contractor hereunder and nothing herein shall be deemed to impose on any Agent any fiduciary obligations to the Banks or the Borrower. SECTION 12.4. CONSULTATION WITH EXPERTS. Each Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. -61- SECTION 12.5. LIABILITY OF AGENT. Neither any Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither any Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document or any Credit Event or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower; (iii) the satisfaction of any condition specified in Section 8, except receipt of items required to be delivered to such Agent; or (iv) the validity, effectiveness, genuineness, enforceability or collectability hereof or of any other Loan Document or any other instrument or writing furnished in connection therewith; and no Agent makes any representation of any kind or character with respect to any such matter mentioned in this sentence. Each Agent may execute any of its duties under any of the Loan Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, the Borrower or any other Person for the default or misconduct of any such agents or attorneys-in-fact selected with reasonable care. No Agent shall incur any liability by acting in reliance upon any notice, consent, certificate, request or statement (whether written or oral) or other document believed by it to be genuine or to be signed or sent by the proper party or parties. Each Agent may treat the Banks that are named herein as the holders of the Notes and the indebtedness contemplated herein unless and until such Agent receives notice of the assignment of the Note and the indebtedness held by a Bank hereunder pursuant to an assignment contemplated by Section 14.12 hereof. SECTION 12.6. INDEMNIFICATION. Each Bank shall, ratably in accordance with its Percentage, indemnify each Agent (to the extent not reimbursed by the Borrower) against any cost, expenses (including reasonable counsels' fees and disbursements), claims, demands, actions, losses, obligations, damages, penalties, judgments, suits or liability (except such as result from such Agent's gross negligence or willful misconduct) that such Agent may suffer or incur in connection with this Agreement or any action taken or omitted by such Agent hereunder. SECTION 12.7. CREDIT DECISION. Each Bank acknowledges that it has, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. SECTION 12.8. RESIGNATION OF AGENT AND SUCCESSOR AGENT. Each Agent may resign at any time by giving written notice thereof to the Banks and the Borrower. Upon any such resignation of any Agent, the Required Banks shall have the right to appoint, with the consent of the Borrower and each other Agent, a successor Agent to serve in the same capacity as such resigning Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within thirty (30) days after the -62- retiring Agent's giving of notice of resignation then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any state thereof that has a combined capital and surplus of at least $200,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent under the Loan Documents, and the retiring Agent shall be discharged from its duties and obligations thereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. SECTION 12.9. PAYMENTS. Unless the Administrative Agent shall have been notified by a Bank prior to the date on which such Bank is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Bank does not intend to make such payment, the Administrative Agent may assume that such Bank has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Bank pays such amount to the Administrative Agent at a rate per annum equal to the Federal Funds Rate. If such amount is not received from such Bank by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Bank with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan, so that the Borrower will have no liability under Section 3.8 hereof with respect to such payment. SECTION 12.10. SYNDICATION AGENTS. Nothing in this Agreement shall impose any obligation on either of Bank of Montreal or PNC Bank in their capacity as Syndication Agents. SECTION 13 THE GUARANTEES. SECTION 13.1. THE GUARANTEES. To induce the Banks to provide the credits described herein and in consideration of benefits expected to accrue to each Guarantor by reason of the Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Guarantor hereby unconditionally and irrevocably guarantees jointly and severally to the Agents and the Banks, and each other holder of the indebtedness guaranteed hereby, the due and punctual payment of all present and future indebtedness of the Borrower evidenced by or arising out of the Loan Documents, including, but not limited to, the due and punctual payment of principal of and interest on the Notes and on the Reimbursement Obligations and the due and punctual payment of all other obligations now or hereafter owed by the Borrower under the Loan Documents as and when the same shall -63- become due and payable, whether at stated maturity, by acceleration or otherwise, according to the terms hereof and thereof. In case of failure by the Borrower punctually to pay any indebtedness or other obligations guaranteed hereby, each Guarantor hereby unconditionally agrees jointly and severally to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by the Borrower. SECTION 13.2. GUARANTEE UNCONDITIONAL. The obligations of each Guarantor as a guarantor under this Section 13 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Borrower or of any other Guarantor under this Agreement or any other Loan Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any other Loan Document; (c) any change in the corporate existence, structure or ownership of, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting, the Borrower, any other Guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Borrower or of any other Guarantor contained in any Loan Document; (d) the existence of any claim, set-off or other rights which the Guarantor may have at any time against any Agent, any Bank or any other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Borrower, any other Guarantor or any other Person or Property; (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of the Borrower, regardless of what obligations of the Borrower remain unpaid; (g) any invalidity or unenforceability relating to or against the Borrower or any other Guarantor for any reason of this Agreement or of any other Loan Document or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower or any other Guarantor of the principal of or interest on any Note or any other amount payable by it under the Loan Documents; or (h) any other act or omission to act or delay of any kind by the Administrative Agent, any Bank or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of the Guarantor under this Section 13. -64- SECTION 13.3. DISCHARDGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN CIRCUMSTANCES. Each Guarantor's obligations under this Section 13 shall remain in full force and effect until the Commitments are terminated and the principal of and interest on the Notes and all other amounts payable by the Borrower under this Agreement and all other Loan Documents shall have been paid in full. If at any time any payment of the principal of or interest on any Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or of a Guarantor, or otherwise, each Guarantor's obligations under this Section 13 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. SECTION 13.4. WAIVERS. (a) GENERAL. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Agent, any Bank or any other Person against the Borrower, another Guarantor or any other Person. (b) SUBROGATION AND CONTRIBUTION. Unless and until the Obligations have been fully paid and satisfied and the Commitments have terminated, each Guarantor hereby agrees not to exercise or otherwise assert any claim or other right it may now or hereafter acquire against the Borrower or any other Guarantor that arises from the existence, payment, performance or enforcement of such Guarantor's obligations under this Section 13 or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, or any right to participate in any claim or remedy of any Agent, any Bank or any other holder of the indebtedness guaranteed hereby against the Borrower or any other Guarantor whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Guarantor directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other right. SECTION 13.5. LIMIT ON RECOVERY. Notwithstanding any other provision hereof, the right to recovery of the holders of the indebtedness guaranteed hereby against each Guarantor under this Section 13 shall not exceed $1.00 less than the amount which would render such Guarantor's obligations under this Section 13 void or voidable under applicable law, including without limitation fraudulent conveyance law. SECTION 13.6. STAY OF ACCELERATION. If acceleration of the time for payment of any amount payable by the Borrower under this Agreement or any other Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents shall nonetheless be payable jointly and severally by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Required Banks. -65- SECTION 14. MISCELLANEOUS. SECTION 14.1. WITHHOLDING TAXES. (a) PAYMENTS FREE OF WITHHOLDING. Except as otherwise required by law and subject to Section 14.1(b) hereof, each payment by the Borrower under this Agreement or the other Loan Documents or in respect of the Letters of Credit shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the jurisdiction in which the Borrower is domiciled, any jurisdiction from which the Borrower makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein. If any such withholding is so required, the Borrower shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Bank and the Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Bank or the Administrative Agent (as the case may be) would have received had such withholding not been made. If the Administrative Agent or any Bank pays any amount in respect of any such taxes, penalties or interest the Borrower shall reimburse the Administrative Agent or that Bank for that payment on demand in the currency in which such payment was made. If the Borrower pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Bank or Administrative Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment. If any Bank or the Administrative Agent determines it has received or been granted a credit against or relief or remission for, or repayment of, any taxes paid or payable by it because of any taxes, penalties or interest paid by the Borrower and evidenced by such a tax receipt, such Bank or Administrative Agent shall, to the extent it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Borrower such amount as such Bank or Administrative Agent determines is attributable to such deduction or withholding and which will leave such Bank or Administrative Agent (after such payment) in no better or worse position than it would have been in if the Borrower had not been required to make such deduction or withholding. Nothing in this Agreement shall interfere with the right of each Bank and the Administrative Agent to arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or the Administrative Agent to disclose any information relating to its tax affairs or any computations in connection with such taxes. (b) U.S. WITHHOLDING TAX EXEMPTIONS. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the earlier of the date the initial Borrowing is made hereunder and thirty (30) days after the date hereof, two duly completed and signed copies of either Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Bank, including fees, pursuant to the Loan Documents and the Loans) or Form 4224 (relating to all amounts to be received by such Bank, including fees, pursuant to the Loan Documents and the Loans) of the United States Internal Revenue Service. Thereafter and from time to time, each Bank shall submit to the Borrower and the Administrative Agent such additional duly -66- completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) requested by the Borrower in a written notice, directly or through the Administrative Agent, to such Bank and (ii) required under then-current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Bank, including fees, pursuant to the Loan Documents or the Loans or the Letters of Credit. (c) INABILITY OF BANK TO SUBMIT FORMS. If any Bank determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower or Administrative Agent any form or certificate that such Bank is obligated to submit pursuant to subsection (b) of this Section 14.1, or that such Bank is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the Borrower and Administrative Agent of such fact and the Bank shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable. SECTION 14.2. NO WAIVER OF RIGHTS. No delay or failure on the part of the Administrative Agent or any Bank or on the part of the holder or holders of any Note in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise thereof preclude any other or further exercise of any other power or right. The rights and remedies hereunder of the Administrative Agent, the Banks and the holder or holders of any Notes are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. SECTION 14.3. NON-BUSINESS DAY. If any payment of principal or interest on any Note or any fees shall fall due on a day which is not a Business Day, (i) interest at the rate such Note bears for the period prior to maturity shall continue to accrue on such principal from the stated due date thereof to and including the next succeeding Business Day and (ii) such principal, interest and fees shall be payable on such next succeeding Business Day SECTION 14.4. DOCUMENTARY TAXES. The Borrower agrees that it will pay any documentary, stamp or similar taxes payable in respect to any Loan Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. SECTION 14.5. SURVIVAL OF REPRESENTATIONS. All representations and warranties made herein or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder. -67- SECTION 14.6. SURVIVAL OF INDEMNITIES. All indemnities and all other provisions relative to reimbursement to the Banks of amounts sufficient to protect the yield of the Banks with respect to the Loans, including, but not limited to, Section 3.8, Section 11.3 and Section 14.15 hereof, shall survive the termination of this Agreement and the other Loan Documents and the payment of the Loans and all other Obligations hereunder. SECTION 14.7. SHARING OF SET-OFF. Each Bank agrees with each other Bank a party hereto that if such Bank shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise ("SET-OFF"), on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such obligations then outstanding to the Banks, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of the Loans or Reimbursement Obligations, or participations therein, held by each such other Banks (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; PROVIDED, HOWEVER, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section 14.7, amounts owed to or recovered by, the Administrative Agent in connection with Reimbursement Obligations in which Banks have been required to fund their participation shall be treated as amounts owed to or recovered by the Administrative Agent as a Bank hereunder. SECTION 14.8. NOTICES. Except as otherwise specified herein, all notices under the Loan Documents shall be in writing (including cable, telecopy, or other electronic communication) and shall be given to a party hereunder at its address or telecopier number set forth below or such other address or telecopier number as such party may hereafter specify by notice to the Administrative Agent and the Borrower, given by courier, by United States certified or registered mail, or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices under the Loan Documents to the Banks and the Administrative Agent shall be addressed to their respective addresses, telecopier, or telephone numbers set forth on the signature pages hereof, and to the Borrower and the Guarantors to: Nash-Finch Company 7600 France Avenue South Minneapolis, Minnesota 55440-0355 Attention: Chief Financial Officer Telecopy: (612) 844-1060 Telephone: (612) 844-1236 Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section 14.8 or on the signature pages hereof and a confirmation of receipt of such telecopy has been received by the sender, (ii) if given by courier, when delivered, (iii) if given by mail, three Business Days after such communication is deposited in the mail, registered with -68- return receipt requested, addressed as aforesaid or (iv) if given by any other means, when delivered at the addresses specified in this Section 14.8 or on the signature pages hereof; PROVIDED THAT any notice given pursuant to Section 1 or 2 hereof shall be effective only upon receipt and notices described in clauses (i), (ii) and (iv) above that are received after normal business hours will be deemed received at the opening of business on the next Business Day. SECTION 14.9. COUNTERPARTS. This Agreement may be executed in any number of counterpart signature pages, and by the different parties on different counterparts, each of which when executed shall be deemed an original but all such counterparts taken together shall constitute one and the same instrument. SECTION 14.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of each of the Banks and the benefit of their respective successors and assigns, including any subsequent holder of any Note. The Borrower may not assign any of its rights or obligations under any Loan Document without the written consent of all of the Banks. SECTION 14.11. PARTICIPANTS. Each Bank shall have the right at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Loans made and Reimbursement Obligations and/or Commitments held by such Bank at any time and from time to time to one or more other Persons; PROVIDED THAT (i) no such participation shall relieve any Bank of any of its obligations under this Agreement and (ii) no such participant shall have any direct rights under this Agreement except as provided in this Section 14.11, and no Agent shall have any obligation or responsibility to such participant. Any agreement pursuant to which such participation is granted shall provide that the granting Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower and Guarantors under this Agreement and the other Loan Documents including, without limitation, the right to approve any amendment, modification or waiver of any provision of the Loan Documents, except that such agreement may provide that such Bank will not agree to any modification, amendment or waiver of the Loan Documents that would reduce the amount of or postpone any fixed date for payment of any Obligation in which such participant has an interest. Any party to which such a participation has been granted shall have the benefits of Section 3.8 and Section 11.3 hereof. The Borrower and each Guarantor authorizes each Bank to disclose to any participant or prospective participant under this Section 14.11 any financial or other information pertaining to the Borrower or any Guarantor. SECTION 14.12. ASSIGNMENT AGREEMENTS. Each Bank may, at its own expense, from time to time upon at least five Business Days' notice to the Agents, assign to other commercial lenders part of its rights and obligations under this Agreement (including without limitation the indebtedness evidenced by the Notes then owned by such assigning Bank, together with an equivalent proportion of its obligation to make loans and advances and participate in Letters of Credit hereunder) pursuant to written agreements executed by such assigning Bank, such assignee lender or lenders, the Borrower and the Administrative Agent, which agreements shall specify in each instance the portion of the indebtedness evidenced by the Notes which is to be assigned to each such assignee lender and the portion -69- of the Commitment of the assigning Bank to be assumed by it (the "ASSIGNMENT AGREEMENTS"); provided, however, that (i) except with respect to the Swing Loans (which must be assigned in whole), each such assignment shall be of a constant, and not a varying, percentage of the assigning Bank's rights and obligations under this Agreement and the assignment shall cover the same percentage of such Bank's Commitment, Loans, Notes and interests in Letters of Credit; (ii) unless the Administrative Agent and the Borrower otherwise consent, the aggregate amount of the Commitment, Loans, Notes and interests in the Letters of Credit of the assigning Bank being assigned to such assignee lender pursuant to each such assignment (determined as of the effective date of the relevant Assignment Agreement) shall in no event be less than $10,000,000 and shall be an integral multiple of $5,000,000 (other than assignments between existing Banks which may be in the amount of $1,000,000 or in such greater amount which is an integral multiple of $1,000,000); (iii) each Bank shall maintain for its own account at least $10,000,000 of its Commitment or assign all of its Commitment; (iv) the Administrative Agent and (except for an assignment made during the continuance of any Event of Default) the Borrower must each consent, which consent shall not be unreasonably withheld, to each such assignment to (provided no such consent is required for any assignment to (i) any Bank party hereto, whether an original signatory of this Agreement or a party hereto by reason of an Assignment Agreement and (ii) any Affiliate of any such Bank), and (v) the assignee lender must pay to the Administrative Agent a processing and recordation fee of $3,000 and any out-of-pocket attorney's fees incurred by the Administrative Agent in connection with such Assignment Agreement. Upon the execution of each Assignment Agreement by the assigning Bank thereunder, the assignee lender thereunder, the Borrower and the Administrative Agent and payment to such assigning Bank by such assignee lender of the purchase price for the portion of the indebtedness of the Borrower being acquired by it, (i) such assignee lender shall thereupon become a "BANK" for all purposes of this Agreement with a Commitment (and, if relevant, shall be deemed to be Harris Bank for purposes of the Swing Loans) in the amount set forth in such Assignment Agreement and with all the rights, powers and obligations afforded a Bank hereunder, (ii) such assigning Bank shall have no further liability for funding the portion of its Commitment (and, if relevant, Swing Line Commitment) assumed by such other Bank and (iii) the address for notices to such assignee Bank shall be as specified in the Assignment Agreement executed by it. Concurrently with the execution and delivery of such Assignment Agreement, the Borrower shall execute and deliver new Notes to the assignee Bank in the amount of its Commitment (and, if relevant, Swing Line Commitment) and Bid Loans and new Notes to the assigning Bank in the amounts of its Commitment and Bid Loans after giving effect to the reduction occasioned by such assignment, such new Notes to constitute "NOTES" for all purposes of this Agreement. SECTION 14.13. AMENDMENTS. Any provision of the Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Required Banks, and (c) if the rights or duties of any Agent are affected thereby, such Agent; provided that: (i) no amendment or waiver pursuant to this Section 14.13 shall (A) increase the Commitment (or, if relevant Swing Line Commitment) of any Bank without the consent of such Bank or (B) reduce the amount of or postpone any fixed date for -70- payment of any principal of or interest on any Loan or Reimbursement Obligation or of any fee payable hereunder without the consent of each Bank or (C) extend the Termination Date without the consent of each Bank; and (ii) no amendment or waiver pursuant to this Section 14.13 shall, unless signed by each Bank, change any provision of Section 8, Section 10, this Section 14.13, or the definition of Required Banks, or affect the number of Banks required to take any action under the Loan Documents. SECTION 14.14. HEADINGS. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement. SECTION 14.15. LEGAL FEES, OTHER COSTS AND INDEMNIFICATION. The Borrower agrees to pay all reasonable costs and expenses of the Agents in connection with the preparation, negotiation, associated due diligence review, administration, and syndication of the Loan Documents, including without limitation, the reasonable fees and disbursements of Chapman and Cutler, counsel to the Administrative Agent, and Messrs. Buchanan Ingersoll, Professional Corporation, counsel to PNC Bank, in connection with the preparation and execution of the Loan Documents, and any amendment, waiver or consent related hereto, whether or not the transactions contemplated herein are consummated. The Borrower further agrees to indemnify each Bank, each Agent, and their respective directors, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto) which any of them may incur or reasonably pay arising out of or relating to any Loan Document or any of the transactions contemplated thereby (including without limitation the Acquisition) or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification or otherwise expressly provided herein to be paid for by such Bank. The Borrower, upon demand by an Agent or a Bank at any time, shall reimburse such Agent or Bank for any legal or other expenses incurred in connection with investigating or defending against any of the foregoing, except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. SECTION 14.16. SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, each Bank and each subsequent holder of any Note is hereby authorized by the Borrower and each Guarantor at any time or from time to time, without notice to the Borrower, to the Guarantors or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts, and in whatever currency denominated) and any other indebtedness at any time held or owing by that Bank or that subsequent holder to or for the credit or the account of the Borrower or any Guarantor, whether or not matured, against and on account of the obligations and liabilities of the Borrower or any Guarantor to that Bank or that subsequent holder under the Loan -71- Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Loan Documents, irrespective of whether or not (a) that Bank or that subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans or Notes and other amounts due hereunder shall have become due and payable pursuant to Section 10 and although said obligations and liabilities, or any of them, may be contingent or unmatured. SECTION 14.17. ENTIRE AGREEMENT. The Loan Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior or contemporaneous agreements, whether written or oral, with respect thereto are superseded thereby, except for the letter agreement dated as of October 4, 1996 referred to in Sections 4.3 and 4.4 hereof. SECTION 14.18. GOVERNING LAW. This Agreement and the other Loan Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Illinois. SECTION 14.19. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. THE BORROWER, THE AGENTS, AND EACH BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. [SIGNATURE PAGES TO FOLLOW] -72- Upon your acceptance hereof in the manner hereinafter set forth, this Agreement shall be a contract between us for the purposes hereinabove set forth. Dated as of this 8th day of October, 1996. NASH-FINCH COMPANY By -------------------------------- Name: --------------------------- Title: -------------------------- -73- Accepted and Agreed to as of the day and year last above written. 111 West Monroe Street HARRIS TRUST AND SAVINGS BANK, Chicago, Illinois 60690 in its individual capacity as a Bank Attention: Agribusiness Group and as Administrative Agent Telecopy: (312) 765-8095 Telephone: (312) 461-3796 Commitment: $30,000,000 By -------------------------------- Name: --------------------------- Title: Vice President Swing Line Commitment: $25,000,000 Lending Offices: Base Rate Loans: 111 West Monroe Street Chicago, Illinois 60603 Eurodollar Loans: 111 West Monroe Street Chicago, Illinois 60603 Bid Loans: 111 West Monroe Street Chicago, Illinois 60603 -74- 115 South LaSalle Street BANK OF MONTREAL, Chicago, Illinois 60603 in its individual capacity as a Bank Telecopy: 312-750-4314 and as Syndication Agent Telephone: 312-750-4369 Commitment: $220,000,000 By -------------------------------- Name: --------------------------- Title: -------------------------- Lending Offices: Base Rate Loans: 115 South LaSalle Street Chicago, Illinois 60603 Eurodollar Loans: 115 South LaSalle Street Chicago, Illinois 60603 Bid Loans: 115 South LaSalle Street Chicago, Illinois 60603 -75- 500 West Madison Street PNC BANK, NATIONAL ASSOCIATION, Suite 3140 in its individual capacity as a Bank Chicago, Illinois 60661 and as Syndication Agent Attention: Gregory T. Gaschler Telecopy: 312-906-3420 Telephone: 312-906-3472 Commitment: $250,000,000 By -------------------------------- Name: --------------------------- Title: -------------------------- Lending Offices: Base Rate Loans: Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 Attention: Loan Operations Eurodollar Loans: Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 Attention: Loan Operations Bid Loans: Fifth Avenue and Wood Street Pittsburgh, Pennsylvania 15222 Attention: Loan Operations -76- EXHIBIT A-1 COMMITTED LOAN NOTE $______________ _____________, 1996 FOR VALUE RECEIVED, the undersigned, Nash-Finch Company, a Delaware corporation (the "BORROWER"), promises to pay to the order of ________________ (the "BANK") on the Termination Date of the hereinafter defined Credit Agreement, at the principal office of Harris Trust and Savings Bank in Chicago, Illinois, in immediately available funds, the principal sum of _________ Dollars ($________) or, if less, the aggregate unpaid principal amount of all Committed Loans made by the Bank to the Borrower under its Commitment pursuant to the Credit Agreement and with each Committed Loan to mature and become payable on the last day of the Interest Period applicable thereto, but in no event later than the Termination Date, together with interest on the principal amount of each Committed Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books and records or on the schedule attached to this Note, which is a part hereof, each Committed Loan made by it pursuant to its Commitment, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, whether the Committed Loan is a Base Rate Loan or an Eurodollar Loan and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Note all such amounts shall be recorded on the schedule attached to this Note. The record thereof, whether shown on such books and records or on the schedule to this Note, shall be PRIMA FACIE evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Committed Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Committed Loan Note is one of the Notes referred to in the Credit Agreement dated as of October 8, 1996, among the Borrower, Harris Trust and Savings Bank, as Administrative Agent, and the Banks signatory thereto (the "CREDIT AGREEMENT"), and this Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois without regard to choice of law doctrine. Prepayments may be made hereon and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. NASH-FINCH COMPANY By -------------------------------- Name: --------------------------- Title: -------------------------- A1-2 EXHIBIT A-2 SWING LINE NOTE $25,000,000.00 __________, 199____ On the Termination Date, for value received, the undersigned, Nash-Finch Company, a Delaware corporation (the "BORROWER"), promises to pay to the order of Harris Trust and Savings Bank (the "BANK"), at the principal office of Harris Trust and Savings Bank in Chicago, Illinois, the principal sum of (i) Twenty- Five Million and 00/100 Dollars ($25,000,000.00), or (ii) such lesser amount as may at the time of the maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid principal amount of all Swing Loans owing from the Borrower to the Bank under the Swing Line Commitment provided for in the Credit Agreement hereinafter mentioned. This Note evidences Swing Loans made and to be made to the Borrower by the Bank under the Swing Line Commitment provided for under that certain Credit Agreement dated as of October 8, 1996 by and between the Borrower, Harris Trust and Savings Bank individually and as Administrative Agent and certain lenders which are or may from time to time become parties thereto (the "CREDIT AGREEMENT"), and the Borrower hereby promises to pay interest at the office specified above on each Swing Loan evidenced hereby at the rates and times specified therefor in the Credit Agreement. Each Swing Loan made under the Swing Line Commitment provided for in the Credit Agreement by the Bank to the Borrower against this Note, any repayment of principal hereon and the interest rates applicable thereto shall be endorsed by the holder hereof on the reverse side of this Note or recorded on the books and records of the holder hereof (provided that such entries shall be endorsed on the reverse side hereof prior to any negotiation hereof) and the Borrower agrees that in any action or proceeding instituted to collect or enforce collection of this Note, the entries so endorsed on the reverse side hereof or recorded on the books and records of the Bank shall be PRIMA FACIE evidence of the unpaid balance of this Note and the interest rates applicable thereto. This Note is issued by the Borrower under the terms and provisions of the Credit Agreement, and this Note and the holder hereof are entitled to all of the benefits and security provided for thereby or referred to therein, to which reference is hereby made for a statement thereof. This Note may be declared to be, or be and become, due prior to its expressed maturity as specified in the Credit Agreement, and certain prepayments are required to be made hereon, all in the events, on the terms and with the effects provided in the Credit Agreement. All capitalized terms used herein without definition shall have the same meaning herein as such terms have in the Credit Agreement. This Note shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to principles of conflict of law. The Borrower hereby promises to pay all reasonable costs and expenses (including attorneys' fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. NASH-FINCH COMPANY By -------------------------------- Name: --------------------------- Title: -------------------------- A2-2 EXHIBIT B BID NOTE _______, 1996 FOR VALUE RECEIVED, the undersigned, Nash-Finch Company, a Delaware corporation (the "BORROWER"), promises to pay to the order of ________________ (the "BANK") on the Termination Date of the hereinafter defined Credit Agreement, at the principal office of Harris Trust and Savings Bank in Chicago, Illinois, in immediately available funds, the aggregate unpaid principal amount of all Bid Loans made by the Bank to the Borrower pursuant to the Credit Agreement and with each Bid Loan to mature and become payable on the last day of the Interest Period applicable thereto, but in no event later than the Termination Date, together with interest on the principal amount of each Bid Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books and records or on the schedule attached to this Note, which is a part hereof, each Bid Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances thereof from time to time outstanding hereon and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Note all such amounts shall be recorded on the schedule attached to this Note. The record thereof, whether shown on such books and records or on the schedule to this Note, shall be PRIMA FACIE evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Bid Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Bid Note is one of the Notes referred to in the Credit Agreement dated as of October 8, 1996, among the Borrower, Harris Trust and Savings Bank as Administrative Agent and the Banks signatory thereto (the "CREDIT AGREEMENT"), and this Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois without regard to choice of law doctrine. At any time and from time to time, the Bank may assign or otherwise transfer (in whole or in part) to any Person this Note or any Loan hereunder. This Note may be declared due prior to the expressed maturity hereof on the terms and in the manner provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. NASH-FINCH COMPANY By -------------------------------- Name: --------------------------- Title: -------------------------- B-2 EXHIBIT C BID LOAN REQUEST CONFIRMATION [Date] Harris Trust and Savings Bank, as Administrative Agent 111 West Monroe Street Chicago, Illinois 60690 Attention: ----------------- Dear : ---------------- The undersigned, Nash-Finch Company (the "BORROWER") refers to the Credit Agreement dated as of October 8, 1996 (the "CREDIT AGREEMENT"), among the Borrower, the Banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The Borrower hereby confirms that it has, on the date hereof, given you notice pursuant to Section 2.2 of the Credit Agreement that it requests a Bid Loan Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Bid Loan Borrowing is requested to be made: (A) Type of Bid Loan Borrowing(1) ---------------- (B) Date of Bid Loan Borrowing(2) ---------------- (C) Aggregate Principal STATED RATE EURODOLLAR Amount of Bid Loan Borrowing(3) --------------- ---------------- - ----------------------------- (1) Stated Rate or Eurocurrency. (2) The Bid Loan Request Confirmation must be received on a Business Day by the Agent not later than 11:30 A.M. (Chicago time) one (1) Business Day before the proposed Borrowing Date in the case of Stated Rate Bid Loans and five (5) Business Days before the proposed Borrowing Date in the case of Eurodollar Bid Loans. (3) Not less than $5,000,000 and in integral multiples of $1,000,000. (D) Maturities(4) --------------- ---------------- --------------- ---------------- --------------- ---------------- (E) If, applicable --------------- ---------------- maximum amount --------------- ---------------- requested for each --------------- ---------------- maturity Upon acceptance of any or all of the Bids offered by Banks in response to this request, the Borrower shall be deemed to affirm as of such date the representations and warranties made in the Credit Agreement. NASH-FINCH COMPANY By --------------------------------- Its ----------------------------- - ---------------------------- (4) List up to 3 maturities of 1 to 180 days in the case of Stated Rate Bid Loans and 1, 2, 3, 4, 5 or 6 months in the case of Eurodollar Bid Loans, but never beyond the Termination Date. C-2 EXHIBIT D INVITATION TO BID [Date] [Name of Bank] [Address of Bank] Attention: Reference is made to the Credit Agreement dated as of October 8, 1996 (the "CREDIT AGREEMENT") among Nash-Finch Company (the "BORROWER"), the Banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The Borrower made a Bid Loan Request on __________, ________ pursuant to Section 2.2 of the Credit Agreement, and in that connection you are invited to submit a Bid by [DATE](1). Your Bid must comply with Section 2.2 of the Credit Agreement and the terms set forth below on which the Bid Loan Request was made. (A) Type (Stated Rate or Eurodollar) ---------------- (B) Date of Proposed Bid Loan Borrowing ---------------- STATED RATE EURODOLLAR (C) Aggregate Principal Amount of Bid Loan --------------- ---------------- (D) Maturities and maximum amount, if different from (C), for any maturity --------------- ---------------- Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent By --------------------------------- Its ----------------------------- - ------------------------------ (1) The Bid must be received by the Agent not later than 9:00 a.m. Chicago time, on the proposed Borrowing Date for Stated Rate Bid Loans and 11:00 a.m. four Business Days prior to the proposed Borrowing Date for Eurodollar Bid Loans. EXHIBIT E CONFIRMATION OF BID [Date] Harris Trust and Savings Bank, as Administrative Agent 111 West Monroe Street Chicago, Illinois 60690 Attention: ------------------------ The undersigned [Name of Bank], refers to the Credit Agreement dated as of October 8, 1996 (the "CREDIT AGREEMENT") among Nash-Finch Company (the "BORROWER"), the Banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The undersigned hereby confirms that on the date hereof it has made a Bid pursuant to Section 2.2 of the Credit Agreement, in response to the Bid Loan Request made by the Borrower on __________, _______, and in that connection sets forth below the terms on which such Bid is made: Type (Stated Rate or Eurocurrency): ---------------- Date of proposed Bid Loan Borrowing: (1) ---------------- Interest Rate or spread above Principal Amount(1) Maturity(2) or below Adjusted LIBOR(3) Very truly yours, [Name of Bank] By --------------------------------- Its ----------------------------- - --------------------------- (1) As specified in the related Invitation to Bid. (1) Principal amount of bid for each maturity may not exceed the principal amount requested by the Borrower or the maximum amount requested for that maturity, if less. Bids must be made in an amount of $5,000,000 and in integral multiples of $1,000,000. (2) List each maturity of 1 to 180 days in the case of Stated Rate Bid Loans and 1, 2, 3, 4, 5 or 6 months in the case of Eurodollar Bid Loans. (3) Specify rate of interest per annum computed on the basis of a year of 360 days and actual days elapsed for Stated Rate Bid Loans and percentage to be added to or subtracted from Adjusted LIBOR for Eurodollar Bid Rate Loans. EXHIBIT F NOTICE OF ACCEPTANCE OF BID [Date] [Name of Bank] [Address of Bank] Attention: ---------------- Reference is made to the Credit Agreement dated as of October 8, 1996 (the "CREDIT AGREEMENT") among Nash-Finch Company (the "BORROWER"), the Banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The Borrower made a Bid Loan Request on __________, ______ pursuant to Section 2.2 of the Credit Agreement, and in that connection you have submitted a Bid. Your Bid has been accepted as set forth below. (A) Type of Bid Loan ---------------- (B) Date of Bid Loan Borrowing ---------------- Interest Rate or (C) Aggregate Spread above or principal amount Principal below Adjusted of each Bid maturity Amount Maturity LIBOR and interest rate --------- -------- ----- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------- ---------- ---------- Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent By --------------------------------- Its ----------------------------- EXHIBIT G NOTICE OF PAYMENT REQUEST [Date] [Name of Bank] [Address] Attention: Reference is made to the Credit Agreement, dated as of October 8, 1996, among Nash-Finch Company, the Banks named therein, and Harris Trust and Savings Bank, as Administrative Agent (the "CREDIT AGREEMENT"). Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement. [The Borrower has failed to pay its Reimbursement Obligation in the amount of $__________. Your Bank's Percentage of the unpaid Reimbursement Obligation is $____________] or [Harris Trust and Savings Bank has been required to return a payment by the Borrower of a Reimbursement Obligation in the amount of $____________. Your Bank's Percentage of the returned Reimbursement Obligations is $____________.] Very truly yours, HARRIS TRUST AND SAVINGS BANK By --------------------------------- Its ----------------------------- EXHIBIT H COMPLIANCE CERTIFICATE To: The Banks parties to the Credit Agreement Described Below This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of October 8, 1996, among Nash-Finch Company (the "BORROWER"), the banks party thereto and Harris Trust and Savings Bank as Administrative Agent for the Banks (the "AGREEMENT"). Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected _______________________________ of the Borrower; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or an Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ______ day of ______________, 19___. --------------------------------- Name: ---------------------------- Title: --------------------------- H-2 SCHEDULE I TO COMPLIANCE CERTIFICATE NASH-FINCH COMPANY Compliance Calculations for Credit Agreement Dated as of October 9, 1996 Calculations as of ________________, 19__ A. CURRENT RATIO (SECTION 9.7 OF THE AGREEMENT) 1. Current Assets $_______________ A1 2. Current Liabilities (excluding Loans) $_______________ A2 3. Ratio of Line A1 to Line A2 _____ : 1.0 A3 4. Line A3 Ratio must be greater than: 1.25:1.0 5. Is Company in Compliance? (Circle Yes or No) Yes / No B. TANGIBLE NET WORTH (SECTION 9.8 OF THE AGREEMENT) 1. Total Shareholder's Equity $__________ $_______________ B1 2. Sum of: (i) Intangibles $_________ (ii) Write-up of Assets $_________ $_______________ B2 3. Line B1 minus Line B2 (Tangible Net Worth) $_______________ B3 4. Line B3 must be greater than or equal to (the Minimum Required Amount): $_______________ 5. Is Company in Compliance? (Circle Yes or No) Yes / No C. LEVERAGE RATIO (SECTION 9.19 OF THE AGREEMENT) 1. Total Funded Debt $_______________ C1 2. Consolidated Net Income for the specified fiscal $_______________ quarter or quarters of the Company most recently C2 completed (as adjusted per definition of Leverage Ratio) 3. Interest Expense for the same period $_______________ C3 4. Federal, state and local income taxes for the $_______________ same period C4 5. Deprecation of fixed assets for the same period $_______________ C5 6. Amortization for the same period $_______________ C6 7. Add Lines C2-C6 (EBITDA) $_______________ C7 8. Ratio of Line C1 to C7 _____ : 1.0 9. Line C8 Ratio must be less than or equal to: _____ : 1.0 10. Is Company in Compliance? (Circle Yes or No) Yes / No D. INTEREST COVERAGE RATIO (SECTION 9.10 OF THE AGREEMENT) 1. Interest Expense for the specified fiscal quarter $_______________ or quarters of the Company most recently completed D1 (as adjusted per definition of Interest Coverage Ratio) 2. Consolidated Net Income for the same period $_______________ D2 3. Interest Expense for the same period $_______________ D3 4. Federal, state and local income taxes for $_______________ the same period D4 5. Add Lines D2-D4 (EBIT) (as adjusted per definition $_______________ of Interest Coverage Ratio) D5 6. Ratio of Line D1 to Line D5 _____ : 1.0 7. Line D6 ratio must not be less than: _____ : 1.0 2 8. Is Company in Compliance? (Circle Yes or No) Yes / No E. LONG-TERM DEBT (SECTION 9.11 OF THE AGREEMENT) 1. NF Term Refinancing Credit extended $_______________ E1 2. Amount of Commitments $_______________ E2 3. Weighted Average Life to Maturity of Long-Term $_______________ Debt issued during such period E3 4. Line E3 life must not be less than: 7 years E4 5. Is line E3 greater than or equal to 7 years Yes/No 6. Is Company in Compliance? (Circle Yes or No) Yes/No F. INDEBTEDNESS OF BORROWER (SECTION 9.12(a) OF THE AGREEMENT) 1. Total Funded Debt of the Borrower $_______________ F1 2. Line F1 must be less than or equal to: $ 475,000,000 F2 3. Is Company in Compliance? (Circle Yes or No) Yes/No G. INDEBTEDNESS OF SUBSIDIARIES (SECTION 9.12(b) OF THE AGREEMENT) 1. Aggregate amount of Indebtedness of Subsidiaries $_______________ G1 2. Total Assets as defined $_______________ G2 3. Ratio of Line G1 to Line G2 $_______________ G3 4. Line G3 Ratio must be less than or equal to: ________________ G4 5. Is Company in Compliance? (Circle Yes or No) Yes / No 3 EXHIBIT I SUBSIDIARY GUARANTEE AGREEMENT _______________, 19___ HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement dated as of October 8, 1996, among Nash-Finch Company, such Banks and such Administrative Agent (the "CREDIT AGREEMENT") Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [NAME OF SUBSIDIARY GUARANTOR], a [JURISDICTION OF INCORPORATION] corporation, hereby elects to be a "GUARANTOR" for all purposes of the Credit Agreement, effective from the date hereof. The undersigned confirms that the representations and warranties set forth in Section 7 of the Credit Agreement are true and correct as to the undersigned as of the date hereof. Without limiting the generality of the foregoing, the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Credit Agreement, including, without limitations, Section 13 thereof, to the same extent and with the same force and effect as if the undersigned were a direct signatory thereto. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Illinois. Very truly yours, [NAME OF SUBSIDIARY GUARANTOR] By____________________________ Name:_______________________ Title:______________________ EXHIBIT J EMPLOYEE BENEFIT PLANS Neither the Borrower, Super Food nor any of their respective ERISA Affiliates maintains or contributes to any Welfare Plan (other than a multiemployer plan as defined in Section 3(37) of ERISA) which provides benefits to employees after termination of employment (other than as required under Section 601 of ERISA or any comparable applicable state law) which could result in a material obligation to pay money, except for such plans listed below. THE BORROWER AND ITS ERISA AFFILIATES: 1. Nash-Finch Company Welfare Benefit Plan. 2. Nash-Finch Company and its ERISA Affiliates from time to time on an ad hoc basis pay severance benefits. SUPER FOOD AND ITS ERISA AFFILIATES: 1. The Super Food Services, Inc. Employee Health Care Plan. 2. The Super Foods/Lexington Division Employee Health Care Plan. 3. Super Food and its ERISA Affiliates from time to time on an ad hoc basis pay severance benefits. 4. The Super Food Services, Inc. Section 125 Cafeteria Plan for Non-Union Employees. 5. The Super Food Services, Inc. Short-Term Disability Plan -- Cincinnati Division Union Employees. 6. The Super Food Services, Inc. Health and Welfare Plan -- Cincinnati Division Union Employees. 7. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Employees not Covered by Union Plan. 8. Kentucky Food Stores, Inc. Group Disability Plan. 9. Kentucky Food Stores, Inc. Health Care Plan. 10. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Bellefontaine Division. 11. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Orlando, Florida. 12. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Bridgeport, Michigan. EXHIBIT K FORM OF OPINION OF COUNSEL October 8, 1996 Harris Trust and Savings Bank (Individually and as Administrative Agent) 111 West Monroe Street Chicago, Illinois 60603 and the other Banks now and from time to time hereafter party to the Credit Agreement (as defined below) Re: Credit Agreement, dated as of October 8, 1996 (the "CREDIT AGREEMENT"), among Nash-Finch Company, a Delaware corporation (the "COMPANY"), the Banks (defined therein), Harris Trust and Savings Bank, as Administrative Agent, and Bank of Montreal and PNC Bank, National Association, as Syndication Agent Gentlemen: This opinion is being delivered to you pursuant to Section 8.1(a) of the Credit Agreement. Capitalized terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. We have acted as counsel for the Company and NF Acquisition Corporation, a Delaware corporation ("NF Acquisition") in connection with the negotiation, execution and delivery of the Credit Agreement by the Company and a Subsidiary Guaranty Agreement by NF Acquisition. In connection with this opinion, we have reviewed an original or a copy of each of the following items: (A) the Credit Agreement; (B) the Notes; and (C) the Subsidiary Guaranty Agreement executed by NF Acquisition. We have also examined the originals, or copies certified, or otherwise identified, to our satisfaction, of such other corporate records of the Company and its Subsidiaries, and such other agreements, instruments and documents as we have deemed necessary as a basis Harris Trust and Savings Bank October 8, 1996 Page 2 for the opinions hereinafter expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. The opinions expressed herein are qualified in their entirely as follows: (a) No opinion is expressed with respect to laws other than those of the States of Minnesota, the corporate law of the State of Delaware and the laws of the United States of America. To the extent the Credit Agreement and Notes and Subsidiary Guaranty Agreement are governed by Illinois law, we have assumed that Illinois law is identical to Minnesota law in all relevant respects. (b) To the extent that the opinions given below relate to the enforceability of the Notes and the Credit Agreement or Subsidiary Guaranty Agreement, the opinions are subject to the effect of: (i) applicable bankruptcy, fraudulent transfer or conveyance, insolvency, reorganization, moratorium and other similar laws limiting the enforceability of creditors' rights generally, as from time to time in effect, and (ii) equitable limitations upon the enforcement, whether by an action for specific performance, injunctive relief or otherwise, of remedies or obligations enforceable in a court of equity and the discretion of courts in granting or withholding equitable relief with respect to such enforcement. (c) Certain rights and remedies of the Administrative Agent, the Syndication Agents and the other Banks provided for in the Notes and Credit Agreement and Subsidiary Guaranty Agreement may not be available or enforceable, and certain waivers of rights by the Company may not be effective, but, in our opinion, the unavailability or enforceability thereof will not make the rights and remedies provided for in the Notes and Credit Agreement and Subsidiary Guaranty Agreement, when taken as a whole, inadequate for the practical realization by the Administrative Agent, the Syndication Agents and the other Banks of the benefits sought to be realized thereby. (d) Provisions of the Notes and Credit Agreement and Subsidiary Guaranty Agreement which permit the Administrative Agent, the Syndication Agent or any other Bank to take action or make determinations may be subject to a requirement that such actions be taken or such determinations be made on a reasonable basis and in good faith. Harris Trust and Savings Bank October 8, 1996 Page 3 (e) Insofar as the opinion expressed in paragraph 3 of Articles I and II below relates to material agreements known to us, our investigation and review has been limited to agreements identified and made available to us by the Company. (f) The term "to the best of our knowledge" as used in the opinion expressed in paragraph 5 of Article I below, means only the personal knowledge of the individual attorney preparing this opinion, based solely on discussions with the chief legal officer of the Company. As to all questions of fact (but not law), material to such opinions, we have relied upon certificates of the Company and its officers and of public officials and have examined the representations and warranties made by the Company contained in the Credit Agreement and have relied upon the relevant facts stated therein. Based on the foregoing, we are of the opinion that: I.THE COMPANY 1. The Company is a corporation duly existing and in good standing under the laws of the State of Delaware, and is duly qualified in each jurisdiction in which the failure to so qualify would materially and adversely affect the Company. 2. The Company has full power to execute, deliver and perform its obligations under the Credit Agreement and the Notes, to borrow money and to request the issuance of Letters of Credit. 3. The execution and delivery of the Credit Agreement and the Notes, the borrowings and incurrence of obligations in respect of Letters of Credit issued thereunder, and the performance by the Company of its obligations under the Credit Agreement and Notes have been duly authorized by all necessary corporate action, have received all necessary governmental approval, and do not and will not contravene or conflict with any provision of law or of the charter or by- laws of the Company or, to our knowledge, of any material agreement binding upon the Company. 4. The Credit Agreement and the Notes have been duly executed and delivered by the Company and are the legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms. 5. To the best of our knowledge, there are no actions, suits or proceedings pending threatened against or affecting the Borrower or any Subsidiary or the Properties of the Borrower or any Subsidiary before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would read reasonably be expected to effect a material adverse change in the business, operations, Properties or financial or other condition of the Borrower and the Subsidiaries, taken as a whole. Harris Trust and Savings Bank October 8, 1996 Page 2 II.THE SUBSIDIARY GUARANTY AGREEMENT 1. NF Acquisition is a corporation duly existing and in good standing under the laws of the State of Delaware, and is duly qualified in each jurisdiction in which the failure to so qualify would have a material adverse effect on NF Acquisition. 2. NF Acquisition has full power to execute, deliver and perform its obligations under the Subsidiary Guaranty Agreement. 3. The execution and delivery of the Subsidiary Guaranty Agreement and the performance by NF Acquisition of its obligations thereunder have been duly authorized by all necessary corporate action, have received all necessary governmental approval, and do not and will not contravene or conflict with any provision of law or of the charter or by-laws of NF Acquisition or, to our knowledge, of any material agreement binding upon NF Acquisition. 4. The Subsidiary Guaranty Agreement has been duly executed and delivered by NF Acquisition and is the legal, valid and binding obligation of NF Acquisition, enforceable in accordance with its terms. We wish to note that Richard G. Lareau, a director of the Company, is a partner in our firm. This opinion is furnished to the Administrative Agent for it and on behalf of the other Banks for their sole benefit in connection with the above- referenced transaction. This opinion is not to be relied upon by any other Person or to be used, circulated, quoted or otherwise referenced for any other purpose, except that (i) Assignees may rely hereon and (ii) copies of this opinion may be shown by the Banks to their accountants, regulators and counsel as well as to participants. EXHIBIT L EXISTING NF REVOLVER DEBT 1. Credit Agreement, dated December 27, 1995, between the Company and First Bank National Association, Norwest Bank Minnesota, National Association, PNC Bank, National Association, Mitsubishi Bank, Limited Chicago Branch, and Wachovia Bank of Georgia, N.A. EXHIBIT M EXISTING NF TERM DEBT Note Agreements dated March 22, 1991 between the Company and The Minnesota Mutual Life Insurance Company, and between the Company and The Minnesota Mutual Life Insurance Company - Separate Account F. Note Agreements dated as of February 15, 1993 between the Company and Principal Mutual Life Insurance Company, and between the Company and Aid Association for Lutherans. Note Agreement dated March 22, 1996 between the Company and The Variable Annuity Life Insurance Company, Independent Life and Accident Insurance Company, Northern Life Insurance Company and Northwestern National Life Insurance Company. Note Agreement dated August 1, 1986 between the Company and Nationwide Life Insurance Company. Note Agreements dated September 15, 1987 between the Company and IDS Life Insurance Company and between the Company and IDS Life Insurance Company of New York. Note Agreements dated September 29, 1989 between the Company and Nationwide Life Insurance Company, and between the Company and West Coast Life Insurance Company. EXHIBIT N EXISTING SUPER FOOD DEBT 1. $10,000,000 Revolving Credit Loan Agreement dated April 9, 1991 between Super Food and Society Bank, N.A. 2. $25,000,000 Note Agreement dated as of November 1, 1989 between Super Food and Nationwide Life Insurance Company. 3. $10,000,000 Loan Agreement dated September 17, 1987 between Super Food and PNC Bank, Ohio (then known as The Central Trust Company, N.A.) as amended by Amendment to Loan Agreement dated April 11, 1991. 4. $10,000,000 Credit Agreement dated August 30, 1991 between Super Food and The First National Bank of Chicago. SCHEDULE 7.2 SUBSIDIARIES OF NASH-FINCH COMPANY A. Direct Subsidiaries of Nash-Finch Company (the voting stock of which is owned, with respect to each subsidiary, 100 percent by Nash-Finch Company): Subsidiary Corporation State of Incorporation ---------------------- ---------------------- Nash-DeCamp Company California Piggly Wiggly Northland Corporation Minnesota GTL Truck Lines, Inc. Nebraska T.J. Morris Company Georgia NFC Acquisition Corporation Delaware B. Direct Subsidiaries of Nash-Finch Company (the voting stock of which is owned, with respect to each subsidiary, 66.6 percent by Nash-Finch Company): Subsidiary Corporation State of Incorporation ---------------------- ---------------------- Gillette Dairy of the Black Hills, Inc. South Dakota Nebraska Dairies, Inc. Nebraska C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned, with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent by Nash-DeCamp Company): Subsidiary Corporation State/Country of Incorporation ---------------------- ------------------------------ Forrest Transportation Service, Inc. California Agricola Nadco Limitada* Chile *Ninety-nine percent (99%) of Agricola Nadco Limitada is owned by Nash-DeCamp Company Exhibit J Neither the Borrower, Super Food nor any of their respective ERISA Affiliates maintains or contributes to any Welfare Plan (other than a multiemployer plan as defined in Section 3(37) of ERISA) which provides benefits to employees after termination of employment (other than as required under Section 601 of ERISA or any comparable applicable state law) which could result in a material obligation to pay money, except for such plans listed below. THE BORROWER AND ITS ERISA AFFILIATES: 1. Nash-Finch Company Welfare Benefit Plan. 2. Nash-Finch Company and its ERISA Affiliates from time to time on an ad hoc basis pay severance benefits. SUPER FOOD AND ITS ERISA AFFILIATES: 1. The Super Food Services, Inc. Employee Health Care Plan. 2. The Super Foods/Lexington Division Employee Health Care Plan. 3. Super Food and its ERISA Affiliates from time to time on an ad hoc basis pay severance benefits. 4. The Super Food Services, Inc. Section 125 Cafeteria Plan for Non-Union Employees. 5. The Super Food Services, Inc. Short-Term Disability Plan -- Cincinnati Division Union Employees. 6. The Super Food Services, Inc. Health and Welfare Plan -- Cincinnati Division Union Employees. 7. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Employees not Covered by Union Plan. 8. Kentucky Food Stores, Inc. Group Disability Plan. 9. Kentucky Food Stores, Inc. Health Care Plan. 10. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Bellefontaine Division. 11. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Orlando, Florida. 12. The Super Food Services, Inc. Medical/Surgical/Disability Plan for Union Employees -- Bridgeport, Michigan. EX-99.(C)(1) 12 AGMT & PLAN OF MERGER AGREEMENT AND PLAN OF MERGER AMONG NASH-FINCH COMPANY NFC ACQUISITION CORPORATION AND SUPER FOOD SERVICES, INC. Dated as of OCTOBER 8, 1996 ARTICLE 1. THE OFFER 1.1. The Offer. 1.2. Company Actions. ARTICLE 2. THE MERGER 2.1. The Merger 2.2. Effective Time 2.3. Effects of the Merger 2.4. Certificate of Incorporation and By-Laws 2.5. Directors and Officers 2.6. Conversion of Shares 2.7. Company Stock Plans. . . . . . . . . . . . . . . . . . . . . . . 5 2.8. Closing ARTICLE 3. DISSENTING SHARES; EXCHANGE OF SHARES 3.1. Dissenting Shares 3.2. Exchange of Shares. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB 4.1. Organization and Qualification 4.2. Authority Relative to this Agreement 4.3. Proxy Statement 4.4. Consents and Approvals; No Violation 4.5 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5.1. Disclosure Schedule 5.2. Organization and Qualification. 5.3. Capitalization 5.4. Authority Relative to this Agreement 5.5. Absence of Certain Changes 5.6. Reports 5.7. Proxy Statement 5.8. Consents and Approvals; No Violation 5.9. Absence of Undisclosed Liabilities 5.10. Litigation 5.11. Liens and Encumbrances 5.12. Contracts 5.13. Taxes 5.14. Employee Benefit Plans 5.15. Compliance with Applicable Law 5.16. Inventories 5.17. Accounts and Notes Receivable 5.18. Intellectual Property Rights 5.19. Insurance 5.20. Labor Matters 5.21. Environmental Matters 5.22. Brokerage Fees and Commissions ARTICLE 6. COVENANTS 6.1. Conduct of Business of the Company 6.2. No Solicitation 6.3. Access to Information 6.4. Reasonable Efforts 6.5. Indemnification and Insurance. 6.6. Employee Plans and Benefits and Employment Contracts. 6.7. Board Representation 6.8. Meeting of the Company's Stockholders. 6.9. Proxy Statement 6.10. Public Announcements 6.11. Merger Without Meeting of Stockholders 6.12. Current Information 6.13. Supplement to Disclosure Schedule 6.14. Section 203 6.15. Preferred Stock Purchase Rights ARTICLE 7. CONDITIONS TO CONSUMMATION OF THE MERGER 7.1. Conditions to Each Party's Obligation to Effect the Merger 7.2. Conditions to Obligations of Parent and Acquisition Sub Effect the Merger ARTICLE 8. TERMINATION; AMENDMENT; WAIVER 8.1. Termination 8.2. Effect of Termination 8.3. Termination Fee; Reimbursement of Parent's Expenses. 8.4. Amendment 8.5. Extension; Waiver ARTICLE 9. MISCELLANEOUS 9.1. Non-Survival of Representations and Warranties 9.2. Entire Agreement; Assignment 9.3. Enforcement of the Agreement 9.4. Validity 9.5. Notices 9.6. Governing Law 9.7. Descriptive Headings 9.8. Parties in Interest 9.9. Counterparts 9.10. Expenses. 9.11. Performance by Acquisition Sub 9.12. Submission to Jurisdiction. AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of October 8, 1996, among Nash-Finch Company, a Delaware corporation ("Parent"), NFC Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition Sub"), and Super Food Services, Inc., a Delaware corporation (the "Company"). Background The respective Boards of Directors of Parent, Acquisition Sub and the Company have each determined that it is advisable and in the best interests of the stockholders of the respective corporations, on the terms and subject to the conditions of this Agreement, (i) for a wholly owned subsidiary of Parent to commence a cash tender offer to purchase any and all outstanding shares of Common Stock, par value $1.00 per share, of the Company (the "Common Stock" and such shares, the "Shares") and (ii) following the cash tender offer, to merge Acquisition Sub with and into the Company. Terms In consideration of the premises and the mutual covenants herein contained and intending to be legally bound, Parent, Acquisition Sub and the Company hereby agree as follows: ARTICLE 1 THE OFFER The Offer. Provided that this Agreement shall not have been terminated in accordance with Section 8.1 and none of the events set forth in Annex I hereto shall have occurred and be continuing, as promptly as practicable (but in no event later than the fifth (5th) business day after the initial public announcement of Acquisition Sub's intention to commence the Offer (as hereinafter defined), Parent will cause Acquisition Sub to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), and Acquisition Sub will commence, an offer to purchase for cash any and all issued and outstanding Shares at a price of $15.50 per Share net to the seller in cash (as amended or supplemented in accordance with this Agreement, the "Offer"). The obligation of Parent and Acquisition Sub to consummate the Offer, to accept for payment and to pay for any Shares tendered is subject to the conditions set forth in Annex I, including, without limitation, that there be validly tendered and not withdrawn by the expiration date of the Offer a number of Shares which, together with Shares already beneficially owned by Parent and any of its wholly owned subsidiaries, would represent at least a majority of the outstanding Shares, calculated by taking into account the number of outstanding shares of Common Stock on the date of consummation of the Offer plus the number of shares subject to options to purchase shares of Common Stock outstanding as of consummation of the Offer, whether or not such options are exercisable or fully vested (the "Minimum Condition"). As soon as practicable on the date of commencement of the Offer, Parent and Acquisition Sub will file with the Securities and Exchange Commission (the "SEC"), with respect to the Offer, a Tender Offer Statement on Schedule 14D-l (which, together with all amendments and supplements thereto and including the exhibits thereto, is referred to herein as the "Schedule 14D-1") in accordance with applicable federal securities laws containing the terms of the Offer and forms of related letters of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents"). Parent will deliver copies of the proposed forms of the Schedule 14D-l and the Offer Documents to the Company within a reasonable time prior to the commencement of the Offer for review and comment by the Company and its counsel. Parent agrees to provide the Company and its counsel with any written comments that Parent, Acquisition Sub or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt thereof. The information provided and to be provided by Parent, Acquisition Sub and the Company for use in the Schedule 14D-l, and the Offer Documents and any amendments or supplements thereto will not, in the case of the Schedule 14D-l at the time filed with the SEC and in the case of the Offer Documents when first published, sent or given to the stockholders of the Company, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that Parent and Acquisition Sub make no representation or warranty as to any of the information relating to and supplied in writing by the Company specifically for inclusion in the Schedule 14D-l or the Offer Documents and any amendments or supplements thereto and the Company makes no representation or warranty as to any information except that information relating to and supplied in writing by the Company specifically for inclusion in the Schedule 14D-1 or the Offer Documents and any amendments or supplements thereto. Parent, Acquisition Sub and the Company agree to promptly correct any such information in the Schedule 14D-1 or the Offer Documents that shall have become false or misleading in any material respect and each of Parent and Acquisition Sub will take all steps necessary to cause such Schedule 14D-1 or Offer Documents as so corrected to be filed with the SEC and disseminated to the stockholders of the Company, as and to the extent required by applicable federal securities laws. The Company agrees that, subject to Section 6.2 hereof, the Offer Documents shall contain the unanimous recommendation of the Board of Directors of the Company that the holders of the Shares accept the Offer. The Offer will initially expire twenty (20) business days after its commencement. Neither Parent nor Acquisition Sub will, without the prior written consent of the Company, decrease the price per Share payable in the Offer, change the form of consideration payable in the Offer, decrease the number of Shares sought pursuant to the Offer, change the conditions to the Offer, impose additional conditions to the Offer, waive the Minimum Condition, change the expiration date of the Offer, or amend any term of the Offer in any manner adverse to holders of Shares; provided, however, that if any of the conditions described in Annex I exists at the time of the scheduled expiration date of the Offer, then Acquisition Sub may, in its sole discretion, giving prior notice to the Company, extend and reextend the Offer for periods of time (not to exceed ten (10) days in any particular instance) so that the expiration date of the Offer (as so extended) is as soon as reasonably practicable or advisable after the date on which the particular condition described in Annex I no longer exists (it being understood that a period of two (2) business days is reasonable for such purposes); provided further, that the Offer may not be so extended and reextended beyond the earlier of: (i) five (5) business days before the date the meeting of the stockholders of the Company to approve the Merger and this Agreement (as provided in Section 6.8); or (ii) ninety (90) days after the date of this Agreement. Notwithstanding the foregoing, Acquisition Sub may extend the Offer for up to ten (10) business days in connection with any and each increase in the consideration to be paid pursuant to the Offer. In addition, Acquisition Sub may extend the Offer, in its sole discretion, giving prior notice to the Company, on one or more occasions for a period or periods not to exceed in the aggregate ten (10) business days if on the date of any such extension less than 90% of the Shares have been validly tendered and not properly withdrawn pursuant to the Offer. Subject to the foregoing, assuming the prior satisfaction or waiver of the conditions to the Offer, Acquisition Sub will accept for payment, in accordance with the terms of the Offer, Shares tendered pursuant to the Offer as soon as permitted after the commencement thereof. Company Actions. The Company hereby consents to the Offer and represents that: (i) its Board of Directors (at a meeting duly called and held) has unanimously (A) determined that each of the Offer and the Merger (as hereinafter defined) is fair to and in the best interests of the stockholders of the Company, (B) approved the Offer, the Merger and this Agreement and the transactions contemplated hereby and thereby, (C) acknowledged that such approval constitutes approval for purposes of Section 203(a)(l) and Section 251(b) of the General Corporation Law of the State of Delaware (the "DGCL"), (D) resolved to recommend acceptance of the Offer and approval of the Merger and this Agreement by the stockholders of the Company, (E) pursuant to the terms of the Rights Agreement between the Company and Chase Manhattan Bank, N.A. dated as of January 27, 1989, a copy of which has been previously provided to Parent together with all amendments thereto through the date hereof (the "Rights Agreement"), approved this Agreement, the acquisition of Shares by Parent and Acquisition Sub pursuant to the Offer and the Merger and determined that, after receiving advice from Lazard Frres & Co. LLC ("Lazard Frres"), a nationally recognized investment banking firm selected by its Board of Directors, the acquisition of Shares by Parent and Acquisition Sub is at a price and on terms that are fair to the Company's stockholders (taking into account all factors which the Board of Directors deems relevant including, without limitation, prices which could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value) and otherwise are in the best interests of the Company and its stockholders, so that the Preferred Stock purchase rights issued pursuant to the Rights Agreement will not become exercisable as a result of the execution of this Agreement or the consummation of the Merger or the other transactions provided for in this Agreement; (ii) under the Rights Agreement as amended, neither Parent nor Acquisition Sub will be deemed to be an Acquiring Person or a "Beneficial Owner" (as such terms are defined in the Rights Agreement ) as a result of the execution of this Agreement or the consummation of the Offer or the Merger or the other transactions provided for in this Agreement; and (iii) Lazard Frres has delivered to the Company's Board of Directors its written opinion that, as of the date of such opinion and based upon the assumptions set forth therein and such other matters as Lazard Frres deems relevant, the $15.50 per Share in cash to be received by the Company's stockholders in the Offer and Merger is fair to such stockholders from a financial point of view. The Company will file with the SEC as soon as practicable after the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (which, together with all amendments and supplements thereto and including the exhibits thereto, is referred to herein as the "Schedule 14D-9") reflecting, subject to Section 6.2 hereof, the unanimous recommendation of the Board of Directors of the Company as stated in the first sentence of this Section 1.2(a) and will disseminate the Schedule 14D-9 as required by Rule l4d-9 promulgated under the Exchange Act. The Schedule 14D-9 will comply in all material respects with the provisions of all applicable federal securities laws and will not, on the date filed with the SEC and on the date first published, sent or given to the stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will promptly correct any information in the Schedule l4D-9 that shall have become false or misleading in any material respect and will take all steps necessary to cause such Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the stockholders of the Company, as and to the extent required by applicable federal securities laws. In connection with the Offer, the Company will furnish Parent with mailing labels, security position listings and any available listing or computer file containing the names and addresses of the record holders of the Shares as of a recent date and will furnish Parent with such information and assistance as Parent or its agents may reasonably request in communicating the Offer to the record and beneficial stockholders of the Company. Subject to the requirements of law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent and Acquisition Sub will, and will cause each of their affiliates to, hold the information contained in any of such labels and lists in confidence, use such information only in connection with the Offer and the Merger, and, if this Agreement is terminated, promptly deliver to the Company all copies of such information or extracts therefrom them in their possession or under their control. ARTICLE 2 THE MERGER The Merger. Upon the terms and subject to the conditions hereof, and in accordance with the relevant provisions of the DGCL, Acquisition Sub shall be merged with and into the Company (the "Merger") as soon as practicable following the satisfaction or waiver, if permissible, of the conditions set forth in Article VII. Following the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") under the name "Super Food Services, Inc." and will continue its existence under the laws of the State of Delaware, and the separate corporate existence of Acquisition Sub will cease. At the election of Parent, any wholly owned subsidiary of Parent may be substituted for Acquisition Sub as a constituent corporation in the Merger. Notwithstanding this Section 2.1, Parent may elect at any time prior to the fifth (5th) business day preceding the date on which the notice of the meeting of stockholders of the Company to consider approval of the Merger and this Agreement (the "Meeting") is first given to the Company's stockholders (or at any time in the event a Meeting does not occur) that instead of merging Acquisition Sub into the Company as hereinabove provided, to merge the Company into Acquisition Sub or another wholly owned subsidiary of Parent; provided, however, that the Company will not be deemed to have breached any of its representations, warranties or covenants herein solely by reason of such election. In such event the parties will execute an appropriate amendment to this Agreement in order to reflect the foregoing and to provide that Acquisition Sub or such other subsidiary of Parent will be the Surviving Corporation and will continue under the name "Super Food Services, Inc." Effective Time. The Merger shall be consummated by filing with the Secretary of State of the State of Delaware a certificate of merger or a certificate of ownership and merger if permitted by the DGCL (the "Certificate of Merger") in accordance with the DGCL (the time of such filing being the "Effective Time"). Such filing shall be made by Parent or Acquisition Sub as soon as practicable following the satisfaction or waiver, if permissible, of the conditions set forth in Article VII. Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL. As of the Effective Time, the Company shall be a wholly owned subsidiary of Parent. Certificate of Incorporation and By-Laws. The Certificate of Incorporation and the By-Laws of Acquisition Sub in effect at the Effective Time shall be the Certificate of Incorporation and By-Laws of the Surviving Corporation until amended in accordance with applicable law; provided that Article I of the Certificate of Incorporation of the Surviving Corporation shall be amended as of the Effective Time to read "The name of this corporation is Super Food Services, Inc." Directors and Officers. The directors and officers of Acquisition Sub immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation until their respective successors are duly elected and qualified. Conversion of Shares. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Acquisition Sub, the Company or the holders of any of the following securities: each Share then held by the Company as treasury stock (or held by any subsidiary of the Company) and each issued and outstanding Share owned by Parent, Acquisition Sub or any other subsidiary of Parent shall be canceled and retired and no payment made with respect thereto; each then issued and outstanding Share, other than: (i) those Shares referred to in Section 2.6(a); and (ii) Dissenting Shares (as defined in Section 3.1), shall be converted into the right to receive an amount of cash equal to $15.50 (or any higher price per Share paid pursuant to the Offer) (the "Merger Consideration") payable to the holder thereof, without interest thereon, upon the surrender of the certificate formerly representing such Share; and each common share, par value $0.01, of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. Company Stock Plans. Option Plans. The Company shall have the right, at any time and during the period prior to the consummation of the Merger, to pay to each holder of outstanding options to purchase shares of Common Stock ("Stock Options"), heretofore granted under the Company's 1978 Stock Option Plan or the Company's 1986 Stock Option Plan (the "Option Plans") an amount equal to the difference between the Merger Consideration and the per Share exercise price of such Stock Options held by such holder multiplied by the number of Shares then exercisable pursuant to such Stock Options in exchange for the surrender and cancellation of such Stock Options. Prior to the Effective Time, the Company may also elect to accelerate the exercisability or vesting of such Stock Options and adopt any amendments to its Option Plans (to the extent permitted by the Option Plans) as shall be necessary to effectuate the foregoing. At the Effective Time, any Stock Options which the holder thereof has not exercised in full or surrendered for cancellation shall terminate. If any employee's employment with the Company or any of its subsidiaries is terminated after the acceptance of Shares for payment and payment for Shares pursuant to the Offer and prior to the Effective Time, and if as a consequence thereof, any Stock Options granted to such employee expire or terminate prior to the Effective Time without having been exercised, such employee shall be entitled to the payments hereunder in respect of such Stock Options, at the same time such amounts are paid to other holders of Stock Options, as if such employee had continued as an employee of the Company or its subsidiary through the Effective Time and as if such Stock Options had been surrendered for cancellation. Purchase Plan. Prior to the consummation of the Merger, the Company shall amend the Company's Employee Stock Purchase Plan, as amended to the date hereof (the "Purchase Plan"), to provide that each participant that has elected to participate in the Purchase Plan for the current Purchase Period (as defined in the Purchase Plan) shall be entitled to receive, in exchange for the amount in such participant's Stock Purchase Account (as defined in the Purchase Plan) as of the Effective Time, an amount equal to the product of (i) the amount in the Stock Purchase Account divided by $11.10, multiplied by (ii) $15.50. Closing. Upon the terms and subject to the conditions hereof, as soon as practicable after consummation of the Offer, and after the vote of the stockholders of the Company in favor of the approval of the Merger and this Agreement has been obtained (if such approval is required under applicable law), the Company (or Parent or Acquisition Sub, if appropriate) shall execute in the manner required by the DGCL and deliver to the Secretary of State of the State of Delaware a duly executed Certificate of Merger, as required by the DGCL, and the parties shall take all such other and further actions as may be required by law to make the Merger effective. Prior to the filing referred to in this Section 2.8, a closing (the "Closing") will be held at the offices of Oppenheimer Wolff & Donnelly, Plaza VII, Suite 3400, 45 South Seventh Street, Minneapolis, Minnesota 55402 (or such other place as the parties may agree) for the purpose of confirming all of the foregoing. ARTICLE 3 DISSENTING SHARES; EXCHANGE OF SHARES Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by any holder of Common Stock who has not voted in favor of the Merger and has properly exercised and perfected appraisal rights in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into the right to receive Merger Consideration but shall become the right to receive such consideration as may be determined to be due such Dissenting Shares pursuant to the DGCL; provided, however, that any holder of Dissenting Shares who shall have failed to perfect or who effectively shall have withdrawn or lost his or its rights of appraisal of such Shares under the DGCL shall forfeit the right to appraisal of such Shares, such Shares shall no longer be Dissenting Shares and such Shares shall thereupon be deemed to have been converted into the right to receive, as of the Effective Time, the respective amounts and rights set forth in Section 2.6, without interest. The Company shall give Parent and Acquisition Sub prompt notice of any written demands for appraisal, withdrawals of demands for appraisal and any other related instruments received by the Company and, prior to the Effective Time, Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. Notwithstanding anything to the contrary contained in this Section, if (i) the Merger is rescinded or abandoned or (ii) if the stockholders of the Company revoke the authority to effect the Merger, then the right of any stockholder to be paid the fair value of such a stockholder's Shares shall cease. The Surviving Corporation shall comply with all of the obligations of the DGCL with respect to dissenting stockholders. Exchange of Shares. Prior to the Effective Time, Parent will appoint a disbursing agent for the Merger (the "Disbursing Agent") and enter into a disbursing agent agreement with the Disbursing Agent, in form and substance reasonably acceptable to the Company, and shall deposit or cause to be deposited with the Disbursing Agent in trust for the benefit of the Company's stockholders, cash in an aggregate amount necessary to make the payments pursuant to Section 2.6 to holders of Shares and to make the appropriate cash payments, if any, to holders of Dissenting Shares, assuming Dissenting Shares are entitled to the same price per Share as in effect under the Offer (such amounts being hereinafter referred to as the "Exchange Fund"). The Disbursing Agent shall, pursuant to irrevocable instructions, make the payments provided for in the preceding sentence out of the Exchange Fund. The Disbursing Agent shall invest portions of the Exchange Fund as Parent directs, provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations receiving the highest rating from either Moody's Investors Services, Inc. or Standard & Poor's Corporation, or in certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $100 million. Any net profit resulting from, or interest or income produced by, such investment shall be payable to the Surviving Corporation. The Exchange Fund shall not be used for any other purpose, except as provided in this Agreement. Promptly after the Effective Time, the Surviving Corporation shall cause the Disbursing Agent to mail to each record holder, as of the Effective Time, of an outstanding certificate or certificates (the "Certificates") which immediately prior to the Effective Time represented Shares (other than those owned beneficially by Parent or any subsidiary thereof), a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Disbursing Agent) and instructions for use in effecting the surrender of the Certificate or payment therefor. Upon surrender to the Disbursing Agent of a Certificate, together with such letter of transmittal duly executed, the holder of such certificate shall be paid in exchange therefor cash in an amount equal to the product of the number of Shares represented by such Certificate multiplied by the Merger Consideration, and such Certificate shall forthwith be canceled. No interest will be paid or accrued on the cash payable upon the surrender of the Certificates. If payment is to be made to a person other than the person in whose name the Certificate surrendered is registered, it shall be a condition of payment that the Certificate so surrendered be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the Certificate surrendered or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 3.2, each Certificate (other than Certificates representing Shares owned by Parent, Acquisition Sub or any other subsidiary of Parent, and Dissenting Shares) shall represent for all purposes only the right to receive the Merger Consideration in cash multiplied by the number of Shares evidenced by such Certificate, without any interest thereon. At and after the Effective Time, there shall be no transfers of Shares which were outstanding immediately prior to the Effective Time on the stock transfer books of either the Company or the Surviving Corporation. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they will be canceled and exchanged for cash as provided in this Article III. At the close of business on the day of the Effective Time the stock ledger of the Company will be closed. Any portion of the Exchange Fund that remains unclaimed by the stockholders of the Company for six (6) months after the Effective Time, together with any proceeds of any investments of the Exchange Fund, shall be repaid to the Surviving Corporation. Any stockholders of the Company who have not theretofore complied with Section 3.1 shall thereafter look only to Parent or the Surviving Corporation (subject only to abandoned property, escheat and other laws) for payment of their claim for the Merger Consideration per Share, without any interest thereon. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB Parent and Acquisition Sub represent and warrant to the Company as follows: Organization and Qualification. Each of Parent and Acquisition Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power to carry on its business as it is now being conducted and to own, lease and operate its property and assets. Each of Parent and Acquisition Sub is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except where the failure (as hereinafter defined) to be so qualified would not result in a material adverse effect on the Parent or Acquisition Sub. The copies of the Certificate of Incorporation and By-Laws of Parent and the Certificate of Incorporation and By-Laws of Acquisition Sub previously delivered to the Company are true, complete and correct as of the date hereof. Authority Relative to this Agreement. Each of Parent and Acquisition Sub has all requisite corporate power and authority to execute and deliver this Agreement, to carry out their respective obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Parent and Acquisition Sub of this Agreement and the consummation by Parent and Acquisition Sub of the transactions contemplated hereby have been duly and validly authorized by the respective Boards of Directors of Parent and Acquisition Sub, and the stockholder of Acquisition Sub, and no other corporate proceedings on the part of Parent or Acquisition Sub are necessary to authorize this Agreement, to commence the Offer and to consummate the transactions so contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by each of Parent and Acquisition Sub and, assuming this Agreement constitutes a valid and binding obligation of the Company, this Agreement constitutes a valid and binding agreement of each of Parent and Acquisition Sub, enforceable against each of Parent and Acquisition Sub in accordance with its terms. Proxy Statement. None of the information supplied or to be supplied by Parent, Acquisition Sub and their respective affiliates specifically for inclusion in the Proxy Statement (as hereinafter defined) shall, at the time the Proxy Statement is mailed, at the time of the Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Any letter to stockholders, notice of meeting, proxy statement and form of proxy, or the information statement, as the case may be, distributed to stockholders in connection with the Merger, or any schedule required under applicable law to be filed with the SEC in connection therewith are collectively referred to herein as the "Proxy Statement." If, at any time prior to the Effective Time, any event relating to Parent or any of its affiliates, officers or directors is discovered by Parent that should be set forth in a supplement to the Proxy Statement, Parent will promptly inform the Company. Consents and Approvals; No Violation. Neither the execution and delivery of this Agreement by Parent and Acquisition Sub, nor the performance by Parent and Acquisition Sub of their obligations hereunder, nor the consummation of the transactions contemplated hereby will: (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-Laws of Parent or the Certificate of Incorporation or By-Laws of Acquisition Sub or any other similar governing documents of any other subsidiary of Parent; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any third party or any public governmental body or regulatory authority, except (A) in connection with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "H-S-R Act"), (B) pursuant to the Exchange Act, (C) the filing of the Certificate of Merger pursuant to the DGCL, (D) such filings and approvals as may be required under the "blue sky", takeover or securities laws of various states, or (E) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not prevent or delay consummation of the Offer or the Merger and would not otherwise prevent Parent from performing its obligations under this Agreement; (iii) except as disclosed in writing by Parent to the Company prior to the execution of this Agreement, result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, lease, mortgage, license, agreement or other instrument or obligation to which Parent or any of its subsidiaries is a party or by which any of its subsidiaries or any of their respective assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained or which, in the aggregate, would not result in a material adverse effect on Parent; or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent, any of its subsidiaries or any of their respective assets, except for violations which would not result in a material adverse effect on Parent. Financing. Parent has entered into an agreement for the borrowing of funds necessary to consummate the Offer and the Merger and the transactions contemplated hereby, and to pay the related fees and expenses, and will make such funds available to Acquisition Sub on or before (i) the time of acceptance for purchase by Acquisition Sub of shares pursuant to the Offer and (ii) the Effective Time. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Parent and Acquisition Sub as follows: Disclosure Schedule. Simultaneously with the execution and delivery of this Agreement, the Company has executed and delivered to Parent a Disclosure Schedule (the "Disclosure Schedule"), which is divided into sections which correspond to the subsections of this Article 5. Disclosures in any subsection thereof shall not (in the absence of appropriate cross-references) constitute disclosure for purposes of any other subsection thereof or any other section or subsection of this Agreement. The Disclosure Schedule is accurate and complete in all material respects in accordance with the requirements of this Article 5. Organization and Qualification. The Company and each subsidiary of the Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power to carry on its business as it is now being conducted and to own, lease and operate its property and assets. The Company and each subsidiary of the Company is duly qualified as a foreign corporation to do business, and, except as is set forth in the Disclosure Schedule, is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not result in a material adverse effect on the Company. The copies of the Company's Certificate of Incorporation and By-Laws previously delivered to Parent are true, complete and correct as of the date hereof. The only subsidiaries of the Company are those named in the Disclosure Schedule. Capitalization. The authorized capital stock of the Company consists of 35,000,000 common shares, par value $1.00 per share, and 1,000,000 preferred shares without par value, of which 100,000 shares have been designated Series A Junior Participating Preferred Stock (the "Series A Preferred Stock"). As of the date hereof: (i) 10,997,448 shares of Common Stock (including shares of restricted Common Stock) were issued and outstanding; (ii) no shares of Preferred Stock were issued or outstanding; (iii) Stock Options to purchase an aggregate of 197,277 shares of Common Stock were outstanding under the Company's Option Plans; (iv) up to 47,099 shares of Common Stock were subscribed for under the Purchase Plan; and (v) no shares of Common Stock were held in treasury. The rights to purchase shares of Series A Preferred Stock outstanding under the Rights Agreement are evidenced by the certificates representing shares of Common Stock and not by separate certificates. Except for the First Amendment of the Rights Agreement entered into effective as of the date hereof, the Rights Agreement has not been amended on or prior to the date of this Agreement. All of the issued and outstanding Shares have been, and all shares of Common Stock which are to be issued pursuant to the exercise of stock options will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued and fully paid and nonassessable with no liability attaching to the ownership thereof and not subject to preemptive or similar rights created by statute, the Certificate of Incorporation or By-Laws of the Company or any agreement to which the Company or any of its subsidiaries is a party or is bound. All outstanding shares of capital stock of the subsidiaries of the Company have been validly issued and are fully paid and nonassessable and owned by the Company or a wholly owned subsidiary of the Company, free and clear of all liens, charges, encumbrances, equities, claims and options of any nature. Except as set forth in this Section 5.3 and except for shares of Common Stock that may be issued upon exercise of the Stock Options or pursuant to the Purchase Plan, both as disclosed above, there are not now, and at the Effective Time there will not be, any shares of capital stock of the Company issued or outstanding or any subscriptions, options, warrants, calls, rights, commitments or any other agreements of any character obligating the Company or any of its subsidiaries to issue any additional Shares or any other shares of capital stock of the Company or any other securities convertible into or evidencing the right to subscribe for any Shares or any other shares of capital stock of the Company or any of its subsidiaries. There are no voting trusts or other agreements or understandings to which the Company is a party with respect to the voting of the capital stock of the Company or any of its subsidiaries. There are no contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is obligated to repurchase, redeem or otherwise acquire any Shares. Authority Relative to this Agreement. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby (subject with respect to the Merger, if required, to approval of the Merger and this Agreement by the holders of a majority of the votes represented by the Shares). The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions so contemplated (other than, with respect to the Merger, the approval of this Agreement by stockholders, if required by the DGCL, holding a majority of the votes represented by the Shares). This Agreement has been duly and validly executed and delivered by the Company, and, assuming this Agreement constitutes a valid and binding obligation of each of Parent and Acquisition Sub, this Agreement constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms. Absence of Certain Changes. Except as disclosed in the Company SEC Filings (as hereinafter defined) or as contemplated by this Agreement or disclosed to Parent in the Disclosure Schedule, since August 26, 1995, neither the Company nor any of its subsidiaries has suffered any material adverse effect, and no event has occurred which may result in a material adverse effect on the Company. Without limiting the generality of the foregoing, except as disclosed in the Company SEC Filings or disclosed to Parent in the Disclosure Schedule, since August 26, 1995, there has not been: (i) any declaration, setting aside or payment of any dividend or other distribution in respect of the Shares or any redemption or other acquisition by the Company of any Shares; (ii) any entry into any agreement, commitment or transaction by the Company which is material to the Company and its subsidiaries taken as a whole, except agreements, commitments or transactions in the ordinary course of business; or (iii) any significant change by the Company in accounting methods, principles or practices. Reports. Since December 31, 1991, the Company has filed all reports, registration statements and other filings with the SEC required to be filed by it pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act and has heretofore delivered to Parent true and complete copies of all such reports, registration statements and other filings as requested by Parent. All such reports, registration statements and other filings (including all notes, exhibits and schedules thereto, all documents incorporated by reference therein, and any amendments thereto), whether filed before or after the date hereof, are sometimes collectively referred to herein as the "Company SEC Filings." As of their respective dates of filing with the SEC, the Company SEC Filings complied in all material respects with all of the rules and regulations of the SEC and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company and its subsidiaries will file with the SEC and make available to Parent all Company SEC Filings filed with the SEC between the date of this Agreement and the Effective Date. As of their respective dates, such filings will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The unaudited consolidated financial statements and unaudited interim financial statements included in the Company SEC Filings were and, with respect to filings to be made with the SEC after the date hereof, will be, prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and fairly present the consolidated financial position of the Company and its subsidiaries as of the dates thereof and the results of its operations and changes in financial position for the periods then ended, subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments. Proxy Statement. If a Proxy Statement is required for the consummation of the Merger under applicable law, the Proxy Statement will comply in all material respects with the Exchange Act, except that no representation is made by the Company with respect to information supplied by Parent or any affiliate of Parent specifically for inclusion in the Proxy Statement. None of the information supplied by the Company specifically for inclusion in the Proxy Statement will, at the time the Proxy Statement is mailed, at the time of the meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied by the Company specifically for inclusion in any other documents to be filed with the SEC or any other regulatory agency in connection with the transactions contemplated hereby will, at the respective time such documents are filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Consents and Approvals; No Violation. Neither the execution and delivery of this Agreement by the Company, nor the performance by the Company of the obligations hereunder, nor the consummation of the transactions contemplated hereby will: (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-Laws of the Company or any other similar governing documents of any subsidiary of the Company; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any third party or any public governmental body or regulatory authority, except (A) in connection with the H-S-R Act, (B) pursuant to the Exchange Act, (C) the filing of the Certificate of Merger pursuant to the DGCL, (D) such consents, approvals, orders, authorizations, registrations and declarations as may be required under the law of any foreign country in which the Parent or any of its subsidiaries conducts any business or owns any assets, (E) such filings and approvals as may be required under the "blue sky", takeover or securities laws of various states, or (F) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not prevent or delay consummation of the Offer or the Merger and would not otherwise prevent the Company from performing its obligations under this Agreement; (iii) except as disclosed in the Disclosure Schedule, result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, lease, mortgage, license, agreement or other instrument or obligation to which the Company or by which the Company or any of its assets other than its subsidiaries may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained or which, in the aggregate, would not result in a material adverse effect on the Company; or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any of its subsidiaries or any of their respective assets, except for violations which would not in the aggregate result in a material adverse effect on the Company. Absence of Undisclosed Liabilities. There are no liabilities of the Company or its subsidiaries of any kind whatsoever (whether absolute, accrued, contingent or otherwise, and whether due or to become due), and the Company knows of no valid basis for the assertion of any such liabilities, whether contingent or absolute and whether determined or determinable, and no existing condition, situation or set of circumstances which is reasonably likely to result in such a liability, other than: (i) liabilities disclosed in the Company SEC Filings filed with the SEC prior to the date hereof; (ii) liabilities disclosed in the Disclosure Schedule; (iii) liabilities which would not, individually or in the aggregate, have a material adverse effect on the Company; (iv) liabilities which were incurred in the ordinary course of business and which were not required to be disclosed in the Company's financial statements or the Company SEC Filings; and (v) liabilities which were incurred in the ordinary course of business subsequent to the date of the Company's financial statements. Litigation. As of the date hereof, except as set forth in the Disclosure Schedule, there is no action, suit, judicial or administrative proceeding, arbitration or investigation pending or, to the knowledge of the Company, threatened against or involving the Company or any of its subsidiaries, or any of their properties or rights, before any court, arbitrator or administrative or governmental body, nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against the Company or any of its subsidiaries, which, individually or in the aggregate, would have a material adverse effect on the Company. The Company and its subsidiaries are not in violation of any term of any judgments, decrees, injunctions or orders outstanding against them which, individually or in the aggregate, would have a material adverse effect on the Company. Liens and Encumbrances. All properties and assets owned by the Company and its subsidiaries are free and clear of all title defects, liens, pledges, claims, security interests, restrictions, mortgages, options and encumbrances of any kind (collectively, "Liens") except: (i) statutory Liens not yet delinquent or the validity of which is being contested in good faith by appropriate actions; (ii) Liens for taxes not yet delinquent or the validity of which is being contested in good faith by appropriate actions; (iii) Liens described in the Disclosure Schedule; and (iv) Liens which, in the aggregate, do not materially detract from the value or impair the use of the property subject thereto, or impair the operations of the Company or any of its subsidiaries. All of the assets that are material to the operation of the business of the Company and its subsidiaries are in good operating condition and repair in accordance with industry practice (subject to normal wear and tear) and are adequate to conduct the business of the Company and its subsidiaries as presently conducted. Contracts. Except as set forth in the Disclosure Schedule, the Company has heretofore furnished to Parent or made available for inspection true and correct copies of: (i) every contract, plan, agreement or understanding to which the Company is a party which would be required to be filed with the SEC in a filing to which paragraph (b)(10) (but only with respect to contracts, plans, agreements or understandings to be performed in whole or in part after the date hereof) of Item 601 of Regulation S-K of the rules and regulations of the SEC would be applicable, and which has not been filed with the SEC; (ii) every employment or consulting agreement with or arrangement with or for the benefit of any officer or employee of the Company; and (iii) every contract, agreement or understanding to which the Company is a party which could reasonably be expected to result in annual payments by or to the Company in excess of $100,000 or that extends for more than one year (except for the collective bargaining agreement relating to the Company's Michigan division, which has not been executed but which has been delivered to Parent in its current draft form, and except for contracts entered into in the ordinary course of business consistent with the Company's historical practices for the purchase of inventory or supplies or for the purchase, leasing or maintenance of equipment entered into with independent parties on an arm's-length basis). Except as set forth in the Disclosure Schedule, neither the Company, nor, to the knowledge of the Company, any other party thereto is in default under any material contract, plan, agreement, understanding or arrangement made or obligation owed by or to the Company and, to the Company's knowledge, there are no facts or circumstances which make such a default likely to occur subsequent to the date hereof. Taxes. Except as set forth in the Disclosure Schedule, the Company has filed or has or will cause to be filed all federal, state, local and foreign tax returns required to be filed by each of its subsidiaries and any member of its consolidated, combined, unitary or similar group (each such member, a "Tax Affiliate") the failure of which to be filed by the Company may result in a material adverse effect on the Company, and has paid or has or will cause to be paid, or has made or will make adequate provision or set up an adequate accrual or reserve for the payment of, all taxes required to be paid in respect of the periods for which returns are due, has established or will establish an adequate accrual or reserve for the payment of all taxes payable in respect of the period subsequent to the last of said periods, required (pursuant to generally accepted accounting principles) to be so accrued or reserved (except in either case in an amount not material), and neither it nor any of its Tax Affiliates has or will have any material liability for taxes in excess of the amounts so paid or the accruals or reserves so established. Except as set forth in the Disclosure Schedule, neither the Company nor any of its Tax Affiliates is delinquent in the payment of any material tax in excess of the amount reserved or provided therefor, and no material deficiencies for any tax, assessment or governmental charge in excess of the amount reserved or provided therefor have been threatened, claimed, proposed or assessed. Except as set forth in the Disclosure Schedule, no waiver or extension of time to assess any taxes has been given or requested since December 31, 1991. Except as set forth in the Disclosure Schedule, the Company's federal and state income tax returns, respectively, have not, since December 31, 1991, been audited or examined by the Internal Revenue Service or comparable state agencies nor, except as set forth in the Disclosure Schedule, has any such audit or examination been requested or scheduled. None of the independent contractors hired by the Company should be treated as "employees" for federal or state income or payroll tax purposes. For the purposes of this Section 5.13, the term, "tax" or "taxes" shall include all taxes, charges, withholdings, fees, levies, penalties, additions, interest or other assessments imposed on the Company or any of its Tax Affiliates by any federal, state, local, foreign or other taxing authority. Employee Benefit Plans. Except as set forth in the Disclosure Schedule: Neither the Company nor any other "person" within the meaning of Section 7701(a)(1) of the Code, that together with the Company is considered a single employer pursuant to Sections 414(b), (c), (m) or (o) of the Code or Sections 3(5) or 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (an "Affiliated Organization") sponsors, maintains, contributes to, is required to contribute to or has or could have any material liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to, any "employee pension benefit plan" ("Pension Plan") as such term is defined in Section 3(2) of ERISA, including without limitation, any such plan that is excluded from coverage by Section 4(b)(5) of ERISA or is a "Multiemployer Plan" within the meaning of 4001(a)(3) of ERISA. To the knowledge of the Company, each such Pension Plan that is a Multiemployer Plan that is not administered by the Company has been operated in all material respects in accordance with its terms and in compliance in all material respects with the applicable provisions of ERISA, the Code and all other applicable law. Each such other Pension Plan has been operated in all material respects in accordance with its terms and in compliance in all material respects with the applicable provisions of ERISA, the Code and all other applicable law. All Pension Plans operated as plans that are qualified under the provisions of Section 401(a) of the Code satisfy in form and operation all applicable qualification requirements. Neither the Company nor any Affiliated Organization has or could have any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, to any Pension Plan, the Pension Benefit Guaranty Corporation ("PBGC") or any other person, arising directly or indirectly under Title IV of ERISA. No "reportable event," within the meaning of Section 4043 of ERISA, has occurred with respect to any Pension Plan. Neither the Company nor any Affiliated Organization has ceased operations at any facility or withdrawn from any Pension Plan in a manner which could subject the Company or Affiliated Organization to liability under Section 4062(e), 4063 or 4064 of ERISA. Neither the Company nor any Affiliated Organization maintains, contributes to or has participated in or agreed to participate in any Pension Plan that is a Multiemployer Plan. Neither the Company nor any Affiliated Organization currently has any obligation, known or unknown, direct or indirect, absolute or contingent, to make any withdrawal liability payment to any Pension Plan which is a Multiemployer Plan. Neither the Company nor any Affiliated Organization has been a party to a sale of assets to which Section 4204 of ERISA applied with respect to which it could incur any withdrawal liability (including any contingent or secondary withdrawal liability) to any Multiemployer Plan. Neither the Company nor any Affiliated Organization has incurred, or has experienced an event that will, within the ensuing twelve (12) months, result in, a "complete withdrawal" or "partial withdrawal," as such terms are defined respectively in Sections 4203 and 4205 of ERISA, with respect to a Pension Plan which is a Multiemployer Plan, and nothing has occurred that could result in such a complete or partial withdrawal. Neither the Company nor any Affiliated Organization has incurred a decline in contributions to any Multiemployer Plan such that, if the current rate of contributions continues, a 70% decline in contributions (as defined in Section 4205 of ERISA) will occur within the next three plan years. Neither the Company nor any Affiliated Organization sponsors, maintains, contributes to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to, any "employee welfare benefit plan" ("Welfare Plan") as such term is defined in Section 3(1) of ERISA, whether insured or otherwise, including, without limitation, any such plan that is a "Multiemployer Plan" within the meaning of Section 3(37) of ERISA. Each such disclosed Welfare Plan has been operated in all material respects in accordance with its terms and in compliance in all material respects with the applicable provisions of ERISA, the Code and all other applicable law. Benefits under each Welfare Benefit Plan are fully insured by an insurance company unrelated to the Company. Neither the Company nor any Affiliated Organization has established or contributed to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to any "voluntary employees' beneficiary association" within the meaning of Section 501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419 of the Code, "qualified asset account" within the meaning of Section 419 of the Code, "qualified asset account" within the meaning of Section 419A of the Code or "multiple employer welfare arrangement" within the meaning of Section 3(40) or ERISA. No Welfare Plan which is a Multiemployer Plan imposes any post-withdrawal liability or contribution obligations upon the Company or any Affiliated Organization. Neither the Company nor any Affiliated Organization maintains, contributes to or has or could have any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to medical, health, life or other welfare benefits for present or future terminated employees or their spouses or dependents other than as required by Part 6 of Subtitle B of Title I of ERISA or any comparable state law. Neither the Company nor any Affiliated Organization is a party to, maintains, contributes to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to, any bonus plan, incentive plan, stock plan or any other current or deferred compensation (other than current salary or wages paid in the form of cash), separation, retention, severance, paid time off or similar agreement, arrangement or policy, or any individual employment, consulting or personal service agreement other than a Pension or Welfare Plan ("Compensation Plans"). Each such disclosed Compensation Plan has been operated in all material respects in accordance with its terms and in compliance in all material respects with the applicable provisions of all applicable law. here are no facts or circumstances which could, directly or indirectly, subject the Company or any Affiliated Organization to any (1) excise tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, (2) penalty tax or other liability under Chapter 68 of Subtitle F of the Code or (3) civil penalty, damages or other liability under Section 502 of ERISA. Full payment has been made of all amounts which the Company or any Affiliated Organization is required, under applicable law, the terms of any Pension Plan, Welfare Plan or Compensation Plan, or any agreement relating to any Pension Plan or Welfare Plan or Compensation Plan, to have paid as a contribution, premium or other remittance thereto or benefit thereunder. Each Pension Plan that is subject to the minimum funding standards of Section 412 of the Code and Section 302 of ERISA meets those standards and has not incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code and no waiver of any minimum funding requirement under Section 412 of the Code has been applied for or obtained with respect to any such Pension Plan. The Company and each Affiliated Organization has made adequate provisions for reserves or accruals in accordance with generally accepted accounting principles to meet contribution, benefit or funding obligations arising under applicable law or the terms of any Pension Plan or Welfare Plan or Compensation Plan or related agreement. There will be no change on or before Closing in the operation of any Pension Plan, Welfare Plan or Compensation Plan or any documents with respect thereto which will result in an increase in the benefit liabilities under such plans, except as may be required by law. The Company and each Affiliated Organization has timely complied in all material respects with all reporting and disclosure obligations with respect to the Pension Plans, Welfare Plans and Compensation Plans imposed by the Code, ERISA or other applicable law. There are no pending or, to the Company's knowledge, threatened audits, investigations, claims, suits, grievances or other proceedings, and there are no facts that could give rise thereto, involving, directly or indirectly, any Pension Plan, Welfare Plan, or Compensation Plan, or any rights or benefits thereunder, other than the ordinary and usual claims for benefits by participants, dependents or beneficiaries. The transactions contemplated herein do not result in the acceleration of accrual, vesting, funding or payment of any contribution or benefit under any Pension Plan, Welfare Plan or Compensation Plan. No payments made or to be made to any individual pursuant to any agreement with any of the Company or any Affiliated Organization could individually or collectively (and assuming that any contingencies or conditions occur in a manner that maximizes payment) give rise to a "parachute payment" within the meaning of Section 280G of the Code. No action or omission of the Company or any director, officer, employee, or agent thereof in any way restricts, impairs or prohibits Parent or the Company or any successor from amending, merging, or terminating any Pension Plan, Welfare Plan or Compensation Plan in accordance with the express terms of any such plan and applicable law. The Disclosure Schedule lists and the Company has delivered to Parent true and complete copies of: (i) all Pension, Welfare and Compensation Plans and related trust agreements or other agreements or contracts evidencing any funding vehicle with respect thereto; (ii) the three most recent annual reports on Treasury Form 5500, including all schedules and attachments thereto, with respect to any Plan for which such a report is required; (iii) the three most recent actuarial reports with respect to any Pension Plan that is a "defined benefit plan" within the meaning of Section 414(j) of the Code; (iv) the form of summary plan description, including any summary of material modifications thereto or other modifications communicated to participants, currently in effect with respect to each Pension Plan, Welfare Plan or Compensation Plan; and (v) the most recent determination letter with respect to each Pension Plan intended to qualify under Section 401(a) of the Code and the full and complete application therefor submitted to the Internal Revenue Service. Compliance with Applicable Law. Each of the Company and its subsidiaries holds, and at all times has held, all licenses, franchises, permits and authorizations necessary for the lawful conduct of its business under and pursuant to, and the business of each of the Company and its subsidiaries is not being conducted, nor has it ever been conducted, in violation of, any provision of any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to the Company or any of its subsidiaries, except to the extent that the failure to hold any such licenses, franchises, permits or authorization, or any such violation, did not or would not, individually or in the aggregate have a material adverse effect on the Company. No investigation or review, except as set forth in the Disclosure Schedule, by any federal, state or local governmental authority with respect to the Company or any of its subsidiaries is pending or, to the Company's knowledge threatened, nor, to the Company's knowledge, has any federal, state or local governmental authority indicated an intention to conduct the same. Inventories. Except as disclosed in the Disclosure Schedule, all inventories of the Company, whether reflected in the latest balance sheet included in the Company SEC filings (the "Latest Balance Sheet") or acquired since the date of the Latest Balance Sheet, were purchased in the ordinary course of business, consist of a quality and quantities useable and salable in the ordinary course of business, subject to waste and spoilage not in excess of industry norms, and the present quantities of all inventories of the Company are reasonable in the present circumstances of the business of the Company as currently conducted and as proposed to be conducted. All inventories have been carried on the books of the Company for financial reporting purposes in accordance with the generally accepted accounting principles applied on a consistent basis, including without limitation, for purposes of the unaudited financial statements included in the Company SEC filings. Accounts and Notes Receivable. Except as disclosed in the Disclosure Schedule or in the aging schedule dated as of September 4, 1996 (the "Aging Schedule") provided to Parent as described below: (i) the Company has good right, title and interest in and to all of its accounts receivable and notes receivable of any kind or nature whatsoever, whether from trade accounts or affiliated parties or otherwise, whether reflected in the Latest Balance Sheet or acquired or generated since the date of the Latest Balance Sheet (except for those paid or compromised since the date of the Latest Balance Sheet) (the "Receivables"); (ii) none of the Receivables is subject to any mortgage, pledge, lien or security interest of any kind or nature (whether or not of record); (iii) each of the Receivables constitutes a valid and enforceable claim arising from a bona fide transaction in the ordinary course of business, and there are no claims, refusals to pay or other rights of set-off against any Receivables outstanding as of the date hereof; (iv) no account (as of the date of the Aging Schedule) or note debtor (as of August 31, 1996) whose account or note balance exceeded $10,000 was (as of the indicated date) delinquent in payment by more than ninety (90) days, and there has been no material deterioration in Receivables between the indicated dates and the date of this Agreement; (v) the Aging Schedule of the Receivables previously furnished to Parent is complete and accurate; (vi) the reserve for doubtful accounts set forth in the Latest Balance Sheet has been established by the Company in accordance with generally accepted accounting principles applied on a consistent basis; and (vii) all of the Receivables will be collected by the Company in accordance with their respective terms, except to the extent of the reserve for doubtful accounts set forth on the Latest Balance Sheet. Intellectual Property Rights. The Company owns the industrial and intellectual property rights, including without limitation the trademarks, trade names and service marks (collectively the "Intellectual Property Rights") described in the Disclosure Schedule. Except as disclosed in the Disclosure Schedule, the use of all Intellectual Property Rights necessary or required for the conduct of the business of the Company as presently conducted and as proposed to be conducted does not and will not infringe or violate or allegedly infringe or violate the Intellectual Property Rights of any person or entity. Except as disclosed in the Disclosure Schedule, the Company does not own or use any Intellectual Property Rights pursuant to any written license agreement and has not granted any person or entity any rights pursuant to a written license agreement or otherwise, to use the Intellectual Property Rights or any part thereof. Insurance. The Disclosure Schedule contains an accurate and complete list of all policies of fire and other casualty, general liability, theft, life, workers' compensation, health, directors and officers business interruption, and other forms of insurance owned or held by the Company, specifying the insurer, the policy number, the term of the coverage and, in the case of any "claims made" coverage, the same information as to predecessor policies for the previous five (5) years. All such policies are in full force and effect and no premiums with respect thereto are past due. The Company has not been denied any form of insurance coverage and no policy of insurance has been revoked or rescinded during the past five (5) years. Labor Matters. Except as disclosed in the Disclosure Schedule: (i) the Company is and has been in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including without limitation, any such laws respecting employment discrimination and occupational safety and health requirements and has not and is not engaged in any unfair labor practice; (ii) there is no unfair labor practice complaint against the Company pending or, to the knowledge of the Company, threatened before the National Labor Relations Board or any other comparable authority; (iii) there is no organized labor strike, dispute, slowdown, or stoppage actually pending or, to the knowledge of the Company, threatened against or directly affecting the Company; (iv) no labor representation question exists respecting the employees of the Company and there is not pending or, to the knowledge of the Company, threatened any activity intended or likely to result in a labor representation vote respecting the employees of the Company; (v) no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claims therefore exist or, to the knowledge of the Company, have been threatened; (vi) no collective bargaining agreement is binding and in force against the Company or currently being negotiated by the Company; (vii) the Company has not, since December 31, 1991, experienced any significant work stoppage or any other significant labor difficulty; (viii) the Company is not delinquent in any material amount for payments to any persons for any wages, salaries, commissions, bonuses or other direct or indirect compensation for any services performed by them or amounts required to be reimbursed to such persons, including without limitation, any amounts due under any pension plan, welfare plan or compensation plan; (ix) upon termination of the employment of any person, neither the Company nor the Surviving Corporation will, by reason of anything done at or prior to or as of the Effective Time, be liable to any of such persons for so-called "Severance Pay" or any other payments; and (x) within the twelve (12) months prior to the date hereof, to the knowledge of the Company, there has not been any expression of intention to the Company by any officer or key employee to terminate his or her employment other than at normal retirement age. Environmental Matters. Except as set forth in the Disclosure Schedule: Neither the Company, any subsidiary or former subsidiaries of any of the Company, nor any previous owner, tenant, occupant or user of any property owned or leased by or to any of the Company or by or to any subsidiary or former subsidiary of any of the Company (the "Properties") has (i) stored, used, generated, released or disposed of any Environmentally Regulated Materials (as hereinafter defined) in a manner that has or may reasonably result in a material adverse condition that may require remedial action, or (ii) transported any Environmentally Regulated Materials to, from or across the Properties in a manner that has or may reasonably result in a material adverse condition that may require remedial action, nor are any Environmentally Regulated Materials presently, stored, used, generated or otherwise located on, under, in or about the Properties, nor have any Environmentally Regulated Materials migrated from the Properties upon or beneath other properties, nor have any Environmentally Regulated Materials migrated or threatened to migrate from other properties upon, about or beneath the Properties, in each such case described above in a manner that has or may reasonably result in a material adverse condition that may require remedial action. No violation or noncompliance with Environmental and Occupational Safety and Health Laws has occurred with respect to the Properties or operations conducted thereon that has or may result in a material adverse effect on the Company or that has or may result in a material adverse condition that may require remedial action; no material enforcement, investigation, cleanup, removal, remediation or response or other governmental or regulatory actions have been asserted or threatened with respect to operations conducted on the Properties or the Properties themselves or against the Company or any subsidiary, or former subsidiary of the Company with respect to or in any way regarding the Properties pursuant to any Environmental and Occupational Safety and Health Laws; and no material claims or settlements with respect to the Properties or the operations thereon, or against the Company or any subsidiary or former subsidiary of the Company with respect to the Properties or operations conducted thereon, relating to or arising out of Environmental and Occupational Safety and Health Laws or Environmentally Regulated Materials have been made or threatened by any third party, including any governmental entity, agency or representative, nor, to the knowledge of the Company, does there exist any basis for any such claim. The term "Environmental and Occupational Safety and Health Law" as used in this Agreement means any common law or duty, caselaw or ruling, statute, rule, regulation, law, ordinance or code, whether local, state, federal, international or otherwise in effect, that (i) regulates, creates standards for or imposes liability or standards or conduct concerning any element, compound, pollutant, contaminant, or toxic or hazardous substance, material or waste, or any mixture thereof, or relates in any way to emissions or releases into the environment or ambient environmental conditions, or conduct affecting such matters or (ii) is designed to provide safe and healthful working conditions or reduce occupational safety and health hazards. Such laws include, but are not limited to, the National Environmental Policy Act, 42 U.S.C. Sections 4321 et seq., the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Federal Clean Air Act, 42 U.S.C. Sections 7401 et seq., the Toxic Substances Control Act), 15 U.S.C. Sections 2601 et seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001, the Hazard Communication Act 29 U.S.C. Sections 651 et seq., the Occupational Safety and Health Act, 29 U.S.C. Sections 651 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, and any caselaw interpretations, amendments or restatements thereof or similar enactment thereof, as is now or at any time hereafter may be in effect, as well as their intentional, state and local counterparts. The term "Environmentally Regulated Materials" as used in this Agreement means any element, compound, pollutant, contaminant, substance, material or waste, or any mixture thereof, designated, listed, referenced, regulated or identified pursuant to any Environmental and Occupational Safety and Health Law. Brokerage Fees and Commissions. Except for those fees and expenses payable to Lazard Frres, a true and complete copy of whose engagement agreement has been provided to Parent, no person is entitled to receive from the Company or any of its affiliates any investment banking, brokerage or finder's fee in connection with this Agreement or the transactions contemplated hereby. ARTICLE 6 COVENANTS Conduct of Business of the Company. Except as contemplated by this Agreement or to the extent that Parent shall otherwise consent in writing, during the period from the date of this Agreement to the Effective Time, the Company and its subsidiaries will each conduct its operations according to its ordinary and usual course of business and consistent with past practice and the Company shall use reasonable efforts to preserve intact in all material respects the business organization of the Company, use reasonable efforts to keep available the services of its current officers and key employees, and use reasonable efforts to preserve in all material respects the good will of those having advantageous business relationships with it and its subsidiaries. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement or to the extent that Parent shall otherwise consent in writing, neither the Company nor any of its subsidiaries, as the case may be, shall, without the prior written consent of Parent: (i) issue, sell or pledge, or authorize or propose the issuance, sale or pledge of: (A) additional shares of capital stock of any class (including the Shares), or securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or other convertible securities, or grant or accelerate any right to convert or exchange any securities of the Company for Shares, other than (1) Shares issuable pursuant to the terms of outstanding options and commitments disclosed pursuant to Section 5.3, or (2) the issuance of shares of capital stock to the Company by a wholly owned subsidiary of the Company; or (B) any other securities in respect of, in lieu of or in substitution for the Shares outstanding on the date thereof; (ii) purchase or otherwise acquire, or propose to purchase or otherwise acquire, any of its outstanding securities (including the Shares); (iii) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or distribution on any shares of capital stock of the Company; (iv) make any acquisition of a material amount of assets (by merger, consolidation or acquisition of stock or assets) or securities, any disposition of a material amount of assets or securities or any material change in its capitalization, or enter into a material contract or release or relinquish any material contract rights not in the ordinary course of business (except as permitted pursuant to Section 6.2 of this Agreement); (v) intentionally incur any liability or obligation (absolute, accrued, contingent or otherwise) other than in the ordinary and usual course of business and either consistent with past practice or in the reasonable business judgment of the officers of the Company (including borrowing in the ordinary course pursuant to existing loan agreements or debt instruments) or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual or entity in any case in an amount material to the Company and its subsidiaries, taken as a whole; (vi) propose or adopt any amendments to the Certificate of Incorporation or By-Laws of the Company; (vii) make any change in accounting methods, principles or practices; (viii) other than as contemplated or permitted by this Agreement: (A) enter into any new employment agreements with any officers, directors or key employees or grant any material increases in the compensation or benefits to officers, directors and key employees other than increases in the ordinary course of business and consistent with past practice; (B) pay or agree to pay any pension, retirement allowance or other employee benefit not required or permitted by any existing plan, agreement or arrangement to any such director, officer or key employee in amounts material to the Company and its subsidiaries, taken as a whole; (C) commit itself (other than pursuant to any collective bargaining agreement) to any additional pension, profit-sharing bonus, extra compensation, incentive, defined compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or to any employment or consulting agreement with or for the benefit of any director, officer or key employee, whether past or present, in amounts material to the Company and its subsidiaries, taken as a whole; or (D) except as required by applicable law, amend in any material respect any such plan, agreement or arrangement; or (ix) agree in writing or otherwise to take any of the foregoing actions or any action which would make any representation or warranty in this Agreement untrue or incorrect. No Solicitation. Unless this Agreement is terminated in accordance with Article 8, neither the Company, its subsidiaries, nor any of their respective officers, directors, employees, financial advisors, counsel, representatives, agents and affiliates will, directly or indirectly, encourage, solicit, initiate, or, subject to the fiduciary duties of the Company's Board of Directors, officers or stockholders as advised by outside counsel to the Company, enter into any agreement with respect to, or participate in any way in discussions or negotiations with, provide any confidential information to, any Third Party (as hereinafter defined) concerning any tender offer (including a self-tender offer), exchange offer, merger, sale of substantial assets, sale of securities or similar transactions involving the Company or any material subsidiary or division of the Company (each, an "Acquisition Proposal"); except that, nothing contained in this Section 6.2 or in any other provision of this Agreement shall prohibit the Company or its Board of Directors from: (i) taking and disclosing to the Company's stockholders a position with respect to a tender or exchange offer by a Third Party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act; (ii) making such disclosure to the Company's stockholders as, in the judgment of its Board of Directors with the advice of outside counsel, is required under applicable law; or (iii) considering and negotiating an unsolicited Acquisition Proposal if the Board of Directors determines in good faith, after consultation with its outside counsel, that such consideration and negotiation would be necessary to fulfill the fiduciary duties of the Board of Directors. For purposes of this Agreement, "Third Party" shall mean any corporation, partnership, person, or other entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition Sub or any affiliate of Parent or Acquisition Sub and their respective directors, officers, employees, representatives, and agents. As long as this Agreement remains in effect, the Company may furnish confidential information regarding the Company to any Third Party if and only if: (i) the Company's Board of Directors determines in good faith, with the advice of outside counsel, that its fiduciary duties require disclosure of the information; and (ii) the Company and such Third Party enter into a confidentiality agreement with terms and provisions (including standstill provisions) no less onerous or restrictive on the Third Party than the terms and provisions of the Confidentiality Agreement dated February 29, 1996 between Parent and the Company with respect to Parent. Subject to the provisions of Section 8.1, the Company may approve, accept and recommend an Acquisition Proposal if and only if: (i) the Board of Directors determines in good faith, in the exercise of its fiduciary duties and after consultation with its outside counsel and financial advisors, that the Acquisition Proposal would result in a transaction more favorable to the Company's stockholders from a financial point of view than the transaction contemplated by this Agreement (such Acquisition Proposal is referred to hereinafter as an "Approved Offer"); and (ii) Parent does not make within five (5) business days of Parent's receiving notice of such third-party offer, an offer which the Board of Directors, after consultation with its financial advisers, determines is superior to such third-party offer. As used in this Section 6.2, "third-party offer" shall mean any bona fide Third Party offer, other than an offer by Parent, Acquisition Sub or any of their respective affiliates for a merger or other business combination involving the Company resulting in the acquisition of more than 50% of the outstanding Shares or to acquire in any manner more than 50% of the outstanding Shares or all or substantially all of the assets of the Company. The Company shall promptly notify Parent of the receipt and the terms of any offer which it may receive in respect of an Acquisition Proposal, including the identity of the offeror. The Company and its Board of Directors acknowledge that the agreements contained in this Section 6.2 are derived from and based upon their opinions that the Offer and the Merger are fair and in the best interests of the Company and its stockholders. The Company has advised the Parent that no negotiations are currently pending with any other party for the acquisition of the Company. Access to Information. Between the date of this Agreement and the Effective Time, the Company will upon reasonable notice: (i) give Parent and its authorized representatives access during regular business hours to all of the Company's offices, warehouses and other facilities and to all of its books and records; (ii) permit Parent to make such inspections as it may require; and (iii) cause its officers and those of its subsidiaries to furnish Parent with such financial and operating data and other information with respect to the business and properties of the Company and its subsidiaries as Parent may from time to time request. Reasonable Efforts. Subject to the terms and conditions herein provided, and to the fiduciary duties of the Board of Directors of the Company under applicable laws, each of the parties hereto agrees to use its reasonable efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action. Such efforts shall include, without limitation: (i) obtaining all necessary consents, approvals or waivers from third parties and governmental authorities necessary to the consummation of the transactions contemplated by this Agreement; and (ii) opposing vigorously any litigation or administrative proceeding relating to this Agreement or the transactions contemplated hereby, including, without limitation, promptly appealing any adverse court or agency order. Indemnification and Insurance. The Company and Parent will indemnify and hold harmless, and after the Effective Time, the Surviving Corporation and Parent will indemnify and hold harmless, each present and former employee, agent, director or officer of the Company and the Company's subsidiaries (the "Indemnified Parties") as provided in their respective charters or by-laws or otherwise in effect at the date hereof (to the extent consistent with applicable law), which provisions shall survive the Merger and shall continue in full force and effect for a period of six (6) years from the Effective Time. In the event any claim or claims (a "Claim or Claims") are asserted or made pursuant to the preceding sentence within such six-year period, all rights to indemnification in respect of any such Claim or Claims shall continue until final disposition of any and all such Claims. Without limiting the foregoing, the Company and Parent, and after the Effective Time the Surviving Corporation and Parent, to the extent provided in their respective charters or by-laws and to the extent permitted by applicable law, will periodically advance expenses as incurred with respect to the foregoing, provided that the person to whom the expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. Parent and the Surviving Corporation shall cause to be maintained in effect for not less than five (5) years from the Effective Time the current policies of the directors' and officers' liability insurance maintained by the Company and the Company's subsidiaries (provided that Parent and the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are no less advantageous to the Indemnified Parties so long as no lapse in coverage occurs as a result of such substitution) with respect to all matters, including the transactions contemplated hereby, occurring prior to, and including, the Effective Time, provided that, in the event that any Claim or Claims are asserted or made within such five-year period, such insurance shall be continued in respect of any such Claim or Claims until final disposition of any and all such Claims; provided, however, that during the first year after the Effective Time Parent and the Surviving Corporation shall purchase such coverage in the amount of not less than $15,000,000, and during the second through the fifth year after the Effective Time shall purchase such coverage in the amount of not less than $10,000,000, and provided further that, in no event shall Parent or the Surviving Corporation be required to pay annual premiums in excess of $160,000, and if Parent and the Surviving Corporation are unable to obtain the insurance required by this Section 6.5(a) they shall obtain as much comparable insurance as can be obtained for an annual premium equal to such maximum amount. In the event of any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal or administrative (including, without limitation, any such claim, action, suit, proceeding or investigation in which any of the current or former officers, directors, employees, fiduciaries or agents (the "Indemnitees") of the Company or any of its subsidiaries is, or is threatened to be, made a party by reason of the fact that he is or was a director, officer, employee, fiduciary or agent of the Company or any of its subsidiaries, or is or was serving at the request of the Company or any of its subsidiaries as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise) arising with respect to events occurring before or as of the Effective Time or arising out of the transactions contemplated by this Agreement, the parties hereto agree to cooperate and use all reasonable efforts to defend against and respond thereto. It is understood and agreed that the Company will indemnify and hold harmless, and after the Effective Time each of the Surviving Corporation and Parent will indemnify and hold harmless, as and to the fullest extent provided in their respective charters or by-laws and to the extent permitted by applicable law, each Indemnitee against any losses, claims, damages, liabilities, costs, expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement in connection with any such claim, action, suit, proceeding or investigation. In the event of any such claim, action, suit, proceeding or investigation whether arising with respect to events occurring before or as of the Effective Time or arising out of the transactions contemplated by this Agreement: (i) the Indemnitees may retain counsel satisfactory to them, and the Company, or the Surviving Corporation and Parent after the Effective Time, shall pay all reasonable fees and expenses of such counsel for the Indemnitees promptly as statements therefor are received; and (ii) the Company, or the Surviving Corporation and Parent after the Effective Time, will use their respective best efforts to assist in the vigorous defense of any such matter; provided that neither the Company nor the Surviving Corporation or Parent shall be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld); and provided further that the Surviving Corporation and Parent shall have no obligation hereunder to any Indemnitee when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that indemnification of such Indemnitee in the manner contemplated hereby is prohibited by applicable law. The Indemnitees as a group may retain only one law firm to represent them with respect to any such matter unless there is, under applicable standards of professional conduct, a conflict of any significant issue between the positions of any two or more Indemnitees as determined in good faith by such Indemnitees. Parent and the Surviving Corporation agree to take no action which would have the effect of impairing the rights of indemnity, limitation of liability and other rights currently afforded to the current or former directors, officers, employees, fiduciaries or agents of the Company and its subsidiaries and the Indemnitees (whether through reincorporation of the Surviving Corporation or any of its subsidiaries in another jurisdiction providing or permitting less favorable indemnification or limitation of liability provisions, or otherwise). Parent agrees to guarantee all of the obligations of the Surviving Corporation under this Section 6.5. In the event that the Surviving Corporation or Parent or their respective successors or assigns: (i) consolidates with or merges into another person and shall not be the continuing or surviving corporation or entity of such consolidation or merger; or (ii) transfers all or substantially all of its properties or assets to any person, then and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation or Parent, as the case may be, shall assume the obligations set forth in this Section 6.5. Employee Plans and Benefits and Employment Contracts. Parent and the Surviving Corporation agree that, following the Effective Time and until the later of forty-five (45) days after the purchase of Shares pursuant to the Offer or December 31, 1996, they will maintain for the benefit of the officers and employees of the Company the employee benefits, including, without limitation, cash compensation, incentive opportunities, non-cash non-incentive benefits, retirement plans and programs and severance plans and policies, which are in each category at least comparable in the aggregate to those provided under the Company's plans, programs and arrangements in existence at the Effective Time and, to the extent practicable and appropriate, the existing Company benefit plans, programs, and arrangements will be continued for such period. In furtherance of the foregoing, during such period, Parent and the Surviving Corporation agree not to reduce benefits to existing retirees (or persons who become retirees during such period) under the Company's early retirement health care plan as disclosed to Parent. Thereafter, such officers and employees will be entitled to participate in the employee benefit plans, programs and arrangements maintained by Parent for its similarly situated employees, upon the same terms and conditions that apply to such employees of Parent (which provision is not intended to guarantee participation in any such plan, program or arrangement in which participation is determined in the discretion of a person or committee pursuant to such plan, program or arrangement). From and after the Effective Time, Parent and the Surviving Corporation agree to honor in accordance with their lawful terms all existing employment, severance, consulting or other compensation agreements or arrangements or benefit contracts between the Company or any of its subsidiaries and any officer, director or employee of the Company or any of its subsidiaries and all benefits or other amounts earned or accrued through the Effective Time and thereafter under all employee benefit plans of the Company and any of its subsidiaries while such plans are maintained. Each individual who is an employee of the Company or any of its subsidiaries at the Effective Time will, for purposes of determining eligibility and vesting under any employee benefit plan, practice or policy of Parent or the Surviving Corporation, be given credit for all service prior to the Effective Time with the Company and its subsidiaries or any predecessor employer (but only to the extent such credit was given for purposes of the similar or corresponding plan, practice or policy of the Company). Board Representation. Promptly upon the purchase of Shares pursuant to the Offer and from time to time thereafter, Parent shall be entitled to designate such number of directors, rounded up to the next whole number on the Board of Directors of the Company as will give Parent, subject to compliance with Section 14(f) of the Exchange Act and the rules and regulations promulgated thereunder, representation on the Board of Directors of the Company equal to the product of: (i) the number of directors on the Board of Directors of the Company; and (ii) the percentage that such number of votes represented by the Shares so purchased bears to the number of votes represented by Shares outstanding. The Company shall, upon request by Parent, promptly increase the size of the Board of Directors of the Company or exercise its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board of Directors of the Company and shall cause Parent's designees to be so elected. At such time, the Company shall also cause persons designated by Parent to constitute the same percentage (rounded up to the next whole number) as is on the Company's Board of Directors of (A) each committee of the Company's Board of Directors, (B) each board of directors (or similar body) of each subsidiary of the Company and (C) each committee (or similar body) of each such board. The Company shall promptly take, at its expense, all action required pursuant to Section 14(f) and Rule l4f-l in order to fulfill its obligations under this Section 6.7 and shall include in the Schedule l4D-9 or otherwise timely mail to its stockholders such information with respect to the Company and its officers and directors as is required by Section 14(f) and Rule l4f-l in order to fulfill its obligations under this Section 6.7. Parent will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule l4f-l. In the event that Parent's designees are elected to the Board of Directors of the Company, until the Effective Time, the Board of Directors of the Company shall have at least three (3) directors who are directors on the date hereof (the "Independent Directors"), provided that, in such event, if the number of Independent Directors shall be reduced below three (3) for any reason whatsoever, any remaining Independent Directors (or Independent Director, if there be only one remaining) shall be entitled to designate persons to fill such vacancies who shall be deemed to be Independent Directors for purposes of this Agreement or, if no Independent Director then remain, the other directors shall designate three (3) persons to fill such vacancies who shall not be designees, stockholders or affiliates of Parent or Acquisition Sub and such persons shall be deemed to be Independent Directors for purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, in the event that Parent's designees are elected to the Board of Directors, after the acceptance for payment of Shares pursuant to the Offer and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (a) amend or terminate this Agreement by the Company, (b) exercise or waive any of the Company's rights, benefits or remedies hereunder, (c) extend the time for performance of Parent's and the Acquisition Sub's respective obligations hereunder, (d) take any other action by the Company's Board of Directors under or in connection with this Agreement, or (e) approve any other action by the Company which could adversely affect the interests of the stockholders of the Company (other than Parent, Acquisition Sub and their affiliates) with respect to the transactions contemplated hereby. Meeting of the Company's Stockholders. If required by applicable law, the Company shall promptly after the consummation of the Offer, take all action necessary in accordance with the DGCL and its Certificate of Incorporation and By-Laws to convene the Meeting to consider and vote on the Merger and this Agreement. At the Meeting, all of the Shares then owned by Parent, Acquisition Sub or any other subsidiary of Parent shall be voted to approve the Merger and this Agreement. Subject to applicable fiduciary obligations to stockholders of the Company as advised by counsel, the Board of Directors of the Company shall recommend that the Company's stockholders vote to approve the Merger and this Agreement if such vote is sought (which recommendation shall be included in the Proxy Statement), shall use all reasonable efforts to solicit from stockholders of the Company proxies in favor of the Merger and shall take all other action in its judgment necessary and appropriate to secure the vote of stockholders required by the DGCL to effect the Merger. Parent and Acquisition Sub shall not, and they shall cause their subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of the Shares acquired pursuant to the Offer or otherwise prior to the Meeting; provided, however, that this Section 6.8(b) shall not apply to the sale, transfer, assignment, encumbrance or other disposition of any or all of such Shares in transactions involving solely Parent, Acquisition Sub and/or one or more of their wholly owned subsidiaries. Proxy Statement. If required under applicable law, the Company and Parent shall prepare the Proxy Statement, file it with the SEC under the Exchange Act as promptly as practicable after Acquisition Sub purchases Shares pursuant to the Offer, and use all reasonable efforts to have it cleared by the SEC. As promptly as practicable after the Proxy Statement has been cleared by the SEC, the Company shall mail the Proxy Statement to the stockholders of the Company as of the record date for the Meeting. The Company will use all reasonable efforts to obtain and furnish the information required to be included by it in the Proxy Statement and, after consultation with Parent, respond promptly to any comments of the SEC relating to the preliminary proxy or information statement relating to the transactions contemplated by this Agreement and to cause the definitive proxy statement relating to the transactions contemplated by this Agreement to be mailed to its stockholders, all at the earliest practical time. Whenever any event occurs which should be set forth in an amendment or supplement to the Proxy Statement or any other filing required to be made with the SEC, each party will promptly inform the other and cooperate in filing with the SEC and/or mailing to stockholders such amendment or supplement. The Proxy Statement, and all amendments and supplements thereto, shall comply with applicable law and be in form and substance satisfactory to Parent. Public Announcements. Parent and the Company shall to the fullest extent practicable consult with each other before issuing any press release or otherwise making any public statement with respect to the Offer and the Merger and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any governmental agency if required by such agency or the rules of the National Association of Securities Dealers, Inc. or the rules of the New York Stock Exchange. Merger Without Meeting of Stockholders. Notwithstanding the foregoing, in the event that Parent or Acquisition Sub shall acquire at least 90% of the outstanding Shares, the parties hereto agree, at the request of Parent, to take all appropriate and necessary action to cause the Merger to become effective, as soon as practicable after the consummation of the Offer and the completion of all activities necessary to finance the consummation of the Merger and the transactions contemplated hereby, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. Current Information. From the date of this Agreement to the Effective Time, the Company will cause one or more of its designated representatives to confer on a regular and frequent basis (not less often than semi-monthly) with representatives of Parent and to report the general status of its ongoing operations and to deliver to Parent (not less often than monthly) unaudited consolidated balance sheets and related consolidated statements of operations, statements of cash flows and statements of stockholders' equity for the period since the last such report. The Company will promptly notify Parent of any material change in the normal course of business or in the operation of the properties of the Company or its subsidiaries. Supplement to Disclosure Schedule. At least five (5) business days prior to the scheduled expiration date of the Offer, the Company shall deliver to Parent and Acquisition Sub a supplement to the Disclosure Schedule which sets forth any matter hereafter arising which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or which is necessary to correct any information in such Disclosure Schedule which has been rendered inaccurate. In the event that the Offer is extended beyond the initial expiration date for the Offer, the Company shall be required to deliver an additional supplement to the Disclosure Schedule five (5) days prior to the extended expiration date only if such prior supplement shall be more than fifteen (15) business days old. No supplement shall have any effect for the purpose of determining the satisfaction of the conditions set forth on Annex I or the compliance by the Company with the covenant set forth in Section 6.1 hereof. Section 203. From and after the date hereof, the Company will not, except pursuant to an Approved Offer or as otherwise provided in this Agreement, approve any acquisition of shares of Common Stock by any person which would result in such person becoming an interested stockholder (as such term is defined in Section 203 of the DGCL) or otherwise be subject to Section 203 of the DGCL. Preferred Stock Purchase Rights. Immediately prior to the consummation of the purchase of the Shares pursuant to the Offer, if so requested by Parent (as long as Parent or Acquisition Sub is not in breach of any material provision of this Agreement), the Company agrees to redeem all of the outstanding Series A Preferred Stock purchase rights issued pursuant to the Rights Agreement in accordance with Section 23 of the Rights Agreement. From and after the date hereof, the Company will not: (i) take or fail to take any action which would permit the Series A Preferred Stock purchase rights to become nonredeemable by the Company; (ii) except as otherwise provided in this Section 6.15, redeem the Series A Preferred Stock purchase rights; (iii) except as otherwise required to permit the commencement or consummation of the Offer or the consummation of the Merger, amend the Rights Agreement; or (iv) approve any transaction, offer or agreement (other than an Approved Offer) with any party other than Parent and Acquisition Sub pursuant to Section 11(a)(ii) of the Rights Agreement. ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE MERGER Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of each party to effect the Merger are subject to the satisfaction or waiver, where permissible, prior to the Effective Time, of the following conditions: this Agreement, the Merger and the transactions contemplated hereby shall have been approved and adopted by the requisite vote of the stockholders of the Company, if required by applicable law in order to consummate the Merger; provided, however, that Parent and its subsidiaries shall vote all of its Shares in favor of the Merger; no statute, rule, regulation, executive order, decree, injunction or other order shall have been enacted, entered, promulgate or enforced by any court or governmental authority which is in effect and has the effect of prohibiting, restraining, enjoining or restricting the consummation of the Merger; and the waiting period (and any extension thereof) applicable to the consummation of the Merger under the H-S-R Act, if any, shall have expired or been terminated. Conditions to Obligations of Parent and Acquisition Sub to Effect the Merger. The obligations of Parent and Acquisition Sub to effect the Merger are further subject to the satisfaction, on or prior to the Effective Time, of the conditions that Parent shall have accepted for payment and paid for Shares tendered pursuant to the Offer, provided that this condition will be deemed satisfied if Parent fails to accept for payment and pay for Shares pursuant to the Offer in violation of the terms thereof or of this Agreement. ARTICLE 8 TERMINATION; AMENDMENT; WAIVER Termination. This Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time notwithstanding approval thereof by the stockholders of the Company, but prior to the Effective Time: by mutual written consent duly authorized by the Boards of Directors of the Company, Parent and Acquisition Sub; by either the Company or Parent: if (1) the Offer terminates or expires in accordance with its terms or if Parent terminates the Offer as the result of the occurrence of any of the conditions set forth in Annex I hereto without Acquisition Sub having purchased any Shares pursuant to the Offer, provided, however, that the right to terminate this Agreement pursuant to this Section 8.l(b)(i)(1) shall not be available to Parent if the failure by Parent or Acquisition Sub to fulfill any of their respective obligations under this Agreement or a misrepresentation or breach of warranty by Parent or Acquisition Sub results in the occurrence of any such condition, and shall not be available to the Company if the failure by the Company to fulfill any of its obligations under this Agreement or a misrepresentation or breach of warranty by Company results in the occurrence of any such condition; or (2) Acquisition Sub shall not have purchased any Shares pursuant to the Offer on or before December 31, 1996, provided however, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i)(2) shall not be available to Parent if such failure to purchase any Shares is the result of a failure by Parent or Acquisition Sub to fulfill any of their respective obligations under this Agreement or a misrepresentation or breach of warranty by Parent or Acquisition Sub, and shall not be available to the Company if such failure to purchase any Shares is the result of a failure by the Company to fulfill any of its obligations under this Agreement or a misrepresentation or breach of warranty by Company; if the Merger shall not have been consummated on or before six (6) months after the date hereof, unless the failure to consummate the Merger is the result of a material breach of this Agreement by the party seeking to terminate this Agreement; or if any court of competent jurisdiction or any other governmental body shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; by the Company if (i) the Offer has not been timely commenced in accordance with Section 1.1; or (ii) Parent or Acquisition Sub fails to perform in any material respect any of their respective obligations under this Agreement and such failure to perform has not been cured within five (5) business days after notice thereof is given to Parent by the Company (except that no cure period shall be provided for any failure which, by its nature, cannot be cured); by Parent or Acquisition Sub if the Company fails to perform in any material respect any of its obligations under this Agreement and such failure to perform has not been cured within five (5) business days after notice thereof is given to the Company by Parent (except that no cure period shall be provided for any failure which, by its nature, cannot be cured); or by the Company if the Board of Directors of the Company has approved, accepted or recommended an Approved Offer in accordance with Section 6.2. Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, this Agreement, except for the provisions of Sections 8.3 and 9.10, shall forthwith become void and have no effect, without any liability on the part of any party or its directors, officers or stockholders. Nothing in this Section 8.2 shall relieve any party to this Agreement of liability for willful breach of this Agreement. Termination Fee; Reimbursement of Parent's Expenses. If neither Acquisition Sub nor Parent is in material breach of any of its obligations under this Agreement and, prior to acceptance of Shares for payment pursuant to the Offer or the payment therefor, this Agreement is terminated: by Company or Parent pursuant to Section 8.1(b)(i) if the Offer terminates or expires in accordance with its terms as a result of the occurrence of any of the conditions set forth in paragraph (d) or (e) or in clause (ii) or (iii) of paragraph (g) of Annex I; or by Parent or Acquisition Sub pursuant to Section 8.1(d); or by the Company pursuant to Section 8.1(e); then the Company shall, whether or not any payment is made pursuant to Section 8.3(b) below, reimburse each of Acquisition Sub and Parent (not later than two (2) business days after submission of statements therefor) for all reasonable out-of-pocket expenses and fees, including, without limitation, fees payable to all banks, investment banking firms and other financial institutions, and their respective agents, for arranging or providing the financing, and all fees of counsel, accountants, experts, agents and consultants to Acquisition Sub or Parent incurred by Parent or Acquisition Sub in good faith in connection with the negotiation, preparation, execution and performance of this Agreement and the financing (all of the foregoing being referred to collectively as the "Expenses"), subject to a maximum reimbursement of $5,000,000. If neither Acquisition Sub nor Parent is in material breach of any of its obligations under this Agreement and, prior to acceptance of Shares for payment pursuant to the Offer or the payment therefor, this Agreement is terminated: by Company or Parent pursuant to Section 8.1(b)(i) if the Offer terminates as a result of the occurrence of any of the conditions set forth in paragraphs (d), (e) or (g) of Annex I; or by Parent or Acquisition Sub pursuant to Section 8.1(d); or by the Company pursuant to Section 8.1(e); and either prior to such termination or within twelve (12) months thereafter, (x) any "person" (as such term is defined in Section 13(d)(3) of the Exchange Act) (A) acquires the Company by merger or otherwise; (B) acquires more than 50% in value of the total assets of the Company and its subsidiaries taken as a whole; or (C) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of Securities representing, or the right to acquire beneficial ownership of or to vote securities (or which could result in the acquisition of beneficial ownership of or the right to vote securities) representing, more than 50% of the outstanding voting securities of the Company (each of the foregoing transactions being referred to as a "Third Party Acquisition"); or (y) the Board of Directors of the Company accepts, approves or recommends any Third Party Acquisition; or (z) the Board of Directors of the Company shall have withdrawn or modified in any material respect its recommendation of the Offer; then the Company shall pay Parent, in no event later than two (2) business days after the obligation arises to make such payment pursuant to the terms set forth above in this Section 8.3(b), a termination fee of $6,500,000 in addition to the payment of Expenses in accordance with paragraph (a) above, which amount shall be payable in same day funds. If Parent becomes entitled to the termination fee without having previously become entitled to reimbursement of Expenses in accordance with paragraph (a) above, Parent shall thereupon become entitled to reimbursement of Expenses in accordance with, and subject to the limitations set forth in, paragraph (a) above. Amendment. To the extent permitted by applicable law, this Agreement may be amended by action taken by or on behalf of the Boards of the Company, Parent and Acquisition Sub at any time before or after approval of this Agreement by the stockholders of the Company but, after any such stockholder approval, no amendment shall be made which decreases or changes the form of the Merger Consideration or which adversely affects the rights of the Company's stockholders hereunder without the approval of all such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of all the parties. Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, Parent or Acquisition Sub, may: (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto; (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party; or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. ARTICLE 9 MISCELLANEOUS Non-Survival of Representations and Warranties. None of the representations and warranties made in this Agreement shall survive after the Effective Time. This Section 9.1 shall not limit any covenant or agreement of the parties hereto which by its terms contemplates performance after the Effective Time. Entire Agreement; Assignment. This Agreement (a) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof and (b) shall not be assigned by operation of law or otherwise, provided that Parent or Acquisition Sub may assign any of their rights and obligations to any wholly owned subsidiary of Parent, but no such assignment shall relieve Parent or Acquisition Sub of its obligations hereunder. Either Parent or any wholly owned subsidiary of Parent may purchase Shares under the Offer. Enforcement of the Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any federal or state court located in the State of Delaware (as to which the parties agree to submit to jurisdiction for the purposes of such action), this being in addition to any other remedy to which they are entitled at law or in equity. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by cable, telegram, facsimile transmission with confirmation of receipt, or telex, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties as follows: if to Parent or Acquisition Sub: Nash-Finch Company 7600 France Avenue South Edina, Minnesota 55435 Attention: Norman R. Soland Fax: 612-844-1235 with a copy to: Oppenheimer Wolff & Donnelly Plaza VII, Suite 3400 45 South Seventh Street Minneapolis, Minnesota 55402 Attention: Mark A. Kimball, Esq. Fax: (612) 344-9376 if to the Company: Super Food Services, Inc. 3233 Newmark Drive Dayton, Ohio 45342 Attention: John Demos Fax: (937) 439-7514 with a copy to: Thompson Hine & Flory P.L.L. 2000 Courthouse Plaza, N.E. P.O. Box 8801 Dayton, Ohio 45401-8801 Attention: J. Michael Herr, Esq. Fax: (513) 443-6637 or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above (provided that notice of any change of address shall be effective only upon receipt thereof). Governing Law. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware regardless of the laws that might otherwise govern under principles of conflicts of laws applicable thereto. Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement except for Section 6.5 and 6.6 (which are intended to be for the benefit of the persons entitled to therein, and may be enforced by such persons). Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Expenses. Subject to Section 8.3, all costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such expenses, except that Parent and the Company will share equally all documented out-of-pocket fees and expenses incurred in connection with the printing and filing of the Proxy Statement. Parent acknowledges and agrees that the Company has disclosed it is indebted for fees and expenses (including fees and expenses of its counsel and financial advisors) incurred by it in connection with the transactions contemplated by this Agreement. It is understood that certain of such fees and expenses may be paid by the Company prior to or after the execution of this Agreement, and Parent agrees to refrain from taking any action which would interfere with the payment of the foregoing fees and expenses by the Company. Performance by Acquisition Sub. Parent hereby agrees to cause Acquisition Sub to comply with its obligations hereunder and under the Offer and to cause Acquisition Sub to consummate the Merger as contemplated herein. Submission to Jurisdiction. The parties to this Agreement, acting for themselves and for their respective successors and assigns, hereby irrevocably and unconditionally consent to submit to the jurisdiction of the federal or state courts located in the State of Delaware for any actions, suits or proceedings arising out of or relating to this Agreement (and none of such persons shall commence any action, suit or proceeding relating thereto except in such courts). Such person hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, in the federal or state courts located in the State of Delaware. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all at or on the day and year first above written. NASH-FINCH COMPANY ATTEST: By: Secretary President NFC ACQUISITION CORPORATION ATTEST: By: Secretary President SUPER FOOD SERVICES, INC. ATTEST: By: Secretary Chairman and Chief Executive Officer ANNEX I CONDITIONS TO THE OFFER Notwithstanding any other provisions of the Offer and in addition to (and not in limitation of) Parent's right to extend and amend the Offer (subject to the terms of the Merger Agreement), Parent shall not be required to accept for payment or pay for, subject to Rule 14e-l(c) of the Exchange Act, any Shares not theretofore accepted for payment or paid for and may terminate or amend the Offer as to such Shares if (i) the Minimum Condition shall not have been satisfied or (ii) at any time on or after the date of commencement of the Offer and before the acceptance of such Shares for payment or the payment therefor, any of the following conditions exist or shall occur and remain in effect (provided that the right to terminate or amend the Offer pursuant thereto shall not be available to Parent if the failure by Parent or Acquisition Sub to fulfill any of their respective obligations under the Merger Agreement results in the occurrence of any such condition): (a) there shall have occurred (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (ii) a formal declaration of war or national or international calamity directly or indirectly involving the United States, (iii) any limitation (whether or not mandatory) by any United States governmental authority on the extension of credit by banks or other financial institutions that materially affects the extension of credit by banks or other lending institutions or (iv) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (b) there shall have been any action taken, or any statute, rule, regulation, judgment, order or injunction promulgated, entered, enforced, enacted issued or deemed applicable to the Offer or the Merger by any court, government or governmental authority or agency, domestic or foreign which (i) prohibits Parent's ownership or operation of all or a material portion of its or the Company's (or any of their respective subsidiaries') business or assets, or compels Parent to dispose of or hold separate all or a material portion of its or the Company's (or any of their respective subsidiaries') business or assets as a result of the Offer or the Merger, (ii) prohibits, or makes illegal the acceptance for payment or payment for Shares or the consummation of the Offer or the Merger, or (iii) imposes material limitations on the ability of Parent or Acquisition Sub effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Acquisition Sub on all matters properly presented to the Company's stockholders; provided, however, that with respect to any action, ruling or order taken or made by any court, government or governmental authority or agency that is preliminary, until such action, ruling or order becomes final, Parent may not terminate the Offer, but shall extend the expiration of the Offer and shall postpone acceptance for payment or purchase of, or payment for, any Shares pursuant to this paragraph (b); further provided, however, that in no event shall Parent be obligated to attempt to cause any such decree, order or injunction to be vacated or reversed or to extend the Offer beyond December 31, 1996; or (c) the Merger Agreement shall have been terminated in accordance with its terms; or (d) any of the representations and warranties of the Company set forth in the Merger Agreement were inaccurate when made or became inaccurate at any time thereafter (other than (i) any misrepresentations that, in the aggregate, do not have a material adverse effect on the Company or (ii) any misrepresentations that the Company cures within five (5) business days after notice thereof is given by Parent (except that no cure period shall be provided for a breach by the Company which, by its nature, cannot be cured)) or the Company shall have failed in any material respect to perform any material obligation or covenant required by the Merger Agreement to be performed or complied with by it which failure would have a material adverse effect on the Company; or (e) the Board of Directors of the Company shall have withdrawn or modified in any material respect its recommendation of the Offer; provided, however, that this condition shall not be deemed to exist, and Acquisition Sub shall have no right to terminate the Offer or not accept for payment or pay for Shares, if as a result of the Company's receipt of a proposal for the acquisition of all or a material portion of the business or assets of the Company or the Shares, the Company withdraws, modifies or amends its approval or recommendation of the Offer, the Merger or the Merger Agreement by reason of taking and disclosing to the Company's shareholders a position contemplated by Rule 14e-2(a)(2) or (3) promulgated under the Exchange Act with respect to such proposal, the Offer, the Merger or the Merger Agreement and if within five (5) business days of taking and disclosing to its shareholders the aforementioned position, the Company publicly reconfirms its recommendation of the Offer, the Merger and the Merger Agreement; or (f) the waiting period (and any extension thereof) applicable to the consummation of the Offer under the H-S-R Act shall not have expired or been terminated; provided, however, that (i) until such H-S-R Act waiting periods expire or terminate, Parent may not terminate the Offer (but shall extend the expiration of the Offer and shall postpone acceptance for payment or purchase of, or payment for, any Shares pursuant to this paragraph (f)); further provided, however, that in no event shall Parent be obligated to extend the Offer beyond December 31, 1996 and (ii) unless Parent theretofore shall have terminated the Offer in accordance with the terms of the Merger Agreement, Parent shall continue to seek to resolve any action or proceeding in accordance with the provisions of the Merger Agreement; or (g) (i) a tender or exchange offer for 20% or more of the Shares shall have been publicly proposed to be made by another person or shall have been publicly disclosed, (ii) a tender or exchange offer for 20% or more of the Shares shall have been made by another person or (iii) the Parent shall have learned that any person, entity or "group" (as that term is used in Section 13(d)(3) of the Exchange Act), shall beneficially own (as that term is used in Section 13(d)(3) of the Exchange Act) or shall have acquired 20% or more of the Shares, or shall have been granted any option or right, conditional or otherwise, to acquire 20% or more of the Shares; which, in the reasonable judgment of Parent, in any case, and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment, purchase of, or payment for Shares. The foregoing condition are for the sole benefit of Parent and may be asserted by Parent regardless of the circumstances giving rise to any such condition and may be waived by Parent, in whole or in part, at any time and from time to time, in the sole discretion of Parent. The failure by Parent at any time to exercise any of the foregoing rights will not be deemed a waiver of any right and each right will be deemed an ongoing right which may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Shares not theretofore accepted for payment shall forthwith be returned by the Disbursing Agent to the tendering stockholders. EX-99.(C)(2) 13 STOCKHOLDER AGMT STOCKHOLDER AGREEMENT THIS AGREEMENT, dated as of October 8, 1996, among NASH-FINCH COMPANY, a Delaware corporation ("Parent"), NFC ACQUISITION CORPORATION, a Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition Sub"), and the individuals listed on Schedule I hereto (each a "Stockholder" and, collectively, the "Stockholders"). WHEREAS, concurrently herewith, Parent, Acquisition Sub and Super Food Services, Inc., a Delaware corporation (the "Company"), are entering into an Agreement and Plan of Merger (as such agreement may hereafter be amended from time to time, the "Merger Agreement") pursuant to which Acquisition Sub will be merged with and into the Company (the "Merger"); WHEREAS, capitalized terms used and not defined herein have the respective meanings ascribed to them in the Merger Agreement; and WHEREAS, as an inducement and a condition to entering into the Merger Agreement, Parent and Acquisition Sub have required that the Stockholders agree, and the Stockholders have agreed, to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and the mutual premises, representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: Definitions. For purposes of this Agreement: "Beneficially Own" or "Beneficial Ownership" with respect to any securities shall mean having ownership of record or "beneficial ownership" of such securities (as determined pursuant to Rule l3d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" as within the meanings of Section 13(d) (3) of the Exchange Act. "Company Common Stock" shall mean at any time the Common Stock, par value $1.00 per share, of the Company. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Person" shall mean an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. Tender of Shares. Each Stockholder hereby agrees to validly tender (and not to withdraw) pursuant to and in accordance with the terms of the Offer, not later than the fifth business day after commencement of the Offer pursuant to Section 1.1(a) of the Merger Agreement, (i) all of the shares of Company Common Stock owned of record or Beneficially Owned by such Stockholder that such Stockholder has the power to tender, including, without limitation, the number of shares of Company Common Stock set forth opposite such Stockholder's name on Schedule I hereto (the "Existing Shares"), and (ii) any shares of Company Common Stock acquired by such Stockholder after the date hereof and prior to the termination of this Agreement whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution or otherwise (each Stockholder shall promptly provide written notice to Parent upon consummation of any such acquisition from and after the date hereof and such Shares shall together with the Existing Shares be referred to herein as the "Shares"). Each Stockholder hereby acknowledges and agrees that Parent's obligation to accept for payment and pay for Shares in the Offer, including the Shares Beneficially Owned by such Stockholder, is subject to the terms and conditions of the Offer. Anything to the contrary herein notwithstanding if (x) the Merger Agreement is terminated, (y) the Offer is terminated without the purchase of Shares thereunder or (z) the Minimum Condition is not satisfied (other than by waiver) upon termination of the Offer, the obligations of the Stockholders under this Agreement shall terminate and within two business days thereof the Shares tendered under the Offer pursuant to this Agreement by each Stockholder shall be returned to such Stockholder. Through the transfer by each Stockholder of his or its Shares to Acquisition Sub in the Offer, Acquisition Sub shall acquire good, valid and marketable title to the Shares, free and clear of all claims, liens, charges, encumbrances, restrictions, security interests, pledges, limitations, conditional sales agreements, or obligations relative to the sale or transfer thereof, and not subject to any adverse claim. Each Stockholder hereby agrees to permit Parent, Acquisition Sub and the Company to publish and disclose in the documents relating to the Offer and Merger (including all documents, schedules and proxy statements filed with the Commission) his or its identity and ownership of Company Common Stock and the nature of his or its commitments, arrangements and understandings under this Agreement. Proxy; Provisions Concerning Company Common Stock. Each Stockholder, by this Agreement, does hereby constitute and appoint Parent, or any nominee of Parent, with full power of substitution, as his or its true and lawful attorney and proxy, for and in his or its name, place and stead, to vote as his or its proxy at any meeting of the holders of Company Common Stock, however called, and to sign such Stockholder's name to any written consent of the holders of Company Common Stock with respect to, the Shares held of record or Beneficially Owned by such Stockholder that such Stockholder has the power to vote (including at a minimum the Existing Shares), whether heretofore owned or hereafter acquired, (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions reasonably required in furtherance thereof and hereof; (ii) against any action or agreement that would reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or this Agreement; and (iii) against the following actions or agreements (other than the Merger and the transactions contemplated by the Merger Agreement): (A) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or any of its Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of the Company or its Subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or its Subsidiaries; (C) (1) any change in a majority of the persons who constitute the board of directors of the Company; (2) any change in the present capitalization of the Company or any amendment of the Company's Certificate of Incorporation or Bylaws; (3) any other material change in the Company's corporate structure or business; or (4) any other action or agreement which, in the case of each of the matters referred to in clauses (C)(l), (2) or (3), is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, discourage, or adversely affect the Merger and the transactions contemplated by this Agreement and the Merger Agreement. Each Stockholder further agrees to cause his or its Shares to be voted in accordance with the foregoing. Each Stockholder acknowledges receipt and review of a copy of the Merger Agreement. Other Covenants, Representations and Warranties. Each Stockholder hereby represents and warrants to Parent as follows: Ownership of Shares. Such Stockholder is the record owner of the number of Shares set forth opposite such Stockholder's name on Schedule I hereto. On the date hereof, the Existing Shares set forth opposite such Stockholder's name on Schedule I hereto constitute all of the Shares owned of record by such Stockholder. The Shares are not subject to any voting trust agreement or to such Stockholder's knowledge other agreement restricting or otherwise relating to the voting, dividend rights or disposition of the Shares, other than this Agreement. Such Stockholder has sole power with respect to the matters set forth in this Agreement with respect to all of the Existing Shares set forth opposite such Stockholder's name on Schedule I hereto, with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. Power; Binding Agreement. Such Stockholder has the legal capacity, power and authority to enter into and perform all of such Stockholder's obligations under this Agreement. The execution, delivery and performance of this Agreement by such Stockholder will not violate any other to which such Stockholder is a party including, without limitation, any voting agreement, stockholders agreement or voting trust. This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which such Stockholder is trustee whose consent is required for the execution and delivery of this Agreement or the consummation by such Stockholder of the transactions contemplated hereby. No Conflicts. (i) No filing with, and no permit, authorization, consent or approval of, any state or federal public body or authority is necessary for the execution of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby other than filings required under the Exchange Act and (ii) none of the execution and delivery of this Agreement by such Stockholder, the consummation by such Stockholder of the transactions contemplated hereby or compliance by such Stockholder with any of the provisions hereof shall result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, modification or acceleration) under any of the terms, conditions or provisions of any agreement to which such Stockholder is a party or by which such Stockholder may be bound or affected. No Encumbrances. Except as applicable in connection with the transactions contemplated by Section 2 hereof, such Stockholder's Shares and the certificates representing such Shares are, and at all times during the term hereof will be, held by such Stockholder, or by a nominee or custodian for the benefit of such Stockholder, free and clear of all liens, security interests, proxies, voting trusts or agreements, or to such Stockholder's knowledge any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder. No Finder's Fees. Except as provided in the Merger Agreement, no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Stockholder. No Solicitation. No Stockholder shall, in his capacity as such, directly or indirectly, through any agent or representative or otherwise invite, initiate, solicit or knowingly encourage (including by way of furnishing information), or respond to, any inquiries or the making of any proposal by any person or entity (other than Parent or any affiliate of Parent) that constitutes or any reasonably be expected to lead to, an Acquisition Proposal, or otherwise cooperate with, or assist or participate in or facilitate or encourage any effort or attempt by any person to do or seek any of the foregoing. If any Stockholder receives or becomes aware of any such inquiry or proposal or Acquisition Proposal, then such Stockholder will promptly inform Parent in writing of the existence thereof. Each Stockholder will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. However, nothing in this Section 4(f) or this Agreement shall restrict, limit or prohibit such Stockholder from taking any actions necessary in his capacity as a Director of the Company to satisfy his fiduciary duties as a Director under Delaware law. Restriction on Transfer, Proxies and Non-Interference. Except as applicable in connection with the transactions contemplated by Section 2 hereof, no Stockholder shall, directly or indirectly: (i) except for transfers to such Stockholder's family or trusts established for the benefit of members of such Stockholder's family (provided that in the case of this clause (i) the transferee of such shares agrees in writing to be bound by the terms hereof in form satisfactory to Parent), offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of such Stockholder's Shares or any interest therein; (ii) except as contemplated by this Agreement, grant any proxies or powers of attorney, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares; or (iii) take any action that would make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing such Stockholder's obligations under this Agreement. Waiver of Appraisal Rights. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that such Stockholder may have. Reliance by Parent. Each Stockholder understands and acknowledges that Parent is entering into, and causing Acquisition Sub to enter into, the Merger Agreement in reliance upon such Stockholder's execution and delivery of this Agreement. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. Without limiting the foregoing, each Stockholder agrees, upon the written request of Parent, to use his or its best efforts to cause all certificates representing such Stockholder's Shares to bear in a conspicuous place the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 8, 1996, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE CORPORATION AND WILL BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST. SUCH STOCKHOLDERS AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR THE GRANTING OF CERTAIN PROXIES TO VOTE THE SHARES REPRESENTED HEREBY AND FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE. BY ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. THE CORPORATION RESERVES THE RIGHT TO REFUSE TO TRANSFER THE SHARES REPRESENTED BY THIS CERTIFICATE UNLESS AND UNTIL THE CONDITIONS TO TRANSFER SET FORTH IN SUCH STOCKHOLDERS AGREEMENT HAVE BEEN FULFILLED. Stop Transfer. Each Stockholder agrees with, and covenants to, Parent that such Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Stockholder's Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Section 2 hereof). In the event of a stock dividend or distribution, or any change in the Company Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Shares" shall be deemed to refer to and include the Shares as well as all such stock dividends and distributions and any shares into which or for which any or all of the Shares may be changed or exchanged. Termination. Except as otherwise provided herein, the covenants and agreements contained herein with respect to the Shares shall terminate upon the earlier of (i) termination of the Merger Agreement in accordance with its terms, or (ii) December 31, 1996. Confidentiality. The Stockholders recognize that successful consummation of the transactions contemplated by this Agreement may be dependent upon confidentiality with respect to the matters referred to herein. In this connection, pending public disclosure thereof or of the Merger Agreement, each Stockholder hereby agrees not to disclose or discuss this Agreement with anyone not a party to this Agreement (other than such Stockholder's counsel and advisors, if any) without the prior written consent of Parent, except for filings required pursuant to the Exchange Act and the rules and regulations thereunder or as required by law, in which event such Stockholder shall give notice of such disclosure to Parent as promptly as practicable so as to enable Parent to seek a protective order from a court of competent jurisdiction with respect thereto. Miscellaneous. Entire Agreement. This Agreement, and the agreements contemplated hereby constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. Certain Events. Each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Stockholder's heirs, guardians, administrators or successors. Notwithstanding any transfer of Shares, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. Assignment. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of the other party, provided that Parent may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Parent of its obligations hereunder. Amendments, Waivers, Etc. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, with respect to any one or more Stockholders, except upon the execution and delivery of a written agreement executed by the relevant parties hereto; provided that Schedule I hereto may be supplemented by Parent by adding the name and other relevant information concerning any stockholder of the Company who agrees to be bound by the terms of this Agreement without the agreement of any other party hereto, and thereafter such added stockholder shall be treated as a "Stockholder" for all purposes of this Agreement. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, telegram, telex or telecopy, or by mail (registered or certified mail, postage prepaid, return receipt requested) by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses: If to Stockholder: At the addresses set forth on Schedule I hereto If to Parent: Nash-Finch Company 7600 France Avenue South Edina, MN 55435 Attn: Norman R. Soland copy to: Oppenheimer Wolff & Donnelly Plaza VII, Suite 3400 45 South Seventh Street Minneapolis, MN 55402 Attn: Mark A. Kimball or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. Jurisdiction. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any state or federal court located in the State of Delaware in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a state or federal court sitting in the State of Delaware. In any event any Stockholder is made party to any litigation as a result of such Stockholders' execution of this Agreement (other than litigation by or in the right of Parent or Acquisition Sub to enforce this Agreement), and such Stockholder is not then in breach of, and has not disclosed any intention to breach or otherwise fail to fulfill, his obligations under this Agreement, then, upon request by such Stockholder, Parent shall indemnify such Stockholder against the reasonable costs of defense of such litigation, such obligation to indemnify to continue so long as such Stockholder is not in breach of, and has not disclosed any intention to breach or otherwise fail to fulfill, his obligations under this Agreement, In connection with such indemnification, Parent may require that all Stockholders requesting indemnification be represented in such litigation by a single law firm satisfactory to Parent and such Stockholders. Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation 9f this Agreement. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same Agreement. IN WITNESS WHEREOF, Parent, Acquisition Sub and each Stockholder have caused this Agreement to be duly executed as of the day and year first above written. NASH-FINCH COMPANY By: Its: NFC ACQUISITION CORPORATION By: Its: John W. Berry John Demos Thomas S. Haggai Edward H. Jennings Robert F. Koogler Sam Robinson C. Elwood Shaffer Jack Twyman SCHEDULE I NAME AND ADDRESS NUMBER OF SHARES John W. Berry 7880 Tipp-Elizabeth Road New Carlisle, OH 45344 156,816 John Demos 1329 Glen Jean Court Dayton, OH 45459 75,839 Thomas S. Haggai 2116 Guilford College Road Jamestown, NC 27282 6,142 Edward H. Jennings 420 W. 5th Avenue Columbus, OH 43201 200 Robert Koogler 1553 Southlawn Fairborn, OH 45324 50,635 Sam Robinson 8134 Camargo Woods Court Cincinnati, OH 45243 41,972 C. Elwood Shaffer 870 Meadow Lane Xenia, OH 45385 46,713 Jack Twyman 8955 Indian Ridge Road Cincinnati, OH 45243 199,174 EX-99.(C)(3) 14 CONFIDENTIALITY AGMT DATED 2/20/96 CONFIDENTIALITY AGREEMENT This Confidentiality Agreement, dated as of February 29, 1996, is made by NASH-FINCH COMPANY, ("Nash-Finch") in favor of SUPER FOOD SERVICES, INC. (the "Company"). 1. For purposes of this Agreement, the term "Confidential Information" shall mean the non-public written information regarding the Company delivered to Nash-Finch in connection with Nash-Finch's evaluation of a potential acquisition of the Company. 2. Nash-Finch agrees to hold such Confidential Information in confidence to the same extent it safeguards its own confidential information of similar character for a period of two (2) years from the date of this Agreement. Nash-Finch agrees that it shall not disclose any such Confidential Information to anyone except its employees, agents, or affiliates to whom disclosure is necessary for the purpose of evaluating such information (collectively "Advisors"). Nash-Finch shall appropriately notify such Advisors that the disclosure is made in confidence and shall be kept in confidence in accordance with this Agreement. 3. Upon the request of the disclosing party, all Confidential Information, together with any copies of same as may be authorized herein, shall be returned to the Company or certified destroyed by Nash-Finch. 4. Nash-Finch's obligation of confidentiality contained in this Agreement shall not apply to any information which: (a) is received from a third party that is not known to Nash-Finch to be bound by a confidentiality agreement with the Company; (b) prior to the date hereof or the time of disclosure to Nash-Finch was in its possession; (c) is or hereafter becomes public knowledge through no fault of Nash-Finch; or (d) is required to be disclosed pursuant to any law or any governmental regulation or order. 5. Except for the obligation of confidentiality imposed herein, no obligation of any kind is assumed or implied against either party by virtue of this agreement, any meetings or conversations with respect to the subject matter stated above or with respect to whatever confidential information is exchanged. Each party further acknowledges that neither this Agreement nor any meetings and communications of the parties relating to the same subject matter shall (i) constitute an offer, request, or contract with the other involving a buyer-seller relationship, joint-venture, alliance, investment tor partnership relationship, or (ii) restrict the right of Nash-Finch to make any market entry into the Company's market area or to compete, directly or indirectly, with the Company so long as the confidentiality provisions of this Agreement are followed. 6. The parties expressly agree that any money, expenses or losses expended or incurred by either parity in preparation for, or as result of this Agreement or the parties' meetings and communications, is at such party's sole cost and expense. 7. Without the prior consent of the other party, neither party shall disclose to any third person (other than their Advisors) the fact that discussions are taking place or that Confidential Information is being shared, except as may be required by law and then only after first notifying the other party of such required disclosure. 8. Although the Company has endeavored to include in the Confidential Information all information known to it which it believes to be relevant for the purpose of Nash-Finch's investigation, Nash-Finch understands that neither the Company nor any of its representatives or advisors have made or make any representation or warranty as to the accuracy or completeness of the Confidential Information. Nash-Finch agrees that neither the Company nor its representatives or advisors shall have any liability to Nash-Finch or any of Nash-Finch's representatives or advisors resulting from the use of the Confidential Information. 9. This Agreement constitutes the entire agreement between the Company and Nash-Finch with respect to the subject matter of this Agreement. No provision of this Agreement shall be deemed waived, amended or modified by either party, unless such waiver, amendment or modification is made in writing and signed by the party alleged to be bound thereby. This Agreement supersedes all previous agreements between the Company and Nash-Finch related to the subject matter hereof. 10. Nash-Finch agrees that for a period of two (2) years from the date of this Agreement, neither it nor its affiliates (as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended), will in any manner acquire or make any proposal to acquire any securities or property of the Company (other than property transferred in the ordinary course of the Company's business), unless such acquisition or the making of such proposal has been approved in advance by the Company's Board of Directors. 11. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware. This Agreement shall be binding upon Nash-Finch, its successors and -2- assigns and shall inure to the benefit of and be enforceable by the Company, its successors and assigns. IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to sign this Agreement as of the date set forth below. SUPER FOOD SERVICES, INC., NASH-FINCH COMPANY, a Delaware corporation a Delaware corporation By: JOHN DEMOS By: ALFRED N. FLATEN ----------------------------- ------------------------------- -3- -----END PRIVACY-ENHANCED MESSAGE-----