-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TZi5NS8K1t2huxRGdncjWTBkNbvlAB6hi2GyUY/Q+QbUCWZLmadqlWsBfXEsdAB4 o1Ow90gjActFZ7VW/ELDNw== 0000912057-94-001191.txt : 19940404 0000912057-94-001191.hdr.sgml : 19940404 ACCESSION NUMBER: 0000912057-94-001191 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940101 FILED AS OF DATE: 19940331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASH FINCH CO CENTRAL INDEX KEY: 0000069671 STANDARD INDUSTRIAL CLASSIFICATION: 5140 IRS NUMBER: 410431960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-00785 FILM NUMBER: 94519406 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 10-K 1 10-K - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: Commission file number: January 1, 1994 0-785 ------------- NASH-FINCH COMPANY (Exact name of Registrant as specified in its charter) Delaware 41-0431960 (State of Incorporation) (I.R.S. Employer Identification No.) 7600 France Avenue South P.O. Box 355 Minneapolis, Minnesota (Address of principal 55440-0355 executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 832-0534 ------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $1.66-2/3 per share Common Stock Purchase Rights ------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / As of March 21, 1994, 10,872,424 shares of Common Stock of the Registrant were outstanding, and the aggregate market value of the Common Stock of the Registrant as of that date (based upon the last reported sale price of the Common Stock at that date by the NASDAQ National Market System), excluding outstanding shares deemed beneficially owned by directors and officers, was approximately $180,162,300. ------------- Parts I, II and IV of this Annual Report on Form 10-K incorporate by reference information (to the extent specific pages are referred to herein) from the Registrant's Annual Report to Stockholders for the Year Ended January 1, 1994 (the "1993 Annual Report"). Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the Registrant's Proxy Statement for its Annual Meeting to be held May 10, 1994 (the "1994 Proxy Statement"). - ------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS. (a) GENERAL DEVELOPMENT OF BUSINESS. Nash Finch Company, a Delaware corporation organized in 1921 as the successor to a business founded in 1885, has its principal executive offices at 7600 France Avenue South, Edina, Minnesota 55435. Its telephone number is (612) 832-0534. Unless the context otherwise indicates, the term "Company," as used in this Report, means Nash Finch Company and its consolidated subsidiaries. The Company is one of the largest food wholesalers in the United States, serving approximately 700 affiliated and other independent retail supermarkets as of January 1, 1994. In addition, the Company distributes food and related products to approximately 5,000 convenience stores and other retail outlets and institutional accounts, such as military base commissaries, restaurants, schools and hospitals. No one customer accounts for a significant portion of the Company's sales. The Company also operates and supplies, as of January 1, 1994, 102 Company-owned supermarkets and warehouse stores. The Company's affiliated and Company-owned stores operate under a number of tradenames, including ECONOFOODS-R-, FOOD BONANZA-R-, SUN MART-TM-, FAMILY THRIFT CENTER-TM-, JACK & JILL-R-, ECONOMART-TM-, OUR FAMILY FOODS-R- and FOOD PRIDE-R-. The Company's market areas are in 31 states in the Midwest, West, Mid-Atlantic and Southeast and are serviced through 18 wholesale distribution centers and two general merchandise warehouses. The Company packages, ships and markets fresh produce from California and the country of Chile to a variety of buyers across the United States, Canada and overseas. In July 1993, the Company acquired a 16-store chain of supermarkets operating in Iowa, western Illinois and northern Missouri, from an independent retail store operator. In February 1994, the Company acquired a 23-store chain of retail grocery stores operating in North Carolina (with one store in South Carolina) from an independent retail store operator. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Financial information about the Company's business segments for the most recent three fiscal years is contained on page 25 of the 1993 Annual Report (Note 12 to Consolidated Financial Statements). For segment financial reporting purposes, a portion of the operational profits of fourteen wholesale distribution centers are allocated to retail operations to the extent that merchandise is purchased by these distribution centers and transferred to retail stores directly operated by the Company. For fiscal 1993, 35% of such warehouse operational profits were allocated to retail operations. (c) NARRATIVE DESCRIPTION OF BUSINESS. 1. PRODUCTS SUPPLIED. The Company distributes and sells a full line of food products, including dry groceries, fresh fruits and vegetables, frozen foods, fresh and processed meat products and dairy products, and a variety of non-food products, including health and beauty aids, tobacco products, paper products, cleaning supplies and small household items. The Company primarily distributes and sells nationally advertised brand products and a number of unbranded products (principally meats and produce) purchased directly from various manufacturers, processors and suppliers or through manufacturers' representatives and brokers. Many of the major suppliers of the Company are large companies. The Company has no significant long-term purchase obligations and believes that adequate and alternative sources of supply are available in most cases. The Company also distributes and sells private label products using the Company's own trademarks. A wide variety of grocery, dairy, package meat, frozen foods, health and beauty care products, paper and household products, beverages, and other packaged products are manufactured or processed by others for the Company and sold under Company brand names. 2. DISTRIBUTION. The Company distributes products to Company-owned supermarkets and warehouse stores and to independent customers and military base commissaries from 18 distribution centers, as of January 1, 1994, located in Minnesota (1), Iowa (1), Kansas (1), Nebraska (2), Colorado (1), North Dakota (2), South Dakota (2), Wisconsin (1), North Carolina (3), Virginia (2), Maryland (1) and Georgia (1). The Company's distribution centers are located at strategic points to efficiently serve Company-owned stores and independent customers. The distribution centers are equipped with modern materials handling equipment for receiving, storing and shipping goods and merchandise and are designed for high-volume operations at low unit costs. The Company also distributes health and beauty aids and general merchandise products from two separate warehouse facilities, one in South Dakota and the other in North Carolina, and distributes produce from a separate warehouse facility in North Carolina. The distribution centers serve as central sources of supply for Company-owned and independent stores and institutional customers within their operating areas. The distribution centers maintain complete inventories containing virtually every national brand grocery product sold in supermarkets, together with a wide variety of high-volume private label items. In addition, the distribution centers provide full lines of perishables, including fresh meats and poultry, fresh fruits and vegetables, dairy and delicatessen products and frozen foods. Retailers order their inventory requirements at regular intervals through direct linkage with Company computers. Deliveries are made primarily by the Company's transportation fleet. The frequency of deliveries varies, depending upon customer needs. The Company currently has a modern fleet of approximately 368 tractors, 613 semi-trailers and 230 small trucks and vans, most of which are owned by the Company. In addition, many types of meats, dairy products, bakery and other products are sold by the Company but are delivered by the suppliers directly to retail food stores. Virtually all of the Company's wholesale sales to independent customers are made on a cost-plus-fee basis, with the fee based on the type of commodity and quantity purchased. Selling prices are changed promptly, based on the latest cost information. 3. WHOLESALE OPERATIONS. As of January 1, 1994, the Company distributed food products and non-food items, on a wholesale basis, to approximately 700 affiliated and other independent retail supermarkets and to approximately 5,000 convenience stores, military base commissaries and other retail outlets and institutional accounts. The Company's affiliated and other independent retail supermarkets account for the major portion of the Company's wholesale sales. These are primarily self-service supermarkets that carry a wide variety of grocery products, health and beauty aids and general merchandise. Many stores also have one or more specialty departments such as delicatessens, in-store bakeries, restaurants, pharmacies and flower shops. The stores served by the Company's 2 wholesale operations range in size from small convenience stores to large supermarkets containing approximately 50,000 square feet. The Company offers its affiliated independent stores a broad range of services, most of which are also made available to its other retailers. Services offered include promotion, advertising and merchandising programs, the installation of computerized ordering, receiving and scanning systems, the establishment and supervision of computerized retail accounting, budgeting and payroll systems, personnel management assistance and employee training, consumer and market research, store development services and insurance programs. The Company's retail counselors and other Company personnel advise and counsel the affiliated independents, and directly provide many of the above services. Separate charges are made for some of these services. Other independent stores are charged for services on a negotiated basis. The Company also provides retailers with marketing and store upgrade services, many of which have been developed in connection with Company-owned stores. For example, the Company assists retailers in installing and operating delicatessens and other specialty food sections. Rather than develop a single pattern for the services it provides, the Company has developed flexible programs to serve the needs of most of its affiliated independents, whether rural or urban, large or small. The Company's assistance to its affiliated independent stores in store development provides a means of continued growth for the Company through the development of new retail store locations and the enlargement or remodeling of existing retail stores. The services provided include site selection, marketing studies, building design, store layout and equipment planning and procurement. The Company assists its retail customers in securing existing supermarkets that are for sale from time to time in market areas serviced by the Company and, occasionally, acquires existing stores for resale to customers. The Company also may provide financial assistance to independent retailers it services, generally in connection with new store development and the upgrading or expansion of existing stores. The Company makes secured loans to some of its affiliated independent operators, generally repayable over a period of five or seven years, for inventories, store fixtures and equipment, working capital and store improvements. Loans are secured by liens on inventory or equipment or both, by personal guarantees and by other types of security. As of January 1, 1994, the Company had outstanding $27,965,573 in such secured loans to 96 independent operators. In addition, the Company may provide such assistance to independent retailers by guarantying loans from financial institutions and leases entered into directly with lessors. The Company also uses its credit strength to lease supermarket locations and sublease them to independent operators, at rates that are at least as high as the rent paid by the Company. 4. RETAIL OPERATIONS. As of January 1, 1994, the Company owned and operated 102 retail outlets, including 57 supermarkets, 40 warehouse stores and 5 combination general merchandise/food stores. The Company has devoted considerable resources in recent years to acquire, construct, enlarge and modernize Company-owned stores. Over the last several years, the Company has reduced (and expects to continue to reduce) its number of smaller supermarkets. Concurrently with such reductions, the Company seeks to add either larger conventional supermarkets (at least 30,000 square feet) or warehouse stores (at least 45,000 square feet), as appropriate. The Company has implemented a number of automated systems, including scanning and direct store delivery for its 3 stores. These systems provide inventory control at delivery and checkout points, reducing shrinkage and increasing labor efficiency. The Company operates its 57 supermarkets principally under the names SUN MART-TM-, EASTER FOODS-TM- and JACK & JILL-R-. These stores, of which the Company leases 46 (the remainder are owned), range in size up to approximately 46,000 square feet. These stores are primarily self-service supermarkets that carry a wide variety of grocery products, health and beauty aids and general merchandise. Many stores also have one or more specialty departments such as delicatessens, in-store bakeries, restaurants, pharmacies and flower shops. The Company operates 40 warehouse stores principally under the names ECONOFOODS-R- and FOOD BONANZA-R-. These stores, 13 of which the Company owns (the remainder are leased), range in size up to approximately 73,000 square feet. The Company's warehouse stores have evolved since the first was opened in 1964. The early concept emphasized low prices, limited product selection and none of the standard supermarket services such as bagging, carry-out, trading stamps or other promotions. Today's new and expanded warehouse stores offer a wide variety of high quality groceries, fresh fruits and vegetables, dairy products, frozen foods, fresh fish, fresh and processed meat and health and beauty aids, all at lower prices, and specialty departments such as delicatessens, in-store bakeries, pharmacies, banks and floral and video departments. These stores appeal to quality and price-conscious customers who want national brands, broad selection, and availability of convenience foods, but are willing, in some cases, to forgo standard supermarket services. The stores are able to offer lower prices due to increased business volume as well as the limited services available. The Company also operates five combination general merchandise/food stores principally under the name FAMILY THRIFT CENTER-TM-. These stores, two of which the Company leases (the other three are owned), range in size up to approximately 70,000 square feet. In addition to traditional supermarket food departments, these stores have expanded general merchandise and health and beauty aid departments and pharmacies, and some also have sit-down restaurants, full-service floral departments and book departments. 5. PRODUCE MARKETING OPERATIONS. Through a wholly owned subsidiary, Nash-DeCamp Company, the Company grows, packs, ships and markets fresh fruits and vegetables from locations in California and the country of Chile to customers across the United States and Canada, and also overseas. For regulatory reasons, the amount of business between Nash-DeCamp Company and the Company is limited. The Company owns and operates four modern packing, shipping and/or cold storage facilities that ship fresh grapes, citrus, plums, peaches, nectarines, apricots, pears, persimmons, kiwi fruit and other products. The Company also acts as marketing agent for other packers of fresh produce in California and in the country of Chile. For the above services, the Company receives, in addition to a selling commission, a fee for packing, handling and shipping produce. The Company also owns vineyards and orchards for the production of table grapes, tree fruit, kiwi and citrus. 4 6. COMPETITION. All segments of the Company's business are highly competitive. The Company competes directly at the wholesale level with a number of wholesalers that supply independent retailers, including "cooperative" wholesalers that are owned by their retail customers and "voluntary" wholesalers who, like the Company, are not owned by their retail customers but sponsor a program under which single-unit or multi-unit independent retailers may affiliate under a common name. The Company also competes indirectly with the warehouse and distribution operations of the large integrated chains, which consist of single entities owning both wholesale and retail operations. At the wholesale level, the principal methods of competition are location of distribution centers and the services offered to independent retailers, such as store financing and use of store names. The success of the Company's wholesale business also depends upon the ability of its retail store customers to compete successfully with other retail food stores. The Company competes on the retail level in a fragmented market with many organizations of various sizes, ranging from national chains and voluntary or cooperative groups to local chains and privately-owned unaffiliated stores. Depending on the product and location involved, the principal methods of competition at the retail level include price, service, quality, display, selection and store location. The Company competes directly in its produce marketing operations with a large number of other firms that pack, ship and market produce, and competes indirectly with larger, integrated firms that grow, pack, ship and market produce. The principal methods of competition in this segment are service provided to growers and the ability to sell produce at the most favorable prices. 7. EMPLOYEES. As of January 1, 1994, the Company employed approximately 11,900 persons (approximately 6,000 full-time and 5,900 part-time). ITEM 2. PROPERTIES. The principal executive offices of the Company are located in Edina, Minnesota, and consist of approximately 68,000 square feet of office space. 5 The locations and sizes of the Company's distribution centers, as of January 1, 1994, are as follows (all of which are owned, except as indicated):
Approx. Size Location (Square Feet) -------- ------------- Midwest/West: *Denver, Colorado.................. 301,800 Cedar Rapids, Iowa................ 351,900 Liberal, Kansas................... 177,000 St. Cloud, Minnesota.............. 325,100 Grand Island, Nebraska............ 177,700 Lincoln, Nebraska................. 226,000 Fargo, North Dakota............... 288,800 Minot, North Dakota............... 185,200 Rapid City, South Dakota.......... 186,600 Sioux Falls, South Dakota......... 173,100 *Sioux Falls, South Dakota (general merchandise warehouse). 79,300 Appleton, Wisconsin............... 430,900 Southeast: Macon, Georgia................... 247,700 * Baltimore, Maryland.............. 215,000 (includes 60,000 square feet of refrigerated warehouse space located in Jessup, Maryland) * Hickory, North Carolina.......... 120,500 (general merchandise warehouse) * Lumberton, North Carolina........ 256,600 (includes produce warehouse of 16,100 square feet located in Wilmington, North Carolina) * Newton, North Carolina........... 208,900 * Rocky Mount, North Carolina...... 201,800 Bluefield, Virginia.............. 197,700 * Chesapeake, Virginia............. 233,300 --------- Total square feet................ 4,584,900 --------- --------- - ------------ * Leased facility (excluding produce warehouse in Wilmington, North Carolina, which is owned).
The distribution center facilities are leased for varying terms, all with remaining terms of less than 20 years. Total rent in fiscal 1993 for the leased facilities was $2,568,000. 6 The following table shows the number and aggregate size of Company-owned and operated supermarkets and warehouse stores operated at January 1, 1994: *Supermarkets: Number of Stores................62 Total Square Feet........1,601,000 Warehouse stores: Number of Stores................40 Total Square Feet........1,658,000 Totals: Number of Stores...............102 Total Square Feet........3,259,000 - -------- * Includes 5 combination general merchandise/food stores.
The Company leases 48 of its supermarket and combination general merchandise/food store buildings (the remainder are owned), which range in size up to approximately 70,000 square feet. The Company also leases 27 of its warehouse store buildings, which range in size up to approximately 73,000 square feet. These leases are for varying terms, primarily under 20 years. The total rent in fiscal 1993 for store buildings was $7,994,000. Further information about the lease obligations of the Company is given in Note 8 to Consolidated Financial Statements on page 24 of the 1993 Annual Report, incorporated herein by reference. Nash-DeCamp Company, a wholly owned subsidiary of the Company, owns and operates four packing, shipping and/or cold storage facilities in California in connection with its produce marketing operations, with total space of approximately 184,500 square feet. Its executive offices, comprising approximately 8,000 square feet, are in leased premises located in Visalia, California. In addition, the Company owns approximately 800 acres for the production of table grapes, 40 acres for the production of kiwi fruit, 820 acres for the production of peaches, plums, apricots and nectarines, and 255 acres for the production of citrus. These vineyards and orchards are located in the San Joaquin Valley of California. The Company makes a continuing effort to keep all of its properties and facilities modern, efficient and adequate for its operational needs, through the acquisition, disposition, expansion and improvement of such properties and facilities. As a result, the Company believes that its properties and facilities are, on an aggregate basis, fully utilized and adequate for the conduct of its business. ITEM 3. LEGAL PROCEEDINGS. On August 31, 1993 one of the Company's customers, Paintsville Foods, Inc. (the "Debtor"), filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Eastern District of Kentucky. The Company has filed a plan of reorganization in this case that seeks approval of a bidding procedure to sell the assets of the Debtor. As of March 25, 1994, the plan of reorganization has not been approved by the court. For the fiscal year ended January 1, 1994, 7 the Company's increased provision for bad debts included $5,030,000 relating to this bankruptcy proceeding. There are no other pending or threatened material legal proceedings to which the Company or any of its subsidiaries is a party. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers of the Company, their ages, the year first elected or appointed as an executive officer and the offices held as of March 1, 1994 are as follows:
Year First Elected or Appointed as an Name (Age) Executive Officer Title ---------- ------------------ ----- Harold B. Finch, Jr.(66) 1972 Chairman of the Board and Chief Executive Officer Alfred N. Flaten, Jr.(59) 1991 President and Chief Operating Officer Robert F. Nash (60) 1974 Vice President and Treasurer Norman R. Soland (53) 1986 Vice President, Secretary and General Counsel David W. Bell (49) 1990 Vice President, Corporate Retail Operations Charles F. Ramsbacher (51) 1991 Vice President, Marketing Clarence T. Walters (57) 1988 Vice President, Management Information Systems Steven L. Lumsden (48) 1992 Vice President, Warehouse and Transportation Gerald D. Maurice (60) 1993 Vice President, Store Development Lawrence A. Wojtasiak (48) 1990 Controller
There are no family relationships between or among any of the executive officers or directors of the Company. Executive officers of the Company are elected by the Board of Directors for one-year terms, commencing with their election at the first meeting of the Board of Directors immediately following the annual meeting of stockholders and continuing until the next such meeting of the Board of Directors. Except as indicated below, there has been no change in position of any of the executive officers during the last five years. 8 Mr. Flaten's 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. He was previously an operating officer, having served as Vice President, Corporate Retail Operations from January 1989 to February 1991. Mr. Bell was elected Vice President, Corporate Retail Operations in May 1991, having previously served as Vice President, Marketing from May 1990 to May 1991, and Director of Marketing from February 1990 to May 1990. Mr. Bell was previously employed by Shoprite Supermarkets, Inc., an operator of retail grocery stores, as Executive Vice President, Merchandising and Operations from 1989 to 1990, and as Vice President and General Manager from 1987 to 1989. Mr. Ramsbacher was elected Vice President, Marketing in May 1991, having previously served as operating Vice President, Iowa Division from May 1990 to May 1991, and Iowa Division Manager from August 1988 to May 1990. Mr. Lumsden was elected Vice President, Warehouse and Transportation in May 1992, having previously served as Director, Warehouse and Transportation from May 1990 to May 1992, and Manager, Distribution Center Operations from September 1987 to May 1990. Mr. Maurice was elected Vice President, Store Development in May 1993, having previously served as operating Vice President, Central Division for more than five years. Mr. Wojtasiak was elected Controller in May 1990. He was previously employed by The Diana Corporation, a diversified holding company, as a special project coordinator from July 1988 to April 1990. PART II ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information under the caption "Price Range of Common Stock and Dividends" on page 15 of the Company's 1993 Annual Report is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The financial information under the caption "Consolidated Summary of Operations" on pages 26 and 27 of the Company's 1993 Annual Report is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 14 and 15 of the Company's 1993 Annual Report is incorporated herein by reference. 9 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's Consolidated Financial Statements and the report of its independent auditors on pages 16-25 of the Company's 1993 Annual Report are incorporated herein by reference, as is the unaudited information set forth under the caption "Quarterly Financial Information" on page 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. A. DIRECTORS OF THE REGISTRANT. The information under the captions "Election of Directors--Information About Directors and Nominees" and "Election of Directors--Other Information About Directors and Nominees" in the Company's 1994 Proxy Statement is incorporated herein by reference. B. EXECUTIVE OFFICERS OF THE REGISTRANT. Information concerning Executive Officers of the Company is included in this Report under Item 4A, "Executive Officers of the Registrant." C. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF 1934. Information under the caption "Executive Compensation and Other Benefits--Compliance with Section 16(a) of the Exchange Act" in the Company's 1994 Proxy Statement is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information under the captions "Election of Directors--Director Compensation" and "Executive Compensation and Other Benefits" in the Company's 1994 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under the caption "Principal Stockholders and Beneficial Ownership of Management" in the Company's 1994 Proxy Statement is incorporated herein by reference. 10 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under the caption "Election of Directors--Other Information About Directors and Nominees" in the Company's 1994 Proxy Statement is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS: The following Financial Statements are incorporated herein by reference from the pages indicated in the Company's 1993 Annual Report: Independent Auditors' Report -- page 16 Consolidated Statements of Earnings for the years ended January 1, 1994, January 2, 1993 and December 28, 1991 -- page 16 Consolidated Statements of Cash Flows for the years ended January 1, 1994, January 2, 1993 and December 28, 1991 -- page 17 Consolidated Balance Sheets as of January 1, 1994 and January 2, 1993 -- pages 18 and 19 Consolidated Statements of Stockholders' Equity for the years ended January 1, 1994, January 2, 1993 and December 28, 1991 -- page 20 Notes to Consolidated Financial Statements -- pages 20-25 2. FINANCIAL STATEMENT SCHEDULES: The following financial statement schedules and auditors' report thereon are included herein and should be read in conjunction with the consolidated financial statements referred to above (page numbers refer to pages in this Report): Page ---- Independent Auditors' Report on Consolidated Financial Statement Schedules.............................................. 14 Financial Statement Schedules: V. Property, Plant and Equipment, and Assets Under Capitalized Leases......................................... 15 11 VI. Accumulated Depreciation and Amortization of Property, Plant and Equipment, and Assets Under Capitalized Leases................................... 16 VIII. Valuation and Qualifying Accounts.......................... 17 IX. Short-Term Borrowings...................................... 18 All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. 3. Exhibits: The exhibits to this Report are listed in the Exhibit Index on pages 20 to 24 herein. A copy of any of these exhibits will be furnished at a reasonable cost to any person who was a stockholder of the Company as of March 21, 1994, upon receipt from any such person of a written request for any such exhibit. Such request should be sent to Nash Finch Company, 7600 France Avenue South, P.O. Box 355, Minneapolis, Minnesota, 55440-0355, Attention: Secretary. The following is a list of each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c): A. Nash Finch Profit Sharing Plan -- 1994 Revision and Nash Finch Profit Sharing Trust Agreement (as restated effective January 1, 1994) (filed herewith as Exhibit 10.6). B. Nash Finch Executive Incentive Bonus and Deferred Compensation Plan (as amended and restated effective December 31, 1993) (filed herewith as Exhibit 10.7). C. Excerpt from minutes of the Board of Directors regarding Nash Finch Pension Plan, as amended (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1987 (File No. 0-785)). D. Nash Finch 1988 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1988 (File No. 0-785)). E. Amendment to 1988 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 28.2 to the Company's Registration Statement on Form S-8 (File No. 33-26590)). F. Letter agreement, dated June 12, 1979, between Nash Finch and Donald R. Miller (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983 (File No. 0-785)). 12 G. Excerpts from minutes of the Board of Directors regarding director compensation (filed herewith as Exhibit 10.14). H. Form of Director Fee Deferral Agreement (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990 (File No. 0-785)). I. Form of letter agreement specifying benefits in the event of termination of employment following a change in control of Nash Finch (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990 (File No. 0-785)). J. Nash Finch Company Income Deferral Plan (filed herewith as Exhibit 10.17). (b) Reports on Form 8-K: No reports on Form 8-K were filed during the fourth quarter of the fiscal year covered by this Report. 13 INDEPENDENT AUDITORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES The Board of Directors Nash Finch Company: Under date of March 1, 1994, we reported on the consolidated balance sheets of Nash Finch Company and subsidiaries as of January 1, 1994 and January 2, 1993 and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the years in the three-year period ended January 1, 1994, as contained in the 1993 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned consolidated financial statements, we have also audited the related consolidated financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of Company management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. KPMG Peat Marwick Minneapolis, Minnesota March 1, 1994 14 NASH FINCH COMPANY and SUBSIDIARIES Schedule V Property, Plant and Equipment, and Assets Under Capitalized Leases Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 (In thousands)
Classification - --------------------------------- Balance at Additions Property, plant and equipment beginning Additions due to Retirements Other changes Balance at - --------------------------------- of year at cost acquisitions and sales add (deduct) end of year --------- --------- ------------ --------- ------------- ----------- 52 weeks ended December 28, 1991: Land $ 20,337 2,628 804 22,161 Buildings and improvements 80,278 2,024 2,675 8,511 (a) 88,197 101 (c) (42)(b) Furniture, fixtures and equipment 175,692 17,716 8,157 4,258 (a) 189,551 42 (b) Leasehold improvements 22,509 477 477 2,658 (a) 25,066 (101)(c) Construction in progress 5,725 13,991 415 (15,427)(a) 3,874 --------- ------- ------- -------- ------- $ 304,541 36,836 12,528 -- 328,849 --------- ------- ------- -------- ------- --------- ------- ------- -------- ------- 53 weeks ended January 2, 1993: Land $ 22,161 4,323 2,067 24,417 Buildings and improvements 88,197 6,093 5,517 10,606 (a) 100,772 1,393 (c) Furniture, fixtures and equipment 189,551 14,884 3,316 10,721 3,680 (a) 199,420 (1,290)(c) Leasehold improvements 25,066 568 638 (103)(c) 25,596 703 (a) Construction in progress 3,874 17,123 354 (14,989)(a) 5,654 --------- ------- ------- ------- -------- ------- 328,849 42,991 3,316 19,297 -- 355,859 --------- ------- ------- ------- -------- ------- --------- ------- ------- ------- -------- ------- 52 weeks ended January 1, 1994: Land $ 24,417 673 784 1,283 2,061 (a) 26,652 Buildings and improvements 100,772 2,547 3,090 5,114 784 (c) 105,650 3,571 (a) Furniture, fixtures and equipment 199,420 18,972 4,701 14,242 1,105 (a) 209,172 (784)(c) Leasehold improvements 25,596 635 1,618 2,353 520 (a) 26,016 Construction in progress 5,654 13,555 6,038 (7,257)(a) 5,914 --------- ------- ------- ------- -------- ------- $ 355,859 36,382 10,193 29,030 -- 373,404 --------- ------- ------- ------- -------- ------- --------- ------- ------- ------- -------- ------- Assets under capitalized leases - ------------------------------- 52 weeks ended December 28, 1991: Buildings and improvements $ 5,507 -- -- -- 5,507 --------- ------- ------- -------- ------- --------- ------- ------- -------- ------- 53 weeks ended January 2, 1993: Buildings and improvements $ 5,507 -- 1,748 -- 3,759 --------- ------- ------- -------- ------- --------- ------- ------- -------- ------- 52 weeks ended January 1, 1994: Buildings and improvements $ 3,759 5,451 -- -- 9,210 --------- ------- ------- -------- ------- --------- ------- ------- -------- ------- (a) Construction in progress transferred (to) from other property accounts. (b) Elimination and reclassification entries. (c) Transfers of equipment between classifications.
15 NASH FINCH COMPANY and SUBSIDIARIES Schedule VI Accumulated Depreciation and Amortization of Property, Plant and Equipment, and Assets Under Capitalized Leases Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 (In thousands)
Balance at Charged to Additions beginning costs and due to Retirements Other changes Balance at Description of year expenses acquisitions and sales add (deduct) end of year --------------------------------- ----------- ---------- ------------ ----------- ------------- ----------- Property, plant and equipment ----------------------------- 52 weeks ended December 28, 1991: Buildings and improvements $ 21,490 3,213 622 53 (a) 24,134 Furniture, fixtures and equipment 117,180 20,572 7,389 10 (a) 130,373 Amortization of leasehold 9,769 1,835 273 (63)(a) 11,268 ---------- -------- ------- ----- -------- $ 148,439 25,620 8,284 -- 165,775 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- 53 weeks ended January 2, 1993: Buildings and improvements $ 24,134 3,853 605 61 (a) 27,443 Furniture, fixtures and equipment 130,373 20,779 10,049 141,103 Amortization of leasehold 11,268 1,912 552 (61)(a) 12,567 ---------- -------- ------- ----- -------- $ 165,775 26,544 11,206 -- 181,113 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- 52 weeks ended January 1, 1994: Buildings and improvements $ 27,443 4,829 1,117 2,798 (a) 33,953 Furniture, fixtures and equipment 141,103 20,477 13,320 (2,287)(a) 145,973 Amortization of leasehold 12,567 1,989 1,158 (511)(a) 12,887 ---------- -------- ------- ----- -------- $ 181,113 27,295 15,595 -- 192,813 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- Assets under capitalized leases ------------------------------- 52 weeks ended December 28, 1991: Buildings and improvements $ 4,532 218 -- -- 4,750 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- 53 weeks ended January 2, 1993: Buildings and improvements $ 4,750 225 1,748 -- 3,227 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- 52 weeks ended January 1, 1994: Buildings and improvements $ 3,227 310 -- -- 3,537 ---------- -------- ------- ----- -------- ---------- -------- ------- ----- -------- (a) Transfers of equipment between classifications.
16 NASH FINCH COMPANY and SUBSIDIARIES Schedule VIII Valuation and Qualifying Accounts Fiscal years ended Janaury 1, 1994, January 2, 1993 and December 28, 1991 (In thousands)
Additions --------------------------- Charged Balance at Charged to (credited) Balance beginning costs and Due to to other at end Description of year expenses acquisitions accounts Deductions of year - ----------------------------------------- ---------- ---------- ------------ -------- ---------- ------- 52 weeks ended December 28, 1991: Allowance for doubtful receivables (d) $4,534 1,430 -- 124 (a) 938 (b) 5,150 Provision for losses relating to leases on closed locations 2,526 514 -- 351 (c) 1,877 1,514 ---------- ---------- ------------ -------- ---------- ------- $7,060 1,944 -- 475 2,815 6,664 ---------- ---------- ------------ -------- ---------- ------- ---------- ---------- ------------ -------- ---------- ------- 53 weeks ended January 2, 1993: Allowance for doubtful receivables (d) $5,150 3,668 -- (4,000) (e) 1,316 (b) 3,554 52 (a) Provision for losses relating to leases on closed locations 1,514 316 -- 178 (c) 1,341 667 ---------- ---------- ------------ -------- ---------- ------- $6,664 3,984 -- (3,770) 2,657 4,221 ---------- ---------- ------------ -------- ---------- ------- ---------- ---------- ------------ -------- ---------- ------- 52 weeks ended January 1, 1994: Allowance for doubtful receivables (d) $3,554 10,146 -- (3,123) (e) 2,146 (b) 8,522 91 (a) Provision for losses relating to leases on closed locations 667 583 -- 677 (c) 1,759 168 ---------- ---------- ------------ -------- ---------- ------- $4,221 10,729 -- (2,355) 3,905 8,690 ---------- ---------- ------------ -------- ---------- ------- ---------- ---------- ------------ -------- ---------- ------- (a) Recoveries on accounts previously charged off. (b) Accounts charged off. (c) Change in current portion shown as current liability. (d) Includes current and non-current receivables. (e) Reserve for estimated losses on notes sold reclassified to other current liability, as to which the Company is contingently liable.
17 NASH FINCH COMPANY and SUBSIDIARIES Schedule IX Short-term Borrowings Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 (Dollar amounts in thousands)
Maximum Average Weighted Weighted amount daily amount daily average Balance average oustanding outstanding interest rate Category of aggregate at end of interest during the during the during the short-term borrowings period rate period period period - ------------------------------------------ --------- -------- ---------- ------------ ----------- 52 weeks ended December 28, 1991: Payable to banks for borrowings $ 7,600 5.02 $ 19,000 $ 3,873 6.1 53 weeks ended January 2, 1993: Payable to banks for borrowings $ 47,500 3.7 $ 51,500 $ 27,748 4.1 52 weeks ended January 1, 1994: Payable to banks for borrowings $ 38,300 3.4 $ 56,400 $ 43,234 3.4
18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 30, 1994 NASH-FINCH COMPANY By/s/Harold B. Finch, Jr. ----------------------- Harold B. Finch, Jr. Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on March 30, 1994 by the following persons on behalf of the Registrant and in the capacities indicated. /s/Harold B. Finch, Jr. /s/Alfred N. Flaten, Jr. - ------------------------------------ ------------------------------------ Harold B. Finch, Jr., Chairman of the Alfred N. Flaten, Jr., President, Board,Chief Executive Officer (Principal Chief Operating Officer and Director Executive Officer) and Director /s/Robert F. Nash /S/Lawrence A. Wojtasiak - ---------------------------- ------------------------------------ Robert F. Nash, Vice President and Lawrence A. Wojtasiak, Controller Treasurer (Principal Financial Officer) (Principal Accounting Officer) and Director /s/Carole F. Bitter /s/Richard A. Fisher - ---------------------------- ------------------------------------ Carole F. Bitter, Director Richard A. Fisher, Director /s/Allister P. Graham /s/John H. Grunewald - ---------------------------- ------------------------------------ Allister P. Graham, Director John H. Grunewald, Director /s/Richard G. Lareau /s/Russell N. Mammel - ---------------------------- ------------------------------------ Richard G. Lareau, Director Russell N. Mammel, Director /s/Donald R. Miller /s/Jerome O. Rodysill - ---------------------------- ------------------------------------ Donald R. Miller, Director Jerome O. Rodysill, Director /s/Arthur C. Wangaard, Jr. - ---------------------------- Arthur C. Wangaard, Jr., Director 19 NASH FINCH COMPANY EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K For Fiscal Year Ended January 1, 1994 Item No. Item Method of Filing - ---- ---- ---------------- 3.1 Restated Certificate of Incorporation of Nash Finch.................... Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1985 (File No. 0-785) 3.2 Amendment to Restated Certificate of Incorporation of the Company, effective May 29, 1986............. Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 4, 1986 (File No. 0-785) 3.3 Amendment to Restated Certificate Incorporation of the Company, effective May 15, 1987............. Incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form S-3 (File No. 33-14871) 3.4 Bylaws of the Company.... Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983 (File No. 0-785) 3.5 Amendment to Bylaws of the Company, effective November 12, 1985........ Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1985 (File No. 0-785) 3.6 Amendment to Bylaws of the Company, effective May 13, 1986............. Incorporated by reference to Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the Quarter ended October 4, 1986 (File No. 0-785) 20 Item No. Item Method of Filing - ---- ---- ---------------- 3.7 Amendment to Bylaws of the Company, effective May 12, 1987............. Incorporated by reference to Exhibit 4.9 to the Company's Registration Statement on Form S-3 (File No. 33-14871) 4.1 Specimen Form of the Company's Common Stock Certificate.............. Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1989 (File No. 0-785). 4.2 Amended and Restated Stockholder Rights Agreement, dated January 18, 1990, between the Company and Norwest Bank Minnesota, National Association..... Incorporated by reference to Exhibit 1 to the Company's Amendment to Application or Report on Form 8 dated January 18, 1990 (File No. 0-785) 10.1 Note Agreement, dated August 1, 1986, between the Company and Nationwide Life Insurance Company........ Incorporated by reference to Exhibit 19.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 4, 1986 (File No. 0-785) 10.2 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................. Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 10, 1987 (File No. 0-785) 21 Item No. Item Method of Filing - ---- ---- ---------------- 10.3 Note Agreements, dated September 29, 1989, between the Company and Nationwide Life Insurance Company, and between the Company and West Coast Life Insurance Company........ Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 7, 1989 (File No. 0-785) 10.4 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................ Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 23, 1991 (File No. 0-785) 10.5 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................ Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 27, 1993 (File No. 0-785). 10.6 Nash Finch Profit Sharing Plan--1994 Revision and Nash Finch Profit Sharing Trust Agreement (as restated effective January 1, 1994)......... Filed herewith 10.7 Nash Finch Company Executive Incentive Bonus and Deferred Compensation Plan (as amended and restated effective December 31, 1993).................... Filed herewith 22 Item No. Item Method of Filing - ---- ---- ---------------- 10.8 Excerpts from Minutes of Board of Directors regarding Nash Finch Company Pension Plan, as amended effective January 2, 1966.......... Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1987 (File No. 0-785) 10.9 Nash-Finch Company 1988 Long-Term Stock Incentive Plan, effective May 10, 1988............. Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1988 (File No. 0-785) 10.10 Amendment to 1988 Long- Term Stock Incentive Plan, effective December 22, 1988..................... Incorporated by reference to Exhibit 28.2 to the Company's Registration Statement on Form S-8 (File No. 33-26590) 10.11 Form of Stock Option Agreement under 1988 Long-Term Stock Incentive Plan........... Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (File No. 0-785) 10.12 Form of Restricted Stock Award Agreement under 1988 Long-Term Stock Incentive Plan........... Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (File No. 0-785) 10.13 Letter Agreement, dated June 12, 1979, between the Company and Donald R. Miller................... Incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983 (File No. 0-785) 23 Item No. Item Method of Filing - ---- ---- ---------------- 10.14 Excerpts from Board minutes regarding director compensation............. Filed herewith 10.15 Form of Director Fee Deferral Agreement....... Incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990 (File No. 0-785) 10.16 Form of Letter Agreement Specifying Benefits in the Event of Termination of Employment Following a Change in Control of the Company................... Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1990 (File No. 0-785) 10.17 Nash Finch Company Income Deferral Plan...... Filed herewith 13.1 1993 Annual Report to Stockholders (selected portions of pages 14-27)... Filed herewith 21.1 Subsidiaries of the Registrant................ Filed herewith 23.1 Independent Auditors' Consent................... Filed herewith 24 EX-10.6 2 EXHIBIT 10.6--PROFIT SHARING PLAN NASH-FINCH COMPANY PROFIT SHARING PLAN 1994 REVISION NASH-FINCH COMPANY PROFIT SHARING PLAN 1994 REVISION TABLE OF CONTENTS PAGE ---- ARTICLE I DESCRIPTION AND PURPOSE................................... 1 1.1 Plan Name................................................. 1 1.2 Plan Description.......................................... 1 1.3 Plan Purposes............................................. 1 1.4 Plan Background........................................... 1 ARTICLE II ELIGIBILITY............................................... 2 2.1 Eligibility Requirements.................................. 2 2.2 Termination or Transfer Prior to Entry Date............... 2 2.3 Transfer to or Among Participating Employers.............. 2 2.4 Multiple Employment....................................... 3 2.5 Ceasing to be a Qualified Employee........................ 3 2.6 Condition of Participation................................ 3 2.7 Termination of Participation.............................. 3 ARTICLE III CONTRIBUTIONS............................................. 4 3.1 Pre-Tax Contributions..................................... 4 3.2 Profit Sharing Contributions.............................. 5 3.3 Rollovers and Transfers................................... 7 3.4 Corrective Contributions.................................. 7 ARTICLE IV TRUSTEE'S ACCOUNTS AND VALUATION.......................... 8 4.1 Establishment of Accounts................................. 8 4.2 Valuation and Account Adjustment.......................... 8 4.3 Adjustment Accounting..................................... 8 4.4 Allocations Do Not Create Rights.......................... 8 ARTICLE V PARTICIPANT INVESTMENT DIRECTION.......................... 9 5.1 Establishment of Investment Funds......................... 9 5.2 Investment Directions..................................... 9 5.3 Investment Direction Responsibility Resides With Participants.............................................. 10 5.4 Beneficiaries and Alternate Payees........................ 10 i PAGE ---- ARTICLE VI WITHDRAWALS DURING EMPLOYMENT............................. 11 6.1 Hardship Withdrawals from Pre-Tax Contribution Account.... 11 6.2 Withdrawals from Pre-Tax Contribution Account After Age 59-1/2................................................ 12 6.3 Rules for Withdrawals..................................... 12 6.4 No Withdrawals from Profit Sharing Contribution or Rollover Accounts......................................... 12 ARTICLE VII VESTING................................................... 13 7.1 Full and Immediate Vesting................................ 13 ARTICLE VIII DISTRIBUTIONS AFTER TERMINATION........................... 14 8.1 Form and Time of Distribution............................. 14 8.2 Beneficiary Designation................................... 16 8.3 Assignment, Alienation of Benefits........................ 17 8.4 Payment in Event of Incapacity............................ 17 8.5 Payment Satisfies Claims.................................. 18 8.6 Disposition if Distributee Cannot be Located.............. 18 8.7 Direct Rollovers and Transfers............................ 18 8.8 Suspension of Distributions Following Reemployment........ 18 ARTICLE IX CONTRIBUTION LIMITATIONS.................................. 19 9.1 Pre-Tax Contribution Dollar Limitation.................... 19 9.2 Actual Deferral Percentage Limitations.................... 19 9.3 Earnings on Excess Contributions.......................... 21 9.4 Aggregate Defined Contribution Limitations................ 21 9.5 Aggregate Defined Contribution/Defined Benefit Limitations............................................... 22 9.6 Administrator's Discretion................................ 23 ARTICLE X SERVICE RULES............................................. 24 10.1 Computation Period....................................... 24 10.2 Year of Service.......................................... 24 10.3 Hour of Service.......................................... 24 10.4 One-Year Break in Service................................ 26 10.5 Loss of Service.......................................... 27 10.6 Pre-Acquisition Services................................. 27 ARTICLE XI ADOPTION, AMENDMENT AND TERMINATION...................... 28 11.1 Adoption by Affiliated Organizations..................... 28 11.2 Authority to Amend and Procedure......................... 28 11.3 Authority to Terminate and Procedure..................... 28 ii PAGE ---- 11.4 Vesting Upon Termination, Partial Termination or Discontinuance of Contributions.......................... 29 11.5 Distribution Following Termination, Partial Termination or Discontinuance of Contributions........... 29 ARTICLE XII DEFINITIONS, CONSTRUCTION AND INTERPRETATIONS............ 30 12.1 Account.................................................. 30 12.2 Administrator............................................ 30 12.3 Affiliated Organization.................................. 30 12.4 Beneficiary.............................................. 30 12.5 Board.................................................... 30 12.6 Code..................................................... 30 12.7 Committee................................................ 30 12.8 Company.................................................. 30 12.9 Consent of Spouse........................................ 30 12.10 Effective Date........................................... 31 12.11 Eligible Earnings........................................ 31 12.12 Employee................................................. 32 12.13 Fund..................................................... 32 12.14 Governing Law............................................ 32 12.15 Headings................................................. 32 12.16 Highly Compensated Employee.............................. 32 12.17 Number and Gender........................................ 34 12.18 Participant.............................................. 34 12.19 Participating Employer................................... 34 12.20 Plan..................................................... 34 12.21 Plan Rule................................................ 34 12.22 Plan Year................................................ 34 12.23 Pre-Tax Contribution Account............................. 34 12.24 Pre-Tax Contributions.................................... 34 12.25 Profit Sharing Contribution Account...................... 34 12.26 Profit Sharing Contributions............................. 34 12.27 Qualified Employee....................................... 34 12.28 Rollover Account......................................... 35 12.29 Section 415 Wages......................................... 35 12.30 Termination of Employment................................. 35 12.31 Testing Wages............................................. 36 12.32 Treasury Regulations...................................... 36 12.33 Trust..................................................... 36 12.34 Trustee................................................... 36 12.35 Valuation Date............................................ 36 ARTICLE XIII ADMINISTRATION OF PLAN.................................... 37 13.1 Administrator, Named Fiduciary............................ 37 13.2 Compensation and Expenses................................. 37 iii PAGE ---- 13.3 Adoption of Rules......................................... 38 13.4 Administrator's Discretion................................ 38 13.5 Indemnification........................................... 38 13.6 Benefit Claim Procedure................................... 38 13.7 Correction of Errors...................................... 39 ARTICLE XIV MISCELLANEOUS............................................. 40 14.1 Merger, Consolidation, Transfer of Assets................. 40 14.2 Limited Reversion of Fund................................. 40 14.3 Top-Heavy Provisions...................................... 40 14.4 No Employment Rights Created.............................. 44 iv NASH-FINCH COMPANY PROFIT SHARING PLAN 1994 REVISION ARTICLE I DESCRIPTION AND PURPOSE 1.1 PLAN NAME. The name of the Plan is the "Nash-Finch Company Profit Sharing Plan." 1.2 PLAN DESCRIPTION. The Plan is a profit sharing plan providing for Pre-Tax Contributions pursuant to a cash or deferred arrangement and discretionary Profit Sharing Contributions. The Plan is intended to qualify under Code section 401(a) and to satisfy the requirements of Code section 401(k). Notwithstanding the designation of the Plan as a profit sharing plan, a Participating Employer may make contributions to the Plan even though the Participating Employer has no current or accumulated earnings and profits. 1.3 PLAN PURPOSES. The purposes of the Plan are to promote effort and cooperation on the part of participating Qualified Employees; to provide a measure of economic security to each such Qualified Employee by accumulating contributions for distribution upon retirement, as a supplement to other resources then available; and to permit participating Qualified Employees to share in the profits and growth of their Participating Employer. 1.4 PLAN BACKGROUND. (A) Effective as of January 2, 1966, the Company established the Plan and created the Trust for the benefit of Qualified Employees. Thereafter, the Plan was amended from time to time and restated in its entirety by way of the 1976, 1984 and 1989 Revisions. (B) For purposes of incorporating two separate Declarations of Amendment that were adopted with respect to the 1989 Revision, to bring the Plan into compliance with applicable laws that became effective subsequent to the 1989 Revision and to make other miscellaneous changes to the Plan, the Plan was amended and restated in the manner set forth in this 1994 Revision, effective generally as of January 1, 1994, and in connection therewith, the provisions of the Trust were restated in a separate agreement. 1 ARTICLE II ELIGIBILITY 2.1 ELIGIBILITY REQUIREMENTS. (A) An Employee is eligible to participate in the Plan on the dates provided in clause (1), (2) and (3) for the purposes specified in such clauses, provided, in any case, that the Employee is a Qualified Employee on such date: (1) the day he or she completes an Hour of Service of the type specified in Section 10.3(A)(1) for the purpose of having a rollover or transfer made on his or her behalf pursuant to Section 3.3; (2) the first day of the calendar quarter that falls on or next follows the last day of the Computation Period during which he or she first completes one Year of Service for the purpose of having Pre-Tax Contributions made on his or her behalf pursuant to Section 3.1; and (3) the first day of the calendar quarter that falls on or next follows the last day of the Computation Period during which he or she first completes two Years of Service for the purpose of being eligible to share in the allocation of Profit Sharing Contributions made pursuant to Section 3.2. (B) If an Employee is not a Qualified Employee on the date on which he or she would otherwise be eligible to participate in the Plan for a purpose specified in clause (2) or (3) of Subsection (A), he or she will become eligible to participate in the Plan as of the first day of the calendar quarter that falls on or next follows the date he or she becomes a Qualified Employee if he or she remains a Qualified Employee on that date. (C) Notwithstanding Subsection (A), in conjunction with an acquisition, the Company's Board may specify a special entry date for those Qualified Employees with respect to whom pre-acquisition service is taken into account pursuant to Section 10.6. 2.2 TERMINATION OR TRANSFER PRIOR TO ENTRY DATE. An Employee whose employment is terminated or who is transferred to an employment classification that is excluded from the definition of the term "Qualified Employee" after satisfying the applicable service requirement under Section 2.1(A)(2) or (3) but prior to the date he or she would first become eligible to participate in the Plan for the corresponding purpose specified in Section 2.1(A)(2) or (3) will, subject to Section 10.5, upon subsequent reemployment in, or retransfer to, an employment classification included in the definition of "Qualified Employee," be eligible to commence participation in the Plan for such purpose as of the first day of the calendar quarter that falls on or next follows the day he or she first completes an Hour of Service of the type specified at Section 10.3(A)(1) as a Qualified Employee following the termination or transfer. 2.3 TRANSFER TO OR AMONG PARTICIPATING EMPLOYERS. (A) Notwithstanding Section 2.1(A), an Employee who transfers employment from an Affiliated Organization that is not a Participating Employer to a Participating Employer and who, immediately prior to such transfer, was an active participant in a profit sharing plan qualified under Code section 401(a) maintained by the Affiliated Organization, is eligible to participate in the Plan for all purposes as of the first day of the calendar quarter that falls on or next follows the day he or she first completes an Hour of Service of the type specified in Section 10.3(A)(1) as a Qualified Employee following such transfer. 2 (B) A Participant who transfers from one Participating Employer to another Participating Employer as a Qualified Employee will participate in the Plan for the Plan Year during which the transfer occurs on the basis of his or her separate Eligible Earnings from each Participating Employer. 2.4 MULTIPLE EMPLOYMENT. A Participant who is simultaneously employed as a Qualified Employee with more than one Participating Employer during a Plan Year will participate in the Plan as a Qualified Employee of all such Participating Employers on the basis of his or her separate Eligible Earnings for the Plan Year from each such Participating Employer. 2.5 CEASING TO BE A QUALIFIED EMPLOYEE. No contribution will be made by or on behalf of a Participant after the Participant ceases to be a "Qualified Employee," except for any contribution due on account of the portion of the Plan Year preceding the cessation. Such a Participant will, subject to Section 10.5, be eligible to resume active participation in the Plan as of the first day of the calendar quarter that falls on or next follows the day he or she first completes an Hour of Service of the type specified in Section 10.3(A)(1) after reemployment as a Qualified Employee. 2.6 CONDITION OF PARTICIPATION. Each Qualified Employee, as a condition of participation, is bound by all of the terms and conditions of the Plan and must furnish to the Administrator such pertinent information and execute such instruments as the Administrator may require. 2.7 TERMINATION OF PARTICIPATION. A Participant will cease to be such as of the later of the date on which (a) he or she ceases to be a Qualified Employee, or (b) all benefits, if any, to which he or she is entitled under this Plan have been distributed. 3 ARTICLE III CONTRIBUTIONS 3.1 PRE-TAX CONTRIBUTIONS. (A) Subject to the limitations of Article IX, for each Plan Year the Participating Employer of each Participant who is eligible to participate in the Plan for the purpose of having Pre-Tax Contributions made on his or her behalf pursuant to Article II will make Pre-Tax Contributions to the Trust on behalf of such Participant in the amount by which the Participant's Eligible Earnings have been reduced in accordance with the succeeding provisions of this section. Pre-Tax Contributions will be paid to the Trustee as soon as practicable after the date on which the Participant would have otherwise received the Eligible Earnings with respect to which such contribution is made. (B) Except as provided in Subsection (C), a Participant's Eligible Earnings will be reduced in accordance with the following rules: (1) A Participant may elect to reduce his or her Eligible Earnings by any one percent increment from one percent to 15 percent, and the percentage so elected will automatically apply to the Participant's Eligible Earnings as adjusted from time to time. Plan Rules may, however, specify a lower maximum percentage for Highly Compensated Employees. (2) In conjunction with a Participant's entering or reentering the Plan pursuant to Article II, reduction of the Participant's Eligible Earnings will commence as of the first payroll period that begins at least 30 days (or such shorter period as Plan Rules may allow) after the Administrator receives the Participant's complete and accurate election in form prescribed by Plan Rules. If, however, the election is not received until after the last day of the month during which the Participant enters or reenters the Plan, it will not be effective and commencement of Eligible Earnings reductions will be made in accordance with clause (3). (3) If a Participant does not elect to commence reductions of his or her Eligible Earnings in conjunction with his or her entry or reentry into the Plan in accordance with clause (2), he or she may thereafter elect to have such reductions commence as of the first payroll period that begins on or after the first day of the calendar quarter that follows by at least 30 days (or such shorter period as Plan Rules may allow) the date on which the Administrator receives a complete and accurate election in form prescribed by Plan Rules. (4) No Pre-Tax Contributions will be made on behalf of a Participant with respect to a period during which he or she is not a Qualified Employee. Only Eligible Earnings payable after a Participant's election has been received and become effective will be reduced pursuant to the election. (5) A Participant may change the percentage rate at which his or her Eligible Earnings will be reduced as of the first payroll period that begins on or after the first day of the calendar quarter that follows by at least 30 days (or such shorter period as Plan Rules may allow) the date on which the Administrator receives a complete and accurate notice of such change in form prescribed by Plan Rules. 4 (6) A Participant may suspend Eligible Earnings reductions beginning with the first payroll period that begins at least 30 days (or such shorter period as Plan Rules may allow) after the date on which the Administrator receives a complete and accurate notice of such suspension in form prescribed by Plan Rules. Eligible Earnings reductions for any Participant who makes a hardship withdrawal under Section 6.1 will be automatically suspended for the 12-month period beginning on the date of the withdrawal distribution. (7) A Participant whose Eligible Earnings reductions have ceased by reason of an automatic or voluntary suspension may, after the restoration of eligibility or the end of the suspension period, resume Eligible Earnings reductions by submitting a notice of change in accordance with paragraph (5). (C) In addition to Eligible Earnings reductions on a continuing payroll period basis pursuant to Subsection (B), a Participant may elect, in accordance with, and subject to any limitations specified in, Plan Rules, a percentage reduction with respect to any bonus payments to which a Participant is otherwise entitled. (D) Participants' Eligible Earnings will be reduced in accordance with uniform procedures established by the Administrator. If any election or notice submitted by a Participant to the Administrator is not processed on a timely basis or if, for any reason, a Participant's Eligible Earnings are not reduced in accordance with the Participant's election, no retroactive adjustments of the Participant's Eligible Earnings reductions will be made to take into account the effect of any such delay or failure. A Participant may, however, elect to reduce his or her Eligible Earnings payable during any remaining portion of the Plan Year in which the delay or failure occurred at more than the otherwise applicable percentage to adjust for the effect of such delay or failure so long as the total reductions for the Plan Year do not exceed the applicable maximum percentage. 3.2 PROFIT SHARING CONTRIBUTIONS. (A) Each Participating Employer may, but is not required to, make a Profit Sharing Contribution to the Trust for any Plan Year in such amount, if any, as determined by the Participating Employer's Board. (B) To be eligible to share in a Participating Employer's Profit Sharing Contribution for a particular Plan Year, a Participant must have (1) entered the Plan as a Participant for the purpose of being eligible to share in the allocation of Profit Sharing Contributions for the Plan Year pursuant to Article II, (2) been a Qualified Employee of the Participating Employer during the Plan Year, (3) completed at least 1000 Hours of Service during the Plan Year or, in the case of either (a) a Qualified Employee who, during the Plan Year, first entered the Plan for the purpose of being eligible to share in the allocation of Profit Sharing Contributions, or (b) a former Participant who terminated his or her employment and was rehired as a Qualified Employee during such Plan Year, 5 either completed at least 1000 Hours of Service during such Plan Year or, during the period beginning on the date on which he or she entered or reentered the Plan as a Participant during such Plan Year and ending on the last day of the Plan Year, completed at least the number of Hours of Service equal to the product of 1000 multiplied by a fraction, the numerator of which is the number of full months from such entry or reentry date to the last day of the Plan Year and the denominator of which is 12, and (4) been either actively employed by an Affiliated Organization on the last day of the Plan Year or absent from active employment in connection with (a) a leave authorized by an Affiliated Organization for any cause for the authorized period or, in the absence of an authorized period, for 90 days, plus any extensions granted by the Affiliated Organization, (b) any circumstances (whether or not he or she has terminated employment) so long as the Participant continues to receive his or her regular compensation from an Affiliated Organization for the period extending to or beyond the last day of the Plan Year, (c) service in the armed forces of the United States or other government service in time of war or national emergency, or (d) illness or disability. (C) Subject to the limitations of Article IX, each eligible Participant's allocated share of his or her Participating Employer's Profit Sharing Contribution for a Plan Year will bear the same ratio to the Participating Employer's total Profit Sharing Contribution as such Participant's Eligible Earnings for the Plan Year bear to the aggregate Eligible Earnings of all Participants who share in such Profit Sharing Contribution for the Plan Year. (D) Profit Sharing Contributions, if any, will be paid to the Trustee on such date or dates as the Participating Employer may elect during or following the Plan Year for which they are made; provided, first, that the total amount of any such Profit Sharing Contributions for a particular Plan Year will be paid in full on or before the date required for filing the employer's federal income tax return for its fiscal year ending with or within the Plan Year, or such date as duly extended; and, second, that the Participating Employer will either (1) designate the payment in writing to the Trustee as a payment on account of such fiscal year, or (2) claim such payment as a deduction on its federal income tax return for such fiscal year. (E) Any Profit Sharing Contribution made prior to completion of the allocation of such contribution among Participants eligible to share in the contribution will be carried in a suspense account until the allocation is made, but the allocation, when made, will be made as of the last day of the Plan Year for which such contribution is made. The Trustee will invest the suspense account in accordance with the directions of the Committee, and any earnings or losses will be allocated in the same manner as the contribution. 6 3.3 ROLLOVERS AND TRANSFERS. (A) A Participant may, with the prior consent of the Administrator, contribute to the Trust, within 60 days of receipt, (1) the balance of an individual retirement account to which the only contributions have been one or more "eligible rollover distributions," within the meaning of Code section 402(c)(4), from a plan qualified under Code section 401(a), or (2) an eligible rollover distribution from such a qualified plan. (B) With the prior consent of the Administrator, a Participant's accounts under another plan qualified under Code section 401(a) may be transferred directly to the Trust. Other than in connection with an acquisition, such a transfer will not be permitted if, as a result of the transfer, the Plan would be required to provide any option with respect to the form or time of distribution or any other right, benefit or feature not available under the Plan prior to the transfer. (C) Other than in connection with an acquisition, any contribution or transfer to the Trust pursuant to Subsection (A) or (B) must be made in cash and will be credited to the Participant's Rollover Account. 3.4 CORRECTIVE CONTRIBUTIONS. For any Plan Year a Participating Employer may, but is not required to, contribute to the Profit Sharing Contribution Accounts of Qualified Employees other than Highly Compensated Employees, or any group of such Qualified Employees, such amounts as it deems advisable to assist the Plan in satisfying the requirements of Section 9.2 or other applicable requirements under the Code and Treasury Regulations for such Plan Year. Such contributions will be allocated among such Accounts in proportion to the Qualified Employees' Eligible Earnings, in proportion to the Pre-Tax Contributions made for such Qualified Employees or in equal shares, as the Participating Employer directs at the time such contribution is made. 7 ARTICLE IV TRUSTEE'S ACCOUNTS AND VALUATION 4.1 ESTABLISHMENT OF ACCOUNTS. The following Accounts will be established and maintained for each Participant: (a) Pre-Tax Contribution Account, to which any Pre-Tax Contributions made on the Participant's behalf will be added; (b) Profit Sharing Contribution Account, to which any Profit Sharing Contributions made on the Participant's behalf will be added; and (c) Rollover Account, to which any rollover or trust-to-trust transfer made by or on behalf of the Participant will be added. One or more additional accounts may be established for any Participant or group of similarly situated Participants in connection with a merger of another plan into the Plan, in which case provisions of the Plan applicable to such Accounts will be set forth on an exhibit to the Plan in accordance with Section 14.1(B). 4.2 VALUATION AND ACCOUNT ADJUSTMENT. (A) As of the close of business on each Valuation Date, each Participant's Accounts within each investment fund established pursuant to Section 5.1 will be separately adjusted in a uniform and equitable manner for income, expense, gains and losses of the investment fund since the last prior adjustment. (B) The Committee may from time to time cause Participants' Accounts to be adjusted on any interim Valuation Date where the Committee deems such adjustment to be necessary to prevent inequitable results because of extraordinary increases or decreases in the value of the Fund since the last preceding Valuation Date or other events. 4.3 ADJUSTMENT ACCOUNTING. The adjustments made under Section 4.2 will be set forth in the accounting rendered as of the Valuation Date for which they were made. 4.4 ALLOCATIONS DO NOT CREATE RIGHTS. The fact that allocations are made and credited to the Accounts of a Participant will not vest in the Participant any right, title or interest in or to any portion of the Fund except at the time or times and upon the terms and conditions expressly set forth in the Plan. Notwithstanding any allocation or credit to the Account of any Participant, the issuance of any statement to the Participant or the distribution of all or any portion of a Participant's Account balance, the Administrator may direct the Participant's Account to be adjusted to the extent necessary to correct any error in such Account, whether caused by a misapplication of any provision of the Plan or otherwise, and may recover from the Participant or the Participant's Beneficiary the amount of any excess distribution. Any such adjustment will be made within a reasonable time after the error is discovered. 8 ARTICLE V PARTICIPANT INVESTMENT DIRECTION 5.1 ESTABLISHMENT OF INVESTMENT FUNDS. (A) In order to allow each Participant to determine the manner in which his or her Accounts will be invested, the Trustee will maintain, within the Trust, three or more separate investment funds of such nature and possessing such characteristics as the Committee may specify from time to time. Each Participant's Accounts will be invested in the investment funds in the proportions directed by the Participant in accordance with the procedures set forth in Section 5.2. The Committee may, from time to time, direct the Trustee to establish additional investment funds or terminate any existing investment fund. (B) Notwithstanding any other provision of the Plan to the contrary, the Committee may direct the Trustee to suspend Participant investment activity (including such activity in connection with the withdrawals and distributions) in any or all investment funds, or impose special rules or restrictions of uniform application, for a period determined by the Committee to be necessary in connection with (1) the establishment or termination of any investment fund, (2) the receipt by the Trustee from, or transfer by the Trustee to, another trust of account balances pursuant to Section 3.3 or 8.7 in connection with an acquisition or divestiture or otherwise, (3) a change of Trustee or investment manager, or (4) such other circumstances determined by the Committee as making such suspension or special rules or restrictions necessary or appropriate. 5.2 INVESTMENT DIRECTIONS. (A) Each new Participant will direct the manner in which contributions to his or her Accounts will be invested among the investment funds maintained pursuant to Section 5.1. Investment directions must be made in five percent increments and may be made separately with respect to the Participant's Pre-Tax Contribution Account and with respect to the aggregate of his or her Profit Sharing Contribution and Rollover Accounts. Each direction must be made, in accordance with Plan Rules, in conjunction with the Participant's enrollment in the Plan. To the extent a Participant fails to direct Account investments, the Accounts will be invested in accordance with Plan Rules. (B) A Participant may direct a change in the manner in which his or her Accounts will be invested among the investment funds maintained pursuant to Section 5.1. Such a direction will be subject to the rules set forth in Subsection (A), and will be effective as of the first day of the calendar quarter that begins at least 30 days (or such shorter period as the Plan Rules may allow) after the date on which the Trustee receives direction from the Participant in accordance with Plan Rules. (C) Contributions or transfers made prior to a date on which they may be invested in the investment fund directed by the Participant will be invested in short-term investments until such date, at which time the contributions will be invested in the appropriate investment fund or funds in accordance with the Participants' directions. Any income realized from such short-term 9 investments will be allocated in a uniform and equitable manner among the investment funds in which such contributions are invested. (D) Plan Rules will include procedures that provide Participants with the opportunity to obtain written confirmation of investment directions made pursuant to this section. 5.3 INVESTMENT DIRECTION RESPONSIBILITY RESIDES WITH PARTICIPANTS. Neither the Administrator, the Trustee nor any Affiliated Organization has any authority, discretion, responsibility or liability with respect to a Participant's selection of the investment funds in which his or her Accounts will be invested, the entire authority, discretion and responsibility for, and any results attributable to, the selection being that of the Participant. 5.4 BENEFICIARIES AND ALTERNATE PAYEES. Solely for purposes of this article, the term "Participant" includes the Beneficiary of a deceased Participant and an alternate payee under a qualified domestic relations order within the meaning of Code section 414(p) unless otherwise provided in such order, but only after (1) the Administrator has determined the identity of the Beneficiary and the amount of the Account balance to which he or she is entitled in the case of a Beneficiary of a deceased Participant, or (2) the Administrator has, in accordance with Plan Rules, made a final determination that the order is a qualified domestic relations order and all rights to contest such determination in a court of competent jurisdiction within the time prescribed by Plan Rules have expired or been exhausted in the case of an alternate payee. 10 ARTICLE VI WITHDRAWALS DURING EMPLOYMENT 6.1 HARDSHIP WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT. (A) Subject to the provisions of Section 6.3, a Participant may withdraw from his or her Pre-Tax Contribution Account an amount not in excess of the lesser of (1) the balance of the Account as of the Valuation Date that last precedes the date of distribution by at least 45 days (or such shorter period as Plan Rules may allow) or (2) the balance of the Account on December 31, 1988 increased by the amount of Pre-Tax Contributions added to the Account after December 31, 1988 and reduced by the amount of any withdrawals from the Account after December 31, 1988 on account of hardship. Such withdrawal will be made only if the Administrator determines that the distribution is made on account of an immediate and heavy financial need of the Participant and is necessary to satisfy such financial need. (B) The existence of an immediate and heavy financial need will be made by the Administrator on the basis of all relevant facts and circumstances demonstrating that a need exists to enable the Participant to secure or maintain a livelihood or provide for the needs of his or her spouse or dependent (as described in Code section 152). A distribution will be deemed to be made on account of an immediate and heavy financial need, however, if it is determined by the Administrator to be on account of: (1) expenses for medical care, described in Code section 213(d), incurred or to be incurred by the Participant, the Participant's spouse or the Participant's dependent (as described in Code section 152); (2) costs directly related to the purchase (excluding mortgage payments) of a principal residence of the Participant; (3) payment of tuition and related educational expenses for the next year of post-secondary education for the Participant or his or her spouse, child or other dependent; or (4) payments necessary to prevent the eviction of the Participant from his or her principal residence or foreclosure of the mortgage on the Participant's principal residence. (C) A distribution will be deemed to be necessary to satisfy the immediate and heavy financial need of the Participant only if the Administrator determines that each of the following requirements is satisfied. (1) The distribution is not in excess of the sum of the amount of the immediate and heavy financial need of the Participant plus, if elected by the Participant, the amount necessary to pay any federal, state or local income taxes or penalties reasonably anticipated by the Administrator to result from the distribution. (2) The Participant has received all withdrawals and has taken all nontaxable loans available under all qualified plans maintained by any Affiliated Organization. (3) All Pre-Tax Contributions under this Plan and all elective deferrals and after-tax employee contributions by or on behalf of the Participant under any other qualified or nonqualified plan of deferred compensation (including stock option, stock purchase and 11 similar plans) maintained by any Affiliated Organization are suspended for a period of 12 months following the date of the distribution. (4) For the Participant's taxable year following the taxable year during which he or she received the distribution, the amount of Pre-Tax Contributions under the Plan and elective contributions that may be made on the Participant's behalf pursuant to Code section 402(g) under any other qualified plan maintained by any Affiliated Organization will be reduced by the sum of Pre-Tax Contributions and such other elective contributions made on the Participant's behalf for the taxable year during which he or she received the distribution. (D) The Administrator's determination of the existence of a Participant's financial hardship and the amount that may be withdrawn to satisfy the need created by such hardship will be made in accordance with Treasury Regulations, and will be final and binding on the Participant. Such withdrawal distribution will be made as soon as administratively practicable following the Administrator's determination that a financial hardship exists. The Administrator may require the Participant to make representations and certifications concerning his or her entitlement to a withdrawal pursuant to this section and is entitled to rely on such representations and certifications unless the Administrator has actual knowledge to the contrary. The Administrator will not be obligated to supervise or otherwise verify that amounts withdrawn are applied in the manner specified in the Participant's withdrawal application. 6.2 WITHDRAWALS FROM PRE-TAX CONTRIBUTION ACCOUNT AFTER AGE 59-1/2. Subject to the provisions of Section 6.3, a Participant who has attained age 59-1/2 may withdraw all or any portion of his or her Pre-Tax Contribution Account balance as of the Valuation Date that last precedes the date of distribution by at least 45 days (or such shorter period as Plan Rules may allow). Such withdrawal distribution will be made as soon as administratively practicable following the date of the Administrator's determination that the Participant is entitled to the withdrawal. 6.3 RULES FOR WITHDRAWALS. (A) Any withdrawal from a Participant's Pre-Tax Contribution Account reduces the balance of the Account and the Account will thereafter share in income, expense, gains and losses of the Fund on the basis of the reduced balance. (B) A withdrawal distribution will be made only upon the Participant's application made in accordance with Plan Rules. (C) The Participant's withdrawal application may specify the investment fund or funds from which the withdrawal is to be made and the relative amounts to be withdrawn from such funds, and the Trustee will make the distribution in accordance with such specifications. If the withdrawal application does not otherwise specify, the withdrawal will be made from each investment fund in which the Participant's Pre-Tax Contribution Account is then invested on a pro rata basis. (D) The provisions of Section 8.7(A) will apply to any withdrawal distribution that constitutes an "eligible rollover distribution" within the meaning of Code section 402(c)(4). 6.4 NO WITHDRAWALS FROM PROFIT SHARING CONTRIBUTION OR ROLLOVER ACCOUNTS. Except as provided in Sections 8.1 and 8.8, in no case may a Participant make a withdrawal from his or her Profit Sharing Contribution Account or Rollover Account while employed with an Affiliated Organization. 12 ARTICLE VII VESTING 7.1 FULL AND IMMEDIATE VESTING. Each Participant always has a fully vested, nonforfeitable interest in his or her Accounts. 13 ARTICLE VIII DISTRIBUTIONS AFTER TERMINATION 8.1 FORM AND TIME OF DISTRIBUTION. (A) Following a Participant's termination of employment or earlier attainment of age 70-1/2, the Trustee will distribute to the Participant or, if the Participant has died, to his or her Beneficiary, the balance of the Participant's Accounts. The amount of any distribution made in the form of a lump sum payment will be equal to the aggregate balance of the Participant's Accounts as of the Valuation Date that coincides with or last precedes the distribution date. If a lump sum distribution is made prior to the completion of the valuation as of such Valuation Date, the distribution may be made in two payments, one preceding the completion of the valuation and one following as soon as administratively practicable thereafter, in accordance with Plan Rules. Subject to the remaining subsections of this Section 8.1 and Sections 8.7 and 8.8, distributions will be made in accordance with the following provisions. (1) If the aggregate balance of the Participant's Accounts at the time of the distribution is not more than $3500, distribution to the Participant will be made, in the form of a lump sum cash payment, as soon as administratively practicable following the Participant's termination of employment. This clause will not apply, however, if the Participant's Account balance exceeded $3500 at the time of any previous distribution. (2) If clause (1) does not apply, distribution to the Participant will be made or commence, in the form of a lump sum cash payment or installment cash payments, according to the Participant's election, on or as soon as administratively practicable after a date specified by the Participant. If the Participant terminates employment before attaining age 62, distribution to the Participant must be made or commence not later than the date on which the Participant attains age 65. If the Participant had attained age 62 when he or she terminated employment, distribution to the Participant must be made or commence not later than the date determined under Subsection (C)(1) unless the Participant elects to defer the distribution in the manner described in Subsection (B). (3) If the aggregate balance of a Participant's Accounts at the time of his or her death is not more than $3500, distribution to the Participant's Beneficiary will be made, in the form of a lump sum cash payment, as soon as administratively practicable following the Administrator's receipt of notice of the Participant's death. If the foregoing sentence does not apply, distribution to the Participant's Beneficiary will be made at such time or times and in such manner as the Beneficiary elects in accordance with Subsection (E). (B) Subject to the provisions of the other subsections of this Section 8.1, a Participant described in clause (2) of Subsection (A) who has attained age 62 when he or she terminates employment may elect to defer commencement of his or her distribution under the Plan by providing to the Administrator, by a date determined in accordance with Plan Rules, a written, signed statement describing whether the benefit is to be distributed in the form of a lump sum payment or installment payments and specifying the date on which the payment is to be made or commence; provided, that distribution to the Participant must be made or commence not later than the April 1 of the calendar year following the calendar year during which the Participant attains age 70-1/2. Plan Rules may permit a Participant to modify any election in any manner determined by the Administrator to be consistent with Code section 401(a)(14) and Treasury Regulations thereunder and the other provisions of this Section 8.1. 14 (C) Except as provided in Subsection (B), distribution to the Participant will be made, or in the case of installment payments will commence, not later than the earlier of - (1) The sixtieth day following the close of the Plan Year during which there occurs the later of - (a) the date of his or her termination of employment, (b) his or her sixty-fifth birthday, or (c) the tenth anniversary of the Plan Year in which he or she commenced participation in the Plan; or (2) April 1 of the calendar year following the calendar year during which he or she attains age 70-1/2, except that this clause does not apply to any Participant who attained age 70-1/2 before January 1, 1988 and who is not a "five-percent owner" as defined in Treasury Regulations under Code section 401(a)(9). (D) If a distribution is to be made in installments, such installments will be substantially equal in amount and paid on a quarterly, semi-annual or annual basis, for a period not extending beyond either the Participant's life expectancy or the life expectancy of the Participant and the Participant's Beneficiary; and, if the Participant's Beneficiary is not the Participant's spouse, the period over which such payments are to be made will be determined by reference to the applicable table of joint life expectancies set forth in Treasury Regulation section 1.401(a)(9)-2. Notwithstanding the foregoing, not more than once each Plan Year, a Participant who is receiving installment payments may elect, in accordance with Plan Rules, to either increase the amount of the installment payments or to receive a lump sum payment of all or a portion of the amount by which his or her Account balances as of the Valuation Date immediately preceding the date on which such distribution is made exceeds the aggregate amount of installment payments made to the Participant since Valuation Date. Prior to April 1 of the calendar year following the calendar year during which the Participant attains age 70-1/2, the Participant may elect, in writing to the Administrator, whether the life expectancies for the Participant and the Participant's spouse are to be recalculated on an annual basis for purposes of determining the amount of each installment payment. Any such election will become irrevocable as of the date specified above. If no such election is made, the life expectancies of the Participant and the Participant's spouse will not be recalculated on an annual basis. (E) If a Participant dies before receiving the full amount to which he or she is entitled, the amount remaining will be distributed to the Participant's Beneficiary at such time or times and in such manner as the Beneficiary elects, subject, however to the following rules - (1) If the Participant dies after April 1 of the calendar year following the calendar year during which he or she attains age 70-1/2, the distribution will be made to the Beneficiary at a rate that would result in the benefit being distributed at least as rapidly as if distribution were made at the same rate as was in effect immediately prior to the Participant's death. 15 (2) If the Participant dies before April 1 of the calendar year following the calendar year during which he or she attains age 70-1/2, the distribution will, at the Beneficiary's election, be made either - (a) in its entirety no later than December 31 of the calendar year which contains the fifth anniversary of the date of the Participant's death, or (b) in installments, commencing no later than December 31 of the calendar year immediately following the calendar year in which the Participant died (unless the Beneficiary is the Participant's spouse, in which case payments will begin no later than the later of the date specified above or December 31 of the calendar year in which the Participant would have attained age 70-1/2 had he or she lived), and being paid over a period not exceeding the Beneficiary's remaining life expectancy (as determined on the basis of the Beneficiary's age as of the date on which payments are required to commence under this clause (2) and, if the Beneficiary is the Participant's spouse, as redetermined on an annual basis). A Beneficiary's election with respect to the time and manner in which any amount remaining at the Participant's death will be distributed must be made no later than the earlier of the dates set forth in clause 2(a) and (b) above, and is irrevocable following such date. If the Beneficiary fails to make an election under clause (2), distribution will be made in the manner set forth at clause (2)(a). If the Participant's spouse is the Beneficiary and dies after the Participant's death but before distributions to such spouse have commenced, the foregoing rules will be applied as if the surviving spouse were the Participant, including the substitution of the surviving spouse's date of death for the Participant's date of death; provided that the alternative commencement date in clause (2)(b) relating to the date on which the Participant would have attained age 70-1/2 had he or she lived will not be available. (F) Notwithstanding any other provision of the Plan to the contrary, distributions will be made in accordance with Treasury Regulations issued under Code section 401(a)(9), including Treasury Regulation section 1.401(a)(9)-2, and any provisions of the Plan reflecting Code section 401(a)(9) take precedence over any distribution options that are inconsistent with Code section 401(a)(9). 8.2 BENEFICIARY DESIGNATION. (A) (1) Each Participant may designate, upon forms furnished by the Administrator, one or more persons to be primary Beneficiaries or alternative Beneficiaries for all or a specified fractional part of his or her aggregate Accounts and may change or revoke any such designation from time to time. No such designation, change or revocation will be effective unless executed by the Participant and received by the Administrator during the Participant's lifetime. Except as provided in Subsection (B), no such change or revocation will require the consent of any person. (2) If a Participant (a) fails to designate a Beneficiary, or (b) revokes a Beneficiary designation without naming another Beneficiary, or 16 (c) designates as Beneficiaries one or more persons none of whom survives the Participant, for all or any portion of the Participant's Accounts, such Accounts or portion will be distributed to the first class of the following classes of automatic Beneficiaries that includes a member surviving the Participant: Participant's spouse; Participant's issue, per stirpes and not per capita; Participant's parents; Participant's brothers and sisters; Representative of Participant's estate. (3) When used in this section and, unless the designation otherwise specifies, when used in a Beneficiary designation: the term "per stirpes" means in equal shares among living children and the issue (taken collectively) of each deceased child, with such issue taking by right of representation; "children" means issue of the first generation; and "issue" means all persons who are descended from the person referred to, either by legitimate birth or legal adoption. The automatic Beneficiaries specified above and, unless the designation otherwise specifies, the Beneficiaries designated by the Participant, will become fixed as of the Participant's death so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary, any remaining payments will be made to the representative of such Beneficiary's estate. Any designation of a Beneficiary by name that is accompanied by a description of relationship or only by statement of relationship to the Participant will be effective only to designate the person or persons standing in such relationship to the Participant at the Participant's death. (B) Notwithstanding Subsection (A), no designation of a Beneficiary other than the Participant's spouse will be effective unless such spouse consents to the designation. Any such consent will be effective only with respect to the Beneficiary or class of Beneficiaries so designated and only with respect to the spouse who so consented. 8.3 ASSIGNMENT, ALIENATION OF BENEFITS. (A) Except as required under a qualified domestic relations order, no benefit under the Plan may in any manner be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or charged, and any attempt to do so will be void; and no such benefit will in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit. (B) To the extent provided in a qualified domestic relations order, distribution of benefits assigned to an alternate payee by such order may be distributed to the alternate payee prior to the Participant's earliest retirement age. The terms "qualified domestic relations order," "alternate payee" and "earliest retirement age" have the meanings given in Code section 414(p). 8.4 PAYMENT IN EVENT OF INCAPACITY. If any person entitled to receive any payment under the Plan is physically, mentally, or legally incapable of receiving or acknowledging receipt of the payment, and no legal representative has been appointed for such person, the Administrator in his or her discretion may (but will not be required to) cause any sum otherwise payable to such person to be paid to any one or more as may be chosen by the Administrator from the following: the Beneficiaries, if any, designated by such person, the institution maintaining such person, a custodian 17 for such person under the Uniform Transfers to Minors Act of any state or such person's spouse, children, parents or other relatives by blood or marriage. Any payment so made will be a complete discharge of all liability under the Plan with respect to any such payment. 8.5 PAYMENT SATISFIES CLAIMS. Any payment to or for the benefit of any Participant, legal representative or Beneficiary in accordance with the provisions of the Plan will, to the extent of such payment, be in full satisfaction of all claims against the Trustee, the Administrator and the Participating Employer, any of whom may require the payee to execute a receipted release as a condition precedent to such payment. 8.6 DISPOSITION IF DISTRIBUTEE CANNOT BE LOCATED. If the Administrator is unable to locate a Participant or Beneficiary to whom a distribution is due, the Participant's Accounts will continue to be held in the Fund until such time as the Administrator has located the Participant or Beneficiary or the Participant or Beneficiary makes a proper claim for the benefit, as the case may be; provided, that, any Accounts not claimed within the period prescribed by applicable escheat laws will be paid to such governmental authorities, in such manner, as is specified in such laws. 8.7 DIRECT ROLLOVERS AND TRANSFERS. (A) To the extent a distribution on or after December 31, 1992, is an "eligible rollover distribution," within the meaning of Code section 402(c)(4), the Administrator will, if so instructed by the distributee in accordance with Plan Rules, direct the Trustee to make the distribution to an "eligible retirement plan," within the meaning of Code section 402(c)(8). The foregoing provision will not apply if the aggregate taxable distributions to be made to the distributee during the calendar year are less than $200 or, if less than the entire taxable amount of the distribution is to be distributed to the eligible retirement plan, such amount is less than $500. (B) The Administrator may, in conjunction with the sale by an Affiliated Organization of all or a portion of a business operation of the Affiliated Organization, direct the Trustee to make a trust-to-trust transfer of the balance of any or all of the Accounts of a Participant who is employed with the purchaser of such business operation or an affiliate thereof, to the trustee of a plan sponsored by such purchaser or affiliate, provided (1) such other plan is qualified under Code section 401(a), (2) such other plan satisfies the withdrawal requirements set forth in Code section 401(k) with respect to such transferred Accounts to which such requirements are applicable under the Plan, and (3) such trustee is willing to accept such transfer. 8.8 SUSPENSION OF DISTRIBUTIONS FOLLOWING REEMPLOYMENT. If a Participant who is receiving a distribution of his or her Accounts in connection with his or her termination of employment is reemployed by a Participating Employer as a Qualified Employee, the distribution of the pre-termination Account balances will continue during each month of such reemployment unless he or she has elected, in form prescribed by Plan Rules, to have the distribution cease, in which case the undistributed remainder of his or her Accounts will continue as a part of the Trust for his or her benefit until he or she again becomes entitled to receive a distribution. 18 ARTICLE IX CONTRIBUTION LIMITATIONS 9.1 PRE-TAX CONTRIBUTION DOLLAR LIMITATION. The aggregate amount of Pre-Tax Contributions and other "elective deferrals" (within the meaning of the Code section 402(g)(3)) under any other qualified plan maintained by any Affiliated Organization with respect to a Participant for any taxable year of the Participant may not exceed $7000 (automatically adjusted for increases in the cost of living in accordance with Treasury Regulations). The limitation for any Participant who received a hardship distribution under Section 6.1 will, for the year following the year in which such distribution was made, be reduced as provided in Section 6.1(C)(4). If the foregoing limitation is exceeded for any taxable year of the Participant, the amount of Pre-Tax Contributions in excess of such limitation, increased by Fund earnings or decreased by Fund losses attributable to the excess, will be returned to the Participant. Such distribution may be made at any time after the excess contributions are received, but not later than April 15 of the taxable year following the taxable year to which such limitation relates. The amount returned to a Participant who has made elective deferrals for the taxable year other than pursuant to Section 3.1 will, to the extent of such other elective deferrals, be determined in accordance with written allocation instructions received by the Administrator from the Participant not later than March 1 of the taxable year following the taxable year with respect to which the Pre-Tax Contributions were made. The amount of Fund earnings or losses attributable to Pre-Tax Contributions returned to a Participant pursuant to this Section will be determined in the manner specified in Section 9.3. 9.2 ACTUAL DEFERRAL PERCENTAGE LIMITATIONS. (A) Notwithstanding Section 3.1, for any Plan Year, Pre-Tax Contributions may be made on behalf of Participants who are Highly Compensated Employees only if the requirements of Code section 401(k)(3), as set forth in Subsection (B), are satisfied. To the extent deemed necessary by the Administrator in order to comply with such requirements, the Administrator may, in accordance with Plan Rules, prospectively decrease the rate at which a Participant's Eligible Earnings will be reduced. (B) (1) The requirements of Code section 401(k)(3) will be satisfied for any Plan Year if, for that Plan Year, the Plan satisfies the requirements of Code section 410(b)(1) with respect to "eligible Employees" and either of the following tests. (a) The "actual deferral percentage" for eligible Employees who are Highly Compensated Employees is not more than the product of the actual deferral percentage for all other eligible Employees, multiplied by one and one-quarter. (b) The excess of the actual deferral percentage for eligible Employees who are Highly Compensated Employees over the actual deferral percentage for all other eligible Employees is not more than two percentage points and the actual deferral percentage for such Highly Compensated Employees is not more than the product of the actual deferral percentage of all other eligible Employees, multiplied by two. (2) For purposes of this subsection, (a) "eligible Employee" means a Qualified Employee who is eligible to have Pre-Tax Contributions made on his or her behalf for the Plan Year in question or would be so eligible but for a suspension imposed under Section 6.1(C)(3); and 19 (b) "actual deferral percentage," with respect to either of the two groups of eligible Employees referenced above, is the average of the ratios, calculated separately for each eligible Employee in the particular group of the amount of Pre-Tax Contributions made on the eligible Employee's behalf for that Plan Year, to the Employee's Testing Wages for either the Plan Year or the portion of the Plan Year during which he or she was an eligible Employee, as specified in Plan Rules. In computing the actual deferral percentage, the following rules will apply. (i) If aggregation of Testing Wages and Pre-Tax Contributions is required under Section 12.16(C) and 12.31(C), the actual deferral percentage of the Highly Compensated Employee to whom the aggregate amounts are attributed is the actual deferral percentage determined for the group of all eligible family members, treating such group as a single eligible Employee. (ii) If any eligible Employee is required to be aggregated with more than one family group under Section 12.16(C), all the groups with which such Employee is aggregated will be treated as a single family group. (iii) Any Pre-Tax Contributions made on behalf of an eligible Employee who is not a Highly Compensated Employee that are in excess of the limitation of Section 9.1 will be excluded. (iv) Any Pre-Tax Contributions made on behalf of an eligible Employee that are distributed to the eligible Employee pursuant to Section 9.4(C) or 9.5(D) will be excluded. (v) To the extent determined by the Administrator, all or any portion of the Profit Sharing Contribution for the Plan Year on behalf of all, or any similarly situated group of, eligible Employees will be included. (vi) Elective contributions under any other plan that is aggregated with this Plan to satisfy the requirements of Code section 410(b) will be included. (vii) To the extent provided in Treasury Regulations, elective contributions made under any other cash or deferred arrangement of any Affiliated Organization on behalf of any eligible Employee who is a Highly Compensated Employee will be included. (C) If, for any Plan Year, the requirements of Subsection (B) are not satisfied, the Administrator will determine the amount by which Pre-Tax Contributions made on behalf of each Highly Compensated Employee for the Plan Year exceeds the permissible amount as determined under Subsection (B). The determination will be made by successively decreasing the rate of Eligible Earnings reductions for Highly Compensated Employees who, during the Plan Year, had the greatest percentage of Eligible Earnings reductions made on their behalf, to the next lower percentage, then again decreasing the percentage of such Highly Compensated Employees Eligible Earnings reductions, together with the percentage of Eligible Earnings reductions of such Highly Compensated Employees who were already at such lower percentage, to the next lower percentage, 20 and continuing such procedure for as many percentage decreases as the Administrator deems necessary. The Administrator may, in his or her discretion, make such reductions in any amount, in lieu of one percent increments. (D) At such time as the Administrator specifies on or following the last day of the Plan Year for which such determination is made, but in no case later than the last day of the following Plan Year, the excess will be corrected by taking either or both of the following steps. (1) The amount of excess Pre-Tax Contributions so determined, increased by Fund earnings or decreased by Fund losses attributable to such excess as determined under Section 9.3, will be returned to each such Highly Compensated Employee. The amount to be returned pursuant to the foregoing sentence with respect to any Plan Year will be reduced by the portion of the amount, if any, distributed pursuant to Section 9.1 that is attributable to Pre-Tax Contributions that relate to such Plan Year, determined by assuming that Pre-Tax Contributions in excess of the limitation described in Section 9.1 for a given taxable year are the first contributions made for a Plan Year falling within such taxable year. (2) The Participating Employer will make an additional contribution for the Plan Year pursuant to Section 3.4. (E) Any excess amount determined under Subsection (C) for a Highly Compensated Employee whose actual deferral percentage is determined under item (i) of Subsection (B)(2)(b) will be allocated among all persons whose contributions are aggregated to determine such percentage in proportion to the amount of Pre-Tax Contributions made on behalf of each with respect to the Plan Year. 9.3 EARNINGS ON EXCESS CONTRIBUTIONS. The amount of Fund earnings or losses with respect to the excess amount of contributions returned to a Highly Compensated Employee pursuant to the foregoing provisions of this article is an amount equal to the product of the total earnings or losses for the Participant's Pre-Tax Contribution Account for the Plan Year, multiplied by a fraction, the numerator of which is the excess amount of contributions made on the Participant's behalf to such Account for the Plan Year, and the denominator of which is the closing balance of such Account for the Plan Year, decreased by the amount of earnings credited to that Account, or increased by the amount of losses debited to that Account, for the Plan Year. 9.4 AGGREGATE DEFINED CONTRIBUTION LIMITATIONS. (A) Notwithstanding any contrary provisions of this Plan, there will not be allocated to any Participant's Accounts for a Plan Year any amount that would cause the aggregate "annual additions," with respect to the Participant for the Plan Year to exceed the lesser of: (1) $30,000 (or, if greater, one-fourth of the dollar limitation in effect under Code section 415(b)(1)(A) for the calendar year during which the Plan Year in question begins); and (2) 25 percent of the Participant's Section 415 Wages for the Plan Year. (B) For purposes of Subsection (A), the "annual additions" with respect to a Participant for a Plan Year are the sum of - 21 (1) the aggregate amount of Pre-Tax and Profit Sharing Contributions allocated to the Participant's Accounts under the Plan for the Plan Year (including any Pre-Tax Contributions that are distributed pursuant to Section 9.2, but excluding any Pre-Tax Contributions in excess of the limitation of Section 9.1 that are distributed to the Participant by the April 15 following the Plan Year to which such contributions relate) and employer contributions, employee contributions and forfeitures allocated to the Participant's accounts under any other qualified defined contribution plan maintained by any Affiliated Organization for the Plan Year; plus (2) the amount, if any, attributable to post-retirement medical benefits that is allocated to a separate account for the Participant as a "key employee" (as defined in Section 14.3(C)), to the extent required under Code section 419A(d)(1). (C) (1) If the Administrator, in his or her discretion, determines that the limitation under Subsection (A) would otherwise be exceeded for a Plan Year, to the extent necessary to prevent such excess from occurring, the amount of a Participant's Eligible Earnings reductions and Pre-Tax Contributions will be prospectively reduced. (2) If a further reduction is required, the amount of the Profit Sharing Contribution that would otherwise be allocated to the Participants' Profit Sharing Contribution Account will be reduced to the extent necessary to prevent the limitation under Subsection (A) from being exceeded and such amount will be allocated among other Participants who are Qualified Employees of the Participating Employer of the Participant with respect to whom the reduction is made as an additional Profit Sharing Contribution by the Participating Employer for the Plan Year. (3) If, in spite of such reductions and as a result of reasonable error in estimating the amount of the Participant's Eligible Earnings, Pre-Tax Contributions, other elective deferrals within the meaning of Code section 402(g)(3) or Section 415 Wages for the Plan Year, the limitation would otherwise be exceeded, then, to the extent required to prevent such excess, (a) the amount of Pre-Tax Contributions made for the Participant will be distributed to the Participant, and (b) if a further excess would otherwise exist, the amount of such excess will be held unallocated in a suspense account and will be allocated to all other eligible Participants for the Plan Year and, to the extent necessary, subsequent Plan Years, before Participating Employer contributions are made for such Plan Year or Years, and will operate to reduce the amount of Participating Employer contributions for such Plan Year or Years. 9.5 AGGREGATE DEFINED CONTRIBUTION/DEFINED BENEFIT LIMITATIONS. (A) In no event will the amount of a Participant's annual additions under the Plan exceed an amount that would cause the decimal equivalent of the sum of the "defined benefit fraction" plus the "defined contribution fraction" to exceed one. (B) The "defined benefit fraction" is a fraction, the numerator of which is the Participant's aggregate projected annual benefit under all defined benefit pension plans maintained by any 22 Affiliated Organization (determined as of the end of the Plan Year), and the denominator of which is the lesser of: (1) 125 percent of the maximum dollar benefit limitation in effect under Code section 415(b)(1) for the calendar year during which the Plan Year in question begins; and (2) 140 percent of the average Section 415 Wages of the Participant during the three consecutive Plan Years during which he or she was a Participant in any such defined benefit pension plan that produce the highest average. (C) The "defined contribution fraction" is a fraction, the numerator of which is the sum of the annual additions to the Participant's accounts for the Plan Year under this Plan and any other defined contribution plans maintained by any Affiliated Organization, determined in the manner described in Section 9.4, and the denominator of which is the aggregate of the lesser of: (1) 125 percent of the maximum annual addition dollar limit in effect for the Plan Year under such defined contributions plans; and (2) 140 percent of 25 percent of the Participant's Section 415 Wages for the Plan Year, applied for all years during which the Participant was employed with an Affiliated Organization, without regard to whether there was a defined contribution plan in effect during all such years. (D) If the annual additions that would otherwise be made with respect to a Participant for a Plan Year would cause the limitation of Subsection (A) to be exceeded, the Participant's benefit under one or more defined benefit pension plans maintained by an Affiliated Organization will, to the extent provided in such plans, be reduced to the extent necessary to prevent such excess from occurring, and, if a sufficient reduction cannot be made under such plans, the provisions of Section 9.4(C) will be applied to reduce the amount of the annual additions to the Participant's Accounts under this Plan for such Plan Year to the extent necessary to prevent such excess. 9.6 ADMINISTRATOR'S DISCRETION. Notwithstanding the foregoing provisions of this article, the Administrator may, in his or her discretion, apply the provisions of Sections 9.1 through 9.5 in any manner permitted by Treasury Regulations that will cause the Plan to satisfy the limitations of the Code incorporated in such sections, and the Administrator's good faith application of Treasury Regulations will be binding on all Participants and Beneficiaries. 23 ARTICLE X SERVICE RULES 10.1 COMPUTATION PERIOD. The "Computation Period" with respect to an Employee is the 12-month period commencing with the date on which he or she first completes an Hour of Service of the type specified at Section 10.3(A)(1) and each subsequent 12-month period beginning on the anniversary of that date. 10.2 YEAR OF SERVICE. The term "Year of Service" with respect to an Employee means a Computation Period during which he or she completes at least 1000 Hours of Service. 10.3 HOUR OF SERVICE. (A) Subject to the remaining subsections of this section, the term "Hour of Service," with respect to an Employee, includes and is limited to - (1) each hour for which the Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Organization; (2) each hour for which the Employee is paid, or entitled to payment, by an Affiliated Organization on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness (including disability), layoff, jury duty, military duty or leave of absence; (3) Each hour for which the Employee is not paid or entitled to payment but which is required by federal law to be credited to the Employee on account of his or her military service or similar duties; and (4) each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Organization; provided, first, that Hours of Service taken into account under clause (1) or (2) will not also be taken into account under this clause (4); and second, that Hours of Service taken into account under this clause (4) that relate to periods specified in clause (2) will be subject to the rules under Subsection (B). (B) The following rules will apply for purposes of determining the Hours of Service completed by an Employee under Subsection (A)(2): (1) No more than 501 hours will be credited to the Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single Computation Period). (2) No more than the number of hours regularly scheduled for the performance of duties for the period during which no duties are performed will be credited to the Employee for such period. (3) The Employee will not be credited with hours for which payments are made or due under a plan maintained solely for the purpose of complying with workers' compensation, unemployment compensation or disability insurance laws, or for which payments are made solely to reimburse medical or medically related expenses. 24 (4) A payment will be deemed to be made by or due from an Affiliated Organization, regardless of whether such payment is made by or due from the Affiliated Organization directly or indirectly through a trust fund or insurer to which the Affiliated Organization contributes or pays premiums. (5) If the payment made or due is calculated on the basis of units of time, the number of Hours of Service to be credited will be the number of regularly scheduled working hours included in the units of time on the basis of which the payment is calculated; provided, that, if such a payment is made to an Employee described in Subsection (D)(1), the number of Hours of Service to be credited will be the number of equivalent hours determined under Subsection (D)(1) that are included in the units of time on the basis of which the payment is calculated. (6) If the payment made or due is not calculated on the basis of units of time, the number of Hours of Service to be credited will be equal to the amount of the payment, divided by the Employee's most recent hourly rate of compensation before the period during which no duties are performed. (C) Hours of Service will be credited - (1) in the case of Hours of Service described in Subsection (A)(1), to the Computation Period in which the duties are performed; (2) in the case of Hours of Service described in Subsection (A)(2), to the Computation Period or Periods in which the period during which no duties are performed occurs; provided, that, if the payment is not calculated on the basis of units of time, the Hours of Service will not be allocated between more than the first two Computation Periods of such period; (3) in the case of Hours of Service described in Subsection (A)(4), to the Computation Period or Periods to which the award or agreement for back pay pertains. (D) For purposes of determining the number of Hours of Service completed by an Employee during a particular period of time - (1) an Employee who is not subject to the overtime provisions of the Fair Labor Standards Act of 1938, as from time to time amended, will be credited with 45 Hours of Service for each seven consecutive days, or fraction thereof, during which he or she completes at least one Hour of Service; (2) each other Employee will be credited with the number of Hours of Service that he or she completes during such period. (E) Notwithstanding the foregoing provisions of this section, a person will be credited with the number of Hours of Service he or she completes, determined in the manner specified in Subsections (A) through (E), 25 (1) while, although not employed with an Affiliated Organization, he or she is considered to be a "leased employee" of an Affiliated Organization or of a "related person" (within the meaning of Code sections 414(n)(2) and 144(a)(3)), respectively, and (2) with any other organization to the extent such Hours of Service are required to be taken into account pursuant to Treasury Regulations under Code section 414(o). 10.4 ONE-YEAR BREAK IN SERVICE. (A) An Employee will incur a "One-Year Break in Service" if the Employee fails to complete more than 500 Hours of Service during a Computation Period; provided, that, for purposes only of determining whether an Employee has incurred such a One-Year Break in Service, in addition to Hours of Service credited under Section 10.3, there will be taken into account the number of Hours of Service that otherwise would have been credited to the Employee, or, if the number of such Hours of Service cannot be determined, eight Hours of Service for each day on which the Employee would have otherwise performed services for an Affiliated Organization, during an authorized leave of absence, while still employed with the Affiliated Organization, due to - (1) the Employee's pregnancy, (2) the birth of the Employee's child, (3) the placement of a child with the Employee in connection with the adoption of such child by the Employee, or (4) the Employee's caring for such child for a period beginning immediately following such birth or placement; provided, first, that the total number of such additional Hours of Service taken into account by reason of any such absence will not exceed 501; second, that, if the Employee would be prevented from incurring a One-Year Break in Service for the Computation Period in which such absence commenced solely because the additional Hours of Service are so credited, such Hours of Service will be credited only to such Computation Period or, if a One-Year Break in Service for such Computation Period would not be so prevented, such additional Hours of Service will be credited to the Computation Period following the Computation Period during which such absence commenced; and third, that, notwithstanding the foregoing, no such additional Hours of Service will be credited unless the Employee furnishes to the Administrator, on a timely basis, such information as the Administrator reasonably requires in order to establish the number of days during which the Employee was absent for one of the reasons set forth at items (1) through (4). (B) Notwithstanding Subsection (A), an Employee will not incur a One-Year Break in Service during any period of "excused absence." An excused absence means any of the following: (1) absence on a leave authorized by an Affiliated Organization for any cause for the authorized period or, in the absence of an authorized period, for 90 days, plus any extensions granted by the Affiliated Organization; (2) absence in any circumstances so long as the Employee continues to receive his or her regular compensation from an Affiliated Organization; 26 (3) absence for service in the armed forces of the United States or other government service in time of war or national emergency; or (4) absence by reason of illness or disability. An excused absence ceases to be such and will be deemed a Break in Service (unless the Employee has completed more than 500 Hours of Service in the applicable Computation Period) as of the first day of such absence if the Employee fails to return to the service of an Affiliated Organization (i) on the first scheduled workday following expiration of any leave of absence referred to in clause (1) hereof, (ii) at such time as the payment of regular compensation is discontinued, as referred to in clause (2) hereof, (iii) within 90 days following his or her discharge or release from active duty or, if the Employee does not return to service with the Affiliated Organization within the said 90-day period by reason of a disability incurred while in the armed forces, if he or she returns to service with the Affiliated Organization upon the termination of such disability, as evidenced by release from confinement in a military or veterans hospital, or (iv) upon recovery from illness or disability (as determined by the Affiliated Organization). 10.5 LOSS OF SERVICE.If an Employee experiences at least a One-Year Break in Service before he or she completes two Years of Service, his or her Years of Service completed before the Break in Service will not be taken into account for purposes of determining the date on which he or she enters the Plan for the purpose of being eligible to share in the allocation of Profit Sharing Contributions. 10.6 PRE-ACQUISITION SERVICES.Hours of Service completed by an Employee with an Affiliated Organization prior to the date on which it became an Affiliated Organization (or, with another entity prior to the acquisition of such entity's business or assets by an Affiliated Organization) will be taken into account under this Plan only if, to the extent and for the purposes, provided in any agreement pursuant to which it became an Affiliated Organization (or such business or assets were acquired) or as provided by resolution of the Company's Board. If such Hours of Service are to be taken into account, unless otherwise specifically provided in such agreement or resolution, such Hours of Service will be determined in accordance with the provisions of this article. If less than the entire period of employment with an Affiliated Organization prior to its becoming such (or with another entity prior to the acquisition of its business or assets) is to be taken into account, the extent to which such period of employment is to be taken into account will be specified in an exhibit to the Plan. 27 ARTICLE XI ADOPTION, AMENDMENT AND TERMINATION 11.1 ADOPTION BY AFFILIATED ORGANIZATIONS. An Affiliated Organization may adopt this Plan and become a Participating Employer with the prior approval of the Committee by furnishing a certified copy of a resolution of its Board adopting the Plan. Any adoption of the Plan by an Affiliated Organization, however, must either be authorized by the Company's Board in advance or be ratified by such Board prior to the end of the fiscal year of such Affiliated Organization in which it adopts the Plan. 11.2 AUTHORITY TO AMEND AND PROCEDURE. (A) The Company reserves the right to amend the Plan at any time, to any extent that it may deem advisable. Each amendment will be stated in a written instrument, executed in the name of the Company by two duly authorized officers. Upon the execution of such instrument, the Plan will be deemed to have been amended as set forth in the instrument, and all interested person will be bound by the amendment; provided, first, that no amendment will increase the duties or liabilities of the Trustee without its written consent; and, second, that no amendment will have any retroactive effect so as to deprive any Participant, or any Beneficiary of a deceased Participant, of any benefit already accrued or vested or of any option with respect to the form of such benefit that is protected by Code section 411(d)(6), except that any amendment that is required to conform the Plan with government regulations so as to qualify the Trust for income tax exemption may be made retroactively to the Effective Date of the Plan or to any later date. (B) If the schedule for determining the extent to which benefits under the Plan are vested is changed, whether by amendment or on account of the Plan's becoming or ceasing to be a top-heavy plan, each Participant with at least three years of service may elect to have his or her vested benefits determined without regard to such change by giving written notice of such election to the Administrator within the period beginning on the date such change was adopted (or the Plan's top heavy status changed) and ending 60 days after the latest of (a) the date such change is adopted, (b) the date such change becomes effective or (c) the date the Participant is issued notice of such change by the Administrator or the Trustee. Except as otherwise provided in an amendment permitted by Treasury Regulations, if an optional form of benefit payment protected under Code section 411(d)(6) is eliminated, each Participant may elect to have that portion of the value of his or her Accounts that was accrued as of the date of such elimination, distributed in the optional form of benefit payment that was eliminated. (C) The provisions of the Plan in effect at the termination of a Participant's employment will, except as specifically provided otherwise by a subsequent amendment, continue to apply to such Participant. 11.3 AUTHORITY TO TERMINATE AND PROCEDURE. The Company expects to continue the Plan indefinitely but reserves the right to terminate the Plan in its entirety at any time. Each Participating Employer expects to continue its participation in the Plan indefinitely but reserves the right to cease its participation in the Plan at any time. The Plan will terminate in its entirety or with respect to a particular Participating Employer as of the date specified by the Company or such Participating Employer, as the case may be, to the Trustee in a written notice executed in the manner of an amendment. 28 11.4 VESTING UPON TERMINATION, PARTIAL TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. Upon termination of the Plan or upon the complete discontinuance of contributions by all Participating Employers, the Accounts of each Participant who is an Employee of a Participating Employer or another affiliated organization will, to the extent funded, vest in full. Upon a partial termination of the Plan, the Accounts of each Participant as to whom the Plan has been partially terminated will, to the extent funded, vest in full. 11.5 DISTRIBUTION FOLLOWING TERMINATION, PARTIAL TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. After termination or partial termination of the Plan or the complete discontinuance of contributions under the Plan, the Trustee will continue to hold and distribute the Fund at the times and in the manner provided by Article VIII as if such event had not occurred or, if the Committee so directs in accordance with Treasury Regulations, will distribute to each Participant the entire balance of his or her Accounts. 29 ARTICLE XII DEFINITIONS, CONSTRUCTION AND INTERPRETATIONS The definitions and the rules of construction and interpretations set forth in this article will be applied in construing this instrument unless the context otherwise indicates. 12.1 ACCOUNT. An "Account" with respect to a Participant is any or all of the accounts maintained on his or her behalf pursuant to Section 5.1, as the context requires. 12.2 ADMINISTRATOR. The "Administrator" of the Plan is the Committee or the person to whom administrative duties are delegated pursuant to Section 13.1(E), as the context requires. 12.3 AFFILIATED ORGANIZATION. An "Affiliated Organization" is the Company and any corporation that is a member of a controlled group of corporations (within the meaning of section 1563(a) of the Code without regard to Code sections 1563(a)(4) and 1563(e)(3)(C)) that includes the Company; any trade or business (whether or not incorporated) that is controlled (within the meaning of Code section 414(c)) by the Company; any member of an "affiliated service group" (within the meaning of Code section 414(m)) of which the Company is a member; or any other organization that, together with the Company, is treated as a single employer pursuant to Code section 414(o) and Treasury Regulations; provided, that, for purposes of applying the limitations set forth at Sections 9.4 and 9.5 of the Plan, Code section 1563(a) will be applied by substituting the phrase "more than 50 percent" for the phrase "at least 80 percent" wherever it appears in such Code section. 12.4 BENEFICIARY. A "Beneficiary" is a person designated under the provisions of Section 8.2 as the distributee of benefits payable after the death of a Participant; provided that such a person will not become a Beneficiary, and will have no interest in or rights under the Plan, until the Participant has died. 12.5 BOARD. The "Board" is the board of directors of the Affiliated Organization in question. When the Plan provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by the board of directors in question. 12.6 CODE. The "Code" is the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code will include a reference to such provision as it may be amended from time to time and to any successor provision. 12.7 COMMITTEE. The "Committee" is the administrative committee described in Section 13.1. 12.8 COMPANY. The "Company" is Nash-Finch Company or any successor thereto. 12.9 CONSENT OF SPOUSE. Whenever the consent of a Participant's spouse is required with respect to any act of the Participant, such consent will be deemed to have been obtained only if: (a) the Participant's spouse executes a written consent to such act, which consent acknowledges the effect of such act and is witnessed by the Administrator or a notary public; or 30 (b) the Administrator determines that no such consent can be obtained because the Participant has no spouse, because the Participant's spouse cannot be located, or because of such other circumstances as may, under Treasury Regulations, justify the lack of such consent. Any such consent by the Participant's spouse or such determination by the Administrator that such spouse's consent is not required will be effective only with respect to the particular spouse of the Participant who so consented or with respect to whom such determination was made. Any such consent by the Participant's spouse to an act of the Participant under the Plan will be irrevocable with respect to that act. 12.10 EFFECTIVE DATE. The "Effective Date" of the Plan is January 2, 1966, the date as of which the Plan was first established. 12.11 ELIGIBLE EARNINGS. (A) The "Eligible Earnings" of a Participant for any Plan Year are, except as provided in the succeeding subsections of this section, the total remuneration paid by a Participating Employer to the Participant during the portion of the Plan Year following his or her entry or reentry into the Plan for the purpose in question and while he or she is a Qualified Employee, increased by the amount of Eligible Earnings reductions experienced by the Participant pursuant to the provisions of this Plan and of any cafeteria plan maintained by the Participating Employer pursuant to Code section 125 for that portion of the Plan Year, to the extent such reductions are not otherwise included. (B) Notwithstanding Subsection (A), in no event will a Participant's Eligible Earnings for any Plan Year be taken into account to the extent they exceed $150,000 (automatically adjusted for increases in the cost of living in accordance with Treasury Regulations). (C) In the case of a Participant who is a Highly Compensated Employee described in clause (1) of Section 12.16(A), or of a Highly Compensated Employee described in clause (2) or (3) of Section 12.16(A) whose Eligible Earnings for the Plan Year is not less than the Eligible Earnings of at least ten other Highly Compensated Employees (determined in each case without regard to Section 12.16(C)), the limitation set forth in Subsection (B) will be applied to the Participant, the Participant's spouse and the Participant's lineal descendants who have not attained age nineteen prior to the end of the Plan Year in question as if they were a single Participant. (D) Notwithstanding the provisions of Subsection (A), a Participant's Eligible Earnings will not include: (1) any remuneration not paid in cash; (2) the value of life insurance coverage included in the Participant's wages under Code section 79; (3) any long-term disability benefit paid by a third party; (4) any car allowance or moving expense or mileage reimbursement; (5) any educational assistance payment; 31 (6) severance pay; (7) payments under any plan of deferred compensation; or (8) any benefit under any qualified or nonqualified stock option or stock purchase plan. 12.12 EMPLOYEE. An "Employee" is an individual who performs services as a common-law employee for an Affiliated Organization. 12.13 FUND. The "Fund" is the total of all of the assets of every kind and nature, both principal and income, held in the Trust at any particular time or, if the context so requires, one or more of the investment funds described in Section 5.1. 12.14 GOVERNING LAW. To the extent that state law is not preempted by provisions of the Employee Retirement Income Security Act of 1974 or any other laws of the United States, this Plan will be administered, construed and enforced according to the internal, substantive laws of the State of Minnesota, without regard to its conflict of laws rules. 12.15 HEADINGS. The headings of articles and sections are included solely for convenience. If there exists any conflict between such headings and the text of the Plan, the text will control. 12.16 HIGHLY COMPENSATED EMPLOYEE. (A) A "Highly Compensated Employee" for any Plan Year is any employee who - (1) at any time during such Plan Year or the preceding Plan Year, owns or owned (or is considered as owning or having owned within the meaning of Code section 318) more than five percent of the outstanding stock of Affiliated Organization or stock possessing more than five percent of the total combined voting power of all outstanding stock of an Affiliated Organization, or (2) during the Plan Year preceding such Plan Year - (a) received compensation in excess of $75,000 (or such dollar amount, adjusted to reflect increases in the cost of living, as in effect under Code section 414(q)(1)(B) for the calendar year during which the Plan Year in question begins), or (b) received compensation in excess of $50,000 (or such dollar amount, adjusted to reflect increases in the cost of living, as in effect under Code section 414(q)(1)(C) for the calendar year during which the Plan Year in question begins) and whose compensation exceeded the compensation of at least 80 percent of all employees, excluding, for purposes of determining the number of employees in such group but not for purposes of determining the specific employees comprising the group, all employees who (i) have completed less than six months of service with the Affiliated Organizations, 32 (ii) normally work fewer than 17-1/2 hours per week for the Affiliated Organizations, (iii) normally work for the Affiliated Organizations during not more than six months during any calendar year, or (iv) have not attained age 21, or (c) was at any time an officer (as defined in Code section 416(i) and Treasury Regulation sections 1.416-1 A-T 13 and A-T 15) of an Affiliated Organization and received compensation in excess of 50 percent of the amount in effect under Code section 415(b)(1)(A) for the calendar year during which the Plan Year in question begins, but in no case will there be taken into account more than the lesser of (i) 50 persons, or (ii) the greater of three persons or ten percent of the aggregate number of all employees excluding, for purposes of determining the number of such officers, any employees that are excluded pursuant to clause (b); or, if no officer of an Affiliated Organization received compensation in excess of such amount, the officer of the Affiliated Organization with the highest compensation for the Plan Year, or (3) during such Plan Year, is described in items (a), (b) or (c) of clause (2) and received compensation in an amount that is not less than the amount of compensation received by at least 100 other employees. (B) For purposes of this section, (1) an "employee" is any individual who is not described in clause (b) of Section 12.27 and who, during the Plan Year for which the determination is being made, performs services for an Affiliated Organization as - (a) a common law employee, (b) an employee pursuant to Code section 401(c)(1), or (c) a leased employee who is treated as an employee of an Affiliated Organization pursuant to Code section 414(n)(2) or 414(o)(2), and (2) "compensation" for any period means an employee's Section 415 wages for the period increased by the amount of any reductions to the employee's compensation for the period in connection with an election by the employee made pursuant to a Plan maintained under Code section 125 or 401(k). (C) For purposes of applying Section 9.2, any employee who is the spouse, a lineal ascendant or descendant or the spouse of a lineal ascendant or descendant of a Highly Compensated Employee described in clause (1) of Subsection (A), or of a Highly Compensated Employee described in clause (2) or (3) of Subsection (A) whose compensation for the Plan Year is not less than the compensation of at least ten other Highly Compensated Employees, will not be considered a separate employee of the Affiliated Organization and any Eligible Earnings with respect to such employee, and any contributions allocated to the employee's Accounts under this 33 Plan if the employee is a Participant, will be deemed to have been paid to, or allocated to the Accounts of such Highly Compensated Employee. 12.17 NUMBER AND GENDER. Wherever appropriate, the singular number may be read as the plural, the plural may be read as the singular, and the masculine gender may be read as the feminine gender. 12.18 PARTICIPANT. A "Participant" is a current or former Qualified Employee who has entered the Plan pursuant to Article II and has not ceased to be a Participant pursuant to Section 2.7. 12.19 PARTICIPATING EMPLOYER. A "Participating Employer" is the Company and any other Affiliated Organization that has adopted the Plan, or all of them collectively, as the context requires, and their respective successors. An Affiliated Organization will cease to be a Participating Employer upon a termination of the Plan as to its Employees or upon its ceasing to be an Affiliated Organization. 12.20 PLAN. The "Plan" is that set forth in this instrument as it may be amended from time to time. 12.21 PLAN RULE. A "Plan Rule" is a rule, policy, practice or procedure adopted by the Administrator. Each Plan Rule will be uniform and nondiscriminatory with respect to similarly situated individuals. 12.22 PLAN YEAR. A "Plan Year" is the 12-month period beginning on January 1 of each calendar year and ending on December 31 of such calendar year. 12.23 PRE-TAX CONTRIBUTION ACCOUNT. The "Pre-Tax Contribution Account" is the account established pursuant to clause (a) of Section 4.1 to evidence Pre-Tax Contributions made on behalf of a Participant. 12.24 PRE-TAX CONTRIBUTIONS. "Pre-Tax Contributions" means contributions made pursuant to Section 3.1. 12.25 PROFIT SHARING CONTRIBUTION ACCOUNT. The "Profit Sharing Contribution Account" is the account established pursuant to clause (b) of Section 4.1 to evidence Profit Sharing Contributions made on behalf of a Participant. 12.26 PROFIT SHARING CONTRIBUTIONS. "Profit Sharing Contributions" means contributions made pursuant to Section 3.2. 12.27 QUALIFIED EMPLOYEE. A "Qualified Employee" is any person who performs services for a Participating Employer as a common-law employee, excluding, however, any such person who is - (a) covered by a collective bargaining agreement, for whom retirement benefits were the subject of good faith bargaining between such person's representative and the Participating Employer, and who is not, as a result of such bargaining, specifically covered by this Plan; or 34 (b) a nonresident alien who receives no earned income (within the meaning of Code section 911(d)(2)) from a Participating Employer that constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)). 12.28 ROLLOVER ACCOUNT. The "Rollover Account" is the account established pursuant to clause (c) of Section 4.1 to evidence the amounts, if any, rolled over from an individual retirement arrangement or another qualified plan, or transferred directly from another qualified plan with respect to a Participant, pursuant to Section 3.3. 12.29 SECTION 415 WAGES. (A) An individual's "Section 415 Wages" for any period is the sum of all remuneration received by such individual during such period from all Affiliated Organizations that constitutes "compensation" within the meaning of Code section 415(c)(3) and Treasury Regulations thereunder. (B) The Administrator may, in his or her discretion, for any Plan Year, determine the items of remuneration that, in accordance with Treasury Regulations, will be included in Section 415 Wages for such Plan Year; provided that for each purpose under this Plan, the Administrator's determination will be uniform throughout any Plan Year. (C) Section 415 Wages will not include the amount by which an individual's remuneration is reduced in connection with an election by the individual made pursuant to a plan maintained under Code section 125 or 401(k). 12.30 TERMINATION OF EMPLOYMENT. For purposes of determining entitlement to a distribution under this Plan, a Participant will be deemed to have terminated employment only if he or she has completely severed his or her employment relationship with all Participating Employers and other Affiliated Organizations or if the Affiliated Organization with which he or she is employed ceases to be an Affiliated Organization. Neither transfer of employment among Participating Employers and other Affiliated Organizations nor absence from active service by reason of disability leave, other than in connection with a permanent total disability, or any other leave of absence will constitute a termination of employment. Notwithstanding the preceding sentence, a Participant who, in conjunction with the disposition of all or any portion of a business operation of the Participating Employer or an Affiliated Organization which is not a disposition of a subsidiary or substantially all of the assets used in a trade or business of the Participating Employer or Affiliated Organization within the meaning of Code section 401(k)(10)(A) with respect to which the requirements of Code section 401(k)(10)(B) and (C) are satisfied, transfers employment to the acquiror of such business operation or to any affiliate of such acquiror will not be considered to have terminated employment. If a Participant is deemed to have continued employment by reason of the preceding sentence, such sentence will continue to apply to such Participant in the event of any subsequent transfer of employment in conjunction with the disposition of all or any portion of a business operation of the initial acquiror or any subsequent acquirors that is not a disposition of a subsidiary of such acquiror or of substantially all of the assets used in a trade or business of such acquiror within the meaning of Code section 401(k)(10)(A) with respect to which the requirements of Code section 401(k)(10)(B) and (C) are satisfied. Except in conjunction with such a disposition of a subsidiary or substantially all of the assets used in a trade or business of the seller that satisfies the requirements of Code section 401(k)(10)(B) and (C), such a Participant will be considered to have terminated employment only when he or she has severed the employment relationship with all such acquirors and their affiliates. 35 12.31 TESTING WAGES. (A) An individual's "Testing Wages" for any period is the sum of all of his or her remuneration from all Affiliated Organizations that is reportable in box 1 (wages, tips, other compensation) of Internal Revenue Service Form W-2, increased by the amount by which the individual's remuneration is reduced in connection with an election by the individual made pursuant to a Plan maintained under Code section 125 or 401(k). (B) In no event will an individual's Testing Wages for any Plan Year be taken into account to the extent they exceed $150,000 (automatically adjusted for increases in the cost of living in accordance with Treasury Regulations). (C) In the case of a Participant who is a Highly Compensated Employee described in clause (1) of Section 12.16(A), or a Highly Compensated Employee described in clause (2) or (3) of Section 12.16(A) whose Testing Wages for a Plan Year are not less than the Testing Wages of at least ten other Highly Compensated Employees (determined in each case without regard to Section 12.16(C) and this subsection), the limitation set forth in Subsection (B) will be applied to the Participant, the Participant's spouse and the Participant's lineal descendants who have not attained age 19 before the last day of the Plan Year in question as if they were a single Participant. (D) The Administrator may, in his or her discretion, for any Plan Year, adopt any alternative definition of Testing Wages that complies with Code section 414(s) and Treasury Regulations thereunder; provided, that for each purpose under this Plan, the definition so adopted will be uniform throughout any Plan Year. 12.32 TREASURY REGULATIONS. "Treasury Regulations" mean regulations, rulings, notices and other promulgations issued under the authority of the Secretary of the Treasury that apply to, or may be relied upon in the administration of, this Plan. 12.33 TRUST. The "Trust" is that created by the Company, as grantor, for purposes of implementing benefits under the Plan, and may, as from time to time amended, be referred to as the "Nash-Finch Company Profit Sharing Trust." 12.34 TRUSTEE. The "Trustee" is the corporation and/or individual or individuals who from time to time is or are the duly appointed and acting trustee or trustees of the Trust. 12.35 VALUATION DATE. A "Valuation Date" is the last day of each calendar quarter and such interim dates as the Administrator may from time to time specify pursuant to Section 4.2(B). 36 ARTICLE XIII ADMINISTRATION OF PLAN 13.1 ADMINISTRATOR, NAMED FIDUCIARY. (A) The general administration of the Plan and the duty to carry out its provisions is vested in the Company, which is the "named fiduciary" of the Plan for purposes of the Employee Retirement Income Security Act of 1974, as amended. To carry out such duties, the Company's Board will appoint a Committee of three members who will serve at the pleasure of the Board. Any Committee member may be dismissed at any time, with or without cause, on ten days' notice from the Company's Board. Any Committee member may resign by delivering his or her written resignation to the Company's Board. Vacancies arising by the death, resignation or removal of a Committee member will be filled by the Company's Board. (B) The Committee will elect one of its number to serve as Chair. The Chair will preside at all meetings of the Committee or will delegate such responsibility to another Committee member. The Committee will elect one person to serve as Secretary to the Committee. The Secretary may, but need not, be a member of the Committee. All third parties may rely on any communication signed by the Secretary, acting as such, as an official communication from the Committee. (C) Any and all acts of the Committee will be by majority rule; provided, first, that if at any time, there are less than three members of the Committee in office, pending the appointment of a successor to fill an existing vacancy, the remaining members have the authority to act; and, second, that if the Board fails to fill a vacancy, and in any event, until the Board fills the vacancy, the remaining members of the Committee may appoint an interim Committee member to fill any vacancy occurring on the Committee. The Committee may act by vote taken in a meeting, or by action taken in writing without the formality of convening a meeting. The Secretary will keep written minutes of each meeting, and of all actions taken without a meeting, including the vote of each Committee member as to all matters considered. (D) The Committee may delegate to each or any one of its members or to its Secretary authority to sign any documents on its behalf, or to perform ministerial acts, but no member to whom such authority is delegated may perform any act involving the exercise of any discretion other than pursuant to a written delegation pursuant to Subsection (E). (E) The Committee may delegate to any person, whether or not such person is a Committee member, any fiduciary duty under the Plan. Each such delegation must be in writing and must be furnished to the person to whom the duty is delegated. Upon such person's filing an acknowledgement and acceptance of such delegation, that person will become a fiduciary of the Plan and Administrator with respect to that duty and, to the extent allowed under applicable law, the Committee will be relieved of fiduciary responsibility with respect to that duty. Such person's fiduciary responsibility with respect to that duty will terminate upon revocation of such delegation by the Committee or upon revocation of such acceptance by such person. Any such revocation must be in writing, and will be effective upon delivery thereof to the person to whom the duty was delegated or to a member of the Committee, as the case may be. (F) The Committee will render an annual report to the Company's Board. All actions taken by the Committee will be deemed to be those of the Company acting as Administrator. 13.2 COMPENSATION AND EXPENSES. An employee of an Affiliated Organization performing administrative duties in connection with the Plan will receive no compensation from the Fund for 37 such services, but will be entitled to reimbursement from the Fund for all sums reasonably and necessarily expended in the performance of such duties. The Administrator may retain such independent accounting, legal, clerical and other services as may reasonably be required in the administration of the Plan and may pay reasonable compensation from the Fund for such services. Any such reimbursement or compensation and all other costs of administering the Plan will, to the extent not paid by the Participating Employers, be paid by the Trustee from the Fund upon statements issued by the Administrator. 13.3 ADOPTION OF RULES. The Administrator has the discretionary power to make and enforce such Plan Rules the Administrator deems to be required or advisable for the effective administration of the Plan. 13.4 ADMINISTRATOR'S DISCRETION. The Administrator has the discretionary power and authority to make all determinations necessary for administration of the Plan, except those determinations that the Plan requires others to make, and to construe, interpret, apply and enforce the provisions of the Plan and Plan Rules, including the power to remedy ambiguities, inconsistencies, omissions and erroneous account balances. In the exercise of discretionary powers, the Administrator will treat all similarly situated Participants and Beneficiaries uniformly. 13.5 INDEMNIFICATION. The Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee of any Affiliated Organization against any and all liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services in connection with the Plan, but only if such person did not act dishonestly or in bad faith or in willful violation of the law or regulations under which such liability, loss, cost or expense arises. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action for which a person may be entitled to indemnification under this provision. 13.6 BENEFIT CLAIM PROCEDURE. If a request for a benefit by a Participant or Beneficiary of a deceased Participant is denied in whole or in part, he or she may within 30 days after denial file with the Administrator a written claim objecting to the denial. Not later than 90 days after receipt of such claim, the Administrator will render a written decision on the claim to the claimant. If the claim is denied in whole or in part, such decision will include: the reasons for the denial; a reference to the Plan provision that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the Plan's claim procedure. Not later than 60 days after receiving the Administrator's written decision, the claimant may file with the Administrator a written request for review of the Administrator's decision, and the claimant or the representative may thereafter review Plan documents that relate to the claim and submit written comments to the Administrator. Not later than 60 days after the Administrator's receipt of the request for review, the Administrator will render a written decision on the claim, which decision will include the specific reasons for the decision, including references to specific Plan provisions where appropriate. The 90- and 60-day periods during which the Administrator must respond to the claimant may be extended by up to an additional 90 or 60 days, respectively, if circumstances beyond the Administrator's control so require and if notice of such extension is given to the claimant. 38 13.7 CORRECTION OF ERRORS. If the Committee determines that, by reason of administrative error or other cause attributable to a Participating Employer, the Account of any Participant has incurred a loss, the Committee may enter into an agreement with such Participating Employer under which the Account is fully restored and may, upon such restoration, release the Participating Employer from further responsibility. 39 ARTICLE XIV MISCELLANEOUS 14.1 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. (A) If this Plan is merged or consolidated with, or its assets or liabilities are transferred to, any other plan, each Participant will be entitled to receive a benefit immediately after such merger, consolidation or transfer (if such other plan were then terminated) that is equal to or greater than the benefit he or she would have been entitled to receive immediately before such merger, consolidation or transfer (if this Plan had then terminated). (B) If any other plan is merged into this Plan, any provisions unique to the Accounts resulting from such merger will be set forth on an exhibit to the Plan. 14.2 LIMITED REVERSION OF FUND. (A) Except as provided in Subsection (B), no corpus or income of the Trust will at any time revert to Participating Employer or be used other than for the exclusive benefit of Eligible Employees, Participants and Beneficiaries by paying benefits and, if applicable, administrative expenses of the Plan. (B) Notwithstanding any contrary provision in the Plan, (1) All contributions made by a Participating Employer to the Trustee prior to the initial determination of the Internal Revenue Service as to qualification of the Plan under section 401(a) of the Code and the tax exempt status of the Trust under Code section 501(a) will be repaid by the Trustee to such Participating Employer, upon the Participating Employer's written request, if the Internal Revenue Service rules that the Plan, as adopted by that Participating Employer, is not qualified or the Trust is not tax exempt; provided, that the Participating Employer requests such determination within a reasonable time after adoption of the Plan, and the repayment by the Trustee to such Participating Employer is made within one year after the date of denial of qualification of the Plan; and (2) To the extent a contribution is made by a Participating Employer by a mistake of fact or a deduction is disallowed a Participating Employer under Code section 404, the Trustee will repay the contribution to such Participating Employer upon the Participating Employer's written request; provided, that such repayment is made within one year after the mistaken payment is made or the deduction is disallowed, as the case may be. The amount returned to the Participating Employer will not include any investment gains or earnings but will be reduced by any investment losses. Each contribution to the Plan by a Participating Employer is expressly conditioned on such contribution's being fully deductible by the Participating Employer under Code section 404. 14.3 TOP-HEAVY PROVISIONS. (A) The following provisions will apply to and control the operation and administration of the Plan for those Plan Years during which the Plan is a top-heavy plan. (1) Notwithstanding the provisions of Sections 3.1 and 3.2, the amount of contributions (excluding Pre-Tax Contributions) made and allocated for such Plan Year on behalf of each Participant who is not a key employee and who is employed with an Affiliated Organization on the last day of the Plan Year (whether or not such Participant completed at least 1000 Hours of Service during the Plan Year), expressed as a percentage of the Participant's Testing Wages for the Plan Year, will be at least equal to the lesser of 40 (a) three percent, or (b) the largest percentage of such Testing Wages at which contributions (including Pre-Tax Contributions) are made and allocated on behalf of any key employee for such Plan Year. (2) If, in addition to this Plan, an Affiliated Organization maintains another qualified defined contribution plan or qualified defined benefit plan during a Plan Year, the provisions of clause (1) will be applied for such Plan Year - (a) by taking into account employer contributions (other than elective contributions for a non-key employee) on behalf of the Participant under all such defined contribution plans; (b) without regard to any Participant who is not a key employee and whose accrued benefit, expressed as a single life annuity, under a defined benefit pension plan maintained by the Affiliated Organization for such Plan Year is not less than the product of - (i) the Participant's average Testing Wages for the period of consecutive years not exceeding the period of consecutive years (not exceeding five) when the Participant had the highest aggregate Testing Wages, disregarding years in which the Participant completed less than 1000 Hours of Service, multiplied by (ii) the lesser of (A) two percent per year of service, disregarding years of service beginning after the close of the last Plan Year in which such defined benefit plan was a top heavy plan, or (B) 20 percent. (3) Each Participant's vested interest in his or her Profit Sharing Contribution Account will be the vested interest otherwise determined under the Plan or determined in accordance with the following schedule, whichever provides the greater vested interest for the Participant:
YEARS OF VESTING SERVICE EXTENT OF VESTED INTEREST ------------------------ ------------------------- Less than Two Years 0% Two Years 20% Three Years 40% Four Years 60% Five Years 80% Six or more Years 100%
If the Plan ceases to be a top-heavy plan, the portion of a Participant's Profit Sharing Contribution Account that has vested pursuant to the foregoing schedule will remain nonforfeitable, notwithstanding the subsequent application of the otherwise applicable vesting schedule to amounts subsequently allocated to the Profit Sharing Contribution Account. 41 (B) For purposes of Subsection (A), (1) (a) The Plan will be a "top-heavy plan" for a particular Plan Year if, as of the last day of the preceding Plan Year, the aggregate of the Account balances of key employees is greater than 60 percent of the aggregate of the Account balances of all Participants. (b) For purposes of calculating the aggregate Account balances for both key employees and employees who are not key employees: (i) Any distributions made within the five-year period preceding the Plan Year for which the determination is being made, other than a distribution transferred or rolled over to a plan maintained by an Affiliated Organization, will be included; (ii) Amounts transferred or rolled over from a plan not maintained by an Affiliated Organization at the initiation of the Participant will be excluded; (iii) The Account balances of any key employee and any employee who is not a key employee who has not performed an Hour of Service of the type specified at Section 10.3(A)(1) at any time during the five-year period ending on the date as of which the determination is being made will be excluded; and (iv) The terms "key employee" and "employee" include the Beneficiaries of such persons who have died. (2) (a) Notwithstanding the provisions of clause (1), this Plan will not be a top-heavy plan if it is part of either a "required aggregation group" or a "permissive aggregation group" and such aggregation group is not top-heavy. An aggregation group will be top-heavy if the sum of the present value of accrued benefits and account balances of key employees is more than 60 percent of the sum of the present value of accrued benefits and account balances for all Participants, such accrued benefits and account balances being calculated in each case in the same manner as set forth in clause (1). (b) Each plan in a required aggregation group will be top-heavy if the group is top-heavy. No plan in a required aggregation group will be top-heavy if the group is not top-heavy. (c) If a permissive aggregation group is top-heavy, only those plans that are part of an underlying top-heavy, required aggregation group will be top-heavy. No plan in a permissive aggregation group will be top-heavy if the group is not top-heavy. (3) The "required aggregation group" consists of (i) each plan of an Affiliated Organization in which a key employee participates, and (ii) each other plan of an Affiliated 42 Organization that enables a plan in which a key employee participates to meet the nondiscrimination requirements of Code sections 401(a)(4) and 410. (4) A "permissive aggregation group" consists of those plans that are required to be aggregated and one or more plans (providing comparable benefits or contributions) that are not required to be aggregated, which, when taken together, satisfy the requirements of Code sections 401(a)(4) and 410. (5) For purposes of applying clauses (2), (3) and (4) of this Subsection (B), any qualified defined contribution plan maintained by a Participating Employer or another Affiliated Organization at any time within the five-year period preceding the Plan Year for which the determination being made which, as of the date of such determination, has been formally terminated, has ceased crediting service for benefit accruals and vesting and has been or is distributing all plan assets to participants or their beneficiaries, will be taken into account to the extent required or permitted under such clauses and under Code section 416. (C) A "key employee" is any person who is or was employed with an Affiliated Organization and who, at any time during the Plan Year in question or any of the preceding four Plan Years is or was: (1) An officer of the Affiliated Organization (an administrative executive in regular and continued service with the Affiliated Organization) whose compensation for such Plan Year exceeds 50 percent of the amount in effect under Code section 415(b)(1)(A) for such Plan Year, but in no case will there be taken into account more than the lesser of (a) 50 persons, or (b) the greater of (i) three persons or (ii) ten percent of the number of the Affiliated Organization's employees, excluding for purposes of determining the number of such officers, any employees that are excluded pursuant to Section 12.16(A)(2)(b); (2) The owner of an interest in the Affiliated Organization, including business entities that are required to be aggregated under Code section 414(b), (c) or (m), that is not less than the interest owned by at least ten other persons employed with the Affiliated Organization; provided, that, such owner will not be a key employee solely by reason of such ownership for a Plan Year if he or she does not own more than one-half of one percent of the value of the outstanding interests of the Affiliated Organization or if the amount of his or her compensation for such Plan Year is less than the amount in effect under Code section 415(c)(1)(A) for such Plan Year; (3) The owner of more than five percent of the Affiliated Organization's outstanding stock or more than five percent of the total combined voting power of the Affiliated Organization's stock; or (4) The owner of more than one percent of the Affiliated Organization's outstanding stock or more than one percent of the total combined voting power of the Affiliated Organization's stock, whose compensation for such Plan Year exceeds $150,000. For purposes of this Subsection (C), the term "compensation" has the same meaning as in Section 12.16(B)(2) and ownership of the Affiliated Organization's stock will be determined in accordance with Code section 318; provided, that subparagraph 318(a)(2)(C) will be applied by substituting the phrase "5 percent" for the phrase "50 percent" wherever it appears in such Code section. 43 (D) If an Affiliated Organization maintains a qualified defined contribution plan and a qualified defined benefit plan, the limitation on combined contributions and accrued benefits will be adjusted by substituting "100 percent" for "125 percent" in the definitions of the defined benefit fraction and the defined contribution fraction in Section 9.5; provided, first, that this Subsection (D) will be applied prospectively only to prohibit additional contributions allocated, and forfeitures reallocated, to and defined benefit accruals for, a Participant and will not reduce any allocations or reallocations made to, or benefits accrued for, such Participant prior to the Plan Year for which it first becomes effective; and, second, that if the Plan would not be a top heavy plan if "90 percent" were substituted for "60 percent" in clause (1)(a) of Subsection (B), this Subsection (D) will not apply if - (1) the aggregate employer contribution (other than elective contributions) under all such qualified defined contribution plans on behalf of each Participant who is not a key employee and who is employed with an Affiliated Organization on the last day of the Plan Year is not less than seven and one-half percent of his or her Testing Wages for the Plan Year, or (2) the accrued benefit for each Participant under the qualified defined benefit pension plan is not less than the benefit described in Subsection (A)(2)(b), applied by substituting "three percent" for "two percent" in item (A) of clause (ii) and "30 percent" for "20 percent" in item (B) of clause (ii). 14.4 NO EMPLOYMENT RIGHTS CREATED. The establishment and maintenance of the Plan neither give any Employee a right to continuing employment nor limit the right of an Affiliated Organization to discharge or otherwise deal with the Employee without regard to the effect such action might have on his or her initial or continued participation in the Plan. 44 NASH-FINCH COMPANY PROFIT SHARING PLAN EXHIBIT A SPECIAL PROVISIONS APPLICABLE TO FORMER PARTICIPANTS IN THE THOMAS & HOWARD COMPANY, INCORPORATED AND AFFILIATED EMPLOYERS PROFIT-SHARING PLAN AND TRUST Effective as of January 1, 1987, the Thomas & Howard Company, Incorporated and Affiliated Employers Profit-Sharing Plan and Trust, as separately adopted and applied to Thomas & Howard Company of Hickory, Inc., T & H Service Merchandisers, Inc., Thomas & Howard Company of Rocky Mount, Inc. and Virginia Foods of Bluefield, Inc. ("Thomas & Howard Plan"), was amended by way of adoption of the Plan. For purposes of applying the provisions of the Plan to the participation of participants in the Thomas & Howard Plan prior to January 1987 ("Thomas & Howard Participants") from and after January 1987, and to the assets and liabilities attributable to contributions made by and on behalf of Thomas & Howard Participants, the terms of this Exhibit A control to the extent such terms are inconsistent with the remaining provisions of the Plan. (1) A separate account will be maintained for each Thomas & Howard Participant with respect to assets and liabilities of the Trust Fund attributable to contributions made on his or her behalf under the Thomas & Howard Plan for Plan Years beginning prior to January 1, 1987. (2) A Thomas & Howard Participant will acquire a vested, nonforfeitable interest in his or her separate account established pursuant to paragraph (1) above, in accordance with the following rules. (a) Such a Participant will acquire a fully vested interest in such separate account upon attaining age 65 or upon his or her death or becoming totally and permanently disabled (unable to continue his or her usual and customary employment with the Affiliated Organizations, as determined by a physician selected by the Administrator) prior to his or her termination of employment. (b) (i) Upon such a Participant's termination of employment in circumstances other than those described in clause (a) above, the Participant will acquire a vested interest in such separate account to the extent set forth in the following schedule:
YEARS OF SERVICE EXTENT OF VESTED INTEREST ---------------- ------------------------- Less than 3 0% 3 20% 4 40% 5 60% 6 80% 7 or more 100%
(ii) For purpose of applying, the foregoing schedule, the number of such Participant's Years of Service is the sum of: 45 (A) The number of years of service that he or she had completed under the Thomas & Howard Plan as of the last day of the Plan Year ending prior to December 31, 1986; plus (B) One year, if he or she completes at least 1000 Hours of Service during the 12-month period that begins on the first day of the most recent Plan Year that commences prior to January 1987; plus (C) The number of Plan Years, commencing with the Plan Year that begins on January 1, 1987, during each of which he or she completes at least 1000 Hours of Service. (iii) Following a Participant's termination of employment, prior to its forfeiture and reallocation in accordance with the next sentence, the nonvested portion of a Participant's separate account will be invested in accordance with the Plan Rules. The nonvested portion of such a Participant's separate account will be forfeited upon his or her incurring five consecutive One-Year Breaks in Service (determined on the basis of Plan Year computation periods) following his or her termination of employment. Such forfeited amount will be reallocated, as of the last day of the Plan Year during which such forfeiture occurred, among the separate accounts of those Thomas & Howard Participants who, as of the last day of such Plan Year, were employed as Qualified Employees of the Participating Employer with whom the terminating Participant was last employed. Each such Participant's allocated share of such forfeiture will bear the same ratio to the total amount of such forfeiture as such Participant's Eligible Earnings for such Plan Year bears to the total amount of Eligible Earnings of all such Participants who are eligible to share in such forfeiture allocation. (c) Such a Participant will, at all times, have a fully vested interest in any Rollover Account established under the Thomas & Howard Plan on his or her behalf. (3) Appointments of beneficiaries to receive the undistributed portion of such separate account following the death of a Thomas & Howard Participant will be made in accordance with the provisions of Section 8.2. (4) Distribution of such separate account following a Thomas & Howard Participant's termination of employment or attainment of age 70-1/2 will be made in accordance with the provisions of Article VIII. 46 NASH FINCH COMPANY PROFIT SHARING PLAN EXHIBIT B SPECIAL PROVISIONS APPLICABLE TO FORMER PARTICIPANTS IN THE TIMBERLAKE GROCERY COMPANY OF MACON PROFIT SHARING PLAN AND TRUST. Effective as of January 1, 1991, the Timberlake Grocery Company of Macon Profit Sharing Plan and Trust ("Timberlake Plan") maintained by the Timberlake Grocery Company of Macon ("Timberlake") was merged into the Nash-Finch Company Profit Sharing Plan. All benefits accrued and unpaid under the Timberlake Plan as of the date of the merger were transferred to this Plan. Notwithstanding anything in this Plan to the contrary, the following provisions of this Exhibit B apply to former participants in the Timberlake Plan and to the benefits transferred from the Timberlake Plan on behalf of such former participants: (1) Separate accounts will be maintained for Timberlake Plan participants with respect to assets and liabilities of the Trust Fund attributable to amounts transferred from the Timberlake Plan. More than one separate account may be established if required by the Plan or if considered advisable by the Plan Administrator. (2) Former Timberlake Plan participants for whom a separate account is established pursuant to paragraph (1) above will at all times be fully vested in the amounts held in such accounts to the extent attributable to the participant's Basic Contribution Account and Rollover Account under the Timberlake Plan. Any other amounts held in such accounts on behalf of a former Timberlake Plan participant will become vested in accordance with the following rules: (a) Full vesting will occur upon the participant's death, Disability or Retirement. Whether Disability or Retirement has occurred will be determined under the terms of the Timberlake Plan as in effect immediately prior to the merger. (b) In all other cases, vesting will be determined according to the following schedule:
VESTED YEARS OF SERVICE PERCENTAGE ---------------- ---------- Less than 3 years 0% 3 years but less than 4 20% 4 years but less than 5 40% 5 years but less than 6 60% 6 years but less than 7 80% 7 years or more 100%
For purposes of applying this schedule, a participant's Years of Service will be the sum of the following: 47 (i) the participant's full years of service under the Timberlake Plan as of December 31, 1990, plus (ii) One Year of Service if the participant would have been credited with a year of service under the Timberlake Plan for a 12-month period beginning after January 1, 1991 and on or before December 31, 1991 had the merger not occurred; (iii) the number of the participant's Years of Service for service on and after January 1, 1991 determined in accordance with the terms of the Plan. (c) In the case of a former Timberlake Plan participant whose unvested benefits are transferred to the Plan and who thereafter receives, not later than the last day of the second Plan Year following the Plan Year during which he or she terminates employment, a distribution of his or her entire vested account balance under the Plan, the unvested portion of the participant's separate account will, as of the last day of the Plan Year during which such distribution occurs, be forfeited and be used to reduce the amount of the Profit Sharing Contributions for such Plan Year of the Participating Employer with whom he or she was last employed and, to the extent not so used, for subsequent Plan Years; provided, that, if such participant (i) received a distribution of less than the entire balance of his or her separate accounts, (ii) resumes employment with a Participating Employer as a Qualified Employee, and (iii) repays to the Trustee the full amount distributed from his or her separate account before the earlier of five years following the date of his or her reemployment with the Participating Employer as a Qualified Employee, or the date on which he or she incurs five consecutive One-Year Breaks in Service, then the amount of any forfeitures will be restored by the Participating Employer to his or her separate account, unadjusted for any change in value occurring after the Valuation Date on which the distribution was based. Such restoration will be made from forfeitures that arise for the Plan Year for which such restoration is to be made. To the extent such forfeitures are insufficient for such purpose, the Participating Employer will contribute an amount sufficient to restore such separate accounts. (d) Except as otherwise provided in subparagraph (c), the unvested portion of a former Timberlake Plan participant's separate account will be held in the account following the participant's termination of employment until he or she incurs five consecutive One-Year Breaks in Service, at which time such portion will be forfeited and used to reduce the amount of the Profit Sharing Contribution of the Participating Employer with whom the participant was last employed for the Plan Year during which such forfeiture occurs and, to the extent not so used, for succeeding Plan Years. (e) Notwithstanding anything in this paragraph (2) to the contrary, all amounts held on behalf of a former Timberlake Plan participant whose unvested benefits were forfeited prior to the plan merger and whose forfeited benefits have not been restored to his or her separate account, will be fully vested. If such a participant is reemployed by an Employer as an Employee prior to incurring five consecutive One-Year Breaks in Service, the amount forfeited prior to the merger will be restored as follows: (i) If the former Timberlake Plan participant received a distribution of his or her entire vested balance attributable to the Timberlake Plan not later than 48 the last day of the second Plan Year following the Plan Year during which his or her employment terminated, the amount forfeited will be restored only if such participant repays to the Plan the full amount distributed before the earlier of five years following the date of his or her reemployment with a Participating Employer as a Qualified Employee, or the date on which he or she incurs five consecutive One-Year Breaks in Service. (ii) If clause (i) does not apply, the amount forfeited will be restored upon such participant's completion of a Year of Service. No repayment to the Plan is required. (iii) Restoration of accounts pursuant to (i) or (ii) above will be done in a manner similar to the manner described in subparagraph (c). (f) If amounts forfeited by a former Timberlake Plan participant are restored to such participant's separate account pursuant to subparagraph (e)(ii), or the unvested portion of a participant's separate account is being held pursuant to subparagraph (d), and such participant is not fully vested at the time of his or her subsequent termination, his or her vested interest in the portion of his separate account subject to vesting will not be less than the amount "X" determined by the formula: X = P (AB + (RxD)) - (RxD), where P is his or her vested percentage at the time of determination; AB is the value of the relevant portion of his or her separate account at the time of determination; D is the amount previously distributed; and R is the ratio of the relevant portion of the separate account at the time of determination, to such portion of the account immediately following the distribution. (3) Appointments of beneficiaries to receive the undistributed portion of such separate accounts will be made in accordance with Section 8.2. (4) Distribution of such separate account following a former Timberlake Plan participant's termination of employment or attainment of age 70-1/2 will be made in accordance with the provisions of Article VIII. (5) Former Timberlake Plan participants may make withdrawals from the portion of a separate account established pursuant to paragraph (1) above that is attributable to basic contributions under the Timberlake Plan, subject to the following: (a) Such participants may withdraw all or any portion of the withdrawable assets in their separate accounts at any time after attaining age 59-1/2. (b) Prior to age 59-1/2, withdrawals will be permitted only for an immediate and heavy financial need of the participant for which funds are not reasonably available from other resources of the participant. If approved by the Administrator, such withdrawal will equal the lesser of (i) the amount required to be distributed to meet the need created by the hardship, (ii) the participant's basic contributions under the Timberlake Plan (less any amounts previously withdrawn by the participant, whether before or after the merger). The circumstances which may warrant approval of a participant's application for a hardship withdrawal are: 49 (i) Educational expenses for undergraduate education for the participant or his or her dependents; (ii) Medical expenses (to the extent not otherwise reimbursed under any other medical care programs) incurred by the participant or his or her dependents; (iii) Expenses for the purchase of a principal residence or major alteration thereto; or (iv) Such other circumstances as the Administrator may determine to be within the intent of this section and permitted under Code section 401(k). The determination of the existence of financial hardship and the amount required to be distributed to meet the need created by the hardship must be made in a uniform and non-discriminatory manner. (c) No more than one withdrawal under subparagraph (a) and one hardship withdrawal under subparagraph (b) will be permitted during any 12-month period. 50 NASH-FINCH COMPANY PROFIT SHARING TRUST AGREEMENT (AS RESTATED EFFECTIVE JANUARY 1, 1994) NASH-FINCH COMPANY PROFIT SHARING TRUST AGREEMENT TABLE OF CONTENTS PAGE PREAMBLE................................................................... 1 ARTICLE I GENERAL....................................................... 2 1.1 Name of Trust................................................ 2 1.2 Acceptance of Trust.......................................... 2 1.3 Part of Plan................................................. 2 1.4 Certification of Fiduciaries and Administrator............... 2 1.5 Construction and Applicable Law.............................. 2 1.6 Board........................................................ 2 1.7 Committee.................................................... 2 ARTICLE II TRUST FUND.................................................... 3 2.1 Composition.................................................. 3 2.2 Contributions................................................ 3 2.3 Exclusive Benefit of Participants and Beneficiaries.......... 3 ARTICLE III TRUSTEE....................................................... 4 3.1 General Responsibility....................................... 4 3.2 Powers of Trustee............................................ 5 3.3 Compensation and Expenses.................................... 7 3.4 Records and Accountings...................................... 8 3.5 Record Retention............................................. 8 ARTICLE IV INVESTMENTS................................................... 9 4.1 General...................................................... 9 4.2 Appointment of Insurance Company as Investment Manager....... 10 4.3 Appointment of Investment Adviser as Investment Manager...... 11 4.4 Appointment of Bank as Investment Manager.................... 13 4.5 Directions of Committee...................................... 15 ARTICLE V CHANGE IN TRUSTEE............................................. 18 5.1 Resignation.................................................. 18 5.2 Removal...................................................... 18 5.3 Successor.................................................... 18 5.4 Duties on Succession......................................... 18 5.5 Changes in Organization of Trustee........................... 18 ARTICLE VI MISCELLANEOUS................................................. 19 6.1 Benefits May Not Be Assigned or Alienated.................... 19 6.2 Evidence..................................................... 19 6.3 Dealings of Others With Trustee.............................. 19 6.4 Insurance Company Not Party.................................. 19 6.5 Audits....................................................... 19 6.6 Successor Company............................................ 19 6.7 Waiver of Notice............................................. 19 6.8 Headings..................................................... 19 6.9 Use of Compounds of Word "Here".............................. 19 6.10 Construed as a Whole......................................... 19 6.11 Counterparts................................................. 20 ARTICLE VII AMENDMENT AND TERMINATION..................................... 21 7.1 No Diversion................................................. 21 7.2 Amendment.................................................... 21 7.3 Termination of Plan.......................................... 21 7.4 Transfer to Other Funding Agency............................. 22 NASH-FINCH COMPANY PROFIT SHARING TRUST AGREEMENT This Trust Agreement is made and entered into as of January 1, 1994, by and between NASH-FINCH COMPANY, a Delaware corporation (the "Company"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association with trust powers, as trustee (the "Trustee"). RECITALS: 1. The Company maintains the Nash-Finch Company Profit Sharing Plan (the "Plan") and, in connection therewith, has previously created an implementing trust. An organization that is affiliated with the Company in a manner specified in the Plan may adopt the Plan for the benefit of its eligible employees and the Company and each such organization that has adopted the Plan is sometimes referred to in this Agreement as a "Participating Employer." 2. The Trustee is the duly appointed and acting trustee of the trust. 3. In connection with the restatement of the Plan in the manner set forth in the 1994 Revision thereof, the Company and the Trustee desire to restate the terms of the agreement evidencing the trust. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties agree as follows: 1 ARTICLE I GENERAL 1.1 NAME OF TRUST. The name of the Trust evidenced by this Trust Agreement is the "Nash-Finch Company Profit Sharing Trust" (the "Trust"). 1.2 ACCEPTANCE OF TRUST. The Trustee confirms its prior acceptance of its appointment as trustee of the Trust. 1.3 PART OF PLAN. This Trust forms a part of the Plan. The Company warrants that promptly upon the adoption of any amendment to the Plan it will furnish the Trustee with a copy of the amendment and with an appropriate certificate evidencing its due adoption. The Company further agrees that no amendment of the Plan will have the effect of changing the rights, duties or obligations of the Trustee without its written consent. The Trustee may rely on the latest Plan document furnished it as above provided without further inquiry or verification. 1.4 CERTIFICATION OF FIDUCIARIES AND ADMINISTRATOR. The Secretary or an Assistant Secretary of the Company will certify to the Trustee the names of the Committee members and of each other person who has authority on behalf of the Company to direct the Trustee as to disbursements from the Fund for purposes of the Plan and to communicate with the Trustee with respect to any other matter or matters relating to the Fund and will provide the Trustee with a specimen signature of each such person. Action by the Board of a Participating Employer will be certified by the Secretary or an Assistant Secretary of the Participating Employer. The Trustee may rely on the latest relevant certificate without further inquiry or verification. 1.5 CONSTRUCTION AND APPLICABLE LAW. This Trust is intended to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code") exempt from federal income tax under section 501(a) of the Code, and the Trustee may assume such, until advised to the contrary. The Company and the Trustee also intend that the Trust be in full compliance with applicable requirements of the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and this Agreement will be construed and administered consistent with such intent. To the extent that state law is not preempted by ERISA or any other laws of the United States, this Agreement will also be construed, administered and enforced according to the internal laws of the State of Minnesota (without regard to the conflict of law rules of the State of Minnesota or of any other jurisdiction) and all controversies, disputes and claims arising under or in connection with this Agreement will be submitted to the United States District Court for the District of Minnesota. 1.6 BOARD. The "Board" is the board of directors of the Company or other Participating Employer in question. When this Agreement provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by such board of directors. 1.7 COMMITTEE. The "Committee" is the committee established pursuant to the provisions of the Plan to carry out certain duties and responsibilities related to the Plan and this Trust. When this Agreement provides for an action to be taken by the Committee, the action may be taken by any person who is authorized to take such action pursuant to a proper delegation by the Committee. 2 ARTICLE II TRUST FUND 2.1 COMPOSITION. All sums of money, securities and other property acceptable to the Trustee and received by it to be held in trust under this Agreement or under any prior version of this Agreement, as evidenced by its receipts, from whatever source received, together with all investments made therewith, the proceeds thereof, and all earnings and accumulations thereon, and the part thereof from time to time remaining, will be held and administered by the Trustee, in trust, in a fund referred to herein as the "Fund," in accordance with the terms and provisions of this Agreement. The Fund will be held, administered and disbursed by the Trustee without distinction between principal and income. 2.2 CONTRIBUTIONS. The Trustee has no duty to require that any contributions be made to it, to determine that the contributions received by it comply with the provisions of the Plan or with any applicable resolution of the Board of any Participating Employer providing therefor, or to collect any transfers or contributions payable to it pursuant to the Plan. The responsibility of the Trustee is limited to the sums of money, securities and other property actually received by it. 2.3 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. The Fund will be used for the exclusive benefit of the participants and their beneficiaries covered by the Plan. Nothing contained in this Agreement, however, will be construed to prevent any right of return or refund of assets of the Fund to a Participating Employer as authorized under the Plan or to restrict the use of such assets for the payment of taxes, expenses of administration or other charges properly assessed against the Fund under the Plan or pursuant to this Agreement. 3 ARTICLE III TRUSTEE 3.1 GENERAL RESPONSIBILITY. The general responsibilities of the Trustee are as follows: (a) Except as expressly otherwise provided in this Agreement, the Trustee has exclusive authority and discretion to manage and control the assets held in the Fund. (b) The Trustee will hold, administer, invest and reinvest, and disburse the Fund in accordance with the powers and subject to the restrictions stated in this Agreement. (c) The Trustee will disburse monies and other properties from the Fund in accordance with the direction of the Committee in such form as the Trustee may reasonably require. The Trustee is not liable for any disbursement made by it pursuant to such directions and has no duty to make inquiry as to whether any disbursement made by it pursuant to any such direction is made pursuant to the provisions of the Plan. The receipt of the payee will constitute a full acquittance to the Trustee. (d) The Trustee has the responsibilities, if any, expressly allocated to it by the Plan. Except as responsibilities may be expressly so allocated, the Trustee, in its capacity as such, has no responsibility or authority with respect to the operation and administration of the Plan, and the rights, powers and duties of the Trustee are governed solely by the terms of this Agreement without reference to the provisions of the Plan. (e) The Trustee will reimburse the Company from the Fund for expenses incurred by the Company or any employee or agent thereof in connection with the administration of the Plan to the extent permitted by ERISA and the Code upon its receipt of written statements therefor in form acceptable to the Trustee. (f) The Trustee will maintain separate investment funds and effect investment directions of Plan participants, beneficiaries of deceased participants and alternate payees under domestic relations orders that the Administrator has determined to be qualified under section 414(p) of the Code which directions are in accordance with the provisions of the Plan and this Agreement and such procedures as the Committee and the Trustee may from time to time establish. (g) The Trustee will establish and maintain a trust account with respect to the Plan. The Trustee will also establish and maintain such participant accounts and subaccounts as the Committee may direct and such other subaccounts as may be appropriate or desirable to aid in the administration of the Plan. The Committee will give instructions to the Trustee specifying the participant accounts and subaccounts to which transfers and contributions are to be added and from which withdrawals, distributions or transfers are to be subtracted and the amounts thereof. (h) The Trustee will provide such additional administrative services as may be agreed upon by the Company or the Committee and the Trustee. 4 3.2 POWERS OF TRUSTEE. The Trustee has the right, power and authority to take any action and to enter into and carry out every agreement with respect to the Fund that it deems necessary or advisable to discharge its responsibilities under this Agreement, and without limiting the generality of the foregoing and in addition to all other rights, powers and authorities expressly granted to the Trustee elsewhere in this Agreement, the Trustee has the following rights, powers and authorities to be exercised in its absolute discretion, except as otherwise expressly provided in this Agreement - (a) To hold securities and other properties in bearer form or in the name of a nominee or nominees without disclosing any fiduciary relationship; provided, however, that on the books and records of the Trustee such securities and properties will at all times be shown to be a part of the Fund, and no such registration or holding by the Trustee relieves it from liability for the safe custody and proper disposition of such securities and properties in accordance with the terms and provisions of this Agreement and the requirements of ERISA, the Code and other applicable law. (b) To sell, grant options to buy, transfer, assign, convey, exchange, mortgage, pledge, lease or otherwise dispose of any of the properties comprising the Fund at such prices and on such terms and in such manner as it may deem proper, and for terms within or extending beyond the duration of the Trust. (c) To manage, administer, operate, lease for any number of years, regardless of any restrictions on leases made by fiduciaries, develop, improve, repair, alter, demolish, mortgage, pledge, grant options with respect to, or otherwise deal with any real property or interest therein at any time held by it; and to cause to be formed a corporation or trust to hold title to any such real property with such powers, all upon such terms and conditions as may be deemed advisable. (d) To renew or extend or participate in the renewal or extension of any note, bond or other evidence of indebtedness, or any other contract or lease, or to exchange the same, or to agree to a reduction in the rate of interest or rent thereon or to any other modification or change in the terms thereof, or of the security therefor, or any guaranty thereof, in any manner and to any extent that it may deem advisable in its absolute discretion; to waive any default, whether in the performance of any covenant or condition of any such note, bond or other evidence of indebtedness, or any other contract or lease, or of the security therefor, and to carry the same past due or to enforce any such default as it may in its absolute discretion deem advisable; to exercise and enforce any and all rights to foreclose, to bid in property on foreclosure; to exercise and enforce in any action, suit, or proceeding at law or in equity any rights or remedies in respect to any such note, bond or other evidence of indebtedness, or any other contract or lease, or the security therefor; to pay, compromise, and discharge with the funds of the Fund any and all liens, charges, or encumbrances upon the same, in its absolute discretion, and to make, execute, and deliver any and all instruments, contracts, or agreements necessary or proper for the accomplishment of any of the foregoing powers. (e) To borrow such sums of money for the benefit of the Fund from any lender upon such terms, for such period of time, at such rates of interest, and upon giving such collateral as it may determine; to secure any loan so made by pledge or mortgage of the trust property; and to renew existing loans. 5 (f) To use the assets of the Fund, whether principal or income, for the purpose of improving, maintaining or protecting property acquired by the Fund, and to pay, compromise and discharge with the assets of the Fund any and all liens, charges or encumbrances at any time upon the same. (g) To hold uninvested reasonable amounts of cash whenever the Trustee determines it is advisable to do so to facilitate disbursements or for other operational reasons, and to deposit the same, with or without interest, in the commercial or savings departments of the Trustee or of any other bank, trust company or other financial institution including those affiliated with the Trustee. (h) To receive, collect and give receipts for every item of income or principal of the Fund. (i) To institute, prosecute, maintain or defend any proceeding at law or in equity concerning the Fund or the assets thereof, at the sole cost and expense of the Fund, and to compromise, settle and adjust any claims and liabilities asserted against or in favor of the Fund or of the Trustee; but the Trustee is under no duty or obligation to institute, maintain or defend any action, suit or other legal proceeding unless it has been indemnified to its satisfaction against any and all loss, cost, expense and liability it may sustain or anticipate by reason thereof. (j) To vote all stocks and to exercise all rights incident to the ownership of stocks, bonds or other securities or properties held in the Fund and to issue proxies to vote such stocks; to enter into voting trusts for such period and upon such terms as it may determine; to give general or special proxies or powers of attorney, with or without substitution; to sell or exercise any and all subscription rights and conversion privileges; to sell or retain any and all stock dividends; to oppose, consent to or join in any plan of reorganization, readjustment, merger or consolidation in respect to any corporation whose stocks, bonds or other securities are a part of the Fund, including becoming a member of any stockholders' or bondholders' committee; to accept and hold any new securities issued pursuant to any plan of reorganization, readjustment, merger, consolidation or liquidation; to pay any assessments on stocks or securities or to relinquish the same; and to otherwise exercise any and all rights and powers to deal in and with the securities and properties held in the Fund in the same manner and to the same extent as any individual owner and holder thereof might do. (k) To make application for any contract issued by an insurance company to be purchased under a Plan, to accept and hold any such contract, and to assign and deliver any such contract. (l) To employ such agents, experts, counsel and other persons (any of whom may also be employed by or represent a Participating Employer) deemed by the Trustee to be necessary or proper for the administration of the Trust; to rely and act on information and advice furnished by such agents, experts, counsel and other persons; and to pay their reasonable expenses and compensation for services to the Trust from the Fund. Notwithstanding the foregoing, no person so serving may receive compensation from the Fund for fiduciary services if such person, natural or 6 otherwise, is affiliated with the Company, and no person so serving who already receives full-time pay from any Participating Employer may receive compensation from the Fund for fiduciary services, except for reimbursement of expenses properly and actually incurred. (m) To pay out of the Fund all real and personal property taxes, income taxes, and other taxes of any and all kinds levied or, assessed under existing or future laws against the Fund, without any approval or direction of the Company. (n) To pay any estate, inheritance, income or other tax, charge or assessment attributable to any benefit which, in the Trustee's opinion, it is or may be required to pay out of such benefit; and to require, before making any payment, such release or other document from any taxing authority and such indemnity from the intended payee as the Trustee deems necessary for its protection. (o) To retain any funds or property subject to any dispute without liability for the payment of interest, and to decline to make payment or delivery thereof until final adjudication is made by a court of competent jurisdiction. (p) To provide ancillary services to the Trust for not more than reasonable compensation. (q) To serve not only as Trustee but also in any other fiduciary capacity with respect to the Plan pursuant to such agreements or practices as the Trustee considers necessary or appropriate under the circumstances. (r) To participate in and use the Federal Book-entry Account System (a service provided by the Federal Reserve Bank for its member banks for deposit of Treasury securities), or to use the Depository Trust Company, Midwest Trust Company or other generally accepted central depositories. (s) To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers granted to the Trustee in this Agreement. (t) To bring action before any court of competent jurisdiction for instructions with respect to any matter pertaining to the interpretation of this Agreement or the administration of the Fund. 3.3 COMPENSATION AND EXPENSES. The Trustee is entitled to receive such reasonable compensation for its services as Trustee or in any other capacity in connection with the Plan as may be agreed upon with the Company. The Trustee is entitled to reimbursement for all reasonable and necessary costs, expenses and disbursements incurred by it in the performance of such services. Such compensation and reimbursements will be charged to and paid out of the Fund as an administrative expense, but if not so paid or if the Committee so specifies, will be paid directly by the Participating Employers in such proportions as the Committee determines. 7 3.4 RECORDS AND ACCOUNTINGS. The Trustee will keep accurate and detailed records and accounts of all investments, receipts, disbursements and other transactions under this Agreement, and all records, books and accounts relating thereto will be open to inspection by the Committee at all reasonable times. As soon as reasonably practicable following the close of each annual accounting period of the Trust, and as soon as reasonably practicable after the resignation or removal of a Trustee has become effective, the Trustee will file with the Committee a written account setting forth all investments, receipts, disbursements and other transactions effected by it during such year, or during the part of the year to the date the resignation or removal is effective, as the case may be, and containing a description of all securities purchased and sold, the cost or net proceeds of sale, the securities and investments held at the end of such period and the cost of each item thereof as carried on the books of the Trustee. The accounting will also furnish the Committee such other information as the Trustee may possess and as may be necessary to comply with the reporting requirements of ERISA. If the fair market value of an asset in the Fund is not available, when necessary for accounting or reporting purposes the fair value of the asset will be determined in good faith by the Trustee, assuming an orderly liquidation at the time of such determination. If there is a disagreement between the Trustee and anyone as to any act or transaction reported in an accounting, the Trustee has the right to have its account settled by a court of competent jurisdiction. The Trustee will make such other reports as may be agreed upon with the Company or the Committee. 3.5 RECORD RETENTION. The Trustee will retain its records relating to the Trust as long as necessary for the proper administration thereof and at least for any period required by ERISA or other applicable law. 8 ARTICLE IV INVESTMENTS 4.1 GENERAL. Except as otherwise expressly provided in this Agreement, the Trustee has exclusive authority and discretion to invest and reinvest the principal and income of the Fund in real or personal property of any kind and will do so in accordance with ERISA and other applicable law. The Trustee is not limited by the laws of any state proscribing or limiting the investment of trust funds by corporate or individual trustees in or to certain kinds, types or classes of investments or limiting the value or proportion of the trust assets that may be invested in any one property or kind, type or class of investment. Without limiting the generality of the foregoing investments and reinvestments are also subject to the following - (a) Investments will be consistent with any funding policy or investment guidelines communicated to the Trustee in writing by the Committee pursuant to the Plan. The Trustee may rely on the latest such communication received by it without further inquiry or verification. (b) The Trustee may invest and reinvest principal and income of the Fund in common, preferred and other stocks of any corporation; voting trust certificates; interests in investment trusts, including, without limiting the generality thereof, participations issued by an investment company as defined in the Investment Company Act of 1940, as from time to time amended; bonds, notes and debentures, secured or unsecured; mortgages on real or personal property; conditional sales contracts; real estate and leases; and limited partnerships. (c) The Trustee may invest and reinvest the principal and income of the Fund through any common or collective trust fund or pooled investment fund maintained by the Trustee for the collective investment of funds held by it in a fiduciary capacity. The provisions of the document governing any such common or collective trust fund as it may be amended from time to time govern any investment therein and are hereby made a part of this Agreement. (d) The Trustee may commingle for investment all or any part of the funds of the Fund with funds of other trusts entitled to tax exemption under section 501(a) of the Code established by the Company or any entity directly or indirectly controlling, controlled by, or under common control with the Company; provided that records are at all times maintained of the portion of the commingled funds properly allocable to each trust. (e) The Trustee may invest and reinvest the principal and income of the Fund by investing in an annuity contract or contracts (including any agreement or agreements supplemental thereto) issued by an insurance company. (f) The Trustee may engage in the writing, sale and buying in, of covered call option contracts; and the Trustee may acquire and may exercise options to purchase or sell securities or other assets. (g) The Trustee may invest and reinvest principal and income of the Fund in deposits (including savings accounts, savings certificates and similar interest-bearing 9 instruments or accounts) in itself or its affiliates, provided such deposits bear a reasonable rate of interest and otherwise comply with ERISA, the Code and other applicable law. (h) The Declaration of Trust executed by Norwest Bank Minnesota, National Association on April 3, 1989, establishing the Norwest Bank Collective Funds for Employee Benefit Plans, is hereby made a part of this Agreement. Notwithstanding any other provision of this Agreement, the Trustee may cause any part or all of the money of this Trust without limitation as to amount to be commingled with the money of trusts created by others and invested and reinvested as a part of any one or more of the funds heretofore or hereafter created by said Declaration of Trust. Money of this Trust so added to any of the funds heretofore or hereafter created by said Declaration of Trust will be subject to all of the provisions of said Declaration of Trust as it is amended from time to time. (i) The Trustee may purchase or sell financial futures contracts in transactions executed through a generally recognized commodities or securities exchange. (j) The Trustee may transfer, at any time and from time to time, all or any part of the funds of the Trust to any trust which is qualified under section 401(a) and exempt under section 501(a) of the Code and is maintained as a medium for the pooling of a portion of the funds of pension and profit sharing trusts for diversifying investments, and may execute such documents and other instruments as may be necessary in connection therewith. The terms and provisions of any such trust will, upon such transfer and execution, be incorporated by reference into this Agreement to the extent of the assets so transferred. (k) The Trustee may participate in interest rate swaps. 4.2 APPOINTMENT OF INSURANCE COMPANY AS INVESTMENT MANAGER. The Committee may appoint one or more insurance companies that meet the requirements of section 3(38) of ERISA to serve as an investment manager as defined in ERISA. The appointment of any such investment manager and investment of the Fund pursuant to such appointment are subject to the provisions of this Section 4.2, notwithstanding any other provisions of this Agreement to the contrary. (a) Written notice of each such appointment must be given to the Trustee a reasonable time in advance of the effective date of the appointment. (b) The Committee will determine the terms of each contract to be entered into between such insurance company and the Trustee (including any agreement or agreements supplemental thereto) pursuant to which investment management services are to be performed by the insurance company. On written direction of the Committee, the Trustee will make application for each such contract and will hold the contract as an asset of the Fund. (c) The Trustee will pay such premiums to the insurance company pursuant to such contract as may be directed in writing by the Committee; provided, however, that no such payment will be made until the Trustee has been furnished with an 10 acknowledgement in writing by the insurance company that it is a fiduciary with respect to the Plan and this Trust. (d) Except as otherwise agreed in writing by the Trustee and the Committee, the Trustee will take only such actions as contractholder of such contract as may be directed in writing by the Committee. (e) Any direction by the Committee with respect to such contract will be complete as to the terms with respect thereto, it being intended that the Trustee will have no discretion whatsoever with respect to the provisions of such contract or actions taken pursuant thereto. (f) The Participating Employers jointly and severally agree to indemnify the Trustee for and to hold it harmless against any and all liabilities, losses, costs or reasonable expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Trustee at any time by reason of actions taken in connection with any such contract in accordance with directions of an insurance company or action omitted because no such directions are given. However, no such indemnification will be required in any case in which such liabilities, losses, costs or expenses are incurred by the Trustee because it participated knowingly in, or knowingly undertook to conceal, an act or omission of an insurance company acting as investment manager, knowing that such act or omission was a breach of fiduciary duty by said insurance company. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action against the Trustee for which the Trustee may be entitled to indemnification under this provision. 4.3 APPOINTMENT OF INVESTMENT ADVISER AS INVESTMENT MANAGER. The Committee may appoint one or more registered investment advisers under the Investment Advisers Act of 1940 to serve as an investment manager as defined in ERISA. The appointment of any such investment manager and investment of the Fund pursuant to such appointment are subject to the provisions of this Section 4.3, notwithstanding any other provisions of this Agreement to the contrary. (a) Written notice of each such appointment must be given to the Trustee a reasonable time in advance of the effective date of the appointment. The notice will state what portion of the Fund is to be invested by the investment manager and will direct the Trustee to segregate such portion of the Fund into a separate account for the investment manager. Each such separate account is referred to in this section as an "Investment Account." (b) The Trustee will not act on any direction or instruction of the investment manager until the Trustee has been furnished with an acknowledgement in writing by the investment manager that it is a fiduciary with respect to the Plan and this Trust. (c) There will be a written agreement between the Company or Committee and each investment manager. The Trustee will receive a copy of each such agreement and all amendments thereto and will give written acknowledgement of receipt of same. Alternatively, the Committee may direct the Trustee to enter into such agreement 11 and any ancillary agreements that the Committee determines to be necessary or appropriate. Each agreement with an investment manager will provide that: (1) All directions given by an investment manager to the Trustee will be in writing, signed by an officer or partner of the investment manager or by such other person as may be designated in writing by the investment manager; provided, however, that the Trustee will accept oral directions for the purchase or sale of securities, which will be confirmed by such authorized personnel of the investment manager in writing; (2) All settlements of purchases and sales will be in the city where the Trustee, or an agent thereof with custody of the assets in question, is located, or such other place as the Trustee may direct; (3) In all events the Trustee, or an agent thereof, is to retain physical custody of or title to all assets included in an Investment Account; and (4) The Committee, by written notice to the investment manager and the Trustee, may modify or terminate the authority of the investment manager. (d) Payment of the cost of the acquisition, sale or exchange of any security or other property for an Investment Account will be charged to that Investment Account unless the agreement between the Company, Committee or Trustee and the investment manager provides otherwise. (e) So long as the appointment of an investment manager is in effect, the investment manager has full power and authority to direct the Trustee as to, and full responsibility for, investment of its Investment Account and for the retention and disposition of any assets in its Investment Account. Subject to any limitations in the agreement between the Company, Committee or Trustee and the investment manager, the investment manager has the same investment discretion as is accorded the Trustee under Section 4.1. The Trustee may invest any portion of an Investment Account that would otherwise be held in cash but has no obligation to do so. (f) Unless the written agreement between the Company, Committee or Trustee and the investment manager expressly provides to the contrary, the Trustee has voting power with respect to all stocks and other securities in the Investment Account. (g) The Trustee will make available to an investment manager copies of or extracts from such portions of its accounts, books or records relating to the Investment Account of such investment manager as the Trustee may deem necessary or appropriate in connection with the exercise of the investment manager's function, or as the Committee may direct. (h) All charges (other than those covered in subsection (d) above) against each Investment Account will be made in such proportions as the Committee may direct from time to time. 12 (i) If the authority of an investment manager is terminated and a successor investment manager is not appointed, the assets held in its Investment Account may or may not continue to be segregated as the Trustee may determine. Until receipt of written notice of the termination of the authority of an investment manager, the Trustee will be fully protected in assuming the continuing authority of such investment manager. (j) Any direction by an investment manager must be complete as to the terms with respect thereto, it being intended that the Trustee has no obligation whatsoever to invest or otherwise manage any asset of an Investment Account. (k) An investment adviser acting as investment manager is entitled to receive such reasonable compensation for services as may be agreed upon with the Committee. Such compensation will be paid from the Fund if not paid directly by the participating Employers in such proportions as the Committee may determine. The Trustee is not responsible for determining the reasonableness of any compensation paid to an investment adviser. (l) The Participating Employers jointly and severally agree to indemnify the Trustee for and to hold it harmless against any and all liabilities, losses, costs or reasonable expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against the Trustee at any time by reason of action taken in accordance with directions of an investment manager or action omitted because no such directions are given. However, no such indemnification will be required in any case in which such liabilities, losses, costs or expenses are incurred by the Trustee because it participated knowingly in, or knowingly undertook to conceal, an act or omission of an investment manager, knowing that such act or omission was a breach of fiduciary duty by said investment manager. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action against the Trustee for which the Trustee may be entitled to indemnification under this provision. 4.4 APPOINTMENT OF BANK AS INVESTMENT MANAGER. The Committee may appoint one or more banks that meet the requirements of Section 3(38) of ERISA to serve as an investment manager as defined in said Act. The appointment of any such investment manager and investment of the Fund pursuant to such appointment shall be subject to the following, notwithstanding any provisions of this Trust Agreement to the contrary. (a) Written notice of each such appointment must be given to the Trustee a reasonable time in advance of the effective date of the appointment. The notice will state what portion of the Fund is to be invested by the investment manager and will direct the Trustee to segregate such portion of the Fund into a separate account for such bank. Each such separate account is hereinafter in this section referred to as a "Bank Managed Account." (b) The Trustee will not act on any direction of the bank until the Trustee has been furnished with an acknowledgment in writing by the bank that it is a fiduciary with respect to the Plan and this Trust. 13 (c) There will be a written agreement between the Company or Committee and each bank. The Trustee will receive a copy of each such agreement and all amendments thereto and will give written acknowledgement or receipt of same. Alternatively, the Committee may direct the Trustee to enter into such agreement and any ancillary agreements that the Committee determines to be necessary or appropriate. Each agreement with a bank will provide that: (1) All directions given by a bank to the Trustee will be in writing, signed by an officer or partner of the bank or by such other person as may be designated in writing by the bank; provided, however, that the Trustee will accept oral directions for the purchase or sale of securities, which will be confirmed by such authorized personnel of the bank in writing; (2) All settlement of purchases and sales will be in the city where the Trustee, or an agent thereof with custody of the assets in question, is located, or such other place as the Trustee may direct; (3) In all events, the Trustee, or an agent thereof, is to retain physical custody of or title to all of the assets included in a Bank Managed Account; and (4) The Committee, by written notice to the bank and the Trustee, may modify or terminate the authority of the bank. (d) Payment of the cost of the acquisition, sale or exchange of any security or other property for a Bank Managed Account will be charged to that Bank Managed Account unless the agreement between the Company, Committee or Trustee and the bank provides otherwise. (e) So long as the appointment of a bank as investment manager is in effect, the bank has full power and authority to direct the Trustee as to, and responsibility for, investment of its Bank Managed Account and for the retention and disposition of any assets in its Bank Managed Account. Subject to any limitations in the agreement between the Company, Committee or Trustee and the bank, the bank has the same investment discretion as is accorded the Trustee under Section 4.1. The Trustee may invest any portion of a Bank Managed Account that would otherwise be held by it in cash but has no obligation to do so. (f) Unless the written agreement between the Company, Committee or Trustee and the bank expressly provides to the contrary, the Trustee has voting power with respect to all stocks and other securities in the Bank Managed Account. (g) The Trustee will make available to the bank serving as investment manager copies of or extracts from such portions of its accounts, books or records relating to the Bank Managed Account of such bank as the Trustee may deem necessary or appropriate in connection with the exercise of the bank's function, or as the Committee may direct. 14 (h) All charges (other than those covered in subsection (d) above) against each Bank Managed Account will be made in such proportions as the Committee may direct from time to time. (i) If the authority of a bank as investment manager is terminated and a successor investment manager is not appointed, the assets held in its Bank Managed Account may or may not continue to be segregated, as the Trustee may determine. Until receipt of written notice of the termination of the authority of a bank as investment manager, the Trustee will be fully protected in assuming the continuing authority of such bank. (j) Any direction by a bank as investment manager will be complete as to the terms with respect thereto, it being intended that the Trustee has no obligation whatever to invest or otherwise manage any asset of a Bank Managed Account. (k) A bank acting as investment manager is entitled to receive such reasonable compensation for its services as may be agreed upon with the Committee. Such compensation will be paid from the Fund if not paid directly by the Participating Employers in such proportions as the Committee determines. The Trustee is not responsible for determining the reasonableness of any compensation to be paid to a bank. (l) The Participating Employers jointly and severally agree to indemnify the Trustee for, and to hold it harmless against, any and all liabilities, losses, costs or expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, reasonably incurred by, or asserted against the Trustee at any time by reason of actions of a bank as investment manager, actions taken in accordance with directions of such bank, or action omitted because no such directions are given. However, no such indemnification will be required in any case in which such liabilities, losses, costs or expenses are incurred by the Trustee because it participated knowingly in, or knowingly undertook to conceal, an act or omission of a bank acting as investment manager, knowing such act or omission was a breach of fiduciary duty by said bank. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action against the Trustee for which the Trustee may be entitled to indemnification under this provision. 4.5 DIRECTIONS OF COMMITTEE. The Committee, as a named fiduciary, will direct the Trustee as to the establishment of three or more separate investment funds in accordance with the terms of the Plan, and may otherwise direct the Trustee as to the investment and reinvestment of all or a part of the Fund, subject to the following provisions of this Section 4.5, notwithstanding any other provisions of this Agreement to the contrary. (a) Written notice of each such direction must be given to the Trustee a reasonable time in advance of the effective date of the direction. Such notice will state what portion of the Fund is to be invested by the Committee and will direct the Trustee to segregate such portion of the Fund into a separate account for the Committee. Each such separate account is referred to in this section as a "Committee Account." 15 (b) All directions given by the Committee to the Trustee must be in writing, signed by the duly authorized person or persons; provided that the Trustee will accept oral directions for the purchase or sale of securities which will be confirmed by such authorized personnel in writing. (c) All settlements of purchases and sales are to be in the city where the Trustee, or an agent thereof with custody of the assets in question, is located, or such other place as the Trustee may direct. (d) In all events the Trustee or an agent thereof is to retain physical custody of or title to all assets comprising a Committee Account. (e) Payment of the cost of the acquisition, sale or exchange of any security for a Committee Account will be charged to such Account. (f) The Committee has full power and authority to direct the Trustee as to, and full responsibility for, investment of each Committee Account and for the retention and disposition of any assets at any time included in each Committee Account. The Committee has the same investment discretion as is accorded the Trustee under Section 4.1 of this Agreement. The Trustee may invest any portion of a Committee Account that would otherwise be held in cash but has no obligation to do so. (g) The Trustee has the voting power with respect to all stocks and other securities in a Committee Account except to the extent written directions by the Committee to the Trustee grant voting power to the Committee. (h) The Trustee will make available to the Committee copies of or extracts from such portions of its accounts, books or records relating to any Committee Account as the Committee may direct. (i) All charges (other than those covered in subsection (e) above) against each Committee Account will be made in such proportions as the Committee may direct from time to time. (j) Any direction by the Committee must be complete as to its terms, it being intended that the Trustee will have no obligation whatsoever to invest or otherwise manage any asset of a Committee Account. (k) The Trustee will follow all proper directions of the Committee which are made in accordance with the terms of this Agreement and which are not contrary to Title I of ERISA. (l) The Participating Employers jointly and severally agree to indemnify the Trustee for and to hold it harmless against any and all liabilities, losses, costs or reasonable expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against the Trustee at any time by reason of actions taken in accordance with directions of the Committee in connection with a Committee Account or action omitted because no such directions are given. However, no such indemnification will be required in any case in which 16 such liabilities, losses, costs or expenses are incurred by the Trustee because it participated knowingly in, or knowingly undertook to conceal, an act or omission by the Committee, knowing that such act or omission was a breach of fiduciary duty of the Committee. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action against the Trustee for which the Trustee may be entitled to indemnification under this provision. 17 ARTICLE V CHANGE IN TRUSTEE 5.1 RESIGNATION. The Trustee may resign at any time by giving 90 days' advance written notice to the Company, to the attention of the General Counsel with a copy to the Treasurer. 5.2 REMOVAL. The Company may remove the Trustee by giving 30 days' advance written notice to the Trustee. 5.3 SUCCESSOR. In the event of the resignation or removal of the Trustee, the Company will promptly appoint a successor. If no appointment of a successor is made by the Company within a reasonable time after resignation or removal of the Trustee, any court of competent jurisdiction may appoint a successor, after such notice, if any, solely to the Company and the retiring Trustee, as such court may deem proper and suitable. The retiring Trustee will be furnished with written notice from the Company or the court, as the case may be, of the appointment of the successor, and will also be furnished with written evidence of the successor's acceptance of the trusteeship. Only then will the retiring Trustee cease to be such. 5.4 DUTIES ON SUCCESSION. Every successor Trustee accepting a trusteeship under this Agreement has all the right, title, powers, duties, exemptions, and limitations of the predecessor Trustee under this Agreement. No predecessor Trustee has any right, title, or interest in the Fund except as provided in this Section 5.4. The Trustee will, upon the appointment and acceptance of a successor Trustee, transfer and deliver the assets of the Fund to the successor, after reserving such reasonable amount as it deems necessary to provide for its fees and expenses and any sums chargeable against the Fund for which it may be liable. Any predecessor Trustee will do all acts necessary to vest title of record in the successor Trustee. If any assets in the Fund have been invested in a common or collective trust fund, the predecessor will cause such investment to be liquidated at the earliest practical time after notice has been given or received by the predecessor of the resignation or removal. No person becoming a Trustee under this Agreement will be in any way liable or responsible for anything done or omitted to be done by any Trustee prior to such person's acceptance of the trusteeship, nor will such person have any duty to examine the administration of the Trust prior to such acceptance. 5.5 CHANGES IN ORGANIZATION OF TRUSTEE. If any corporate trustee acting under this Agreement is merged with another corporation or association, or is succeeded by another corporation or association, through consolidation or otherwise, the acquiring corporation or association will thereupon become Trustee under this Agreement. If any corporate trustee acting under this Agreement sells and transfers substantially all of its assets and business to another corporation or association, the acquiring corporation or association will thereupon become Trustee under this Agreement. When authorized by statute or court order any corporate trustee acting hereunder may permit itself to be succeeded as such corporate trustee by another corporation or association in which case the acquiring corporation or association will thereupon become Trustee under this Agreement. In each case the acquiring corporation or association will be Trustee of the Trust as though specifically so named in this Agreement. Notwithstanding the foregoing provisions of this Section 5.5, an acquiring corporation or association will become Trustee hereunder only if it has trust powers and is formed under the laws of the United States of America or any subdivision thereof. 18 ARTICLE VI MISCELLANEOUS 6.1 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. Except as otherwise expressly permitted by the Plan or required by law, the interests of participants and their beneficiaries under the Plan or this Agreement may not in any manner whatsoever be assigned or alienated, whether voluntarily or involuntarily, or directly or indirectly. 6.2 EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document, or other instrument which the person acting in reliance thereon considers to be pertinent and reliable, and to be signed, made, or presented by the proper party. 6.3 DEALINGS OF OTHERS WITH TRUSTEE. No person (corporate or individual) dealing with the Trustee is required to see to the application of any money paid or property delivered to the Trustee or to determine whether the Trustee is acting pursuant to any authority granted to it under this Agreement. 6.4 INSURANCE COMPANY NOT PARTY. No insurance company that issues a contract held by the Trustee will be construed to be a party to this Agreement, nor will such insurance company have any responsibility for the validity of this Agreement. An insurance company to which an application may be submitted by the Trustee may accept such application and has no duty to make any investigation or inquiry regarding the authority of the Trustee to make such application or any amendment thereto or to inquire as to whether a person on whose life any contract is to be issued is entitled to such contract under the Plan. 6.5 AUDITS. The Committee has the right to cause the books, records, and accounts of the Trustee that relate to the Trust to be examined and audited by independent auditors designated by the Committee at such times as the Committee may determine, and the Trustee will make such books, records, and accounts available for such purposes at all reasonable times. 6.6 SUCCESSOR COMPANY. If a successor to the Company or a purchaser of all or substantially all of the Company's assets elects to continue the Trust, such successor or purchaser will be substituted for the Company under this Agreement. 6.7 WAIVER OF NOTICE. Any notice required under this Agreement may be waived by the person entitled thereto. 6.8 HEADINGS. Headings at the beginning of articles and sections are for convenience of reference, will not be considered a part of this Agreement and will not influence its construction. 6.9 USE OF COMPOUNDS OF WORD "HERE". Use of the words "hereof", "herein", "hereunder", or similar compounds of the word "here" mean and refer to the entire Agreement unless the context clearly indicates otherwise. 6.10 CONSTRUED AS A WHOLE. The provisions of this Agreement will be construed as a whole in such manner as to carry out the provisions thereof and will not be construed separately without relation to the context. 19 6.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which will be deemed an original. Such counterparts will constitute but one and the same instrument, which may be sufficiently evidenced by any one counterpart. 20 ARTICLE VII AMENDMENT AND TERMINATION 7.1 NO DIVERSION. The Fund will be for the exclusive purpose of providing benefits to participants under the Plan and their beneficiaries and defraying reasonable expenses of administering the Plan. No part of the corpus or income of the Fund may be used for, or diverted to, purposes other than for the exclusive benefit of participants under the Plan or their beneficiaries. Notwithstanding the foregoing: (a) If any contribution or portion thereof is made by a Participating Employer by a mistake of fact, the Trustee will, upon written request of the Committee, return such contribution or portion thereof to the Participating Employer within one year after the payment of the contribution to the Trustee. However, earnings attributable to such contribution or portion thereof will not be returned to the Participating Employer but will remain in the Fund, and the amount returned to the Participating Employer will be reduced by any losses attributable to such contribution or portion thereof. (b) Contributions by a Participating Employer are conditioned upon initial qualification of the Plan as to such Participating Employer under section 401(a) of the Code. If the Plan receives an adverse determination letter with respect to such initial qualification, the Trustee will, upon written request of the Committee, return the amount of such contribution to the Participating Employer within one year after the date of denial of qualification of the Plan. For this purpose, the amount to be so returned will be the contributions actually made, adjusted for the investment experience of, and any expenses chargeable against, the portion of the Fund attributable to the contributions actually made. (c) Contributions by the Participating Employers are conditioned upon the deductibility of each contribution under section 404 of the Code. To the extent the deduction is disallowed, the Trustee will return such contribution (to the extent disallowed) to the Participating Employer within one year after the disallowance of the deduction. However, earnings attributable to such contribution (or disallowed portion thereof) will not be returned to the Participating Employer but will remain in the Trust Fund, and the amount returned to the Participating Employer will be reduced by any losses attributable to such contribution (or disallowed portion thereof). Return of non-deductible contributions will be made in accordance with the requirements of Revenue Procedure 90-49 or any other applicable regulations or procedures. 7.2 AMENDMENT. This Agreement may be amended at any time or from time to time and in any manner by written agreement of the Trustee and the Company, and the provisions of any such amendment may be made applicable to the Fund as constituted at the time of the amendment as well as to the part of the Fund subsequently acquired. 7.3 TERMINATION OF PLAN. If the Plan is terminated, this Trust will nevertheless continue in effect until the Fund has been distributed in accordance with the provisions of the Plan pursuant to directions under Section 3.1(c). 21 7.4 TRANSFER TO OTHER FUNDING AGENCY. If pursuant to directions under Section 3.1(c), the entire Fund is transferred to a funding agency for the Plan that is not a trustee, this Trust will thereupon terminate. 22 IN WITNESS WHEREOF, the Company and Trustee have caused this Agreement to be executed by their duly authorized officers and their respective corporate seals to be hereunto affixed as of the day and year first above written. NASH-FINCH COMPANY (Corporate Seal) By_______________________________________ Its____________________________________ And______________________________________ Its____________________________________ NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (Corporate Seal) By_______________________________________ Its____________________________________ And______________________________________ Its____________________________________ 23 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) On this _____ day of December, 1993, before me personally appeared ___________________________ and ______________________, to me personally known, who, being each by me duly sworn, did say that they are respectively the ______________________________ and _______________________ of NASH-FINCH COMPANY, the corporation named in the foregoing instrument, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors, and they acknowledged said instrument to be the free act and deed of said corporation. Notary Public,_____________________________ Hennepin County, Minnesota My commission expires______________________ STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) On this _____ day of December, 1993, before me personally appeared ___________________________ and ______________________, to me personally known, who, being each by me duly sworn, did say that they are respectively the _________________________________ and _______________________ of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, the national banking association named in the foregoing instrument, and that the seal affixed to said instrument is the corporate seal of said association, and that said instrument was signed and sealed in behalf of said association by authority of its Board of Directors, and they acknowledged said instrument to be the free act and deed of said association. Notary Public,_____________________________ Hennepin County, Minnesota My commission expires______________________ This document was drafted by OPPENHEIMER WOLFF & DONNELLY 3400 Plaza VII Building 45 South Seventh Street Minneapolis, Minnesota 55402 24 25 EX-10.7 3 EXECUTIVE INCENTIVE BONUS PLAN NASH FINCH COMPANY EXECUTIVE INCENTIVE BONUS AND DEFERRED COMPENSATION PLAN (AS AMENDED AND RESTATED EFFECTIVE DECEMBER 31, 1993.) 1. PURPOSE OF THE PLAN. The purpose of this Executive Incentive Bonus and Deferred Compensation Plan is to increase the interest of the Company's top executives and key employees in continuing their employment and to increase their incentive in the management, growth and success of the business by giving such employees an opportunity to participate in the profits and growth of the business in the same manner as if they were shareholders. The term "Company" as used in this Plan includes Nash Finch Company and each of its present and future subsidiaries. 2. ADMINISTRATION OF THE PLAN. This Plan will be administered by the Compensation Committee (the "Committee") of the Board of Directors. Members of the Committee shall not be eligible to vote on any resolution relating to their individual eligibility to participate in the Plan or individual contract. The Committee is empowered to make such rules and regulations and interpretations as may be necessary to carry out the Plan, and its decisions by majority vote shall be binding and conclusive upon all persons participating in this Plan or claiming any rights thereunder. A majority of the members of the Committee shall constitute a quorum for the transaction of business and all actions taken at a meeting shall be by the vote of a majority of those present at such meeting. Any action may be taken by the Committee without a meeting upon written consent signed by all the members of the Committee. The Committee shall authorize records required to be maintained under the Plan. The form of the agreement under this Plan to be entered into with employees shall be approved by the Committee. 3. PARTICIPANTS. The Committee shall determine from time to time which executives or key employees of the Company or any subsidiary shall participate in the Plan. Participants may include (a) directors who are fulltime officers or employees of the Company, (b) fulltime officers and other executive employees of the Company or any subsidiary, and (c) any other fulltime executives or key employees of the Company or any subsidiary selected by the Committee for any calendar year, established by the Committee pursuant to its rules and regulations. 4. PROCEDURE FOR SELECTION OF PARTICIPANTS. At the end of each year or at such time as the Committee shall establish under its rules and regulations, the Committee shall, exclusive of any participants who may be members of the Committee, select the participants to whom allotments are to be made for such year. The selection of a participant for any year shall not entitle such participant to an allotment for any subsequent year for which he is not selected for an allotment. 5. AMOUNT OF ALLOTMENTS. As of the end of each year, the Committee shall allot to the participants selected for such year from the amount of the Incentive Bonus Fund for that year as hereinafter determined, such amount as the Committee in its sole discretion deems to be advisable and appropriate, but not more than 33-1/3% of each participant's basic annual salary from the Company or any subsidiary for such year shall be allotted to him. The Committee shall notify each participant promptly in writing of any allotment made to him. Such allotment shall be evidenced by a written agreement between the Company and the participant if such allotment is the first for such participant, or such allotment shall be included as part of the agreement for any prior year entered into between the Company and the participant. Each allotment shall be contingently credited and converted into share equivalents, as further provided herein, and shall be distributable only in the manner and subject to the conditions set forth herein. The entire amount of each allotment to each participant shall be contingently credited to him at the end of each year. The portion of the Incentive Bonus Fund for any year in excess of the maximum limitation for all participants, as determined by the Committee, shall be cancelled. In order to qualify for an allotment, a participant must be actively employed by the Company, or be on an approved leave of absence, on the last day of the year for which the allotment is made. The allotments to participants for any year shall be made from an Incentive Bonus Fund computed to be 5% of the excess, if any, of the consolidated net income of the Company and its consolidated subsidiaries for the year over 6% of the stockholders' equity as shown in the consolidated balance sheet of the Company and its consolidated subsidiaries at the end of the preceding year as certified by the Company's independent certified public accountants. No Incentive Bonus Fund shall be computed if the consolidated net income of the Company and its consolidated subsidiaries for a year does not exceed 6% of the stockholders' equity at the end of the preceding year. However, the Committee may, in its discretion and by appropriate action, authorize an Incentive Bonus Fund of any amount for such year in the event that the amount of the Incentive Bonus Fund computed under the formula for such year is zero or an insignificant amount in the judgment of the Committee. "Consolidated net income" as used herein, shall mean the amount of the net earnings as shown in the consolidated statement of earnings of the Company and its consolidated subsidiaries for the year as certified by the Company's independent certified public accountants subject, however, to the discretion of the Committee to exclude all or any items of material amount therein applicable to any prior year. 6. CONVERSION OF ALLOTMENTS INTO SHARE EQUIVALENTS AND CREDIT OF DIVIDEND AND INTEREST EQUIVALENTS. Each allotment contingently credited to a participant shall be converted into an equivalent number of shares of the common stock of the Company (the "Common Stock"). Commencing with any such allotment for 1993, and for subsequent years, the number of such share equivalents shall be determined by dividing (a) the amount of the allotment by (b) the -2- average, rounded to the nearest one-tenth of a cent ($.001), of the closing sales prices per share for the Common Stock reported by the NASDAQ National Market System, or such other stock exchange or market on which the Common Stock may be listed at any particular time (the "Average Price"), for the last calendar quarter of the year for which the allotment is made. The number of share equivalents so determined shall be computed to four decimal places. For purposes of determining the Average Price, the closing sales price for any trading day for which there are no reported sales of the Common Stock shall be deemed to be the last previously reported closing sales price. Each participant shall also be contingently credited as of the end of each year with an amount equal to the product of (x) the total dividends per share on the Common Stock declared in such year multiplied by (y) the aggregate number of share equivalents contingently credited to the said participant as of the beginning of such year. The amount so determined and credited shall be converted to additional share equivalents in the manner stated in the preceding paragraph using the Average Price for the last calendar quarter of such year. In the event that the authorized shares of Common Stock are split or changed in any manner by reason of any reorganization, merger, consolidation, stock split, stock dividend, or recapitalization, then the number of share equivalents and the market value equivalent thereof contingently credited to each participant shall be appropriately adjusted. The methods for determining share equivalents to be credited to participants, as set forth in the preceding two paragraphs of this Section 6, shall be effective for allotments and dividend equivalents contingently credited to participants for 1993 and subsequent years. Further, the total "cash" balances contingently credited to participants' accounts for 1992 and prior years for (i) dividends declared and (ii) partial share equivalents, shall be converted as of December 31, 1993, into additional share equivalents in the manner stated in the first paragraph of this Section 6, using the Average Price for the last calendar quarter of 1993. The conversion of allotments for 1992 and prior years into share equivalents shall remain as originally determined; that is, on the basis of the last available closing market quotation price per share for the Common Stock for the applicable year. In the event that a participant's allotment and dividend equivalents are to be distributed to the participant in more than one (1) installment, then the participant shall be paid an amount, within fifteen (15) days of the end of each quarter of the calendar year, equal to the interest which would have accrued during the quarter on the unpaid balance due the participant at the end of such calendar quarter. The interest rate shall equal the prime interest rate charged by Norwest Bank Minnesota, N.A. on the last business day of each quarter. For example, assume that the unpaid balance due a -3- participant on December 31, Year I is $240,000 and that the participant will receive monthly payments of $2,000 for a ten (10) year period beginning in Year II. Further assume that the prime interest rates in effect on the last business day of March, June, September and December, Year II, are 6-1/4%, 6-3/4%, 7-1/4% and 7-3/4%, respectively. During Year II, the participant will be due the following additional interest equivalency payments:
Quarterly Interest Equivalency Payments -------------------- 1st Quarter -- $ 234,000 x .0625 x .25 = $ 3,656.25 2nd Quarter -- 228,000 x .0675 x .25 = 3,847.50 3rd Quarter -- 222,000 x .0725 x .25 = 4,023.75 4th Quarter -- 216,000 x .0775 x .25 = 4,185.00
7. TERMS OF AGREEMENTS. Each agreement authorized under this Plan shall cover a period of one year unless additional allotments are made in any subsequent year in which case such agreement shall also constitute an agreement for such subsequent year or years. Each agreement shall provide that (a) the participant will continue in full-time employment with the Company or a subsidiary until age 65 or other age approved and authorized by the Committee but in no case earlier than age 60, (b) the participant will, upon retirement, agree to be available for consultation during the period that he is receiving distributions hereunder, (c) the participant will refrain from actively participating or engaging in any business in competition with the Company or any subsidiary, (d) the participant will agree to the terms of accumulation and distribution of his allotments, and (e) the participant will agree to be bound concurrently with the Company under this Plan and the rules and regulations of the Committee promulgated thereunder. 8. FORFEITURES. Upon termination of a participant's service with the Company or a subsidiary prior to age 65, such participant shall forfeit 50% of all allotments and dividend equivalents contingently credited to him in any year except that such forfeiture shall not apply in the case of termination of service (a) attributable to death, disability, or discharge without cause, (b) for any reason after the participant has attained age 60, or (c) attributable to any reason approved by the Committee. The entire amount of a participant's allotments, dividend equivalents, and interest equivalents shall be forfeited and cancelled if, without the prior written consent of the Company, the participant at any time prior to his termination of service, or during the period that he is receiving distributions hereunder, actively participates or engages in any business in competition with the Company or any subsidiary or fails to hold himself available for consultation, or if the employment of the participant is terminated at any time prior to age 65 because of evidence of dishonesty or mistrust in his employment or because of his involvement in a crime or misdemeanor against the -4- Company or any subsidiary or any employee thereof for which he is convicted or which he has confessed in writing to the Company or to any law enforcement agency. Allotments and dividend equivalents contingently credited to a participant, as well as interest equivalents, that shall have been forfeited by such participant shall be cancelled and shall not thereafter be reallotted to any other participant. 9. DISTRIBUTION OF ALLOTMENTS. Distribution of the allotments and dividend equivalents contingently credited to and accumulated for the benefit of, a participant as of the end of the year in which termination of his service occurs, or as of an earlier date of retirement or other date of termination which does not entitle him to participate under this Plan for such year, shall be made by payments in cash in such manner and on such dates as determined by the Committee in its sole discretion immediately prior to the date the first payment is due or, if the Committee shall not have made such prior determination as aforesaid, then in equal monthly installments over a period of 120 months commencing with the second month following the month or following the end of the year of termination of service, whichever is applicable. Such installment payments shall also include an additional sum representing interest equivalency pursuant to Section 6 hereof. In the event that a participant dies after retirement but before any or all payments have been made, all remaining payments shall be made to the person or persons or the survivors thereof as designated by the participant pursuant to his agreement with the Company. The Committee shall cause the Company to make such payments in the manner of payment then in effect pursuant to said agreement, or in one or more installments, as the Committee in its sole discretion may then determine. The Company shall deduct from the amount of all payments made under this Plan any taxes required to be withheld under federal, state or local laws. The amount distributable to a participant shall be the greater of (a) the amount at which the participant's total share equivalents were contingently credited to the participant, or (b) an amount equal to the product of (x) the total share equivalents contingently credited to the participant multiplied by (y) the Average Price of the Common Stock for either (i) the calendar quarter ending on the date of termination (if the participant's date of termination is the last day of a calendar quarter or the next following day) or (ii) the last sixty-three (63) days U.S. stock markets are open for the trading of shares prior to or coinciding with the date of termination (if the participant's date of termination is not the last day of a calendar quarter or the next following day). -5- 10. RIGHTS OF PARTICIPANTS. No participant or any other person shall acquire or have any interest in any fund or in any specific asset or assets of the Company or any subsidiary by reason of any allotments to him hereunder, nor any right to receive any distribution under this Plan, except as and to the extent expressly provided in the Plan. Nothing in this Plan shall be deemed to give any officer or employee of the Company or any subsidiary any right to participate in the Plan except to such extent, if any, as the Committee may determine in accordance with the provisions of this Plan. The adoption of this Plan or the authorization and execution of an agreement thereunder shall not be held or construed to confer upon any employee any right or guarantee of continuation of employment by the Company or any subsidiary, nor shall it affect in any way the terms of any employment agreement now or hereafter in effect between the employee and the Company or a subsidiary and, further, it shall not confer upon any participant any rights of a shareholder by reason of the share equivalents contingently credited to him under this Plan. 11. NON-ASSIGNABILITY OF AGREEMENT. The agreement authorized under this Plan when entered into between the Company and the employee shall not be assignable or otherwise subject to hypothecation by the employee, nor shall the employee acquire any rights to any distributable amount thereunder except as provided in this Plan and such agreement. Such agreement shall continue in force under its terms whether or not this Plan is amended or terminated, and shall constitute a legally enforceable contract between the Company and the employee during the period of its existence. 12. AMENDMENT OR TERMINATION OF PLAN. The Committee may amend or discontinue this Plan at any time by the affirmative vote of a majority of such Committee who are not participants under this Plan. No amendment, however, shall alter or impair any agreement then in force without the consent of the employee covered thereby, and no amendment shall apply to or affect the payment or distribution of any participant of any amounts contingently credited to him for any year ended prior to the effective date of such amendment. Termination of the Plan shall not affect the agreements theretofore entered into between the Company and its employees, but all such agreements shall continue in force after the termination of this Plan in accordance with their terms and provisions. 13. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon the approval of the Executive Committee of the Board of Directors of the Company at any regular or special meeting, or at any adjournment thereof, called and held before December 31, 1967, and shall remain in effect until terminated by the Board of Directors. -6- 14. CHANGE IN CONTROL. For purposes of this Section 14, a "Change in Control" of the Company shall mean (a) the sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of related transactions) to any person that is not controlled by the Company, (b) the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company, or (c) a change in control of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item 1(a) of the Current Report on Form 8-K, as in effect on May 1, 1988, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred at such time as (x) any person is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors; or (y) individuals who constitute the Board of Directors on May 1, 1988, cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to May 1, 1988, whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors comprising the Board of Directors on May 1, 1988, (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purpose of this clause (y), considered as though such person were a member of the Board of Directors on May 1, 1988. The Company expressly recognizes that a Change in Control of the Company would be likely to result in a material alteration or diminution of a participant's position and responsibilities, and if that were to occur, certain of the terms of this Plan would be unreasonable or unfair in their application to participants. Accordingly, if, during the term of this Plan any Change in Control of the Company shall occur, the following provisions shall be applicable and shall supersede all other provisions of this Plan: a. CURRENT ALLOTMENTS. Notwithstanding provisions to the contrary in Section 5 and without any need for formal action by the Company, the amounts credited to and accumulated for the benefit of a participant under this Plan shall be increased to include an amount equal to the amount allotted to such participant with respect to the calendar year immediately preceding the occurrence of the Change in Control; -7- b. FORFEITURES. The provisions of Section 8 shall lapse and shall have no further applicability to any participant; and c. ACCELERATION. All amounts credited to and accumulated for the benefit of a participant (or other person receiving payments or entitled to receive payments under Section 9, such other person to be hereinafter called "other recipient"), including the current allotment provided in Section 14a, if any, shall become due and payable and shall be paid in full on the day the Change in Control becomes effective unless a participant or other recipient, prior thereto, shall notify the Committee, in writing, that such participant or other recipient waives the right to acceleration in which case the provision of Section 9 shall continue to apply to such participant or other recipient. In effecting such payment, the Committee may make such arrangements, including deposits in escrow or in trust in advance of the anticipated effective date of the Change in Control, as it may deem advisable to carry out the foregoing and to protect the interests of the Company in the event such Change in Control does not occur. -8- EX-10.14 4 EXERPTS FROM MINUTES EXCERPTS FROM MINUTES OF BOARD OF DIRECTORS MEETING OF NASH-FINCH COMPANY ON FEBRUARY 22, 1994 The Chairman then announced that the next item of business concerned compensation paid to outside directors, and called upon Mr. Flaten to report the recommendation of the Executive Committee. Mr. Flaten offered the following resolution and moved its adoption: RESOLVED, that effective as of March 1, 1994, outside members of the Board of Directors of the Company be compensated at the rate of $1,000 plus reasonable expenses incurred for each meeting of the Board of Directors of the Company attended, $1,000 per month retainer and $600 plus reasonable expenses incurred for attendance at meetings of committees of the Board unless the committee meeting is held on the same day as a Board meeting or is held by telephone conference, in which cases the fee shall be $400. For the purposes of this resolution, an outside director is defined as any director who is not a present full time employee of Nash Finch Company or its subsidiaries. RESOLVED FURTHER, that upon becoming effective, the foregoing resolution shall supersede any resolution heretofore adopted by this Board of Directors pertaining to compensation of outside directors. The above resolution was seconded by Mr. Nash and, upon vote being taken, all present voted unanimously in favor thereof and the same was declared duly adopted. EX-10.17 5 INCOME DEFERRAL PLAN EXHIBIT 10.17 NASH FINCH COMPANY INCOME DEFERRAL PLAN NASH FINCH COMPANY INCOME DEFERRAL PLAN TABLE OF CONTENTS ARTICLE 1 DESCRIPTION................................................... 1 1.1 Plan Name..................................................... 1 1.2 Plan Purpose.................................................. 1 1.3 Plan Type..................................................... 1 ARTICLE 2 PARTICIPATION................................................. 2 2.1 Eligibility................................................... 2 2.2 Transfer Among Participating Employers........................ 2 2.3 Multiple Employment........................................... 2 2.4 Termination or Ceasing to be a Qualified Employee............. 3 2.5 Condition of Participation.................................... 3 2.6 Termination of Participation.................................. 3 ARTICLE 3 BENEFITS...................................................... 4 3.1 Participant Accounts.......................................... 4 3.2 Deferral Credits.............................................. 4 3.3 Earnings Credits.............................................. 5 3.4 Vesting....................................................... 5 ARTICLE 4 DISTRIBUTION.................................................. 6 4.1 Distribution to Participant................................... 6 4.2 Distribution to Beneficiary................................... 7 4.3 Payment in Event of Incapacity................................ 8 ARTICLE 5 SOURCE OF PAYMENTS; NATURE OF INTEREST........................ 10 5.1 Establishment of Trust........................................ 10 5.2 Source of Payments............................................ 10 5.3 Status of Plan................................................ 10 5.4 Non-assignability of Benefits................................. 10 ARTICLE 6 MISCELLANEOUS................................................. 11 6.1 Administration................................................ 11 6.2 Benefit Claim Procedure....................................... 11 6.3 Adoption by Affiliated Organization........................... 12 6.4 Amendment and Termination..................................... 12 6.5 Withholding and Offsets....................................... 13 6.6 Disputes...................................................... 13 6.7 Other Benefits................................................ 13 6.8 No Warranties Regarding Tax Treatment......................... 13 -i- 6.9 No Employment Rights Created.................................. 13 ARTICLE 7 DEFINITIONS, CONSTRUCTION AND INTERPRETATION.................. 14 7.1 Account....................................................... 14 7.2 Active Participant............................................ 14 7.3 Affiliated Organization....................................... 14 7.4 Annual Bonus.................................................. 14 7.5 Base Salary................................................... 14 7.6 Board......................................................... 15 7.7 Beneficiary................................................... 15 7.8 Change in Control............................................. 15 7.9 Code.......................................................... 16 7.10 Committee..................................................... 16 7.11 Company....................................................... 16 7.12 Cross Reference............................................... 16 7.13 Effective Date................................................ 16 7.14 Employee...................................................... 16 7.15 ERISA......................................................... 16 7.16 Governing Law................................................. 17 7.17 Headings...................................................... 17 7.18 Participant................................................... 17 7.19 Participating Employer........................................ 17 7.20 Plan.......................................................... 17 7.21 Plan Year..................................................... 17 7.22 Plan Rule..................................................... 17 7.23 Profit Sharing Plan........................................... 17 7.24 Qualified Employee............................................ 17 7.25 Retirement.................................................... 17 7.26 Termination of Employment..................................... 17 7.27 Trust......................................................... 18 7.28 Trustee....................................................... 18 7.29 Unforeseeable Emergency....................................... 18 -ii- NASH FINCH COMPANY INCOME DEFERRAL PLAN ARTICLE 1 DESCRIPTION 1.1 PLAN NAME. The name of the Plan is the "Nash Finch Company Income Deferral Plan." 1.2 PLAN PURPOSE. The purpose of the Plan is to provide Active Participants with the opportunity to defer a portion of the Base Salary or Annual Bonus or both that would otherwise be payable to them and to compensate Active Participants for the amount, if any, by which such deferrals decrease the amount of profit sharing contributions that would otherwise be made on their behalf pursuant to the Profit Sharing Plan. 1.3 PLAN TYPE. The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees and, as such, is intended to be exempt from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by operation of sections 201(2), 301(a)(3) and 401(a)(4) thereof, respectively, and from the provisions of Title IV of ERISA, to the extent otherwise applicable, by operation of section 4021(b)(6) thereof. The Plan will be construed and administered in a manner that is consistent with and gives effect to such intent. ARTICLE 2 PARTICIPATION 2.1 ELIGIBILITY. (A) Prior to the beginning of each Plan Year, the Committee will determine which Qualified Employees, if any, are eligible to make deferral elections pursuant to Section 3.2 with respect to the Plan Year. (B) At any time during a Plan Year, the Committee may determine that a Qualified Employee who became such after the beginning of the Plan Year is eligible to make a deferral election pursuant to Section 3.2 with respect to the remainder of the Plan Year. (C) The fact that an Employee has been eligible to make deferral elections with respect to any particular Plan Year does not give the Employee any right to make deferral elections in any other Plan Year. (D) A Participant who, pursuant to Section 3.2(B), has revoked an Annual Bonus deferral election in connection with an Unforeseeable Emergency is not eligible to elect additional deferrals (of either Base Salary or Annual Bonus) with respect to the remainder of the Plan Year during which the revocation occurs or the immediately following Plan Year. A Participant who has received a distribution pursuant to Section 4.1(D) is not eligible to elect additional deferrals (of either Base Salary or Annual Bonus) with respect to the Plan Year during which the distribution is received or the four immediately following Plan Years. In either case, however, for the Plan Year during which the revocation or distribution occurs, the Participant's Account will be credited with the amount, if any, determined pursuant to Section 3.2(E) based on his or her deferrals for the portion of the Plan Year preceding the revocation or distribution. (E) In conjunction with his or her initial election to participate in the Plan, a Participant must elect whether his or her distribution made pursuant to Section 4.1(A)(2) following his or her disability or termination of employment on or after attaining Retirement Age will (1) be made or commence within 60 days after termination of employment or within the first 60 days of the following calendar year and (2) be made in the form of a lump sum payment or installments. Such elections are irrevocable and apply to all benefits distributed to the Participant pursuant to the Plan. 2.2 TRANSFER AMONG PARTICIPATING EMPLOYERS. An Active Participant who transfers employment from one Participating Employer to another Participating Employer and who continues to be a Qualified Employee after the transfer will, for the duration of the Plan Year during which the transfer occurs, continue to participate in the Plan, in accordance with the election in effect for the portion of the Plan Year before the transfer, as a Qualified Employee of such other Participating Employer. 2.3 MULTIPLE EMPLOYMENT. An Active Participant who is simultaneously employed as a Qualified Employee with more than one Participating Employer will participate in the Plan as a Qualified Employee of all such Participating Employers on the basis of a single - 2 - deferral election pursuant to Section 3.2 applied separately to his or her Base Salary and Annual Bonus from each such Participating Employer. 2.4 TERMINATION OR CEASING TO BE A QUALIFIED EMPLOYEE. An Active Participant who, during a Plan Year, terminates his or her employment with all Participating Employers or is determined by the Committee to have otherwise ceased to be a Qualified Employee is not eligible for further deferral credits for the Plan Year pursuant to Section 3.2 other than such credits relating to the period prior to such termination or cessation. 2.5 CONDITION OF PARTICIPATION. Each Qualified Employee, as a condition of participation, is bound by all of the terms and conditions of the Plan and the Plan Rules, including but not limited to the reserved right of the Company to amend or terminate the Plan, and must furnish to the Committee such pertinent information, and must execute such election forms and other instruments, as the Committee or Plan Rules may require by such dates as the Committee or Plan Rules may establish. 2.6 TERMINATION OF PARTICIPATION. A Participant or Beneficiary will cease to be such as of the date on which his or her entire Account balance has been distributed. - 3 - ARTICLE 3 BENEFITS 3.1 PARTICIPANT ACCOUNTS. The Committee will establish and maintain an Account for each Participant to evidence amounts credited with respect to the Participant pursuant to Sections 3.2 and 3.3. If a Participant makes deferrals with respect to Base Salary, Annual Bonus or both from more than one Participating Employer, the Committee will establish a separate Account for the Participant with respect to each such Participating Employer. 3.2 DEFERRAL CREDITS. (A) An Active Participant may elect to defer his or her Base Salary for a Plan Year by any one percent increment from one percent to a maximum percentage specified in Plan Rules and the percentage so elected will automatically apply to the Participant's Base Salary as adjusted from time to time. An election made pursuant to this subsection will not be effective unless it is made on a properly completed election form received by the Committee by a date specified by the Committee which is prior to the first day of the Plan Year to which the election relates or, in the case of an Active Participant who is determined by the Committee to be eligible to participate for a Plan Year pursuant to Section 2.1(B), within 30 days after the Committee's determination. An Active Participant may revoke a deferral election made pursuant to this subsection at any time. The revocation will be effective as soon as administratively practicable after the Committee receives a properly completed revocation form. Any election or revocation pursuant to this subsection applies only to Base Salary relating to services performed after the effective date of the election or revocation. (B) An Active Participant who is determined by the Committee to be eligible to participate for a Plan Year pursuant to Section 2.1(A) may elect to defer his or her Annual Bonus for the Plan Year by any five percent increment from five percent to a maximum percentage specified in Plan Rules. An Active Participant who is determined by the Committee to be eligible to participate for a Plan Year pursuant to Section 2.1(B) may, if and to the extent specified by the Committee in conjunction with such determination, elect to defer his or her Annual Bonus for the Plan Year. An election made pursuant to this subsection will not be effective unless it is made on a properly completed election form received by the Committee by a date specified by the Committee which is prior to the first day of the Plan Year to which the election relates or, in the case of an Active Participant who is determined by the Committee to be eligible to participate for a Plan Year pursuant to Section 2.1(B), within 30 days after the Committee's determination. An election pursuant to this subsection is irrevocable after the latest date by which it must be received by the Committee to be effective; provided, that Plan Rules may permit a Participant to revoke the election after that date if the Participant has an Unforeseeable Emergency, in which case no additional deferrals of either Base Salary or Annual Bonus will be made with respect to the portion of the Plan Year following the revocation and the Participant will be ineligible to elect additional deferrals for the period specified in Section 2.1(D). (C) Notwithstanding Subsections (A) and (B), Plan Rules may impose a dollar limitation on the total amount of deferrals that may be made during a Plan Year - 4 - and may establish procedures to be applied in the event that a Participant's deferral elections for a Plan Year would otherwise cause such limitation to be exceeded. Plan Rules may also impose conditions and limitations on participation by any Qualified Employee or any group of similarly situated Qualified Employees. (D) Reductions to an Active Participant's Base Salary and Annual Bonus pursuant to this section will be credited to his or her Account as of the day on which the Participant would have otherwise received the Base Salary or Annual Bonus with respect to which such credit relates. (E) The Account of an Active Participant who is eligible to share in the allocation of a Participating Employer's profit sharing contribution for a Plan Year pursuant to the Profit Sharing Plan will be credited with an amount equal to the amount, if any, by which (1) the amount of the profit sharing contribution that would have been allocated to his or her account under the Profit Sharing Plan but for deferrals made pursuant to this Plan exceeds (2) the amount of the profit sharing contribution actually allocated to his or her account under the Profit Sharing Plan. The Account will be credited as of the first day of the month next following the month during which the Participatory Employer's profit sharing contribution has been made in full. 3.3 EARNINGS CREDITS. As of the last day of each calendar quarter, the Committee will, in accordance with Plan Rules, credit a Participant's Account, including the undistributed portion of an Account being distributed in the form of installment payments, with earnings in an amount equal to the "applicable percentage" of the average daily balance of the Account for the quarter. The applicable percentage for a given calendar quarter is the quarterly equivalent of the average of the annual yield set forth for each month during the quarter in the MOODY'S BOND RECORD, published by Moody's Investor's Service, Inc. (or any successor thereto) under the heading of "Moody's Corporate Bond Yield Averages -- Av. Corp." or, if such yield is no longer available, a substantially similar average selected by the Committee. 3.4 VESTING. Each Participant always has a fully vested nonforfeitable interest in his or her Account. - 5 - ARTICLE 4 DISTRIBUTION 4.1 DISTRIBUTION TO PARTICIPANT. (A) FORM. (1) TERMINATION PRIOR TO RETIREMENT AGE. If a Participant terminates employment prior to attaining Retirement Age, distribution to the Participant will be made in the form of a lump sum payment. (2) DISABILITY OR TERMINATION ON OR AFTER RETIREMENT AGE. If a Participant (a) is determined by the Committee to be absent from active employment because of illness, injury or disease that is likely to be of long or indefinite duration or result in death or (b) terminates employment on or after attaining Retirement Age, distribution to the Participant will be made in the form of ten annual installment payments made on or around the same date in each of the ten years unless, at the time of his or her initial enrollment in the Plan, the Participant makes an irrevocable election to receive his or her distribution in the form of a lump sum payment. (B) TIME. Distribution to a Participant will be made or commence, as the case may be, within the 60-day period following the date on which the Participant is determined to be disabled or terminates employment, unless the distribution is made pursuant to Subsection (A)(2), in which case the distribution will be made or commence within the first 60 days of the calendar year following the calendar year during which he or she is determined to be disabled or terminates employment if the Participant so elected pursuant to Section 2.1(E); provided, that if the Participant makes a written claim pursuant to Section 6.2 objecting to the benefit, distribution will be made or commence as soon as administratively practicable after the Committee's final determination with respect to the claim. (C) AMOUNT. If distribution is made in the form of a lump sum payment, the amount of the payment will be equal to the sum of (1) the balance of the Participant's Account as of the last day of the calendar quarter immediately preceding the date of the distribution plus (2) deferrals credited to the Account pursuant to Section 3.2 since the last day of the calendar quarter immediately preceding the date of the distribution plus (3) earnings on the average daily balance of the Account for the period beginning on the first day of the calendar quarter during which the distribution occurs and ending on the day before the distribution at the rate applied pursuant to Section 3.3 for the calendar quarter immediately preceding the distribution. If distribution is made in the form of installment payments, the amount of the payment each year will be determined by dividing the Participant's Account balance as of the last day of the calendar quarter immediately preceding the payment date by the total number of remaining payments (including the - 6 - payment in question); provided, that the amount of the final installment payment will be determined in accordance with the preceding sentence. (D) SPECIAL RULES. (1) WITHDRAWALS DUE TO UNFORESEEABLE EMERGENCY. Notwithstanding Subsections (A) or (B), a distribution will be made to a Participant if the Participant submits a written distribution request to the Committee and the Committee determines that the Participant has experienced an Unforeseeable Emergency. The amount of the distribution may not exceed the lesser of (a) the amount necessary to satisfy the emergency, as determined by the Committee or (b) the balance of the Account as of the date of the distribution determined in accordance with Subsection (C). The distribution will be made in the form of a lump sum payment as soon as administratively practicable after the Committee's determination that the Participant has experienced an Unforeseeable Emergency. (2) ACCELERATED DISTRIBUTION. Notwithstanding Subsections (A) or (B), a Participant may elect an immediate distribution of his or her Account in an amount equal to 90 percent of the balance of the Account as of the date of the distribution determined in accordance with Subsection (C), in which case the remaining balance of the Account will be forfeited. The distribution will be made in the form of a lump sum payment as soon as administratively practicable after the Committee's receipt of a written application on a form furnished by the Committee. (3) NONDEDUCTIBILITY. If the Committee determines in good faith that there is a reasonable likelihood that any compensation paid to a Participant by an Affiliated Organization for a taxable year of the Affiliated Organization would not be deductible by the Affiliated Organization solely by reason of the limitation under Code section 162(m), to the extent deemed necessary by the Committee to ensure that the entire amount of any distribution to the Participant pursuant to this subsection is deductible, the Committee may defer all or any portion of the distribution. 4.2 DISTRIBUTION TO BENEFICIARY. (A) FORM. In the event of a Participant's death, the balance of the Participant's Account will be distributed to the Participant's Beneficiary in a lump sum payment whether or not payments had commenced to the Participant in the form of installments prior to his or her death. (B) TIME. Distribution to a Beneficiary will be made within the 60-day period following the date on which the Committee receives notice of the Participant's death; provided, that if the Beneficiary makes a written claim pursuant to Section 6.2 objecting to the benefit, distribution will be made as soon as administratively practicable after the Committee's final determination with respect to the claim. - 7 - (C) AMOUNT. The amount of the payment will be determined in accordance with Section 4.1(C). (D) BENEFICIARY DESIGNATION. (1) Each Participant may designate, on a form furnished by the Committee, one or more primary Beneficiaries or alternative Beneficiaries to receive all or a specified part of his or her Account after his or her death, and the Participant may change or revoke any such designation from time to time. No such designation, change or revocation is effective unless executed by the Participant and received by the Committee during the Participant's lifetime. No designation of a Beneficiary other than the Participant's spouse is effective unless the spouse consents to the designation or the Committee determines that spousal consent cannot be obtained because the spouse cannot reasonably be located or is legally incapable of consenting. The consent must be in writing, must acknowledge the effect of the election and must be witnessed by a notary public. The consent is effective only with respect to the Beneficiary or class of Beneficiaries so designated and only with respect to the spouse who so consented. (2) If a Participant - (a) fails to designate a Beneficiary, or (b) revokes a Beneficiary designation without naming another Beneficiary, or (c) designates one or more Beneficiaries none of whom survives the Participant or exists at the time in question, for all or any portion of his or her Account, such Account or portion will be paid to the Participant's surviving spouse or, if the Participant is not survived by a spouse, to the representative of the Participant's estate. (3) The automatic Beneficiaries specified above and, unless the designation otherwise specifies, the Beneficiaries designated by the Participant, become fixed as of the Participant's death so that, if a Beneficiary survives the Participant but dies before the receipt of the payment due such Beneficiary, the payment will be made to the representative of such Beneficiary's estate. Any designation of a Beneficiary by name that is accompanied by a description of relationship or only by statement of relationship to the Participant is effective only to designate the person or persons standing in such relationship to the Participant at the Participant's death. 4.3 PAYMENT IN EVENT OF INCAPACITY. If any individual entitled to receive any payment under the Plan is, in the judgment of the Committee, physically, mentally or legally incapable of receiving or acknowledging receipt of the payment, and no legal representative has been appointed for the individual, the Committee may (but is not required to) cause the payment to be made to any one or more of the following as may be chosen by the Committee: the Beneficiary (in the case of the incapacity of a Participant); the institution - 8 - maintaining the individual; a custodian for the individual under the Uniform Transfers to Minors Act of any state; or the individual's spouse, children, parents, or other relatives by blood or marriage. The Committee is not required to see to the proper application of any such payment and the payment completely discharges all claims under the Plan against the Participating Employer, the Plan and Trust to the extent of the payment. - 9 - ARTICLE 5 SOURCE OF PAYMENTS; NATURE OF INTEREST 5.1 ESTABLISHMENT OF TRUST. (A) A Participating Employer may establish a Trust, or may be covered by a Trust established by another Participating Employer, with an independent corporate trustee. The Trust must be a grantor trust that conforms substantially with the model trust described in Revenue Procedure 92-64. The Participating Employers may from time to time transfer to the Trust cash, marketable securities or other property acceptable to the Trustee in accordance with the terms of the Trust. (B) Notwithstanding Subsection (A), not later than the effective date of a Change in Control, each Participating Employer must transfer to the Trust an amount not less than the amount by which (1) 125 percent of the aggregate balance of all Participants' Accounts attributable to the Participating Employer as of the last day of the month immediately preceding the effective date of the Change in Control (determined in the manner specified in Section 4.1(C) if the last day of the month is not also the last day of a calendar quarter) exceeds (2) the value of the Trust assets attributable to amounts previously contributed by the Participating Employer as of the most recent date as of which such value was determined. 5.2 SOURCE OF PAYMENTS. (A) Each Participating Employer will pay, from its general assets, the portion of any benefit pursuant to Article 4 or Section 6.4 attributable to a Participant's Account with respect to that Participating Employer, and all costs, charges and expenses relating thereto. (B) The Trustee will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer's obligations under the Plan in accordance with the terms of the Trust. The Participating Employer is responsible for paying any benefits attributable to a Participant's Account with respect to that Participating Employer that are not paid by the Trust. 5.3 STATUS OF PLAN. Nothing contained in the Plan or Trust is to be construed as providing for assets to be held for the benefit of any Participant or any other person or persons to whom benefits are to be paid pursuant to the terms of this Plan, the Participant's or other person's only interest under the Plan being the right to receive the benefits set forth herein. The Trust is established only for the convenience of the Participating Employers and the Participants, and no Participant has any interest in the assets of the Trust prior to distribution of such assets pursuant to the Plan. To the extent the Participant or any other person acquires a right to receive benefits under this Plan or the Trust, such right is no greater than the right of any unsecured general creditor of the Participating Employer. 5.4 NON-ASSIGNABILITY OF BENEFITS. The benefits payable under the Plan and the right to receive future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process. - 10 - ARTICLE 6 MISCELLANEOUS 6.1 ADMINISTRATION. (A) The Plan will be administered on behalf of the Company by a committee whose members will be appointed by and will serve at the pleasure of the Company's Board. Any Committee member may be dismissed at any time, with or without cause, on ten days' notice from the Company's Board. Any Committee member may resign by delivering his or her written resignation to the Company's Board. Vacancies arising by the death, resignation or removal of a Committee member may (but need not) be filled by the Company's Board. (B) The Committee will operate in accordance with such rules as the Company's Board may from time to time specify. (C) The Committee may delegate to any person authority to perform nondiscretionary, ministerial acts determined by the Committee to be necessary or desirable in connection with the administration of the Plan. (D) The Committee has discretionary power and authority to adopt, modify and rescind Plan Rules, make all determinations necessary for the administration of the Plan, to construe, interpret, apply and enforce the Plan and Plan Rules and to remedy ambiguities, inconsistencies, omissions and erroneous Account balances. (E) The Committee will maintain records, make the requisite calculations and disburse or direct the Trustee to disburse payments under the Plan. The Committee's interpretations, determinations, regulations and calculations are final and binding on all persons and parties concerned. (F) The Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each member of the Committee or other director, officer or employee of any Affiliated Organization performing administrative duties in connection with the Plan against any and all liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services in connection with the Plan, but only if such person did not act dishonestly or in bad faith or in willful violation of the law or regulations under which such liability, loss, cost or expense arises. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action for which a person may be entitled to indemnification under this provision. 6.2 BENEFIT CLAIM PROCEDURE. Within a reasonable time following termination of a Participant's employment, the Committee will determine and notify the Participant or, if the Participant is deceased, his or her Beneficiary, of his or her benefits, if any, payable under the Plan. Not later than 30 days after receipt of such notice, the Participant or his or her Beneficiary, as the case may be, may file with the Committee a written claim objecting to the Committee's determination. Not later than 90 days after receipt of such claim, the Committee will render a written decision on the claim to the claimant. If the - 11 - claim is denied in whole or in part, such decision will include: the reasons for the denial; a reference to the Plan provision that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the Plan's claim procedure. Not later than 60 days after receiving the Committee's written decision, the claimant may file with the Committee a written request for review of the Committee's decision, and the claimant or his or her representative may thereafter review Plan documents that relate to the claim and submit written comments to the Committee. Not later than 60 days after receiving such request, the Committee will afford the claimant or his or her representative an opportunity to present the claim in person to the Committee. Not later than 60 days after such presentation or, if there is no such presentation, not later than 60 days after the Committee's receipt of the request for review, the Committee will render a final written decision on the claim, which decision will include the specific reasons for the decision, including references to specific Plan provisions where appropriate. The 90- and 60-day periods during which the Committee must respond to the claimant may be extended by up to an additional 90 or 60 days, respectively, if special circumstances beyond the Committee's control so require and if notice of such extension is given to the claimant prior to the expiration of the initial 90- or 60-day period. 6.3 ADOPTION BY AFFILIATED ORGANIZATION. With the prior approval of the Committee, an Affiliated Organization may, by action of its Board, adopt this Plan and become a Participating Employer. 6.4 AMENDMENT AND TERMINATION. (A) By action of its Board, the Company may amend the Plan at any time and in any manner, except that (1) no amendment may adversely affect a benefit to which a Participant or the Beneficiary of a deceased Participant is entitled under the Plan as of the later of the adoption date or effective date of the amendment and (2) no attempted amendment to Section 5.1(B), this clause (2) or Section 7.8 will be effective with respect to any Change in Control, as defined in Section 7.8 without regard to the attempted amendment, occurring within 12 months after the date on which the attempted amendment is approved by the Company's Board unless each Participant provides his or her prior written consent to the amendment. Any amendment that changes the rate of earnings credited to Participants' Accounts pursuant to Section 3.3 is effective with respect to the portion of the Accounts attributable to credits made before the date on which the amendment is adopted only if the Company's Board determines in good faith that on that date, it is reasonably likely that, in the long run, the new rate will not result in materially lower earnings credits than the old rate. Any amendment to the Plan applies only to Participants who terminate employment after the effective date of the amendment unless the amendment expressly otherwise provides. (B) By action of its Board, the Company may terminate the Plan at any time. By action of its Board, any other Participating Employer may terminate its participation in the Plan at any time. If the Plan or a Participating Employer's participation in the Plan is terminated, no additional deferrals or deferral credits will be made with respect to affected Participants, other than credits relating to the period prior to the effective date of the termination, and the Accounts of affected - 12 - Participants will continue to be credited with earnings pursuant to Section 3.3 until they are distributed pursuant to Article 4 following the Participant's termination of employment or death. (C) Notwithstanding any other provision of the Plan to the contrary, the Committee may cause a Participating Employer to make an immediate lump sum distribution to any Participant of the balance of his or her Account (determined in the manner specified in Section 4.1(C)) and/or transfer the benefits that would otherwise be payable under the Plan for all or any Participants to a new plan that is similar in all material respects (other than those which require the action in question to be taken), if the Committee in good faith determines that: (1) such action is necessary to ensure the continued status of the Plan (or the transferee plan) as an unfunded plan maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees, or (2) a Participant's interest in the Plan has been or is likely to be includable in the Participant's gross income for federal income tax purposes prior to the actual payment of benefits pursuant to the Plan. 6.5 WITHHOLDING AND OFFSETS. The Participating Employers and the Trustee retain the right to withhold from any benefit payment under the Plan, any and all income, employment, excise and other tax as the Participating Employers or Trustee deems necessary and the Participating Employers may offset against amounts payable to a Participant or Beneficiary under the Plan any amounts then owing to the Participating Employers by such Participant or Beneficiary. 6.6 DISPUTES. In the event of a dispute over whether any person is entitled to a benefit under the Plan, the amount, form or timing of payment of any such benefit or any other provision of the Plan, the person is responsible for paying any costs he, she or it incurs, including attorney's fees and legal expenses, and each Participating Employer is responsible for paying any costs it incurs, including attorney's fees and legal expenses. 6.7 OTHER BENEFITS. Neither amounts deferred nor amounts paid pursuant to the Plan constitute salary or compensation for the purpose of computing benefits under any other benefit plan, practice, policy or procedure of a Participating Employer unless otherwise expressly provided thereunder. 6.8 NO WARRANTIES REGARDING TAX TREATMENT. The Participating Employers make no warranties regarding the tax treatment to any person of any deferrals or payments made pursuant to the Plan and each Participant will hold the Committee and the Participating Employers and their officers, directors, employees, agents and advisors harmless from any liability resulting from any tax position taken in good faith in connection with the Plan. 6.9 NO EMPLOYMENT RIGHTS CREATED. Neither the establishment of or participation in the Plan confers on any Employee the right to continued employment or limits the right of the Participating Employer to discharge, transfer, demote, modify terms and conditions of employment or otherwise deal with any Employee without regard to the effect which such action might have on him or her with respect to the Plan. - 13 - ARTICLE 7 DEFINITIONS, CONSTRUCTION AND INTERPRETATION The definitions and rules of construction and interpretation set forth in this article apply in construing the Plan unless the context otherwise indicates. 7.1 ACCOUNT. "Account" means the bookkeeping account maintained with respect to a Participant pursuant to Section 3.1. 7.2 ACTIVE PARTICIPANT. "Active Participant" with respect to a Plan Year is a Qualified Employee who the Committee has determined is eligible to participate in the Plan for the Plan Year pursuant to Section 2.1 for the portion of the Plan Year during which he or she remains eligible. 7.3 AFFILIATED ORGANIZATION. An "Affiliated Organization" is the Company and any corporation that is a member of a controlled group of corporations (within the meaning of Code section 1563(a) without regard to Code sections 1563(a)(4) and 1563(e)(3)(C)) that includes the Company or any trade or business (whether or not incorporated) that is controlled (within the meaning of Code section 414(c)) by the Company. 7.4 ANNUAL BONUS. "Annual Bonus" with respect to a Participant for a Plan Year means the discretionary annual cash bonus paid to the Participant by a Participating Employer during the calendar quarter first following the Plan Year or that would have been so paid but for an election made pursuant to the Plan. 7.5 BASE SALARY. "Base Salary" with respect to a Participant for a Plan Year means the regular cash remuneration for services rendered as a Qualified Employee paid to the Participant by a Participating Employer during the Plan Year or that would have been so paid but for an election made pursuant to the Plan, excluding the following: (1) any bonus; (2) the value of life insurance coverage included in the Participant's wages under Code section 79; (3) any car allowance, moving expense or mileage reimbursement; (4) any educational assistance payment; (5) any severance pay; (6) any payments under any plan of deferred compensation; or (7) any benefit under any qualified or nonqualified stock option or stock purchase plan; or (8) any other element of compensation specified in Plan Rules. - 14 - 7.6 BOARD. "Board" means the board of directors of the Affiliated Organization in question. When the Plan provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by the board of directors in question. 7.7 BENEFICIARY. "Beneficiary" with respect to a Participant is the person designated or otherwise determined under the provisions of Section 4.2(D) as the distributee of benefits payable after the Participant's death who has not ceased to be a Beneficiary pursuant to Section 2.6. 7.8 CHANGE IN CONTROL. (A) "Change in Control" is any of the following: (1) the sale, lease, exchange or other transfer, directly or indirectly, of all or substantially all of the assets of the Company, in one transaction or in a series of related transactions, to any person; (2) the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; (3) any person is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (a) 20 percent or more, but not more than 50 percent, of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the continuity directors or (b) more than 50 percent of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors(regardless of any approval by the continuity directors); (4) a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to the effective date of such merger or consolidation have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving company representing (a) 50 percent or more, but not more than 80 percent, of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the continuity directors, or (b) less than 50 percent of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the continuity directors); (5) the continuity directors cease for any reason to constitute at least a majority of the Company's board of directors; or - 15 - (6) a change in control of the Company of a nature that would be required to be reported pursuant to section 13 or 15(d) of the Exchange Act, whether or not the Company is then subject to such reporting requirement. (B) For purposes of this section: (1) a "continuity director" means any individual who is a member of the Company's board of directors on the Effective Date while he or she is a member of the board, and any individual who subsequently becomes a member of the Company's board of directors whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors who are continuity directors (either by a specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for director without objection to such nomination); (2) "Exchange Act" is the Securities Exchange Act of 1934, as amended from time to time; and (3) "person" includes any individual, corporation, partnership, group, association or other "person," as such term is defined in section 14(d) of the Exchange Act, other than (i) the Company; (ii) any corporation at least a majority of whose securities having ordinary voting power for the election of directors is owned, directly or indirectly, by the Company; (iii) any other entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of the entity's governing body; or (iv) any benefit plan sponsored by the Company, a corporation described in clause (ii) or an entity described in clause (iii). 7.9 CODE. "Code" means the Internal Revenue Code of 1986, as amended from time to time. 7.10 COMMITTEE. "Committee" means the administrative committee described in Section 6.1. 7.11 COMPANY. "Company" means Nash Finch Company or any successor thereto. 7.12 CROSS REFERENCE. References within a section of the Plan to a particular subsection refer to that subsection within the same section and references within a section or subsection to a particular clause refer to that clause within the same section or subsection, as the case may be. 7.13 EFFECTIVE DATE. "Effective Date" means June 1, 1994 or an earlier date specified by the Committee. 7.14 EMPLOYEE. "Employee" is an individual who performs services as a common law employee of a Participating Employer. 7.15 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. - 16 - 7.16 GOVERNING LAW. To the extent that state law is not preempted by the provisions of ERISA, or any other laws of the United States, all questions pertaining to the construction, validity, effect and enforcement of the Plan will be determined in accordance with the internal, substantive laws of the State of Minnesota without regard to its conflict of laws rules of the State of Minnesota or any other jurisdiction. 7.17 HEADINGS. The headings of articles and sections are included solely for convenience of reference; if there exists any conflict between such headings and the text of the Plan, the text will control. 7.18 PARTICIPANT. "Participant" is a current or former Active Participant to whose Account amounts have been credited pursuant to Article 3 and who has not ceased to be a Participant pursuant to Section 2.6. 7.19 PARTICIPATING EMPLOYER. "Participating Employer" is the Company and any other Affiliated Organization that has adopted the Plan, or all of them collectively, as the context requires. An Affiliated Organization will cease to be a Participating Employer upon a termination of the Plan as to its Employees and the satisfaction in full of all of its obligations under the Plan or upon its ceasing to be an Affiliated Organization. 7.20 PLAN. "Plan" means the Nash Finch Company Income Deferral Plan, as from time to time amended or restated. 7.21 PLAN YEAR. "Plan Year" means the period beginning on the Effective Date and ending on December 31, 1994 and, thereafter, the calendar year. 7.22 PLAN RULE. "Plan Rule" is a rule, policy, practice or procedure adopted by the Committee. Each Plan Rule will be uniform and nondiscriminatory with respect to persons determined by the Committee to be similarly situated. 7.23 PROFIT SHARING PLAN. "Profit Sharing Plan" means the Nash Finch Company Profit Sharing Plan as amended from time to time. 7.24 QUALIFIED EMPLOYEE. "Qualified Employee" means an Employee who is considered to be a management or highly compensated employee under Plan Rules. 7.25 RETIREMENT AGE. "Retirement Age" means the earliest age at or after which a termination of employment is considered to be a retirement under policies of the Participating Employer generally applicable to Qualified Employees as in effect from time to time. 7.26 TERMINATION OF EMPLOYMENT. (A) For purposes of determining entitlement to distribution under this Plan, subject to Subsections (B) and (C), a Participant will be deemed to have terminated his or her employment only if the Committee determines that he or she has completely severed his or her employment relationship with all Affiliated Organizations or has become disabled within the meaning of Section 4.1(A)(2). Accordingly, neither transfer of employment among Affiliated Organizations nor absence from active service by reason of leave of absence of any nature (other than in connection with a Participant becoming disabled within the meaning of Section 4.1(A)(2)) will - 17 - constitute a termination of employment. In addition, neither termination of the Plan nor, subject to Subsection (C), termination of participation in the Plan by a Participating Employer will be deemed to result in a termination of employment with respect to any affected Participant. (B) If some or all of the assets of a Participating Employer are acquired by a unrelated third party, a Participant who is employed by the acquiror or an affiliate of the acquiror in connection with the acquisition will be deemed to have terminated his or her employment unless the acquiror adopts a successor plan which is substantially similar to the Plan in all material respects and expressly assumes the Participating Employer's obligation to provide benefits to the Participant, in which case the Participating Employer will cease to have any obligation to provide benefits to the Participant pursuant to the Plan as of the effective date of the assumption. (C) If a Participating Employer ceases to be an Affiliated Organization, unless otherwise provided in an agreement between the Company or the Participating Employer and an unrelated third party acquiror: (1) a Participant who is employed with the Participating Employer; or (2) a Participant who is not employed with the Participating Employer but has an Account balance attributable to the Participating Employer will not be deemed to have terminated his or her employment with respect to his or her Account balance attributable to the Participating Employer and the Participating Employer will, after the date on which it ceases to be an Affiliated Organization, continue to be solely responsible to provide benefits to the Participant equal to the balance of the Account as of the effective date of the cessation and as thereafter increased by deferral credits relating to the period before the effective date and earnings credits pursuant to Section 3.3. 7.27 TRUST. "Trust" means any trust or trusts established by a Participating Employer pursuant to Section 5.1. 7.28 TRUSTEE. "Trustee" means the one or more banks or trust companies that at the relevant time has or have been appointed by the Company to act as Trustee of the Trust. 7.29 UNFORESEEABLE EMERGENCY. "Unforeseeable Emergency" means an unanticipated emergency that is caused by an event beyond the control of a Participant and that would result in severe financial hardship to the Participant if the revocation or distribution, as the case may be, were not permitted. An Unforeseeable Emergency includes a sudden and unexpected illness or accident of the Participant or a dependent (as defined in Code section 152(a)) of the Participant, the loss of the Participant's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. An Unforeseeable Emergency does not exist if the financial hardship may be relieved (1) through reimbursement or compensation by insurance or otherwise, (2) by liquidation of the Participant's assets, to the extent the liquidation itself would not cause severe hardship or (3) by cessation of deferrals under - 18 - the Plan. The existence of an Unforeseeable Emergency will be determined by the Committee. - 19 - EX-13.1 6 EXHIBIT 13.1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total sales and revenues increased 8.3% for the 52 weeks of fiscal 1993 to $2.724 billion compared to $2.515 billion in the 53 weeks of 1992 and $2.343 billion in 1991. The increase is primarily attributed to the acquisitions of the military wholesale business of B. Green & Company, which occurred at the end of fiscal 1992, and the 16-store Easter chain, which was acquired at the end of the second quarter of fiscal 1993. In 1993, wholesale sales increased 9.7%. When sales gains realized from acquisitions and the effect of an additional week of operations last year are excluded, the increase was 1.7%. Sales growth continued to be hampered by a general weakness in the economy and deflation in food prices. An internally measured inflation index showed a deflation rate of .75 % in food prices in 1993 compared to an inflation rate of .5 % in 1992. Wholesale sales for 1992 improved over 1991 due to the acquisition of the Tidewater Wholesale Grocery division in January 1992, and the additional week of sales in 1992. Retail sales for 1993 increased 5.1% overall due to acquisitions and the opening of new and expanded stores. When the effects of stores acquired or sold during the year and the extra week of sales last year are eliminated, however, the result is a decline of 1.3%. This is principally attributable to increasing competitive pressures in certain market areas and, to a lesser extent, deflation in food prices. Retail sales increased 2.0% in 1992 compared to 1991 largely due to the additional week of sales. Gross margins were 14.6%, 14.6% and 14.8% in 1993, 1992 and 1991, respectively. Although wholesale sales, which typically achieve lower margins than retail, accounted for a slightly greater proportion of total sales in fiscal 1993 than in 1992, margin improvements for both wholesale and retail segments were sufficient to offset any reduction that might have resulted from the proportionate change in sales. The decrease in margins in 1992 compared to 1991 resulted from a higher proportion of lower margin wholesale sales. Margin improvements in 1993 were the result of an increase in sales, as a percentage of total sales, of higher margin product categories. Selling, general and administrative expenses, as a percentage of revenues were 12.2% in 1993 compared to 11.9% in 1992 and 1991. During 1993, the Company increased its provision for bad debts by $10.1 million compared with $3.7 million in 1992. This represented a substantial portion of the increase in expense over the prior year. The increased provision primarily consisted of approximately $5.0 million relating to the bankruptcy of a multi-store customer in the Southeast and $3.1 million associated with the debt-workout acquisition of 23 Food Folks stores which was completed in January 1994 (see Note 13 of notes to consolidated financial statements). It is the Company's intention to operate these stores as part of its corporate retail operations. Selling, general and administrative expenses showed no change as a percent of revenues in 1992 compared to 1991. Cost containment measures have been successful in controlling costs, especially in the areas of health care and workers' compensation in each of the last two years compared to fiscal 1991. The Company continues to concentrate on cost controls as well as productivity gains in an effort to reduce operating expenses. Depreciation and amortization expense increased 7.7% and 3.5% for 1993 and 1992 compared to their respective prior years. These changes are consistent with increases in property, plant and equipment and intangible assets. Depreciation and amortization expense for 1993 also reflects the expense related to acquisitions which occurred at the end of 1992 as well as the mid-year 1993 acquisition of 16 retail stores. Interest expense in 1993 increased 8.8% over 1992 as a result of greater average short-term borrowings partially offset by more favorable borrowing rates. As a percentage of revenues, interest expense was .37%, .36% and .38% for 1993, 1992 and 1991, respectively. The increase in capital lease obligations also contributed to higher interest expense in fiscal 1993. Earnings before income taxes decreased $5.9 million, or 18.2%, from fiscal 1992. The decrease is attributed to higher bad debt expense at the wholesale level which was partially offset by the profit contribution of the recent acquisitions, especially our Baltimore-based military distribution operation. Retail operations in 1993, both corporate and independent, were hampered by more intense competitive pressures in certain regions. This is expected to continue in 1994 making expense control for our wholesale and retail segments imperative to increasing both profit and return on investment. The operating results of Nash DeCamp, the Company's produce marketing subsidiary, were excellent. Nash DeCamp enjoyed a record year of revenues and earnings as a result of improved prices for most commodities in contrast to the excessive supply of quality fruit and depressed markets which adversely affected 1992. The Company's effective tax rates are 40.5%, 38.4% and 38.1% for 1993, 1992 and 1991, respectively. The rate increase reflects the new federal tax legislation enacted in 1993 and higher state tax rates. The increase in 1992 over 1991 was due to a reduction in the federal targeted jobs credit and higher state tax rates. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its capital needs through a combination of internal and external sources. These sources include retained earnings, short- term bank borrowings, various types of long-term debt, leasing and equity financing. As external financing is required in the future, the Company believes that its conservative debt structure and strong financial position will continue to support its ability to obtain the required funds. Cash provided from operations increased from $30.8 million in 1992 to $83.0 million in 1993. The main reason for this increase was that inventories in existing businesses decreased by $26.5 million in 1993 compared with an increase in inventories in 1992 of $22.2 million. This reduction in 1993 represents the results of sustained efforts to effectively manage inventories thereby freeing cash to fund other corporate needs. The Easter group of stores was acquired during 1993 for cash totaling $27.0 million. The acquisition included 16 stores located in Iowa, Illinois and Missouri. The ratio of current assets to current liabilities at the close of 1993, 1992 and 1991 was 1.37%, 1.45% and 1.55%, respectively. The decrease in current ratio and working capital is principally the result of utilizing short-term financing to fund acquisitions. The Company may consider alternate financing at a later date. The Company's short- term liquidity is, however, stronger than its current ratio would indicate because, as shown in the notes to the January 1, 1994 consolidated financial statements, the replacement value of inventories is $42.5 million more than the reported LIFO inventory values. Excluding acquisitions and capital leases, capital expenditures were $36.4 million in 1993, a decrease of $6.6 million from $43.0 million in 1992. Capital expenditures include improvements to distribution centers and existing retail stores and new store construction. Truck and trailer replacement continued in accordance with pre-established schedules to maintain an up-to-date delivery fleet. Capital expenditures for 1994 are estimated at $40.9 million, exclusive of acquisitions. Dividend payments in 1993 were $.72 per share, up from $.71 per share in 1992. These amounts represented 49% and 38% of net earnings in 1993 and 1992, respectively. On April 2, 1992, the Company sold notes receivable with an approximate principal balance of $22.8 million to an investor for cash. In addition, new loans to customers totaling $15.9 million were made during 1993 compared with $23.0 million in 1992. Long-term debt decreased from $92.1 million at the end of 1992 to $89.8 million at the end of 1993. The amount of long-term debt at the end of 1992 includes short-term debt of $25.0 million reclassified for financial statement presentation purposes to long-term debt based on commitments entered into and finalized subsequent to year end. Long- term debt and capitalized leases as a percentage of total capital decreased from 33.0% at the end of 1992 to 32.9% at the end of 1993. Return on average stockholders' equity was 8.1% in 1993, down from 10.8% in 1992. At year end, the Company had $115 million in informal committed and uncommitted short-term lines of credit with banks. Short-term bank borrowing arrangements have been sufficient to meet funding requirements. Short-term bank borrowings averaged $43.2 million during 1993 and were $38.3 million at year end. Borrowings ranged from a high of $77.5 million, before reclassification of $25.0 million to long- term as explained above, to a low of $18.0 million during the year. Interest on short-term borrowings were generally at negotiated rates. Lines of credit are renewable each year under terms to be negotiated. The Company believes that additional short-term credit would be available if needed. Stockholders' equity increased to $199.3 million at the end of 1993 from $191.2 million at the end of the previous year. This increase will provide an additional equity base for future growth. PRICE RANGE OF COMMON STOCK AND DIVIDENDS Nash Finch Company Common Stock is traded in the national over-the-counter market under the symbol NAFC. The following table sets forth, for each of the calendar periods indicated, the range of high and low closing sales prices for the Common Stock as reported by the NASDAQ National Market System, and the cash dividends paid per share of Common Stock. Prices do not include adjustments for retail mark-ups, mark-downs or commissions. At January 1, 1994 there were 2,074 stockholders of record.
Dividends 1993 1992 Per Share ------------- ----------- ------------ High Low High Low 1993 1992 - -------------------------------------------------------------------------- First Quarter $23 1/4 18 1/4 19 1/2 17 1/4 .18 .17 Second Quarter 21 3/4 19 1/4 19 1/4 17 3/8 .18 .17 Third Quarter 22 1/2 19 3/8 19 3/4 17 1/4 .18 .18 Fourth Quarter 20 1/2 17 19 1/4 16 1/4 .18 .19
NASH FINCH COMPANY AND SUBSIDIARIES Quarterly Financial Information (Unaudited)
A summary of quarterly financial information is presented. First Quarter Second Quarter Third Quarter Fourth Quarter 12 Weeks 12 Weeks 16 Weeks 12 Weeks 13 Weeks -------------------- ----------------- ------------------ --------------------- (In thousands, except per share amounts) 1993 1992 1993 1992 1993 1992 1993 1992 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales and other income $ 601,066 531,883 631,266 567,871 856,551 784,421 634,652 631,263 Cost of sales 516,583 454,212 540,365 483,600 726,926 668,911 541,375 541,122 Earnings before income taxes 4,021 3,698 8,218 7,765 5,384 10,217 9,055 10,918 Income taxes 1,568 1,433 3,205 3,009 2,364 3,959 3,667 4,129 Net earnings 2,453 2,265 5,013 4,756 3,020 6,258 5,388 6,789 Percent to sales and revenues .41 .42 .79 .83 .36 .80 .84 1.08 Net earnings per share $ .23 .21 .46 .44 .27 .57 .50 .63 Average number of shares outstanding 10,872 10,871 10,872 10,872 10,872 10,872 10,872 10,872
[LOGO] NASH-FINCH COMPANY AND SUBSIDIARIES Consolidated Financial Statements January 1, 1994 and January 2, 1993 [LOGO] INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Nash Finch Company: We have audited the accompanying consolidated balance sheets of Nash Finch Company and subsidiaries as of January 1, 1994 and January 2, 1993 and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended January 1, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nash Finch Company and subsidiaries at January 1, 1994 and January 2, 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended January 1, 1994 in conformity with generally accepted accounting principles. As discussed in notes 1, 6 and 11 to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, and Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES, in 1993. KPMG Peat Marwick March 1, 1994 NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Balance Sheets
January 1, 1994 and January 2, 1993 (In thousands, except per share amounts) ASSETS 1993 1992 ------------------------------------------------------------------------------ Current assets: Cash on hand $ 890 789 Accounts and notes receivable, net 95,952 97,292 Inventories 186,637 205,024 Prepaid expenses 7,391 6,668 Deferred tax assets 4,055 397 ------- ------- Total current assets 294,925 310,170 Investments at net equity 7,137 6,108 Notes receivable, noncurrent 20,187 17,275 Property, plant and equipment: Land 26,652 24,417 Buildings and improvements 105,650 100,772 Furniture, fixtures, and equipment 209,172 199,420 Leasehold improvements 26,016 25,596 Construction in progress 5,914 5,654 Assets under capitalized leases 9,210 3,759 ------- ------- 382,614 359,618 Less accumulated depreciation and amortization (196,350) (184,340) ------- ------- Net property, plant and equipment 186,264 175,278 ------- ------- Intangible assets, net 9,512 2,854 Other assets 3,629 1,930 ------- ------- Total assets $ 521,654 513,615 ------- ------- ------- -------
See accompanying notes to consolidated financial statements.
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992 ------------------------------------------------------------------------------ Current liabilities: Outstanding checks, net of cash in banks $ 14,301 19,890 Short-term debt payable to banks 38,300 47,500 Current maturities of long-term debt and capitalized lease obligations 3,980 3,822 Accounts payable 119,970 113,732 Accrued expenses 27,032 21,647 Income taxes 4,315 7,100 Other current liabilities 7,123 -- ------- ------- Total current liabilities 215,021 213,691 Long-term debt 89,811 92,114 Capitalized lease obligations 8,076 2,031 Deferred compensation 9,065 9,638 Other 417 4,937 Stockholders' equity: Preferred stock - no par value, Authorized 500 shares; none issued -- -- Common stock of $1.66-2/3 par value. Authorized 25,000 shares; issued 11,224 shares 18,706 18,706 Additional paid-in capital 11,954 11,944 Retained earnings 171,670 163,624 ------- ------- 202,330 194,274 Less cost of 351 shares and 352 shares of common stock in treasury, respectively (3,066) (3,070) ------- ------- Total stockholders' equity 199,264 191,204 Commitments (Notes 5, 8 and 9) -- -- ------- ------- Total liabilities and stockholders' equity $ 521,654 513,615 ------- ------- ------- -------
NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 1993 1992 1991 (In thousands, except per share amounts) (52 weeks) (53 weeks) (52 weeks) - ------------------------------------------------------------------------------- Income: Net sales $ 2,679,410 2,474,013 2,307,410 Other revenues 44,125 41,425 35,868 --------- --------- --------- Total revenues 2,723,535 2,515,438 2,343,278 Cost and expenses: Cost of sales 2,325,249 2,147,845 1,997,462 Selling, general and administrative, and other operating expenses 332,349 298,663 279,933 Depreciation and amortization 29,145 27,038 26,124 Interest expense 10,114 9,294 8,966 --------- --------- --------- Total costs and expenses 2,696,857 2,482,840 2,312,485 Earnings before income taxes 26,678 32,598 30,793 Income taxes 10,804 12,530 11,738 --------- --------- --------- Net earnings $ 15,874 20,068 19,055 --------- --------- --------- --------- --------- --------- Weighted average number of common shares outstanding 10,872 10,872 10,871 --------- --------- --------- --------- --------- --------- Earnings per share $ 1.46 1.85 1.75 --------- --------- --------- --------- --------- ---------
See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 (In thousands, except per share amounts) Common Stock Additional Treasury Stock Total --------------------- paid-in Retained -------------------- stockholder' Shares Amount capital earnings Shares Amount equity - --------------------------------------------------------------------------------------------------------------------------------- Balance at December 29, 1990 11,224 $ 18,706 11,929 139,829 (354) $ (3,076) 167,388 Net earnings -- -- -- 19,055 -- -- 19,055 Dividend declared of $.70 per share -- -- -- (7,610) -- -- (7,610) Treasury stock issued upon exercise of options and other insignificant items -- -- 9 -- 1 4 13 ------ ------ ------ ------- ----- ------- ------- Balance at December 28, 1991 11,224 18,706 11,938 151,274 (353) (3,072) 178,846 Net earnings -- -- -- 20,068 -- -- 20,068 Dividend declared of $.71 per share -- -- -- (7,718) -- -- (7,718) Treasury stock issued upon exercise of options and other insignificant items -- -- 6 -- 1 2 8 ------ ------ ------ ------- ----- ------- ------- Balance at January 2, 1993 11,224 18,706 11,944 163,624 (352) (3,070) 191,204 Net earnings -- -- -- 15,874 15,874 Dividend declared of $.72 per share -- -- -- (7,828) -- -- (7,828) Treasury stock issued upon exercise of options and other insignificant items -- -- 10 -- 1 4 14 ------ ------ ------ ------- ----- ------- ------- Balance at January 1, 1994 11,224 $ 18,706 11,954 171,670 (351) $ (3,066) 199,264 ------ ------ ------ ------- ----- ------- ------- ------ ------ ------ ------- ----- ------- -------
See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows
Fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 1993 1992 1991 (In thousands) (52 weeks) (53 weeks) (52 weeks) --------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 15,874 20,068 19,055 Adjustments to reconcile net earnings to net cash provided by operating activites: Depreciation and amortization 29,145 27,038 26,124 Provision for bad debts 10,146 3,668 1,430 Recovery from losses on closed lease locations (499) (847) (1,012) Deferred income taxes (4,395) (2,835) (411) Deferred compensation (573) 129 17 Earnings of equity investments (1,534) (965) (618) Other 65 137 (2) Changes in current assets and liabilities: Accounts and notes receivable (161) (5,676) (11,476) Inventories 26,464 (22,242) 5,752 Prepaid expenses (411) (1,474) 409 Accounts payable 6,238 6,755 27 Accrued expenses 5,385 2,631 (2,698) Income taxes (2,785) 4,429 (890) -------- -------- -------- Net cash provided by operating activities $ 82,959 30,816 35,707 -------- -------- -------- Cash flows from investing activities: Dividends received 506 435 510 Disposals of property, plant and equipment 13,435 8,091 4,244 Additions to property, plant and equipment excluding capital leases (36,382) (42,991) (36,836) Businesses acquired (27,087) (40,041) -- Investment in an unconsolidated company -- (3,000) -- Loans to customers (15,942) (22,977) (10,264) Payments from customers on loans 8,286 7,500 7,287 Loans sold including current portion -- 22,847 -- Other (261) (37) 65 -------- -------- -------- Net cash used for investing activities $ (57,445) (70,173) (34,994) -------- -------- -------- Cash flows from financing activities: Dividends paid (7,828) (7,718) (7,610) Proceeds (payments) of short-term debt (9,200) 39,900 (4,300) Proceeds from long-term debt -- 25,000 15,000 Payments of long-term debt (2,352) (15,895) (7,528) Payments of capitalized lease obligations (458) (174) (352) Other 14 8 13 -------- -------- -------- Net cash (used for) provided by financing activities (19,824) 41,121 (4,777) -------- -------- -------- Net increase (decrease) in cash $ 5,690 1,764 (4,064) -------- -------- -------- -------- -------- --------
See accompanying notes to consolidated financial statements. NASH FINCH COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) ACCOUNTING POLICIES Fiscal Year The Company's fiscal year ends on the Saturday nearest to December 31. Fiscal year 1993 was a 52-week year; 1992 was a 53-week year while 1991 was 52 weeks. Principles of Consolidation The accompanying financial statements include the accounts of Nash Finch Company (the Company), its majority-owned subsidiaries and Nash Finch Company's share of net earnings or losses of 50%-owned companies. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain reclassifications were made to prior year amounts to conform with the fiscal 1993 presentation. Cash and Cash Equivalents In the accompanying financial statements, freely transferable cash in banks has been netted for presentation purposes against checks outstanding that have been drawn on other bank accounts. For purposes of the statements of cash flows, cash and cash equivalents include cash on hand, short-term investments with original maturities of three months or less, and outstanding checks, net of cash in banks. Inventories Inventories are stated at the lower of cost or market. At January 1, 1994 and January 2, 1993, approximately 91% of the Company's inventories are valued on the last-in, first-out (LIFO) method. During fiscal 1993 the Company recorded a LIFO credit of $2.0 million primarily due to an overall reduction in certain product costs during the year. The remaining inventories are valued on the first-in, first-out (FIFO) method. If the FIFO method of accounting for inventories had been used, inventories would have been $42.5 million and $44.5 million higher at January 1, 1994 and January 2, 1993, respectively. Property, Plant and Equipment Property, plant and equipment are stated at cost. Assets under capitalized leases are recorded at the present value of future lease payments or fair market value, whichever is lower. Expenditures which improve or extend the life of the respective assets are capitalized while maintenance and repairs are expensed as incurred. (1) ACCOUNTING POLICIES (CONTINUED) Intangible Assets Intangible assets consist primarily of covenants not to compete and goodwill, and are carried at cost less accumulated amortization. Costs are amortized over the estimated useful lives of the related assets ranging from 2- 20 years. Amortization expense charged to operations for fiscal years ended January 1, 1994, January 2, 1993 and December 28, 1991 was $1.3 million, $.2 million and $.3 million, respectively. The accumulated amortization of intangible assets was $2.8 million and $1.4 million at January 1, 1994 and January 2, 1993, respectively. Depreciation and Amortization Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements and capitalized leases are amortized to expense on a straight-line basis over the term of the lease. Income Taxes In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES. Statement 109 requires a change from the deferred method of accounting for income taxes of APB Opinion 11 to the asset and liability method. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company adopted Statement 109 in 1993 and determined that the cumulative effect on prior years earnings was not material. Earnings per Share Earnings per share are computed by dividing net earnings by the weighted average number of common shares outstanding during each year. Options granted under the Company's stock option plans are considered common stock equivalents but have been excluded from the computation since the effect is not material. (2) ACQUISITIONS On June 21, 1993, the Company acquired sixteen supermarket stores (the Easter Stores) from Easter Enterprises, Inc. for approximately $27.0 million. The acquisition has been accounted for by the purchase method and, accordingly, the results of operations of the Easter Stores are included in the accompanying consolidated financial statements from the date of the acquisition. Included in the purchase price is a covenent not to compete valued at $3.0 million. The purchase price resulted in an excess of acquisition costs over net assets acquired of approximately $3.6 million. The noncompete convenant and goodwill are being amortized on a straight-line basis over a period of five years and fifteen years, respectively. On January 26, 1992, the Company acquired Tidewater Wholesale Grocery located in Chesapeake, Virginia, from Provigo Corp., a wholly-owned subsidiary of Provigo, Inc., for approximately $14.3 million. The results of Tidewater's operations are included in the accompanying consolidated financial statements from the date of acquisition. On December 31, 1992 the Company completed two acquisitions. It purchased the assets of a military wholesale distribution business from B. Green & Company, Inc. in Baltimore, Maryland for approximately $20 million. In addition, it acquired the operating assets of five supermarkets in Central Wisconsin from a former customer for approximately $5.7 million. The following unaudited pro forma summary for fiscal years 1993 and 1992 combines the consolidated results of the Company, the Easter Stores and the military distribution business as if the acquisitions had occurred at the beginning of the 1993 and 1992 fiscal years. The unaudited pro forma summary is not necessarily indicative either of results of operations that would have occurred had the purchase been made during the periods presented, or of future results of operations of the combined companies (in thousands, except per share amounts).
1993 1992 ---------- ---------- Net sales $2,781,987 2,775,603 Net earnings 16,605 21,985 Earnings per share 1.53 2.02
(3) ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable at the end of fiscal years 1993 and 1992 are comprised of the following components (in thousands):
1993 1992 --------- --------- Customer notes receivable $ 4,301 3,040 Customer accounts receivable 80,370 81,622 Other receivables 12,983 13,340 Allowance for doubtful accounts (1,702) (710) --------- --------- Net current accounts and notes receivable $ 95,952 97,292 --------- --------- --------- --------- 1993 1992 --------- --------- Noncurrent notes receivable $ 27,007 20,119 Allowance for doubtful accounts (6,820) (2,844) --------- --------- Net non-current notes receivable $ 20,187 17,275 --------- --------- --------- ---------
Operating results include bad debt expense totaling $10.1 million, $3.7 million, and $1.4 million during fiscal years 1993, 1992 and 1991, respectively. On April 2, 1992, the Company sold customer notes totaling $22.8 million. The notes, which have maturities through the year 2000, were sold at face value with limited recourse as to certain notes. The Company is responsible for collection of the notes and remits the principal plus a floating rate of interest to the purchaser on a monthly basis. Proceeds from the sale of the notes receivable were used to pay off short-term bank debt. The remaining balances of such sold notes receivable totaled $11.8 million and $17.9 million at January 1, 1994 and January 2, 1993, respectively. The Company is contingently liable should these notes become uncollectible. The reserve for contingent losses on sold notes is $7.1 million at January 1, 1994 and $4.0 million at January 2, 1993, respectively. At January 1, 1994 this reserve is classified as an other current liability since it relates entirely to the transaction described in Note 13. Substantially all notes receivable are based on floating interest rates which adjust to changes in market rates. As a result, the carrying value of notes receivable approximates market value. (4) LINES OF CREDIT AND OUTSTANDING CHECKS Formal and informal lines of credit are maintained at various banks. Generally, banks are compensated through fees on used and unused lines of credit. At January 1, 1994 unused lines of credit amount to $26.7 million. (5) LONG-TERM DEBT Long-term debt at the end of the fiscal years 1993 and 1992 is summarized as follows (in thousands):
1993 1992 ------ ------- Industrial development bonds, 3.8% to 11% due in annual installments through 2006 $ 7,175 7,370 Term loans, 7.5% to 9.9% due in semi-annual installments through 2006 76,000 77,000 Notes payable and mortgage notes, 8% to 13.5% due in various installments through 2006 10,154 11,224 ------ ------- 93,329 95,594 Less current maturities 3,518 3,480 ------ ------- $ 89,811 92,114 ------ ------- ------ -------
During the first quarter of fiscal 1993, the Company finalized a $25 million long-term credit facility with two insurance companies. The proceeds of this long-term loan were used to replace $25 million outstanding on the short- term lines of credit with banks. Accordingly, this amount was classified as long-term debt at January 2, 1993. Under the new loan, interest is fixed at 7.5%. At January 1, 1994, land, buildings, and other assets pledged to secure outstanding mortgage notes and obligations under issues of industrial development bonds have a depreciated cost of approximately $8.3 million and $6.7 million, respectively. Aggregate annual maturities of long-term debt for the five fiscal years after January 1, 1994 are as follows (in thousands): 1994 $ 3,518 1995 5,369 1996 14,353 1997 6,415 1998 and thereafter 63,674
Interest paid was $10.1 million, $9.3 million, and $9.0 million, for the fiscal years 1993, 1992 and 1991, respectively. Based on borrowing rates currently available to the Company for long-term financing with similar terms and average maturities, the fair value of long-term debt utilizing discounted cash flows is $ 98.5 million. (6) INCOME TAXES As discussed in Note 1, the Company adopted Statement 109 as of January 3, 1993. The effect of this change in accounting for income taxes was not material. Prior years' financial statements have not been restated to apply the provisions of Statement 109. Income tax expense for fiscal years 1993, 1992 and 1991 is made up of the following components (in thousands):
1993 1992 1991 ------- ------ ----- Current: U.S. Federal $12,334 12,500 9,163 State and local 2,865 2,796 1,912 Deferred: U.S. Federal (3,558) (2,324) 522 State and local (837) (442) 141 ------- ------ ----- Total $10,804 12,530 11,738 ------- ------ ----- ------- ------ -----
Deferred income tax expense (benefit) results from timing differences in the recognition of revenue and expense for tax and financial statement purposes. The source of these differences and the tax effect of each for fiscal years 1992 and 1991 are as follows (in thousands):
1992 1991 ------ ----- Excess of tax over financial statement depreciation $ (795) (768) Provision for deferred compensation (50) (7) Provision for losses at closed locations 398 524 Provision for bad debts (1,122) (237) Provision for health care claims (582) 1,151 Inventory capitalization (348) 9 Other, net (267) (9) ------ ----- $(2,766) 663 ------ ----- ------ -----
Total income tax expense represents effective tax rates of 40.5%, 38.4% and 38.1%, for the fiscal years 1993, 1992 and 1991, respectively. The reasons for differences compared with the U.S. federal statutory tax rate (expressed as a percentage of pretax income) are as follows: (6) INCOME TAXES (CONTINUED)
1993 1992 1991 ----- ----- ----- U.S. federal statutory tax rate 35.0% 34.0% 34.0% Items affecting federal income tax rate: State and local taxes, net of federal income tax benefit 4.9 4.8 4.4 Other, net .6 (.4) (.3) ----- ----- ----- Effective tax rate 40.5% 38.4% 38.1% ----- ----- ----- ----- ----- -----
Income taxes paid were $18.0 million, $11.1 million and $13.1 million during fiscal years 1993, 1992 and 1991, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 1, 1994 are presented as follows (in thousands):
Deferred tax assets: Accounts and notes receivable, principally due to allowance for doubtful accounts $ 6,235 Inventories, principally due to additional costs inventoried for tax purposes pursuant to the Tax Reform Act of 1986 1,653 Health care claims, principally due to accrual for financial reporting purposes 345 Deferred compensation, principally due to accrual for financial reporting purposes 3,608 Compensated absences, principally due to accrual for financial reporting purposes 1,124 Compensation and casualty loss, principally due to accrual for financial reporting purposes 1,407 Other 1,372 ------ Total gross deferred tax assets 15,744 Less valuation allowance -- ------ Net deferred tax assets 15,744 ------
(6) INCOME TAXES (CONTINUED) Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation 7,255 Inventories, principally due to differences in LIFO basis 2,724 Other 569 ----- Total gross deferred tax liabilities 10,548 ----- Net deferred tax asset $ 5,196 ----- ----- Since it is more likely than not that the deferred tax asset of $15,744 will be principally realized through carry back to taxable income in prior years, in future reversals of existing taxable temporary differences, and, to a lesser extent, future taxable income and tax planning strategies, the Company has determined that it is not required to establish a valuation allowance for the deferred tax asset as required by Statement 109. (7) STOCK RIGHTS AND OPTIONS Under the Company's 1986 Stockholder Rights Plan, as amended January 18, 1990, one right is attached to each outstanding share of common stock. Each right entitles the holder to purchase, under certain conditions, one-half share of common stock at a price of $28.75 ($57.50 per full share). The rights are not yet exercisable and no separate rights certificates have been distributed. All rights expire on March 31, 1996. The rights become exercisable 20 days after a "flip-in event" has occurred or 10 business days (subject to extension) after a person or group makes a tender offer for 15% or more of the Company's outstanding common stock. A flip-in event would occur if a person or group acquires (1) 15% of the Company's outstanding common stock, or (2) an ownership level set by the Board of Directors at less than 15% if the person or group is deemed by the Board of Directors to have interests adverse to those of the Company and its stockholders. The rights may be redeemed by the Company at any time prior to the occurrence of a flip-in event at $.01 per right. The power to redeem may be reinstated within 20 days after a flip-in event occurs if the cause of the occurrence is removed. Upon the rights becoming exercisable, subject to certain adjustments or alternatives, each right would entitle the holder (other than the acquiring person or group, whose rights become void) to purchase a number of shares of the Company's common stock having a market value of twice the exercise price of the right. If the Company is involved in a merger or other business combination, or certain other events occur, each right would entitle the holder to purchase common shares of the acquiring company having a market value of twice the exercise price of the right. Within 30 days after the rights become exercisable following a flip-in event, the Board of Directors may exchange shares of Company common stock or cash or other property for exercisable rights. The Company provides a stock incentive plan for officers and key employees which provides for the granting of stock options and restricted stock awards. Under the terms of the plan, stock options are granted at 100% of fair market value at dates of grant and are exercisable over a maximum of five years. Restricted stock awards are subject to certain restrictions on transferability that lapse after specified employment periods. At January 1, 1994, options to purchase 1,500 shares of common stock of the Company, at an average price of $23.00 per share, have been granted and are outstanding. No restricted stock awards have been granted. An additional 243,796 shares are reserved for the granting of future stock options and restricted stock awards. (7) STOCK RIGHTS AND OPTIONS (CONTINUED) Changes in outstanding options during the three fiscal years ended January 1, 1994 are summarized as follows (in thousands):
Options Options currently outstanding exercisable ----------------- ------------------ Option Option Shares price Shares price - ---------------------------------------------------------------- Balance at December 29, 1990 166 $ 4,213 41 $ 1,032 Options granted or becoming exercisable: 1991 -- -- 42 1,076 1992 -- -- 42 1,057 1993 -- -- 37 930 Options exercised: 1991 -- -- -- -- 1992 -- -- -- -- 1993 -- -- -- -- Options lapsed: 1991 (20) (507) (20) (507) 1992 (19) (477) (19) (477) 1993 (106) (2,678) (106) (2,678) Options canceled: 1991 (7) (188) (4) (106) 1992 (10) (258) (9) (233) 1993 (3) (70) (3) (70) Balance at January 1, --- ---- --- ----- 1994 1 $ 35 1 $ 24 --- ---- --- ----- --- ---- --- -----
(8) LEASE AND OTHER COMMITMENTS A substantial portion of the store and warehouse properties of the Company are leased. The following table summarizes assets under capitalized leases (in thousands):
1993 1992 ------ ------ Buildings and improvements $9,210 3,759 Less accumulated amortization (3,537) (3,228) ------ ------ Net assets under capitalized leases $5,673 531 ------ ------ ------ ------
At January 1, 1994, future minimum rental payments under noncancelable leases and subleases are as follows (in thousands):
Operating Capital leases leases --------- ------- 1994 $ 16,307 1,314 1995 13,848 1,280 1996 12,934 1,188 1997 11,115 1,148 1998- later years 71,208 12,751 --------- ------- Total minimum lease payments (a) $125,412 17,681 --------- --------- Less imputed interest (rates ranging from 7.9% to 11.5%) (9,143) ------- Present value of net minimum lease payments 8,538 Less current maturities (462) ------- Capitalized lease obligations $ 8,076 ------- ------- (a) Future minimum payments for operating and capital leases have not been reduced by minimum sublease rentals receivable under noncancelable subleases. Total future minimum sublease rentals related to operating and capital lease obligations as of January 1, 1994 are $53 million and $5 million, respectively.
(8) LEASE AND OTHER COMMITMENTS (CONTINUED) Total rental expense under operating leases for fiscal years 1993, 1992 and 1991 is as follows (in thousands):
1993 1992 1991 ------ ------ ------ Total rentals $27,706 25,384 24,323 Less real estate taxes, insurance and other occupancy costs (2,312) (2,236) (2,299) ------ ------ ------ Minimum rentals 25,394 23,148 22,024 Contingent rentals 248 394 414 Sublease rentals (7,060) (7,107) (7,264) ------ ------ ------ $18,582 16,435 15,174 ------ ------ ------ ------ ------ ------
Most of the Company's leases provide that the Company pay real estate taxes, insurance and other occupancy costs applicable to the leased premises. Contingent rentals are determined on the basis of a percentage of sales in excess of stipulated minimums for certain store facilities. Operating leases often contain renewal options. Management expects that, in the normal course of business, leases that expire will be renewed or replaced by other leases. The Company has guaranteed certain lease and promissory note obligations of customers aggregating approximately $19 million. (9) CONCENTRATION OF CREDIT RISK The Company provides financial assistance in the form of secured loans to some of its affiliated independent retailers for inventories, store fixtures and equipment, working capital and store improvements. Loans are secured by liens on inventory or equipment or both, by personal guarantees and by other types of collateral. In addition, the Company guarantees lease and promissory note obligations of customers. As of January 1, 1994, the Company has retained the credit risk associated with outstanding secured loans with a customer which were sold in April 1992. These loans and the Company's guarantee of the customer's bank debt total $11.4 million at January 1, 1994 (See Note 13). As of January 1, 1994, the Company has guaranteed outstanding promissory note obligations of one customer in the amount of $7.6 million and of another customer in the amount of $4.0 million. (9) CONCENTRATION OF CREDIT RISK (CONTINUED) In the normal course of business, the Company's produce marketing operation in California makes cash advances to produce growers during various product growing seasons, to fund production costs. Such advances are repayable at the end of the respective growing seasons. Unpaid advances are generally secured by liens on real estate. At January 1, 1994, $ 7.2 million in advances are outstanding. The Company establishes allowances for doubtful accounts based upon the credit risk of specific customers, historical trends and other information. Management believes that adequate provisions have been made for any doubtful accounts. (10) EMPLOYEE BENEFIT PLANS The Company has a profit sharing plan covering substantially all employees meeting specified requirements. Contributions, determined by the Board of Directors, are made to a noncontributory profit sharing trust based on profit performances. Profit sharing expense for 1993, 1992 and 1991 was $3.6 million, $4.0 million and $3.8 million, respectively. Certain officers and key employees are participants in a deferred compensation plan providing fixed benefits payable in equal monthly installments upon retirement. Annual increments to the deferred compensation plan are charged to earnings. (11) POSTRETIREMENT HEALTH CARE BENEFITS The Company provides certain health care benefits for retired employees. Substantially all of the Company's employees become eligible for those benefits when they reach normal retirement age and have a minimum of 15 years of service with the Company. Prior to 1993, the cost of retiree health care benefits was recognized as expense as claims were paid. Claims paid were $68,000 and $123,000, in fiscal 1992 and 1991, respectively. During the fourth quarter of 1993, the Company adopted Statement of Financial Accounting Standards No. 106, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. SFAS 106 requires that costs of providing postretirement benefits be expensed over an employee's service term and not on a pay-as-you-go basis. The Company has adopted SFAS 106 on a prospective basis, electing to amortize the liability of $4.9 million over the next twenty years. The periodic postretirement benefit cost for 1993 under Statement 106 was as follows (in thousands):
1993 ----- Service costs $250 Interest costs 381 Amortization of unrecognized transition obligation 248 ----- Net postretirement costs $879 ----- -----
The actuarial present value of benefit obligations at January 1, 1994 is as follows (in thousands): Retirees eligible for benefits $1,743 Active employees fully eligible 470 Active employees not fully eligible 2,491 ------ $4,704 ------ ------
The assumed annual rate of future increases in per capita cost of health care benefits was 15.0% in 1993, declining 1% per year to 9.0% in 1999 and .5% per year to 6.5% in 2004 and thereafter. Increasing the health care cost trend by 1% in each year would increase the accumulated benefit obligation by $227,646 at January 1, 1994 and the service and interest costs by $39,334 for 1993. The discount rate used in determining the accumulated benefit obligation was 7.5%. (12) SEGMENT INFORMATION The Company and its subsidiaries sell and distribute food and nonfood products that are typically found in supermarkets. The Company's wholesale distribution segment sells to independently owned retail food stores and institutional customers while the retail distribution segment sells directly to the consumer. Produce marketing includes farming, packing and marketing operations. Operating profit is net sales and revenues, less operating expenses. In computing operating profit, none of the following items have been added or deducted: general corporate expenses, interest expense, interest income, income taxes and equity in income from equity-owned companies. Wholesale distribution operating profits on sales through company- owned stores have been allocated to the retail segment. Identifiable assets are those used exclusively by that industry segment or an allocated portion of assets used jointly by two industry segments. Corporate assets are principally cash and cash equivalents, notes receivable, corporate office facilities and equipment. (12) SEGMENT INFORMATION (CONTINUED)
Major segments of business (in thousands) 1993 1992 1991 - --------------------------------------------------------------- Net sales and other operating revenues: Wholesale distribution $1,836,405 1,673,955 1,517,039 Retail distribution 841,664 801,101 785,073 Produce marketing and other 37,718 34,408 35,448 --------- --------- --------- Total net sales and other operating revenues $2,715,787 2,509,464 2,337,560 --------- --------- --------- --------- --------- --------- Operating profit: Wholesale distribution $ 23,697 28,730 28,975 Retail distribution 7,704 9,302 5,067 Produce marketing and other 2,786 1,386 2,211 --------- --------- --------- Total operating profit 34,187 39,418 36,253 --------- --------- --------- Interest income 2,604 2,474 3,506 Interest expense (10,113) (9,294) (8,966) --------- --------- --------- Earnings before income taxes $ 26,678 32,598 30,793 --------- --------- --------- --------- --------- --------- Identifiable assets: Wholesale distribution $ 237,554 245,520 197,011 Retail distribution 195,454 177,764 163,302 Produce marketing and other 37,394 36,475 32,751 Corporate 51,252 53,856 36,584 --------- --------- --------- $ 521,654 513,615 429,648 --------- --------- --------- --------- --------- --------- Capital Expenditures: Wholesale distribution $ 9,199 10,585 9,051 Retail distribution 18,947 22,224 22,991 Produce marketing and other 5,564 2,101 1,957 Corporate 2,672 8,081 2,837 --------- --------- --------- $ 36,382 42,991 36,836 --------- --------- --------- --------- --------- --------- Depreciation and amortization: Wholesale distribution $ 11,641 11,281 11,056 Retail distribution 14,093 12,675 12,616 Produce marketing and other 1,396 1,230 1,137 Corporate 2,015 1,852 1,315 --------- --------- --------- $ 29,145 27,038 26,124 --------- --------- --------- --------- --------- ---------
(13) SUBSEQUENT EVENT Effective January 31, 1994, the Company acquired the assets of Food Folks, Inc., a former customer with twenty- three stores located in the Carolina's. Under the terms of the agreement, assets with a fair market value of approximately $12.4 million will be transferred to the Company in exchange for $1.8 million in cash, the assumption of liabilities of $3.2 million and the forgiveness of $7.4 million in debt, sold with limited recourse (see Note 3) net of a bad debt reserve established by the Company. This transaction will be accounted for as a troubled debt restructuring in fiscal 1994. NASH FINCH COMPANY Consolidated Summary of Operations
Eleven years ended January 1, 1994 (not covered by Independent Auditors' Report) (Dollar amounts in thousands except per share amounts) 1993 1992 1991 1990 1989 1988 (52 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks) - ------------------------------------------------------------------------------------------------------------------------- Sales and revenues $ 2,715,787 2,509,464 2,337,560 2,369,054 2,219,451 2,091,822 Other income 7,748 5,974 5,718 5,799 4,312 6,012 ---------- --------- --------- --------- --------- --------- Total sales, revenues and other income 2,723,535 2,515,438 2,343,278 2,374,853 2,223,763 2,097,834 Cost of sales 2,325,249 2,147,845 1,997,462 2,036,335 1,904,041 1,807,448 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses 328,703 294,700 276,144 271,735 264,024 230,221 Interest expense 10,114 9,294 8,966 8,670 8,277 8,106 Depreciation and amortization 29,145 27,038 26,124 25,551 23,170 20,193 Profit sharing contribution 3,646 3,963 3,789 3,603 3,089 2,832 Provision for income taxes 10,804 12,530 11,738 11,129 8,010 10,859 ---------- --------- --------- --------- --------- --------- Net earnings $ 15,874 20,068 19,055 17,830 13,152 18,175 ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- --------- Earnings per share: $ 1.46 1.85 1.75 1.64 1.21 1.67 ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- --------- Cash dividends declared per common share (2) $ .72 .71 .70 .69 .67 .65 ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- --------- Average number of common shares outstanding during period (in thousands) (2) 10,872 10,872 10,871 10,870 10,868 10,881 ---------- --------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- --------- Pre-tax earnings as a percent of sales and revenues .98 1.30 1.31 1.22 .95 1.38 Net earnings as a percent of sales and revenues .58 .80 .81 .75 .59 .87 Effective income tax rate 40.5 38.4 38.1 38.4 37.9 37.4 Current assets $ 294,925 310,170 239,850 234,121 212,264 219,956 Current liabilities $ 215,021 213,691 154,993 159,439 128,159 153,068 Net working capital $ 79,904 96,479 84,857 74,682 84,105 66,888 Ratio of current assets to current liabilities 1.37 1.45 1.55 1.47 1.66 1.44 Total assets $ 521,654 513,615 429,648 416,233 380,771 388,269 Capital expenditures $ 36,382 42,991 36,836 36,129 34,635 52,019 Long-term obligations (long-term debt and capitalized lease obligations) $ 97,887 94,145 82,532 74,333 77,950 66,216 1987 1986 1985 1984 1983 (52 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks) ---------- --------- --------- --------- --------- Sales and revenues $ 1,938,758 1,573,717 1,323,294 1,235,327 1,140,599 Other income 4,590 3,640 4,106 2,992 2,389 ---------- --------- --------- --------- --------- Total sales, revenues and other income 1,943,348 1,577,357 1,327,400 1,238,319 1,142,988 Cost of sales 1,682,667 1,360,537 1,142,464 1,070,226 986,402 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses 198,553 165,713 140,798 128,653 120,586 Interest expense 8,087 6,497 5,732 4,199 3,428 Depreciation and amortization 18,389 16,249 14,279 12,034 10,933 Profit sharing contribution 2,734 2,349 2,101 2,038 1,934 Provision for income taxes 14,416 12,178 10,020 9,483 8,638 ---------- --------- --------- --------- --------- Net earnings $ 18,502 13,834 12,006 11,686 11,067 ---------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- Earnings per share: $ 1.75 1.35 1.18 1.15 1.09 ---------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- Cash dividends declared per common share (2) $ .57 .52 .50 .49 .47 ---------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- Average number of common shares outstanding during period (in thousands) (2) 10,576 10,244 10,196 10,179 10,155 ---------- --------- --------- --------- --------- ---------- --------- --------- --------- --------- Pre-tax earnings as a percent of sales and revenues 1.69 1.65 1.66 1.71 1.72 Net earnings as a percent of sales and revenues .95 .88 .90 .94 .97 Effective income tax rate 43.8 46.8 45.5 44.8 43.8 Current assets $ 209,305 182,676 125,051 117,772 105,481 Current liabilities $ 127,608 120,687 77,867 71,465 61,091 Net working capital $ 81,697 61,989 47,183 46,306 44,390 Ratio of current assets to current liabilities 1.64 1.51 1.61 1.65 1.73 Total assets $ 352,187 313,908 239,767 223,024 195,070 Capital expenditures $ 29,680 26,969 25,438 26,954 18,055 Long-term obilgations (long-term debt and capitalized lease obligations) 66,988 61,588 42,250 42,639 34,214
Stockholders' equity $ 199,264 191,204 178,846 167,388 157,024 151,043 Stockholders' equity per share, (1), (2) $ 18.33 17.59 16.45 15.40 14.45 13.90 Return on average stockholders' equity $ 8.13 10.85 11.01 10.99 8.54 12.45 Number of common stockholders of record at year-end 2,074 2,087 2,122 2,138 2,146 2,227 Common stock high price, (2), (3) 23 1/4 19 3/4 20 1/4 25 1/4 25 3/4 27 1/2 Common stock low price, (2), (3) 17 16 1/4 16 1/2 16 1/4 21 1/4 18 Stockholders' equity $ 140,850 116,416 107,384 100,094 93,405 Stockholders' equity per share, (1), (2) $ 12.97 11.34 10.51 9.84 9.17 Return on average stockholders' equity $ 14.38 12.36 11.57 12.08 12.29 Number of common stockholders of record at year-end 2,234 1,829 1,868 1,881 1,807 Common stock high price, (2), (3) 26 1/2 19 1/8 15 5/8 9 1/4 11 Common stock low price, (2), (3) 14 3/4 14 3/4 9 1/4 6 3/4 4 1/2 (1) Based on outstanding shares at year-end. (2) Adjusted to reflect 3-for-2 stock split 1983 and 2-for-1 stock split 1987. (3) High and low closing sale price. Prior to February 1985 high and low bid quotation.
EX-21.1 7 EXHIBIT 21.1--SUBSIDIARIES OF NASH FINCH CO. SUBSIDIARIES OF NASH FINCH COMPANY(1) 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 State of Corporation Incorporation - ---------------------------------------- ------------- Nash-DeCamp Company California Visalia, California Piggly Wiggly Northland Corporation Minnesota Edina, Minnesota GTL Truck Lines, Inc. Nebraska Gering, Nebraska Thomas & Howard Company of Hickory, Inc. North Carolina Newton, North Carolina N-F Liquor, Inc.(2) Wisconsin Appleton, Wisconsin 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 State of Corporation Incorporation - ---------------------------------------- ------------- Gillette Dairy of the Black Hills, Inc. South Dakota Rapid City, South Dakota Nebraska Dairies, Inc. Nebraska Norfolk, Nebraska Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned, with respect to each subsidiary, 100 percent by Nash-Decamp Company): Subsidiary State of Corporation Incorporation - --------------------------------------- ------------- Randolph Marketing Company(3) California Porterville, California - -------------------- (1) These subsidiaries are included in the consolidated financial statements of Nash Finch Company and subsidiaries. (2) Merged into Nash Finch effective as of January 2, 1994. (3) Merged into Nash-DeCamp Company effective as of January 2, 1994. Forrest Transportation Service, Inc. California Visalia, California Subsidiary of Thomas & Howard Company of Hickory, Inc. (the voting stock of which is owned 100 percent by Thomas & Howard Company of Hickory, Inc.) Subsidiary State of Corporation Incorporation - --------------------------------------- ------------- T & H Service Merchandisers, Inc. North Carolina Hickory, North Carolina 2 EX-23.1 8 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Nash Finch Company: We consent to incorporation by reference in the Registration Statement (No. 33-26590) on Form S-8 of Nash Finch Company of our reports dated March 1, 1994, relating to the consolidated balance sheets of Nash Finch Company and subsidiaries as of January 1, 1994 and January 2, 1993 and the related consolidated statements of earnings, stockholders' equity, and cash flows and related consolidated financial statement schedules for each of the years in the three-year period ended January 1, 1994, which reports are included or incorporated by reference in the January 1, 1994 annual report on Form 10-K of Nash Finch Company. KPMG Peat Marwick Minneapolis, Minnesota March 24, 1994 -----END PRIVACY-ENHANCED MESSAGE-----