-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NSrmGc5e6J0XWaCDc6DDMbr2PIUNH2uAKMlJ8UCaX9lFc0EuL3ixwj8BnStdXkqM PsGSLqESKuPx3Rmk8ACZKQ== 0000912057-96-024836.txt : 19961107 0000912057-96-024836.hdr.sgml : 19961107 ACCESSION NUMBER: 0000912057-96-024836 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19951230 FILED AS OF DATE: 19961106 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASH FINCH CO CENTRAL INDEX KEY: 0000069671 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410431960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-00785 FILM NUMBER: 96655236 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-K405/A 1 10-K405/A - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10K/A AMENDMENT NO. 1 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: Commission file number: December 30, 1995 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 25, 1996, 10,920,793 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 $173,677,400. 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 December 30, 1995 (the "1995 Annual Report"). Parts II and III of this Annual Report on Form 10-K incorporate 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 14, 1996 (the "1996 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 1,400 affiliated and other independent retail supermarkets, other retail stores and outlets, and institutional accounts, such as military base commissaries, restaurants, schools and hospitals, as of December 30, 1995. No one customer accounts for a significant portion of the Company's sales. The Company also operates and supplies, as of December 30, 1995, 113 Company-owned supermarkets and warehouse stores. The Company's affiliated and Company-owned stores operate under a number of tradenames, including ECONOFOODS-Registered Trademark-, FOOD BONANZA-Registered Trademark-, SUN MART-TM-, FAMILY THRIFT CENTER-TM-, EASTER FOODS-TM-, FOOD FOLKS-Registered Trademark-, JACK & JILL-Registered Trademark-, ECONOMART-TM-, OUR FAMILY FOODS-Registered Trademark-, FOOD PRIDE-Registered Trademark- and SAX FOOD & DRUG-Registered Trademark-. The Company's market areas are in approximately 30 states in the Midwest, West, Mid-Atlantic and Southeast and are serviced through 16 wholesale distribution centers and one general merchandise warehouse. The Company packages, ships and markets fresh produce from California and the countries of Chile and Mexico to a variety of buyers across the United States, Canada and overseas. During 1995, the Company converted a closed full-line distribution center into a specialized warehouse which handles general merchandise and slow-moving items in support of other Midwest distribution centers. Operations from the closed facility were consolidated into those of four other distribution centers. In December, 1995, the Company sold its two convenience store subsidiaries which distributed food and non-food products to over 3,000 convenience stores primarily in the southeastern United States. The sale involved Thomas & Howard Company of Hickory, Inc. ("Thomas & Howard"), a wholly-owned subsidiary of the Company, and T&H Service Merchandisers, Inc. ("T&H"), a wholly-owned subsidiary of Thomas & Howard. Thomas & Howard operates a grocery distribution center in Newton, North Carolina; T&H operates a general merchandise warehouse in Hickory, North Carolina. In January, 1996, the Company acquired substantially all of the business and assets of Military Distributors of Virginia, Inc. ("MDV"), a Virginia corporation based in Norfolk, Virginia. MDV engages in the business of distributing groceries and related products to military commissaries in the eastern United States and Europe. The MDV operation is being consolidated with the Company's existing military distribution operations in Baltimore, Maryland, and Chesapeake, Virginia, into a single military division which will have two operating centers - one in Norfolk and the other in Baltimore. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Financial information about the Company's business segments for the most recent three fiscal years is contained on pages 24 and 25 of the 1995 Annual Report (Note 11 to Consolidated Financial Statements). For segment financial reporting purposes, a portion of the operational profits of 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 1995, 44% 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 generally available to meet the Company's needs. 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 16 distribution centers, as of December 30, 1995, located in Minnesota (1), Iowa (1), Kansas (1), Nebraska (2), Colorado (1), North Dakota (2), South Dakota (1), Wisconsin (1), North Carolina (2), Virginia (2), Maryland (1) and Georgia (1). The Company's distribution centers are located at strategic points to efficiently serve Company-owned stores, independent customers, and military base commissaries. 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, general merchandise and specialty grocery products from a warehouse facility located in South Dakota, and produce from a separate warehouse facility in North Carolina. The distribution centers serve as central sources of supply for Company-owned and independent stores, military base commissaries and other institutional customers within their operating areas. The distribution centers maintain complete inventories containing virtually 2 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 350 tractors, 610 semi-trailers, and 160 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. The Company distributes products to military base commissaries primarily under contractual arrangements with the manufacturers of those products. The Company provides storage, handling and transportation services for the manufacturers; and, as products ordered from the Company by the commissaries are delivered to them, the Company invoices the manufacturer for the cost of the merchandise delivered plus negotiated fees. 3. WHOLESALE OPERATIONS. As of December 30, 1995, the Company distributed food products and non-food items, on a wholesale basis, to approximately 1,400 affiliated and other independent retail supermarkets, other retail stores and outlets, and institutional accounts, such as military base commissaries, restaurants, schools and hospitals. The Company's retail supermarket customers 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 wholesale operations range in size from small stores to large supermarkets containing approximately 100,000 square feet. The Company offers to its affiliated independent retailers a broad range of services, including 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 3 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 December 30, 1995, the Company had outstanding $7,373,000 in such secured loans to 27 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 December 30, 1995, the Company owned and operated 113 retail outlets, including 75 supermarkets, 34 warehouse stores and 4 combination general merchandise/food stores. The Company has devoted considerable resources in recent years to acquire, construct, enlarge and modernize Company-owned stores; and, by constructing new stores or expanding existing stores, 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 stores. These systems provide inventory control at delivery and checkout points, reducing shrinkage and increasing labor efficiency. The Company operates its 75 supermarkets principally under the names SUN MART-TM-, EASTER FOODS-TM- and FOOD FOLKS-Registered Trademark-. These stores, 14 of which the Company owns (the remainder are leased), 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 34 warehouse stores principally under the names ECONOFOODS-Registered Trademark- and FOOD BONANZA-Registered Trademark-. These stores, 10 of which the Company owns (the remainder are leased), range in size up to approximately 106,000 square feet. The Company's warehouse stores offer a 4 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. Many have 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 four combination general merchandise/food stores under the name FAMILY THRIFT CENTER-TM-. These stores, all of which are owned, range in size up to approximately 60,000 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 countries of Chile and Mexico 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 three 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 countries of Chile and Mexico. 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. 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. Certain of these competing wholesalers may also engage in distribution to military bases. 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, the services offered to independent retailers, such as store financing and use of store names, and the services offered to manufacturers of products sold to military base commissaries. 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. 5 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 December 30, 1995, the Company employed approximately 11,500 persons (approximately 5,400 full-time and 6,100 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. The locations and sizes of the Company's distribution centers, as of December 30, 1995, are listed below (all of which are owned, except as indicated). The distribution center facilities which are leased have varying terms, all with remaining terms of less than 20 years. Total rent in fiscal year 1996 for the leased facilities was $4,385,000.
APPROX. SIZE LOCATION (SQUARE FEET) -------- ------------- Midwest/West: Denver, Colorado (*) 335,800 Cedar Rapids, Iowa 351,900 Liberal, Kansas 176,500 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 (includes 79,300 square feet of warehouse space which is leased) 252,400 Appleton, Wisconsin 430,900 6 APPROX. SIZE LOCATION (SQUARE FEET) -------- ------------- Southeast: Macon, Georgia 242,400 Baltimore, Maryland (*) (includes 60,000 square feet of refrigerated warehouse space located in Jessup, Maryland) 234,500 Lumberton, North Carolina (*) (includes 16,100 square feet of produce warehouse space located in Wilmington, North Carolina) 256,600 Rocky Mount, North Carolina (*) 191,800 Bluefield, Virginia 186,400 Chesapeake, Virginia (*) 236,800 --------- Total Square Footage 4,285,400 --------- --------- ------------ * Leased facility (excluding produce warehouse in Wilmington, North Carolina which is owned by the Company).
The following table shows the number and aggregate size of Company-owned and operated supermarkets and warehouse stores operated at December 30, 1995: Supermarkets (*): Number of Stores 79 Total Square Feet 1,804,000 Warehouse stores: Number of Stores 34 Total Square Feet 1,441,000 Totals: Number of Stores 113 Total Square Feet 3,245,000 ------------ * Includes four combination general merchandise/food stores.
The Company leases 61 of its supermarket and combination general merchandise/food store buildings (the remainder are owned), which range in size up to approximately 60,000 square feet. The Company also leases 24 of its warehouse store buildings, which range in size up to approximately 106,000 square feet. These leases are for varying terms, primarily under 20 years. The total rent in fiscal year 1995 for store buildings was $8,578,000. 7 Further information about the lease obligations of the Company is given in Note 7 to the Consolidated Financial Statements on pages 23 and 24 of the 1995 Annual Report, incorporated herein by reference. Nash-DeCamp Company, a wholly-owned subsidiary of the Company, owns and operates three packing, shipping and/or cold storage facilities in California in connection with its produce marketing operations, with total space of approximately 174,000 square feet. Its executive offices, comprising approximately 9,000 square feet, are in leased premises located in Visalia, California. In addition, Nash-DeCamp Company owns approximately 831 acres for the production of table grapes, 40 acres for the production of kiwi fruit, 925 acres for the production of peaches, plums, apricots and nectarines, 628 acres for the production of citrus, and 237 acres of open ground for future development. Nash-DeCamp Company also leases 112 acres of tree fruit. All of these vineyards and orchards are located in the San Joaquin Valley of California. Nash-DeCamp Company, through a wholly-owned Chilean subsidiary, also leases approximately 789 acres in Chile for the production of table grapes. Nash-DeCamp 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, Nash-DeCamp 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. In November 1992, Jin Ku Kim, currently an employee of the Company, commenced an action against the Company in U.S. District Court for the Northern District of Iowa claiming damages as a result of the alleged failure of the Company to promote Mr. Kim to the position of shipping foreman in November 1990 and April 1992 because of his national origin and race, and the alleged retaliation against him by the Company in terms and conditions of employment after he filed charges of employment discrimination with the Cedar Rapids, Iowa, Civil Rights Commission. On September 16, 1994 a jury verdict was entered against the Company in the amount of $8,786,000, including $36,000 in back pay, $1,750,000 in mental anguish and loss of enjoyment of life and $7,000,000 in punitive damages. On April 13, 1995, the U.S. District Court entered an Amended Judgment reducing the jury award to a total of $421,000 plus attorneys' fees and costs of $114,556. Both Mr. Kim and the Company have filed appeals from the Amended Judgment with the United States Court of Appeals for the Eighth Circuit. Mr. Kim's appeal seeks reinstatement of the jury verdict and the Company's appeal seeks judgment as a matter of law or further reduction of the damage award; both parties seek a new trial in the alternative. Briefs have been submitted and the case was argued on December 14, 1995. No decision has been issued. The Company continues to deny that Mr. Kim has suffered any discrimination or retaliation, or any damages as a result thereof. The Company believes that there is substantial basis, both in the facts of this case and in law, supporting the Company's position before the Eighth Circuit. Although no assurance can be given that the Eighth Circuit will award the relief the Company seeks, the Company believes that 8 the jury verdict will not be reinstated and that the reserves it has established are reasonably adequate to cover its liability. On March 16, 1995 a group of nine separate entities engaged in growing citrus crops in Fresno County and Tulare County, California, commenced an action against Nash-DeCamp Company, a wholly-owned subsidiary of the Company, and others, including three of its officers and directors, in the United States District Court for the Eastern District of California. Nash-DeCamp Company provided services to the plaintiffs relating to the packing, marketing and distribution of produce grown by the plaintiffs, and advanced financing to assist the plaintiffs in growing and harvesting their crops. The plaintiffs' complaint alleges that the defendants engaged in various acts of misconduct relating to the handling, packaging and pricing of such produce, and relating to financing extended to the plaintiffs, in violation of various federal and state laws, resulting in unspecified damages to the plaintiffs. The plaintiffs' complaint sought unspecified compensatory damages, punitive damages, treble damages, rescission of the loan documents relating to the financing extended by Nash-DeCamp Company to the plaintiffs, injunctive relief preventing Nash-DeCamp from enforcing the loan documents, attorneys' fees and costs. The defendants denied any liability under the plaintiffs' claims, and Nash-DeCamp Company counter-sued for judicial foreclosure of certain deeds of trust securing debts of the plaintiffs to Nash-DeCamp Company. At December 30, 1995, while still in the pre-trial phase of this action, the parties entered into a Settlement Agreement and Mutual Release of All Claims, pursuant to which the referenced action was dismissed with prejudice as to all claims. The reserves established by Nash- DeCamp Company at the end of the fiscal year 1995 were sufficient to cover the terms of the settlement, and no financial liability is expected to be incurred in 1996. 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. 9 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, 1996 are as follows:
YEAR FIRST ELECTED OR APPOINTED AS AN NAME (AGE) EXECUTIVE OFFICER TITLE ---------- ------------------ ----- Alfred N. Flaten (61) 1991 President and Chief Executive Officer David W. Bell (51) 1990 Senior Vice President, Retail Sales and Operations William T. Bishop (55) 1994 Senior Vice President, Sales and Logistics Norman R. Soland (55) 1986 Vice President, Secretary and General Counsel Clarence T. Walters (59) 1988 Vice President, Management Information Systems Charles F. Ramsbacher (53) 1991 Vice President, Marketing Steven L. Lumsden (50) 1992 Vice President, Warehouse and Transportation Gerald D. Maurice (62) 1993 Vice President, Store Development John R. Scherer (45) 1994 Vice President and Chief Financial Officer Charles M. Seiler (48) 1995 Vice President, Corporate Retail Operations Edgar F. Timberlake (48) 1995 Vice President, Human Resources Lawrence A. Wojtasiak (50) 1990 Controller Suzanne S. Allen (31) 1996 Treasurer
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. 10 Mr. Flaten was elected Chief Executive Officer in November 1994. His election as President and Chief Operating Officer was effective in November 1991. He had been elected Executive Vice President, Sales and Operations of Nash Finch in February 1991. Mr. Bell was elected as Senior Vice President, Retail Sales and Operations effective in October 1994. He previously served as Vice President, Corporate Retail Operations from May 1991 to October 1994 and Vice President, Marketing from May 1990 to May 1991. Mr. Bishop was elected as Senior Vice President, Sales and Logistics effective in December 1994 after joining the Company in the same month. He was previously employed by Scrivner, Inc., a wholesale and retail food distribution company, serving as its President and Chief Operating Officer from 1987 to 1994. Mr. Ramsbacher was elected Vice President, Marketing in May 1991. He previously served as operating Vice President, Iowa Division from May 1990 to May 1991. Mr. Lumsden was elected Vice President, Warehouse and Transportation in May 1992. He previously served as Director, Warehouse and Transportation from May 1990 to May 1992. Mr. Maurice was elected Vice President, Store Development in May 1993. He previously served as operating Vice President, Central Division for more than five years. Mr. Scherer was appointed as Chief Financial Officer in November 1995. His election as Vice President was effective in December 1994, and he served as Vice President, Planning and Financial Services from December 1994 to November 1995. He previously served as Director of Strategic Planning and Financial Services from April 1994 to December 1994, and Director of Planning and Budgets from January 1988 through April 1994. Mr. Seiler was elected as Vice President, Corporate Retail Operations effective as of October 1994. He previously served as operating Vice President, Iowa Division from May 1993 to October 1994, Iowa Division Manager from June 1991 to May 1993, and Corporate Retail Sales and Operations Supervisor (Fargo, ND) from July 1984 to June 1991. Mr. Timberlake was elected as Vice President, Human Resources in November 1995. He previously served as Director of Human Resources from January 1993, and Director of Training and Management Development from February 1988 to January 1993. Ms. Allen was elected as Treasurer effective as of January 1996. She previously served as Assistant Treasurer from May 1995, Treasury Manager from January 1993 to May 1995, and Treasury Assistant from September 1987 to January 1993. 11 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 1995 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 1995 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 1995 Annual Report is incorporated herein by reference. 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 1995 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 The information under the caption "Independent Auditors" in the Company's 1996 Proxy Statement is incorporated herein by reference. 12 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 1996 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 1996 Proxy Statement is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information under the captions "Election of Directors--Compensation of Directors" and "Executive Compensation and Other Benefits" in the Company's 1996 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 1996 Proxy Statement is incorporated herein by reference. 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 1996 Proxy Statement is incorporated herein by reference. 13 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 1995 Annual Report: Independent Auditors' Report -- page 16 Consolidated Statements of Earnings for the years ended December 30, 1995, December 31, 1994 and January 1, 1994 -- page 16 Consolidated Statements of Cash Flows for the years ended December 30, 1995, December 31, 1994 and January 1, 1994 -- page 17 Consolidated Balance Sheets as of December 30, 1995 and December 31, 1994 -- pages 18 and 19 Consolidated Statements of Stockholders' Equity for the years ended December 30, 1995, December 31, 1994 and January 1, 1994 -- page 20 Notes to Consolidated Financial Statements -- pages 20-25 2. FINANCIAL STATEMENT SCHEDULES: The following financial statement schedules 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 ---- (a) Valuation and Qualifying Accounts .................... 18 (b) Other Schedules. All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. 14 3. Exhibits: The exhibits to this Report are listed in the Exhibit Index on pages E-1 to E-5 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 25, 1996, 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) (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785)). B. Nash Finch Profit Sharing Plan -- 1994 Revision -- First Declaration of Amendment (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 0-785)). C. Nash Finch Profit Sharing Plan -- 1994 Revision -- Second Declaration of Amendment (filed herewith as Exhibit 10.10). D. Nash Finch Executive Incentive Bonus and Deferred Compensation Plan (as amended and restated effective December 31, 1993) (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785)). E. 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)). F. Excerpt from minutes of the Board of Directors regarding Nash Finch Pension Plan, as amended (filed herewith as Exhibit 10.13). 15 G. Excerpts from minutes of the Board of Directors regarding director compensation (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 7, 1995 (File No. 0-785)). H. Excerpts from minutes of the Board of Directors relating to compensation of the Board Chair (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 17, 1995 (File No. 0-785)). I. 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)). J. 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)). K. Nash Finch Income Deferral Plan (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785)). L. Nash Finch 1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 filed July 8, 1994 (File No. 33-54487)). M. Nash Finch 1995 Director Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 17, 1995 (File No. 0-785)). (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. On January 17, 1996, the Company filed a Form 8-K with the Securities and Exchange Commission to report that on January 2, 1996, the Company acquired substantially all of the business and assets of Military Distributors of Virginia, Inc. ("MDV"), a Virginia corporation. Amendment No. 1 on Form 8-K/A, amending the January 17, 1996 filing to include financial statements for the most recent fiscal year of MDV and required pro forma financial information, was filed on March 18, 1996. On February 28, 1996, Nash Finch filed a Form 8-K with the Securities and Exchange Commission to report that on February 13, 1996, the Board of Directors of the Company 16 approved a Stockholder Rights Agreement dated February 13, 1996 between the Company and Norwest Bank Minnesota, a national association, as Rights Agent. Also, on March 7, 1996, Nash Finch filed a Registration Statement on Form 8-A regarding the registration of Common Stock Purchase Rights under the Securities Exchange Act of 1934. 17 SCHEDULE II NASH FINCH COMPANY and SUBSIDIARIES Valuation and Qualifying Accounts Fiscal years ended December 30, 1995, December 31, 1994, and Janaury 1, 1994 (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 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 -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- 52 weeks ended December 31, 1994: Allowance for doubtful receivables (d) $8,522 2,187 961 7,123 (e) 14,207 (b) 4,620 34 (a) Provision for losses relating to leases on closed locations 168 1,451 - (618)(c) 467 534 -------- ------- -------- ------- -------- ------- $8,690 3,638 961 6,539 14,674 5,154 -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- 52 weeks ended December 30, 1995: Allowance for doubtful receivables (d) $4,620 3,997 - 78 (a) 3,815 (b) 4,880 Provision for losses relating to leases on closed locations 534 1,864 - (106)(c) 397 1,895 -------- ------- -------- ------- -------- ------- $5,154 5,861 - (28) 4,212 6,775 -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- -------
(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 previously sold reclassified from other current liability. 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: November 1, 1996 NASH-FINCH COMPANY By /S/ ALFRED N. FLATEN ---------------------------------------- Alfred N. Flaten President, Chief Executive Officer, and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on November 1, 1996 by the following persons on behalf of the Registrant and in the capacities indicated. /S/ ALFRED N. FLATEN /S/ LAWRENCE A. WOJTASIAK - --------------------------------- ------------------------------------------- Alfred N. Flaten, President, Lawrence A. Wojtasiak, Controller (Principal Chief Executive Officer Accounting Officer) (Principal Executive Officer) and Director /S/ JOHN R. SCHERER /S/ CAROLE F. BITTER - --------------------------------- -------------------------------------------- John R. Scherer, Vice President Carole F. Bitter, Director and Chief Financial Officer (Principal Financial Officer) /S/ RICHARD A. FISHER /S/ ALLISTER P. GRAHAM - --------------------------------- ------------------------------------------ Richard A. Fisher, Director Allister P. Graham, Director /S/ JOHN H. GRUNEWALD /S/ RICHARD G. LAREAU - --------------------------------- ------------------------------------------- John H. Grunewald, Director Richard G. Lareau, Director /S/ RUSSELL N. MAMMEL /S/ DON E. MARSH - --------------------------------- -------------------------------------------- Russell N. Mammel, Director Don E. Marsh, Director /S/ DONALD R. MILLER /S/ ROBERT F. NASH - -------------------------------- ------------------------------------------- Donald R. Miller, Director Robert F. Nash, Director /S/ JEROME O. RODYSILL - -------------------------------- Jerome O. Rodysill, Director NASH FINCH COMPANY EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 30, 1995
ITEM NO. ITEM METHOD OF FILING - ---- ---- ---------------- 3.1 Restated Certificate of Incorporation of the Company....... 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 of 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 as amended, effective November 21, 1995.................. Filed herewith. 4.1 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). E-1 ITEM NO. ITEM METHOD OF FILING - ---- ---- ---------------- 4.2 Stockholder Rights Agreement, dated February 13, 1996, between the Company and Norwest Bank Minnesota, National Association.... Incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K dated February 13, 1996 (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). 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). E-2 ITEM NO. ITEM METHOD OF FILING - ---- ---- ---------------- 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 Note Agreement, dated March 22, 1996, between the Company and The Variable Annuity Life Insurance Company, Independent Life and Accident Insurance Company, Northern Life Insurance Company, and Northwestern National Life Insurance Company.................. Filed herewith. 10.7 Credit Agreement, dated December 27, 1995, between the Company and First Bank National Association, Norwest Bank Minnesota, National Association, PNC Bank, National Association, Mitsubishi Bank, Limited Chicago Branch, and Wachovia Bank of Georgia, N.A..... Filed herewith. E-3 ITEM NO. ITEM METHOD OF FILING - ---- ---- ---------------- 10.8 Nash Finch Profit Sharing Plan--1994 Revision and Nash Finch Profit Sharing Trust Agreement (as restated effective January 1, 1994)......... Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785). 10.9 Nash Finch Profit Sharing Plan--1994 Revision-- First Declaration of Amendment.......................... Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1995 (File No. 0-785). 10.10 Nash Finch Profit Sharing Plan -- 1994 Revision -- Second Declaration of Amendment.......................... Filed herewith. 10.11 Nash Finch Executive Incentive Bonus and Deferred Compensation Plan (as amended and restated effective December 31, 1993)................. Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785). 10.12 Excerpts from minutes of Board of Directors regarding Nash Finch 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). 10.13 Excerpts from minutes of the Board of Directors regarding Nash Finch Pension Plan, as amended........... Filed herewith. E-4 ITEM NO. ITEM METHOD OF FILING - ---- ---- ---------------- 10.14 Excerpts from minutes of the Board of Directors regarding director compensation....................... Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 7, 1995 (File No. 0-785). 10.15 Excerpts from minutes of the Board of Directors relating to compensation of the Board Chair................. Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 17, 1995 (File No. 0-785). 10.16 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). 10.17 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). 10.18 Nash Finch Income Deferral Plan.... Incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1994 (File No. 0-785). 10.19 Nash Finch 1994 Stock Incentive Plan Incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-8 filed July 8, 1994 (File No. 33-54487). 10.20 Nash Finch 1995 Director Stock Option Plan............................... Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 17, 1995 (File No. 0-785). 13.1 1995 Annual Report to Stockholders (selected portions of pages 14-27) Filed herewith. 21.1 Subsidiaries of the Company........ Filed herewith. 23.1 Consent of Ernst & Young LLP....... Filed herewith. 23.2 Consent of KPMG Peat Marwick, LLP.. Filed herewith. 23.3 Consent of KPMG Peat Marwick, LLP.. Filed herewith. 23.4 Consent of Ernst & Young LLP....... Filed herewith. 27.1 Financial Data Schedule............ Filed herewith.
E-5 EX-3.4 2 EXHIBIT 3.4 EXHIBIT 3.4 NASH-FINCH COMPANY BY-LAWS RESTATED JULY 26, 1983 ARTICLE I STOCK 1. A certificate of stock shall be issued to each holder of fully paid stock, in numerical order, signed by the President or Executive Vice President, or by a Vice President, and by the Secretary or Assistant Secretary. [Amended 5-9-95] 2. A transfer of stock shall be made only upon the books of the Company and before a new certificate is issued, the old certificate must be surrendered for cancellation. 3. Stock of the Company which shall have been purchased by it and held in the treasury shall be subject to disposal by the Board of Directors, but, while held by the Company, shall not be voted, nor shall it participate in the dividends or profits of the Company; provided that such stock may participate in any stock split in the form of a stock dividend. [Amended 9-1-83] ARTICLE II STOCKHOLDERS AND STOCKHOLDERS MEETINGS 1. The annual meeting of the stockholders of this Company for the election of directors and the transaction of such other business as may properly be brought before such meeting shall be held in April or May of each year, the date and time of such annual meeting to be determined by the Board of Directors not less than 60 days before the date of such meeting. All meetings of the stockholders shall be held in the County of Hennepin, State of Minnesota, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. [Amended 11-21-95.] 2. The holders of a majority of the stock issued and outstanding, and entitled to vote thereat, present in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by law, by the certificate of incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting, until the requisite amount of voting stock shall be present. At such adjourned meeting at which the requisite amount of voting stock shall be represented any business may be transacted which might have been transacted at the meeting as originally notified. Any question coming before a meeting at which a quorum is present shall be decided by a majority vote of the stock issued and outstanding and entitled to vote thereat, then present in person or represented by proxy, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. 3. At any meeting of the stockholders each stockholder shall be entitled to one vote in person or by written proxy for each share of the capital stock having voting power held by such stockholder. 4. Written or printed notice of annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote thereat at such address as appears on the stock ledger of the Company not less than 20 days nor more than 60 days before the date of meeting. 5. The officer who has charge of the stock ledger of the Company shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the county where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified in the notice of the meeting, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -2- 6. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called at any time only by the President or by an affirmative vote of two-thirds (2/3) of the full Board of Directors at any regular or special meeting of the Board of Directors called for that purpose. [Amended 5-9-95] 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. 8. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of such meeting, to each stockholder entitled to vote at such meeting. 9. No action shall be taken by the stockholders except in an annual or special meeting as provided for in this Article II. ARTICLE III DIRECTORS 1. The property and business of this Company shall be managed by its Board of Directors, not less than nine (9) nor more than seventeen (17) in number, which number shall be determined by the Board of Directors from time to time and no fewer than two (2) of whom are neither former officers nor present full-time employees of Nash-Finch Company and its subsidiaries. The directors shall be classified with respect to their terms of office by dividing them into three classes (Classes A, B and C) with each class being as nearly equal in number as possible. The terms of office of the directors initially classified as Class A shall expire at the annual meeting of stockholders to be held in 1986; the terms of those classified as Class B shall expire at the annual meeting of stockholders to be held in 1985; and the terms of those classified as Class C shall expire at the annual meeting of stockholders to be held in 1984. At each annual meeting of stockholders after such initial classification, directors of the class whose term is expiring will be elected to hold office until the third succeeding annual meeting (or, for terms of approximately three years). Directors shall hold office until the expiration of the terms for which they were elected and qualified; provided, however, that a director may be removed from office at any time but only (i) for cause, and (ii) then upon the affirmative vote of the holders of three-fourths (3/4) of all outstanding shares entitled to vote. -3- 2. If the office of any director or directors becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, increase in the number of directors, or otherwise, a majority of the remaining directors, though less than a quorum, at a meeting called for that purpose, may choose a successor or successors, or new director or directors in the event of an increase in the number of directors, who shall hold office until the expiration of the term of the class for which appointed and until a successor shall be elected and shall qualify. 3. In addition to the powers and authorities by these by-laws expressly conferred upon it, the Board of Directors may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. 4. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more directors of the Company, which, to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Company, and may have power to authorize the seal of the Company to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. 5. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall elect a director to serve as Board Chair. The director so elected shall not, by virtue of such election, be deemed to be an officer of the Company pursuant to Article VI hereof. An officer of the Company, elected by the Board of Directors under the provisions of said Article VI, however, may be elected to serve as the Board Chair. The Board Chair shall preside at all meetings of the stockholders and Board of Directors and otherwise shall have such duties and responsibilities as may be assigned from time to time by the Board of Directors. During the absence or disability of the Board Chair, the Board of Directors shall designate another director to discharge the duties of the Board Chair. [Added 5-9-95] -4- ARTICLE IV MEETINGS OF THE BOARD 1. Each newly elected Board of Directors shall hold its first and annual meeting immediately following the annual meeting of the stockholders at a place designated by the Board, or they may meet at such place and time as shall be fixed by the consent in writing of all the directors. No notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting; provided, however, that a majority of the whole Board shall be present. 2. Meetings of the Board of Directors other than the annual meeting, may be called at any time by the Board Chair, President or Secretary, or in their absence by the Executive Vice President, or by any Vice President or on the written request of any three directors; on one day's notice to each director, either personally or by mail or by telegram. Unless otherwise fixed by the Board, such meetings shall be held at the office of the Company in Edina, Minnesota. [Amended 5-9-95] 3. At all meetings of the Board a majority of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation or by these by-laws. 4. Unless otherwise restricted by the certificate of incorporation or these by-laws, any actions required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if all members of the Board or the committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or the committee. 5. Unless otherwise restricted by the certificate of incorporation, the Board of Directors shall have the authority to fix the compensation of directors. -5- ARTICLE V INDEMNIFICATION [Amended and restated 3-16-87] SECTION 1. RIGHT TO INDEMNIFICATION. Every person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation or for its benefit as a director, officer, employee or agent of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, including any employee benefit plan, shall be indemnified and held harmless by the Corporation to the fullest extent legally permissible under the General Corporation Law of the State of Delaware in the manner prescribed therein, from time to time, against all expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection therewith. Similar indemnification may be provided by the Corporation to an employee or agent of the Corporation who was or is a party or is threatened to be made a party to or is involved in any such threatened, pending or completed action, suit or proceeding by reason of the fact that he is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation or for its benefit as a director, officer, employee, or agent of another corporation or as its representative in a partnership, joint venture, trust or other enterprise, including any employee benefit plan. SECTION 2. OTHER INDEMNIFICATION. The rights of indemnification conferred by the Article shall not be exclusive of, but shall be in addition to, any other rights which such directors, officers, employees or agents may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any by-law, agreement, vote of stockholders, provisions or law or otherwise, as well as their rights under this Article. -6- SECTION 3. INDEMNIFICATION AGREEMENT. The Company shall have the express authority to enter such agreements as the Board of Directors deems appropriate for the indemnification of present or future directors or officers of the Company in connection with their service to, or status with, the Company or any other corporation, entity or enterprise with whom such person is serving at the express written request of the Company. ARTICLE VI OFFICERS 1. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall elect the corporate officers of the Company. [Amended 5- 13-86] 2. The corporate officers of the Company shall be a President, as many Vice Presidents (some of whom may be designated Senior Vice Presidents) as may be deemed necessary; such Assistant Vice Presidents as may be deemed necessary; a Secretary and such Assistant Secretaries as may be deemed necessary; a Treasurer and such Assistant Treasurers as may be deemed necessary; and a Controller and such Assistant Controllers as may be deemed necessary. [Amended 5-13-86] 3. The Board of Directors may elect such other corporate officers and agents as it shall deem necessary, including an Executive Vice President, and one or more operating officers (who may be designated Vice Presidents, but who shall not be corporate officers). Such other corporate and operating officers and agents shall hold their offices for such terms, shall exercise such powers and perform such duties as shall be determined from time to time by the Board; provided, however, that operating officers shall exercise only such powers and perform only such duties as may be determined by the Board and shall not have authority to exercise the powers or discharge the duties of any corporate officer. Unless expressly stated to the contrary, any reference in these By-Laws to officers, by title or otherwise, other than in this Paragraph 3 of Article VI, shall be deemed to mean corporate officers. [Amended 5-9-95] 4. The President must be a director but no other officer need be a director. Any two offices may be held by the same person. [Amended 5-9-95] -7- 5. The President shall be the Chief Executive Officer of the corporation; he shall have general and active management of the business of the corporation, shall see that all orders and resolutions of the Board are carried into effect and shall perform such other duties as the Board shall prescribe. He shall possess power to sign all certificates, contracts and other instruments of the corporation. [Amended 5-9-95] 6. [Rescinded 5-9-95] 7. During the absence of the President, the Executive Vice President, and during the absence or disability of both of them, the Vice Presidents in the order in which they have been nominated, shall exercise all the functions of the President. Each Vice President shall have such powers and discharge such duties as may be assigned from time to time by the Board of Directors. [Amended 5-9- 95] 8. The Assistant Vice Presidents shall perform such duties as are prescribed and allotted to them by the Board of Directors or the President. 9. The Secretary shall issue notices of all meetings, shall attend all meetings of the Board of Directors and all meetings of the stockholders, shall keep their minutes, shall have charge of the seal and the corporate books, shall sign with the President, Executive Vice President or Vice Presidents, stock certificates and such other instruments as require such signature, and shall make such reports and perform such other duties as are incident to the office or are properly required of him by the Board of Directors. [Amended 5-9-95] 10. The Assistant Secretary shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors or the President shall prescribe. 11. The Treasurer shall have the custody of all monies and securities of the Company. He shall sign or countersign such instruments as require his signature, and shall perform all duties incident to his office, or that are properly required of him by the Board. He shall render to the President and Board of Directors, whenever required, a report of his transactions as Treasurer and of the financial condition of the Company. [Amended 5-9-95] -8- 12. The Assistant Treasurers shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer, and shall perform such other duties as the Board of Directors or the President shall prescribe. 13. The Controller shall keep regular books of accounts and balance same periodically. He shall keep full and accurate accounts of receipts and disbursements of the Company. He shall deposit all monies, and other valuable effects of the Company, in such depositories as may be designated. He shall disburse the funds of the Company as properly authorized on adequate supporting documents and shall render to the President and Board of Directors, whenever required, an accounting of all of his transactions as Controller and the financial condition of the Company. [Amended 5-9-95] 14. The Assistant Controller shall, in the absence or disability of the Controller, perform the duties and exercise the powers of the Controller, and shall perform such other duties as the Board of Directors or the President shall prescribe. ARTICLE VII DIVIDENDS 1. Dividends upon the capital stock of the Company, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. 2. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Company, or for such other purposes as the directors shall think conducive to the interest of the Company, and the directors may modify or abolish any such reserve in the manner in which it was created. -9- ARTICLE VIII FIXING RECORD DATE 1. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE IX REGISTERED STOCKHOLDERS 1. The Company shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE X NOTICE 1. Whenever under the provision of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, by depositing the same in the post office or letter box, in a postpaid sealed wrapper, addressed to such stockholder or director at such address as appears on the books of the Company, or, in default of other address, to such director or stockholder at the general post office in the City of Wilmington, Delaware, and such notice shall be deemed to be given at the time when the same shall be thus mailed. Notice to directors may also be given by telephone or telegram. -10- 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE XI SEAL 1. The corporate seal of the Company shall be of such design as may be decided upon by the officers of the Company. 1. These by-laws may be amended, repealed or altered in whole or in part by the Board of Directors at any regular meeting or at any special meeting of the Board of Directors where such action has been announced in the call and notice of meeting. ARTICLE XII AMENDMENTS Board of Directors at any regular meeting or at any special meeting of the Board of Directors where such action has been announced in the call and notice of meeting. ARTICLE XIII CONSTRUCTION 1. Masculine pronouns shall be construed as feminine or neuter pronouns and singular pronouns and verbs shall be construed as plural in any place or places herein in which the context may require such construction. -11- EX-10.6 3 EXHIBIT 10.6 - ------------------------------------------------------------------------------- NASH-FINCH COMPANY NOTE AGREEMENT Dated as of March 22, 1996 Re: $30,000,000 7.13% Senior Notes Due October 1, 2011 - ------------------------------------------------------------------------------- TABLE OF CONTENTS (NOT A PART OF THE AGREEMENT) SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . . . .1 Section 1.1. Description of Notes. . . . . . . . . . . . . . . . .1 Section 1.2. Commitment: Closing Date. . . . . . . . . . . . . . .2 Section 1.3. Other Agreements. . . . . . . . . . . . . . . . . . .2 SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . .2 Section 2.1. Required Principal Prepayments. . . . . . . . . . . .2 Section 2.2. Optional Prepayments. . . . . . . . . . . . . . . . .2 Section 2.3. Notice of Optional Prepayments. . . . . . . . . . . .3 Section 2.4. Allocation of Prepayments . . . . . . . . . . . . . .3 Section 2.5. Method and Place of Payment of Principal and Interest. . . . . . . . . . . . . . . . . . . . .3 SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . .4 Section 3.1. Representations of the Company. . . . . . . . . . . .4 Section 3.2. Representations of the Purchaser. . . . . . . . . . .4 SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . .5 Section 4.1. Closing Certificate . . . . . . . . . . . . . . . . .5 Section 4.2. Legal Opinions. . . . . . . . . . . . . . . . . . . .5 Section 4.3. Company's Existence and Authority . . . . . . . . . .6 Section 4.4. Related Transactions. . . . . . . . . . . . . . . . .6 Section 4.5. Consent of Holders of Other Securities. . . . . . . .6 Section 4.6. Private Placement Number. . . . . . . . . . . . . . .6 Section 4.7. Funding Instructions. . . . . . . . . . . . . . . . .6 Section 4.8. Legality of Investment. . . . . . . . . . . . . . . .6 Section 4.9. Proceedings and Documents . . . . . . . . . . . . . .6 Section 4.10. Waiver of Conditions. . . . . . . . . . . . . . . . .7 SECTION 5. INTERPRETATION OF AGREEMENT . . . . . . . . . . . . . . .7 Section 5.1. Definitions . . . . . . . . . . . . . . . . . . . . .7 Section 5.2. Accounting Principles . . . . . . . . . . . . . . . 13 Section 5.3. Directly or Indirectly. . . . . . . . . . . . . . . 13 -2- SECTION 6. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . 13 Section 6.1. Corporate Existence, Etc. . . . . . . . . . . . . . 14 Section 6.2. Insurance . . . . . . . . . . . . . . . . . . . . . 14 Section 6.3. Taxes, Claims for Labor and Materials, Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 14 Section 6.4. Maintenance, Etc. . . . . . . . . . . . . . . . . . 14 Section 6.5. Nature of Business. . . . . . . . . . . . . . . . . 14 Section 6.6. Current Ratio; Fixed Charge Coverage. . . . . . . . 15 Section 6.7. Stockholders' Equity. . . . . . . . . . . . . . . . 15 Section 6.8. Incurrence of Funded Debt . . . . . . . . . . . . . 15 Section 6.9. Liens and Encumbrances. . . . . . . . . . . . . . . 16 Section 6.10. Dividends, Stock Purchases. . . . . . . . . . . . . 18 Section 6.11. Mergers, Consolidations and Sales of Assets . . . . 18 Section 6.12. Reports and Rights of Inspection. . . . . . . . . . 20 Section 6.13. Repurchase of Notes . . . . . . . . . . . . . . . . 22 Section 6.14. Termination of Pension Plans. . . . . . . . . . . . 22 Section 6.15. Transactions with Affiliates. . . . . . . . . . . . 22 SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . 23 Section 7.1. Events of Default . . . . . . . . . . . . . . . . . 23 Section 7.2. Notice to Holders . . . . . . . . . . . . . . . . . 24 Section 7.3. Default Remedies. . . . . . . . . . . . . . . . . . 24 Section 7.4. Rescission of Acceleration. . . . . . . . . . . . . 25 SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . . . . . . 25 Section 8.1. Amendments and Waivers. . . . . . . . . . . . . . . 25 Section 8.2. Solicitation of Holders . . . . . . . . . . . . . . 26 Section 8.3. Binding Effect. . . . . . . . . . . . . . . . . . . 26 SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 26 Section 9.1. Registered Notes. . . . . . . . . . . . . . . . . . 26 Section 9.2. Exchange for Different Denominations. . . . . . . . 26 Section 9.3. Loss, Theft, etc. of Notes. . . . . . . . . . . . . 27 Section 9.4. Expenses, Stamp Tax Indemnity . . . . . . . . . . . 27 Section 9.5. Powers and Rights Not Waived. . . . . . . . . . . . 27 Section 9.6. Notices . . . . . . . . . . . . . . . . . . . . . . 28 Section 9.7. Successors and Assigns. . . . . . . . . . . . . . . 28 Section 9.8. Survival of Covenants and Representations . . . . . 28 Section 9.9. Severability. . . . . . . . . . . . . . . . . . . . 28 Section 9.10. Governing Law . . . . . . . . . . . . . . . . . . . 28 Section 9.11. Captions. . . . . . . . . . . . . . . . . . . . . . 29 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ATTACHMENTS TO NOTE AGREEMENT: Schedule I -- Names and Addresses of Purchasers and Amounts of Commitments Exhibit A -- Form of 7.13% Senior Note due October 1, 2011 Exhibit B -- Form of Closing Certificate Exhibit C -- Description of Special Counsel's Closing Opinion Exhibit D -- Description of Closing Opinion of Counsel to the Company -3- NASH-FINCH COMPANY 7600 France Avenue South Minneapolis, Minnesota 55440-0355 NOTE AGREEMENT Re: $30,000,000 7.13% Senior Notes Due October 1, 2011 Dated as of March 22, 1996 To the Purchaser named in Schedule I hereto which is a signatory to this Agreement Ladies and Gentlemen: The undersigned, NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), agrees with you as follows: SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT SECTION 1.1. DESCRIPTION OF NOTES. The Company will authorize the issue and sale of its 7.13% Senior Notes due October 1, 2011 (the "NOTES") in an aggregate principal amount not exceeding $30,000,000 to be dated the date of issue, to bear interest from the date thereof until maturity at the rate of 7.13% per annum on the principal amount from time to time outstanding, such interest to be payable semi-annually on the first day of April and October in each year (commencing on October 1, 1996), until the principal amount thereof shall be due and payable, to mature on October 1, 2011 and to be otherwise substantially in the form attached hereto as Exhibit A. Overdue principal (including any overdue required or optional prepayment of principal) and premium, if any, and (to the extent legally enforceable) overdue installments of interest shall bear interest at the rate of 8.13% per annum from and after the maturity thereof, whether by acceleration or otherwise, until paid. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months. The Notes are not subject to prepayment or redemption at the option of the Company prior to their expressed maturity dates except on the terms and conditions and in the amounts and with the premium, if any, set forth in Section 2 of this Agreement. The term "NOTES" as used herein shall include each Note delivered pursuant to this Agreement and the separate agreements with the other purchasers named in Schedule I hereto. You and the other purchasers named in Schedule I hereto are hereinafter sometimes referred to as the "PURCHASERS". The terms which are capitalized herein shall have the meanings specified in Section 5 unless the context shall otherwise require. SECTION 1.2. COMMITMENT: CLOSING DATE. Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company agrees to issue and sell to you, and you agree to purchase from the Company, Notes of the Company at a price equal to 100% of the principal amount thereof set forth opposite your name in Schedule 1. The sale and purchase of the Notes shall take place on such date not later than March 22, 1996 as shall be mutually agreed upon by the Company and the Purchasers (the "CLOSING DATE"). On the Closing Date, delivery of the Notes will be made against payment therefor in funds current and immediately available at First Bank National Association, First Bank Place, Minneapolis, Minnesota 55480, ABA #091000022, account number: 150250050179, account name: Nash-Finch Company, at 10:00 A.M. Minneapolis, Minnesota time for credit to the account of the Company upon advice to do so from special counsel to the Purchasers. Unless you notify the Company at least three days prior to the Closing Date, the Notes delivered to you will be delivered to you in the form of a single registered Note, registered in your name or in the name of such nominee as you may specify. SECTION 1.3. OTHER AGREEMENTS. Simultaneously with the execution and delivery of this Agreement, the Company is entering into similar agreements with the other Purchasers under which such other Purchasers agree to purchase from the Company the principal amount of Notes set opposite such Purchasers' names in Schedule I, and your obligations and the obligations of the Company hereunder are subject to the execution and delivery of the similar agreements by the other Purchasers. The obligations of each Purchaser shall be several and not joint and no Purchaser shall be liable or responsible for the acts of any other Purchaser. SECTION 2. PREPAYMENT OF NOTES. SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that it will prepay and apply, and there shall become due and payable $2,500,000 principal amount on October 1 in each year beginning October 1, 2000 up to and including October 1, 2010 (each such payment and the payment on October 1, 2011 being hereinafter referred to collectively as the "PRINCIPAL PAYMENT DATES") in respect of the aggregate principal indebtedness evidenced by the Notes. The remaining unpaid principal amount of the Notes and accrued and unpaid interest thereon shall be due and payable on October 1, 2011. No premium shall be payable in connection with any required prepayment made pursuant to this Section 2.1. In the event of any repurchase of less than all of the outstanding Notes pursuant to Section 6.13, each scheduled prepayment pursuant to the provisions of this Section 2.1 coming due -7- concurrently therewith or thereafter shall be reduced to the amount determined by dividing the aggregate principal amount of Notes outstanding immediately after any such repurchase pursuant to said Section 6.13 by the sum of the number of the remaining Principal Payment Dates, including, if on a Principal Payment Date, the date of such purchase. SECTION 2.2. OPTIONAL PREPAYMENTS. In addition to the prepayments required by Section 2.1, and upon compliance with Section 2.3, the Company shall have the privilege, on the first day of April and October in each year commencing on April 1, 1997, of prepaying the outstanding Notes, either in whole or in part (but if in part then in units of $500,000 or an integral multiple of $100,000 in excess thereof) by payment of the principal amount of the Notes or portion thereof to be prepaid and accrued interest thereon to the date of such prepayment, together with a premium equal to the then applicable Make Whole Premium. SECTION 2.3. NOTICE OF OPTIONAL PREPAYMENTS. The Company will give notice of any optional prepayment of the Notes to be made pursuant to Section 2.2 hereof to each holder thereof not less than 30 days nor more than 60 days before the date fixed for such optional prepayment specifying (a) such date, (b) the principal amount of the holder's Notes to be prepaid on such date, (c) that a premium may be payable, (d) the date when such premium will be calculated, (e) a description of the calculation of the premium, if any, and (f) accrued interest applicable to the prepayment. Such notice of prepayment shall also certify compliance with all requirements, if any, which are conditions precedent to any such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the premium, if any, and accrued interest shall become due and payable on the prepayment date. Two business days prior to the prepayment date, the Company shall provide each holder of a Note (by facsimile transmission) written notice of the premium, if any, payable in connection with such prepayment and, whether or not any premium is payable, a reasonably detailed computation of the Make Whole Premium. SECTION 2.4. ALLOCATION OF PREPAYMENTS. All partial prepayments shall be applied on all outstanding Notes ratably in accordance with the unpaid principal amounts thereof but only in units of $1,000, and to the extent that such ratable application shall not result in an even multiple of $1,000, adjustment may be made by the Company to the end that successive optional prepayments shall result in substantially ratable payments. Partial prepayments made pursuant to Section 2.2 shall be credited in each case first, against the final maturities of the Notes being prepaid and then, against the required prepayments provided for by Section 2.1 hereof in the inverse order of the due dates of such prepayments. SECTION 2.5. METHOD AND PLACE OF PAYMENT OF PRINCIPAL AND INTEREST. Anything in the Notes or this Agreement to the contrary notwithstanding, at the time of any payment, the Company will promptly and punctually pay the principal thereof, if any, and premium, if any, -8- and interest due thereon, without any presentment thereof, directly to the Purchaser or any subsequent holder at the address of the Purchaser set forth in Schedule I or at such other address as the Purchaser or such subsequent holder may from time to time designate in writing to the Company or, if a bank account is designated for a Purchaser on Schedule I hereto or in any written notice to the Company from the Purchaser or any such subsequent holder, the Company will make such payments in immediately available funds or in such manner indicated on Schedule I hereto to such bank account before 12:00 noon, Minneapolis, Minnesota time, marked for attention as indicated, or in such other manner or to such other account of the Purchaser or such holder in any bank in the United States as the Purchaser or any such subsequent holder may from time to time direct in writing. If you shall sell or transfer any Note, you will notify the Company of such action and of the name and address of the transferee of such Note and you will, prior to the delivery of such Note, make a notation on such Note of the date to which interest has been paid on such Note and, if not previously made, a notation on such Note of the extent to which any payment has been made on account of the principal of such Note. SECTION 3. REPRESENTATIONS. SECTION 3.1. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants that all representations set forth in the form of the certificate annexed hereto as Exhibit B are true and correct as of the date hereof and are hereby incorporated herein by reference with the same force and effect as though herein set forth in full. SECTION 3.2. REPRESENTATIONS OF THE PURCHASER. (a) You represent, and in entering into this Agreement the Company understands, that you are acquiring the Notes for the purpose of investment and not with a view to the distribution thereof, and that you have no present intention of selling, negotiating or otherwise disposing of the Notes; PROVIDED that the disposition of your property shall at all times be and remain within your control. (b) You further represent that at least one of the following statements concerning each source of funds to be used by you to purchase the Notes is accurate as of the Closing Date: (1) the source of funds to be used by you to pay the purchase price of the Notes is an "INSURANCE COMPANY GENERAL ACCOUNT" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceed ten percent (10%) of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed with your state of domicile; -9- (2) all or a part of such funds constitute assets of one or more separate accounts, trusts or a commingled pension trust maintained by you, and you have disclosed to the Company the names of such employee benefit plans whose assets in such separate account or accounts or pension trusts exceed 10% of the total assets or are expected to exceed 10% of the total assets of such account or accounts or trusts as of the date of such purchase (for the purpose of this clause (2), all employee benefit plans maintained by the same employer or employee organization are deemed to be a single plan); (3) all or part of such funds constitute assets of a bank collective investment fund maintained by you, and you have disclosed to the Company the names of such employee benefit plans whose assets in such collective investment fund exceed 10% of the total assets or are expected to exceed 10% of the total assets of such fund as of the date of such purchase (for the purpose of this clause (3), all employee benefit plans maintained by the same employer or employee organization are deemed to be a single plan); (4) all or part of such funds constitute assets of one or more employee benefit plans, each of which has been identified to the Company in writing; (5) you are acquiring the Notes for the account of one or more pension funds, trust funds or agency accounts, each of which is a "GOVERNMENTAL PLAN" as defined in Section 3(32) of ERISA; (6) the source of funds is an "investment fund" managed by a "qualified professional asset manager" or "QPAM" (as defined in Part V of PTE 84-14, issued March 13, 1984), provided that no other party to the transactions described in this Agreement and no "affiliate" of such other party (as defined in Section V(c) of PTE 84-14) has at this time, and during the immediately preceding one year has exercised the authority to appoint or terminate said QPAM as manager of the assets of any plan identified in writing pursuant to this clause (6) or to negotiate the terms of said QPAM's management agreement on behalf of any such identified plans; or (7) if you are other than an insurance company, all or a portion of such funds consists of funds which do not constitute "plan assets". The Company shall deliver a certificate on the Closing Date which certificate shall either state that (i) it is neither a "party in interest" (as defined in Title I, Section 3(14) of ERISA) nor a "disqualified person" (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986, as amended), with respect to any plan identified pursuant to paragraphs (2), (3) or (4) above, or (ii) -10- with respect to any plan identified pursuant to paragraph (6) above, neither it nor any "affiliate" (as defined in Section V(c) of PTE 84-14) is described in the proviso to said paragraph (6). As used in this Section 3.2(b), the terms "SEPARATE ACCOUNT", "EMPLOYER SECURITIES", and "EMPLOYEE BENEFIT PLAN" shall have the respective meanings assigned to them in ERISA and the term "PLAN ASSETS" shall have the meaning assigned to it in Department of Labor Regulation 29 C.F.R. Section 2510.3-101. SECTION 4. CLOSING CONDITIONS. Your obligation to purchase and pay for the Notes to be issued on the Closing Date shall be subject to the performance by the Company of its agreements hereunder which by the terms hereof are to be performed at or prior to the time of delivery of the Notes and to the following conditions precedent: SECTION 4.1. CLOSING CERTIFICATE. On the Closing Date you shall receive from the Company a certificate dated such Closing Date, executed by the President or a Vice President of the Company substantially in the form attached hereto as Exhibit B, the truth and accuracy of which shall be a condition to your obligation to accept and pay for the Notes. SECTION 4.2. LEGAL OPINIONS. On the Closing Date you shall receive from Chapman and Cutler, who are acting as your special counsel in this transaction, and from Norman R. Soland, Esq., General Counsel for the Company, their respective opinions, dated the Closing Date, in form and substance satisfactory to you and covering substantially the matters set forth or provided in Exhibits C and D, respectively, hereto. SECTION 4.3. COMPANY'S EXISTENCE AND AUTHORITY. On or prior to the Closing Date, you shall have received in form and substance satisfactory to you and your special counsel, such documents and evidence with respect to the Company as you may reasonably request to establish the existence and good standing of the Company and the authorization of the transactions contemplated by this Agreement. SECTION 4.4. RELATED TRANSACTIONS. Prior to or concurrently with the issuance and sale of the Notes to you, the Company shall have consummated the sale of the entire principal amount of the Notes scheduled to be sold on the Closing Date pursuant to this Agreement and the other agreements referred to in Section 1.3. SECTION 4.5. CONSENT OF HOLDERS OF OTHER SECURITIES. On or prior to the Closing Date, any consents or approvals required to be obtained from any holder or holders of any outstanding Security of the Company and any amendments of agreements pursuant to which any Securities may have been issued which shall be necessary to permit the consummation of the transactions -11- contemplated hereby shall have been obtained and all such consents or amendments shall be satisfactory in form and substance to you and your special counsel. SECTION 4.6. PRIVATE PLACEMENT NUMBER. On or prior to the Closing Date, special counsel to the Purchasers of the Notes shall have duly made the appropriate filings with Standard & Poor's CUSIP Service Bureau, as agent for the National Association of Insurance Commissioners, in order to obtain a private placement number for the Notes. SECTION 4.7. FUNDING INSTRUCTIONS. At least three business days prior to the Closing Date, you shall have received written instructions executed by the President or any Vice President of the Company directing the manner of the payment of funds and setting forth (1) the name and address of the transferee bank, (2) such transferee bank's ABA number, (3) the account name and number into which the purchase price for the Notes is to be deposited, and (4) the name and telephone number of the account representative responsible for verifying receipt of such funds. Section 4.8. LEGALITY OF INVESTMENT. The Notes to be purchased by you shall be a legal investment for you under the laws of each jurisdiction to which you may be subject (without resort to any so-called "BASKET PROVISIONS" to such laws). SECTION 4.9. PROCEEDINGS AND DOCUMENTS. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation thereof, shall be satisfactory in form and substance to you and your special counsel and you and your special counsel shall have received copies (executed or certified as may be appropriate) of all legal documents or proceedings which you and they may reasonably request in connection with consummation of said transactions. SECTION 4.10. WAIVER OF CONDITIONS. If on the Closing Date the Company fails to tender to you the Notes to be issued to you on such date or if the conditions specified in this Section 4 have not been fulfilled, you may thereupon elect to be relieved of all further obligations under this Agreement. Without limiting the foregoing, if the conditions specified in this Section 4 have not been fulfilled, you may waive compliance by the Company with any such condition to such extent as you may in your sole discretion determine. Nothing in this Section 4.10 shall operate to relieve the Company of any of its obligations hereunder or to waive any of your rights against the Company. SECTION 5. INTERPRETATION OF AGREEMENT. -12- SECTION 5.1. DEFINITIONS. Unless the context otherwise requires, the terms hereinafter set forth when used herein shall have the following meanings and the following definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined: "AFFILIATE" shall mean any Person (other than a Subsidiary) (a) which, directly or indirectly, through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, (b) which beneficially owns or holds 10% or more of any class of the Voting Stock of the Company, or (c) 10% or more of the Voting Stock (or in the case of a Person which is not a corporation, 10% or more of the Securities of such Person which shall have any rights or interests similar to the Voting Stock of a corporation) of which is beneficially owned or held by the Company or a Subsidiary. The term "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. "CAPITALIZED LEASE" shall mean any lease which is required to be capitalized on the consolidated balance sheet of the Company and its Subsidiaries in accordance with generally accepted accounting principles. "CAPITALIZED RENTALS" shall mean at any date as of which the amount thereof is to be determined, the amount at which the aggregate rentals due under or to become due under all Capitalized Leases under which the Company or any Subsidiary is a lessee will be reflected as a liability on a consolidated balance sheet of the Company and its Subsidiaries in accordance with generally accepted accounting principles. "CLOSING DATE" is defined in Section 1.2 hereof. "CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES" shall mean such assets and liabilities of the Company and its Subsidiaries on a consolidated basis as shall be determined in accordance with generally accepted accounting principles to constitute current assets and current liabilities, respectively. "CONSOLIDATED NET INCOME" for any period shall mean net earnings after income taxes of the Company and its Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles, but excluding: (a) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; -13- (b) earnings of any Person, substantially all the assets of which have been acquired in any manner by the Company or its Subsidiaries, realized by such Person prior to the date of acquisition by the Company or its Subsidiaries; (c) net earnings of any Person (other than a Subsidiary) in which the Company or any Subsidiary has an ownership interest unless such net earnings shall have actually been received by the Company or such Subsidiary in the form of cash distributions; and (d) the earnings of any Person to which assets of the Company shall have been sold, transferred or disposed of, or into which the Company shall have merged, prior to the date of such transaction. "DEBT" with respect to any Person shall mean, without duplication, the sum of: (a) the obligations of such Person for borrowed money or which have been incurred in connection with the acquisition of assets; (b) liabilities secured by any Lien existing on Property owned by such Person (whether or not such liabilities have been assumed); (c) Capitalized Rentals under any Capitalized Lease; and (d) all Guarantees of Debt of others, whether or not reflected in the balance sheet of such Person. "DEFAULT" shall mean any event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default. "ENVIRONMENTAL LEGAL REQUIREMENT" shall mean any current or future statute, law, regulation, ordinance, order, consent decree, judgment, permit, license or other requirement of any international, foreign, federal, state, regional, county, local or other governmental body which pertains to protection of the environment, health or safety of persons, natural resource use, conservation, wildlife, waste management, hazardous materials or pollution (including regulation of releases to air, land, water and groundwater), and includes, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 ET SEQ., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 ET SEQ., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 ET SEQ., -14- Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 ET SEQ., Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 ET SEQ., Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 ET SEQ., Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Sections 651 ET SEQ., Oil Pollution Act of 1990, 33 U.S.C. Sections 2701 ET SEQ., Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 ET SEQ., National Environmental Policy Act of 1975, 42 U.S.C. Sections 4321 ET SEQ., Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Sections 300(f) ET SEQ., any similar or implementing state law, and all amendments, rules, regulations and guidance documents promulgated thereunder. "EVENT OF DEFAULT" is defined in Section 7.1 hereof. "FIXED CHARGES" for any period shall mean on a consolidated basis the sum of (i) all Rentals (other than Rentals on Capitalized Leases) payable during such period by the Company and its Subsidiaries, and (ii) all Interest Charges on all Debt (including the interest component of Rentals on Capitalized Leases) of the Company and its Subsidiaries. "FUNDED DEBT" with respect to any Person shall mean, without duplication, the sum of (i) all Debt of such Person (including obligations of such Person which are classified as Long-Term Liabilities in accordance with generally accepted accounting principles) in each case having a final maturity of one or more than one year from the date of origin thereof (or which, by the terms of the agreement creating the obligation, is renewable or extendable at the option of the Obligor for a period or periods more than one year from the date of origin), including all payments in respect thereof that are required to be made within one year from the date of any determination of Funded Debt whether or not included in Consolidated Current Liabilities, and (ii) all guarantees of Funded Debt of others, whether or not reflected in the balance sheet of such Person. "GUARANTY" shall mean for any Person all obligations of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any Property or assets constituting security therefor; (b) to advance or supply funds: (1) for the purchase or payment of such indebtedness or obligation; or -15- (2) to maintain working capital or other balance sheet condition or any income statement condition or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease Property or to purchase Securities or other Property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the primary obligor to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of the indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under this Agreement, a Guaranty in respect of any indebtedness for borrowed money shall be deemed to be an amount of indebtedness equal to the portion of the principal amount of such indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect of any other obligation or liability or any dividend shall be deemed to be indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend. "HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic chemical, waste, byproduct, pollutant, contaminant, compound, product or substance, including, without limitation, asbestos, polychlorinated biphenyls, petroleum (including crude oil or any fraction thereof) and any material designated as hazardous or toxic pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 ET SEQ., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 ET SEQ., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 ET SEQ., Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 ET SEQ., Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 ET SEQ., or Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 ET SEQ. "INTEREST CHARGES" for any period shall mean all interest and all amortization of debt, discount and expense for all Debt of a Person for which such calculations are being made. "LIEN" shall mean any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and including but not limited to the pledge or deposit of Property, the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "LIEN" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property. For the -16- purposes of this Agreement, the Company or a Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes and such retention or vesting shall be deemed to be a Lien. "MAKE WHOLE PREMIUM" shall mean in connection with any prepayment or acceleration of the Notes the excess, if any, of (a) the aggregate present values as of the date of such prepayment of each dollar of principal being prepaid (taking into account the application of such prepayment required by Section 2.1, if any,) and the amount of interest (exclusive of interest accrued to the date of prepayment) that would have been payable in respect of such dollar if such prepayment had not been made, determined by discounting such amounts at the Reinvestment Rate from the respective dates on which they would have been payable, over (b) 100% of the principal amount of the Notes being prepaid at the date such Notes are to be prepaid. If the Reinvestment Rate at the time of determination of the Make Whole Premium is equal to or higher than 7.13%, the Make Whole Premium shall be zero. For purposes of any determination of the Make Whole Premium: "REINVESTMENT RATE" means (1) .50% plus the yield to maturity of the United States Treasury obligations having a maturity (as compiled by and published on Telerate Page 500 or its successor ("TELERATE") more than three (3) Business Days immediately preceding the payment date at 11:00 A.M. New York City time) (rounded to the nearest month) corresponding to the Weighted Average Life to Maturity of the Notes being prepaid or paid (taking into account the application of any prepayment required by Section 2.1) or (2) if such rate shall not have been so published by Telerate and Telerate does not publish the Collar Yields referred to in clause (b) of the next following sentence, the Reinvestment Rate in respect of such payment date shall mean .50% plus the yield to maturity of the United States Treasury obligations having a maturity (as compiled by and published on page "USD" of the Bloomberg Financial Market Services ("BLOOMBERG") three (3) Business Days immediately preceding the payment date at 11:00 A.M. New York City time) (rounded to the nearest month) corresponding to the Weighted Average Life to Maturity of the Notes being prepaid or paid (taking into account the application of any prepayment required by Section 2.1), or (3) if such rate shall not have been so published by either Telerate or Bloomberg and Telerate and Bloomberg do not publish the Collar Yields referred to in clause (b) of the next following sentence, the Reinvestment Rate in respect of such payment date shall mean .50% plus the arithmetic mean of the yields for the two columns under the heading "WEEK ENDING" published in the Statistical Release under the caption "TREASURY CONSTANT MATURITIES" for the maturity (rounded to the nearest month) corresponding to the Weighted Average Life to Maturity of the Notes being prepaid or paid (taking into account the application of any prepayment required by -17- Section 2.1). If no maturity exactly corresponding to Weighted Average Life to Maturity of the Notes shall appear in either Telerate, Bloomberg or the Statistical Release, as the case may be, (a) if necessary, U.S. Treasury bill quotations shall be converted to bond-equivalent yields in accordance with accepted financial practice and (b) yields for the published maturity next longer than the Weighted Average Life to Maturity and the published maturity next shorter than the Weighted Average Life to Maturity (such yields described in this clause (b) being referred to as "COLLAR YIELDS") shall be calculated pursuant to the foregoing sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of the relevant periods to the nearest month. For purposes of calculating the Reinvestment Rate pursuant to clause (3) above, the most recent Statistical Release published prior to the date of determination of the Make Whole Premium shall be used. "STATISTICAL RELEASE" shall mean the then most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded U.S. Government Securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination hereunder, then such other reasonably comparable index which shall be designated by the holders of 66-2/3% in aggregate principal amount of the outstanding Notes. "WEIGHTED AVERAGE LIFE TO MATURITY" of the principal amount of the Notes being prepaid shall mean, as of the time of any determination thereof, the number of years obtained by dividing the then Remaining Dollar-Years of such principal by the aggregate amount of such principal. The term "REMAINING DOLLAR-YEARS" of such principal shall mean the amount obtained by (1) multiplying (i) the remainder of (A) the amount of principal that would have become due on each scheduled payment date if such prepayment had not been made, LESS (B) the amount of principal on the Notes scheduled to become due on such date after giving effect to such prepayment and the application thereof in accordance with the provisions of Section 2.1, if any, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between the date of determination and such scheduled payment date, and (2) totaling the products obtained in (1). "MULTIEMPLOYER PLAN" shall have the same meaning as in the Employee Retirement Income Security Act of 1974, as amended. "NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the sum of (i) Consolidated Net Income during such period PLUS (to the extent deducted in determining Consolidated Net Income), (ii) all provisions for any federal, state or other income taxes paid by -18- the Company and its Subsidiaries during such period and (iii) Fixed Charges of the Company and its Subsidiaries during such period. "NOTES" is defined in Section 1.1 hereof. "PERSON" shall mean an individual, partnership, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof. "PROPERTY" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "PURCHASERS" is defined in Section 1.1 hereof. "RENTALS" shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "RESTRICTED PAYMENTS" is defined in Section 6.10 hereof. "SECURITY" shall have the same meaning as in Section 2(l) of the Securities Act of 1933, as amended. "STOCKHOLDERS' EQUITY" shall mean the amount of the capital stock accounts (LESS treasury stock) PLUS the surplus and retained earnings of the Company determined in accordance with generally accepted accounting principles. "SUBSIDIARY" shall mean any corporation of which more than 50% (by number of votes) of the Voting Stock is owned and controlled by the Company and/or one or more corporations which are Subsidiaries. "TOTAL CAPITALIZATION" shall mean the sum of (a) Funded Debt of the Company and its Subsidiaries, (b) deferred income taxes of the Company and its Subsidiaries classified as long-term liabilities in accordance with generally accepted accounting principles, and (c) Stockholders' Equity. -19- "VOTING STOCK" shall mean Securities of any class or classes of a corporation, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions). "WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary, all of the equity Securities (except directors' qualifying shares) of which are owned by the Company and/or the Company's other Wholly-Owned Subsidiaries. SECTION 5.2. ACCOUNTING PRINCIPLES. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with generally accepted accounting principles, to the extent applicable. SECTION 5.3. DIRECTLY OR INDIRECTLY. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person. SECTION 6. COMPANY COVENANTS. From and after the Closing Date and continuing so long as any amount remains unpaid on any Note: SECTION 6.1. CORPORATE EXISTENCE, ETC. The Company will preserve and keep in force and effect, and will cause each Subsidiary to preserve and keep in force and effect, its corporate existence and all licenses and permits necessary to the proper conduct of its business, PROVIDED, HOWEVER, that the foregoing shall not prevent any transaction permitted by Section 6.11. SECTION 6.2. INSURANCE. The Company will maintain or cause to be maintained, and will cause each Subsidiary to maintain or cause to be maintained, insurance coverage by financially sound and reputable insurers in such forms and amounts, including such deductibles and such provisions for self- insurance, and against such risks as are customary for corporations of established reputation engaged in the same or a similar business and owning and operating similar Properties. SECTION 6.3. TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS. The Company will promptly pay and discharge, and will cause each Subsidiary promptly to pay and discharge, all lawful taxes, assessments and governmental charges or levies imposed upon the Company or such Subsidiary, respectively, or upon or in respect of all or any part of the Property or business of the Company or such Subsidiary, all trade accounts payable in accordance with -20- usual and customary business terms, and all claims for work, labor or materials, which if unpaid might become a Lien or charge upon any Property of the Company or such Subsidiary; PROVIDED the Company or such Subsidiary shall not be required to pay any such tax, assessment, charge, levy, account payable or claim if (a) the validity, applicability or amount thereof is being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any Property of the Company or such Subsidiary or any material interference with the use thereof by the Company or such Subsidiary or (b) such nonpayment would not materially and adversely affect the Properties, business, prospects, profits or condition of the Company and its Subsidiaries, and (c) the Company or such Subsidiary shall set aside on its books, reserves, if any, required by generally accepted accounting principles with respect thereto. The Company will promptly comply and will cause each Subsidiary to promptly comply with all laws, ordinances or governmental rules and regulations to which it is subject, including without limitation, the Occupational Safety and Health Act of 1970, as amended, the Employee Retirement Income Security Act of 1974, as amended, and all Environmental Legal Requirements, the violation of any of which would materially and adversely affect the Properties, business, prospects, profits or condition of the Company and its Subsidiaries or would result in any Lien or charge upon any Property of the Company or such Subsidiary. SECTION 6.4. MAINTENANCE, ETC. The Company will maintain, preserve and keep, and will cause each Subsidiary to maintain, preserve and keep, its Properties which are used or useful in the conduct of its business (whether owned in fee or a leasehold interest) in good repair and working order and from time to time will make all necessary repairs, replacements, renewals and additions so that at all times the efficiency thereof shall be maintained. SECTION 6.5. NATURE OF BUSINESS. Neither the Company nor any Subsidiary will engage in any business if, as a result, the general nature of the business which would then be engaged in by the Company and its Subsidiaries would be substantially changed from the general nature of the business engaged in by the Company and its Subsidiaries on the date of this Agreement. SECTION 6.6. CURRENT RATIO; FIXED CHARGE Coverage. (a) The Company will at all times keep and maintain the ratio of Consolidated Current Assets to Consolidated Current Liabilities at not less than 1.10 to 1.0. (b) The Company will keep and maintain the ratio of Net Income Available for Fixed Charges to Fixed Charges (determined as of the end of each fiscal quarter) for the immediately preceding 12-month period (taken as a single accounting period ending at the end of such fiscal quarter) at an amount not less than 1.25 to 1.00. -21- SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will at all times keep and maintain Stockholders' Equity at an amount not less than $100,000,000. SECTION 6.8. INCURRENCE OF FUNDED DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Funded Debt, except: (1) the Notes; (2) Funded Debt of the Company and its Subsidiaries outstanding as of the date of this Agreement and reflected on the consolidated balance sheet of the Company and its Subsidiaries as of December 30, 1995; (3) additional unsecured Funded Debt of the Company; PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Funded Debt of the Company and its Subsidiaries shall not exceed 60% of Total Capitalization; and (4) additional Funded Debt of the Company and its Subsidiaries secured by Liens permitted by and incurred within the limitations of Section 6.9(a)(8), Section 6.9(a)(9) or Section 6.9(a)(10); PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Funded Debt of the Company and its Subsidiaries shall not exceed 60% of Total Capitalization; and (5) Funded Debt of a Subsidiary to the Company or to a Wholly- Owned Subsidiary. (b) Any corporation which becomes a Subsidiary after the date hereof shall for all purposes of this Section 6.8 be deemed to have created, assumed or incurred at the time it becomes a Subsidiary all Funded Debt of such corporation existing immediately after it becomes a Subsidiary. (c) The renewal, extension or refunding of any Funded Debt issued or incurred in accordance with the limitations of Section 6.8(a) shall constitute the issuance of additional Funded Debt, which is, in turn, subject to the limitations of the applicable provisions of this Section 6.8. SECTION 6.9. LIENS AND ENCUMBRANCES. (a) NEGATIVE PLEDGE. Neither the Company nor any Subsidiary will create or incur, or suffer to be incurred or to exist, any Lien on its or their Property or assets, whether now owned -22- or hereafter acquired, or upon any income or profits therefrom, or transfer any Property for the purpose of subjecting the same to the payment of obligations in priority to the payment of its or their general creditors, or acquire or agree to acquire, or permit any Subsidiary to acquire, any Property or assets upon conditional sales agreements or other title retention devices, except: (1) Liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, PROVIDED the payment thereof is not at the time required by Section 6.3; (2) Liens incurred or deposits made in the ordinary course of business (i) in connection with workmen's compensation, unemployment insurance, social security and other like laws, or (ii) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of Property, PROVIDED in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings; (3) attachment, judgment and other similar Liens arising in connection with court proceedings, PROVIDED the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings PROVIDED FURTHER, the aggregate amount of all pledges or deposits made to stay the execution or enforcement of such Liens of the Company and its Subsidiaries does not exceed $1,000,000; (4) Liens on Property of a Subsidiary, PROVIDED such Liens secure only obligations owing to the Company or a Wholly-Owned Subsidiary; (5) reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other similar title exceptions or encumbrances affecting real Property, which are necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on Properties of corporations engaged in similar activities and similarly situated, PROVIDED they do not in the aggregate materially detract from the value of said Properties or materially interfere with their use in the ordinary conduct of the owning company's business; (6) leases of Property other than Capitalized Leases; (7) the Lien of mortgages, conditional sale contracts, security interests or other arrangements for the retention of title (including Capitalized Leases) existing as of -23- the date of this Agreement, securing Funded Debt of the Company or any Subsidiary outstanding on such date; (8) the Lien of mortgages, conditional sale contracts, security interests or other arrangements for the retention of title (including Capitalized Leases) given to secure the payment of the purchase price or the costs of construction or improvement of fixed assets useful and intended to be used in carrying on the business of the Company or such Subsidiary, as the case may be, including Liens existing on such fixed assets at the time of acquisition thereof or at the time of acquisition by the Company or a Subsidiary of any business entity then owning such fixed assets, whether or not such existing Liens were given to secure the payment of the purchase price of the fixed assets to which they attach; PROVIDED that (i) the Lien or charge shall attach solely to the fixed assets acquired, constructed or improved, (ii) at the time of acquisition, construction or improvement of such fixed assets, the aggregate amount remaining unpaid on all indebtedness secured by Liens on such fixed assets (whether or not assumed by the Company or such Subsidiary), shall not be in excess of the lesser of the total purchase price or fair market value thereof at the time of acquisition, construction or improvement of such fixed assets (as determined in good faith by the chief financial officer of the Company), (iii) the indebtedness secured by such Liens is payable in equal monthly, quarterly, semi-annual or annual installments and is not callable or subject to acceleration prior to its stated maturity at the option of the lender for reasons unrelated to the creditworthiness of the obligor or destruction of the collateral thereof, and (iv) the indebtedness secured by such Liens shall have been incurred within the applicable limitations of Section 6.8(A)(4); (9) Liens of mortgages, conditional sale contracts, security interests or other arrangements for the retention of title (including Capitalized Leases) in addition to the Liens permitted by preceding clauses (1) through (8) hereof; PROVIDED that the indebtedness secured by such Liens permitted by this Section 6.9(a)(9) at any one time outstanding shall not exceed 25% of Total Capitalization; and (10) any extension, renewal or replacement of any Lien permitted by the foregoing clauses (7), (8) and (9) in respect of the same Property theretofore subject to such Lien in connection with the extension, renewal or refunding (without increases in principal amount) of the indebtedness secured thereby which is permitted by the provisions of Section 6.8(a)(4). (b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property is subjected to a Lien in violation of this Section 6.9, the Company will make or cause to be made provision whereby the Notes will be secured equally and ratably with all other obligations secured thereby and in any case the Notes shall have the benefit, to the full extent that, and with such priority as, the holders -24- may be entitled thereto under applicable law, of an equitable Lien on such Property so equally and ratably securing the Notes. Such violation of Section 6.9 shall constitute an Event of Default hereunder, whether or not any such provision is made pursuant to this Section 6.9(b). SECTION 6.10. DIVIDENDS, STOCK PURCHASES. The Company will not except as hereinafter provided: (a) declare or pay any dividends, either in cash or Property, on any shares of its capital stock of any class (except dividends or other distributions payable solely in shares of capital stock of the Company); or (b) directly or indirectly, or through any Subsidiary, purchase, redeem or retire any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock (other than in exchange for or out of the net proceeds to the Company from the substantially concurrent issue or sale of other shares of capital stock of the Company or warrants, rights or options to purchase or acquire any shares of its capital stock); or (c) make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its capital stock; (such declarations or payments of dividends, purchases, redemptions or retirements of capital stock and warrants, rights or options, and all such other distributions being herein collectively called "RESTRICTED PAYMENTS"), if after giving effect thereto the aggregate amount of Restricted Payments made during the period from and after December 30, 1995 to and including the date of the making of the Restricted Payment in question, would exceed the sum of (1) $35,000,000, (2) 75% of Consolidated Net Income for such period, computed on a cumulative basis for said entire period (or if such Consolidated Net Income is a deficit figure, then minus 100% of such deficit), and (3) the aggregate net cash proceeds received by the Company from the issuance and sale of capital stock for such period (but without duplication of any net proceeds to the Company referred to in clause (b) above). The Company will not declare any dividend which constitutes a Restricted Payment payable more than 90 days after the date of declaration thereof. For the purposes of this Section 6.10, the amount of any Restricted Payment declared, paid or distributed in Property of the Company shall be deemed to be the greater of the book value or fair market value (as determined in good faith by the chief financial officer of the Company) of such Property at the time of the making of the Restricted Payment in question. -25- SECTION 6.11. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. (a) The Company will not (1) consolidate with or be a party to a merger with any other corporation or (2) sell, lease or otherwise dispose of all or any substantial part (as hereinafter defined) of the assets of the Company, unless: (i) the successor formed by or resulting from such consolidation or merger or the transferee to which such sale, lease or other disposition shall have been made shall be a solvent corporation organized under the laws of the United States of America or a State thereof or the District of Columbia, and after giving effect to such transaction, no Default or Event of Default shall exist; (ii) such successor or transferee corporation shall expressly assume in writing the due and punctual payment of the principal of and interest and premium, if any, on the Notes, according to their tenor, and the due and punctual performance and observance of all the terms, covenants, agreements and conditions of the Notes and this Agreement and shall furnish the holders of the Notes an opinion of counsel satisfactory to such holders to the effect that the instrument has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the surviving corporation enforceable in accordance with its terms; and (iii) after giving effect to such consolidation or merger the Company would be permitted to incur at least $1.00 of additional Funded Debt under the provisions of Section 6.8(a)(3). (b) No Subsidiary will (1) consolidate with or be a party to any merger with any other corporation or (2) sell, lease or otherwise dispose of all or any substantial part of its assets, except in each case, that a Subsidiary may consolidate with, merge into or sell, lease or otherwise dispose of all or any substantial part of its assets to the Company or any Wholly-owned Subsidiary or, in the case of a merger, any other corporation, PROVIDED that, the surviving corporation in such merger is a Wholly-owned Subsidiary. (c) The Company will not sell, transfer or otherwise dispose of any shares of stock of any Subsidiary (except to qualify directors) or any indebtedness of any Subsidiary, and will not permit any Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a Wholly-owned Subsidiary) any shares of stock or any indebtedness of any other Subsidiary, unless: (1) simultaneously with such sale, transfer, or disposition, all shares of stock and all indebtedness of such Subsidiary at the time owned by the Company and by every other Subsidiary shall be sold, transferred or disposed of as an entirety; -26- (2) the Board of Directors of the Company shall have determined, as evidenced by a resolution thereof, that the proposed sale, transfer or disposition of said shares of stock and indebtedness is in the best interests of the Company; (3) said shares of stock and indebtedness are sold, transferred or otherwise disposed of to a Person, for a cash consideration and on terms reasonably deemed by the Board of Directors to be adequate and satisfactory; (4) the Subsidiary being disposed of shall not have any continuing investment in the Company or any other Subsidiary not being simultaneously disposed of; and (5) such sale or other disposition does not involve a substantial part (as hereinafter defined) of the assets of the Company and its Subsidiaries. (d) As used in this Section 6.11, a sale, lease or other disposition of assets shall be deemed to be a "SUBSTANTIAL PART" of the assets of the Company and its Subsidiaries only if the book value of such assets, when added to the book value of all other assets sold, leased or otherwise disposed of by the Company and its Subsidiaries (other than in the ordinary course of business) during the twelve month period ending on the date of such sale, lease or other disposition, exceeds 10% of Total Capitalization, determined as of the end of the immediately preceding fiscal year. SECTION 6.12. REPORTS AND RIGHTS OF INSPECTION. The Company will keep or cause to be kept, and will cause each Subsidiary to keep or cause to be kept, proper books of record and account in which full and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Company or such Subsidiary in accordance with generally accepted accounting principles consistently applied (except for changes disclosed in the financial statements furnished to you pursuant to this Section 6.12 and concurred in by the independent public accountants referred to in Section 6.12(b) hereof), and will furnish to you so long as you are the holder of any Note and to each holder of then outstanding Notes (in duplicate if so requested): (a) QUARTERLY STATEMENTS. As soon as available and in any event within 60 days after the end of each quarterly fiscal period (except the last) of each fiscal year of the Company, copies of: (1) a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the close of such period, setting forth in comparative form the consolidated figures for the fiscal year then most recently ended, -27- (2) consolidated statements of income and retained earnings of the Company and its consolidated Subsidiaries for the portion of the fiscal year ending with such quarterly fiscal period; in each case setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year, all in reasonable detail and certified by the chief financial officer of the Company as complete and correct, subject to changes resulting from year-end and audit adjustments, and (3) consolidated statements of cash flows of the Company and its consolidated Subsidiaries for the portion of the fiscal year ending with such quarterly fiscal period, setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year; (b) ANNUAL STATEMENTS. As soon as available and in any event within 120 days after the close of each fiscal year of the Company, copies of: (1) a consolidated balance sheet of the Company and its consolidated Subsidiaries as of the close of such fiscal year, and (2) consolidated statements of income and retained earnings and cash flows of the Company and its consolidated Subsidiaries for such fiscal year, in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in reasonable detail and accompanied by a report thereon by Ernst & Young LLP or of other independent accountants of recognized national standing selected by the Company to the effect that such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of the end of the fiscal year being reported on and on the consolidated results of the operations and cash flows for said year in conformity with generally accepted accounting principles and that the examination of such accountants in connection with such financial statements has been conducted in accordance with generally accepted auditing standards and included such tests of the accounting records and such other auditing procedures as said accountants deemed necessary in the circumstances; (c) SEC AND OTHER REPORTS. Promptly upon their becoming available, one copy of each regular financial statement or report, as the Company shall send to its stockholders and of each regular and periodic report, registration statement or prospectus filed by the Company with any Securities exchange or the Securities and Exchange Commission (the "SEC") or any successor agency, it being understood that if and to the -28- extent that the Company's SEC Form 10Q and Form 10K or successor forms are provided within the time periods prescribed by clauses (a) and (b) above, the requirements of supplying the quarterly and annual statements provided for in said clauses (a) and (b) shall be deemed to have been met; (d) NOTICE OF DEFAULT. Immediately upon becoming aware of the existence of any condition or event which constitutes an Event of Default, or event which with the lapse of time or giving of notice, or both, would constitute an Event of Default, under this Agreement, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) OFFICER'S CERTIFICATE. Within the period provided in paragraph (b) above, a certificate of an authorized financial officer of the Company stating: (1) that the signer thereof has reexamined the terms and provisions of this Agreement (which statement shall be accompanied by the information and computations (in reasonable detail) required in order to establish whether the Company was in compliance with the requirements of Sections 6.6 through 6.11, inclusive, at the end of the period being covered by the financial statements then being furnished) and (2) whether, to the best knowledge of such officer (after due inquiry), there exists on the date of the certificate any Default or Event of Default under this Agreement and, if any such condition or event exists, specifying the nature and period of existence thereof and the action the Company is taking and proposes to take with respect thereto; and (f) REQUESTED INFORMATION. Such additional information as you or any such holder may reasonably request concerning the Company. Without limiting the foregoing, the Company will permit you, so long as you are the holder of any Note, and each institutional holder of the then outstanding Notes (or such Persons as either you or such holder may designate), under the Company's guidance, to visit the Company at its corporate headquarters and to examine all the books of account, records, reports and other papers of the Company, to make copies and extracts therefrom as is reasonably necessary for the purposes hereof, and to discuss its affairs, finances and accounts with its officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss with you the finances and affairs of the Company) all at such reasonable times and as often as may be reasonably requested. Any information obtained by you or such other holder from such examination or discussion will be treated as confidential unless and until such information has been publicly disclosed by the Company; PROVIDED, HOWEVER, that nothing herein contained shall limit or impair the right or obligation of yourself or such other holder to disclose such information when required by law or to appropriate regulatory authorities having jurisdiction over your or its affairs (including, in all events, to proposed transferees of the Notes -29- and to proposed purchasers of the assets of a holder of Notes) or to use the same in connection with the enforcement of the terms and conditions of this Agreement. Any visitation shall be at your sole expense or the sole expense of such institutional holder unless an Event of Default or an event which with the lapse of time or giving of notice and lapse of time would become an Event of Default shall have occurred and be continuing, in which case, any such visitation or inspection shall be at the sole expense of the Company. SECTION 6.13. REPURCHASE OF NOTES. Neither the Company nor any Subsidiary, directly or indirectly through an Affiliate or otherwise, may repurchase or make any offer to repurchase any Notes unless the offer has been made to repurchase Notes, pro rata, from all holders of the Notes at the same time and upon the same terms. In case the Company repurchases any Notes such Notes shall thereafter be cancelled and no Notes shall be issued in substitution therefor. Without limiting the foregoing, upon the purchase or other acquisition of any Notes by the Company, any Subsidiary or any Affiliate, such Notes shall no longer be outstanding for purposes of any section of this Agreement relating to the taking by the holders of the Notes of any actions with respect hereto, including, without limitation, Section 7.3, Section 7.4 and Section 8.1. SECTION 6.14. TERMINATION OF PENSION PLANS. The Company will not and will not permit any Subsidiary to withdraw from any Multiemployer Plan or permit any employee benefit plan maintained by it to be terminated if such withdrawal or termination could result in withdrawal liability (as described in Part 1 of Subtitle E of Title IV of the Employee Retirement Income Security Act of 1974, as amended) or the imposition of a Lien on any Property of the Company or any Subsidiary pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974, as amended. SECTION 6.15. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit any Subsidiary to, enter into or be a party to, any transaction or arrangement with any Affiliate (including without limitation, the purchase from, sale to or exchange of Property with, or the rendering of any service by or for, any Affiliate), except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person other than an Affiliate. SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR. SECTION 7.1. EVENTS OF DEFAULT. Any one or more of the following shall constitute an "EVENT OF DEFAULT" as the term is used herein: (a) default in the payment of interest on any Note when the same shall have become due and such default shall continue for more than five days; or -30- (b) default in the payment of principal or premium, if any, on any Note when the same shall have become due; or (c) default shall occur in the observance or performance of the covenants or agreements contained in Sections 6.6 through 6.11; or (d) default shall occur in the observance or performance of any other provision of this Agreement which is not remedied within 30 days after the earlier of (1) such default shall first become known to any executive officer of the Company or the chief financial officer of the Company, or (2) notice of such default shall have been given by any holder of the Notes to any executive officer or the chief financial officer of the Company; or (e) any representation or warranty made by the Company herein, or made by the Company in any statement or certificate furnished by the Company in connection with the consummation of the issuance and sale of the Notes or furnished by the Company pursuant hereto proves untrue or misleading in any material respect as of the date of the issuance or making thereof; or (f) the Company or any Subsidiary fails to make any payment of principal and/or interest in respect of any indebtedness for borrowed money aggregating more than $15,000,000 in original principal amount or any event shall occur (other than the mere passage of time) or any condition shall exist in respect of any indebtedness for borrowed money aggregating more than $15,000,000 in original principal amount of the Company or any Subsidiary, or under any agreement securing or relating to such indebtedness, the effect of which is to cause such indebtedness to become due prior to its stated maturity or prior to its regularly scheduled dates of payment; or (g) the Company becomes insolvent or bankrupt, is generally not paying its debts as they become due or makes an assignment for the benefit of creditors, or the Company causes or suffers an order for relief to be entered with respect to it under applicable Federal bankruptcy law or applies for or consents to the appointment of a custodian, trustee or receiver for the Company or for the major part of the Property of either; or (h) a custodian, trustee or receiver is appointed for the Company or for the major part of the Property of the Company and is not discharged within 90 days after such appointment; or -31- (i) final judgment or judgments for the payment of money aggregating in excess of $500,000 is or are outstanding against the Company or against any of the Property or assets of the Company and any one of such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 30 days or such longer period, not to exceed 60 days, as is permitted by applicable law or judicial rule from the date of its entry; or (j) bankruptcy, reorganization, arrangement or insolvency proceedings, or other proceedings for relief under any bankruptcy or similar law or laws for the relief of debtors, are instituted by or against the Company and, if instituted against the Company, are consented to or are not dismissed within 60 days after such institution. SECTION 7.2. NOTICE TO HOLDERS. When any Event of Default described in the foregoing Section 7.L has occurred, or if the holder of any Note or any other evidence of indebtedness for borrowed money of the Company gives any notice or takes any other action with respect to a claimed default, the Company agrees to give notice within seven business days of such event to all holders of the Notes then outstanding, such notice to be in writing and sent by registered or certified mail or by telegram. SECTION 7.3. DEFAULT REMEDIES. When any Event of Default described in subparagraphs (a) or (b) of Section 7.1 has occurred and is continuing, any holder of any Note may, and when any Event of Default described in subparagraphs (c) through (f) and (i) of Section 7.1 has happened and is continuing, the holder or holders of 35% or more of the principal amount of Notes at the time outstanding may exercise any right, power or remedy permitted to such holder or holders at law or in equity and shall have, in particular, without limiting the generality of the foregoing, the right, by notice in writing sent by registered or certified mail to the Company, to declare the entire principal and all interest accrued on all Notes to be, and all Notes shall thereupon become, forthwith due and payable without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. When any Event of Default described in subparagraphs (g), (h) or (j) of Section 7.1 has occurred, then all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes becoming due and payable as a result of any Event of Default as aforesaid, the Company will forthwith pay to the holders of the Notes the entire principal and interest accrued on the Notes and to the extent permitted by law, an amount as liquidated damages for the loss of the bargain evidenced hereby (and not as a penalty) equal to the then applicable Make Whole Premium, determined as of the date on which the Notes shall so become due and payable. No course of dealing on the part of any holder of the Notes nor any delay or failure on the part of any such holder to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers and remedies. The Company further agrees, to the extent permitted by law, to pay to the holder or holders of the Notes all costs and expenses incurred by them in the -32- collection of any Notes upon any default hereunder or thereon, including reasonable compensation to such holder's or holders' attorneys for all services rendered in connection therewith. SECTION 7.4. RESCISSION OF ACCELERATION. The provisions of Section 7.3 are subject to the condition that if the principal of and accrued interest on all or any outstanding Notes have been declared immediately due and payable by reason of the occurrence of any Event of Default described in paragraphs (a) through (i), inclusive, of Section 7.1, the holders of 66-2/3% in aggregate principal amount of the Notes then outstanding may, by written instrument filed with the Company, rescind and annul such declaration and the consequences thereof, PROVIDED that at the time such declaration is annulled and rescinded: (a) no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement; (b) all arrears of interest upon all the Notes and all other sums payable under the Notes and under this Agreement (except any principal, interest or premium on the Notes which has become due and payable solely by reason of such declaration under Section 7.3) shall have been duly paid; and (c) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to Section 8.1; and PROVIDED FURTHER, that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereto. SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS. SECTION 8.1. AMENDMENTS AND WAIVERS. Any term, covenant, agreement or condition of this Agreement may, with the consent of the Company, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the holders of at least 66-2/3% in aggregate principal amount of outstanding Notes; PROVIDED, HOWEVER, that without the written consent of the holders of all the Notes then outstanding no such waiver, modification, alteration or amendment shall be effective (a) which will change the time of payment (including any prepayment required by Section 2.1) of the principal of, the interest on or premium on, if any, any Note or change the principal amount thereof or change the rate of interest thereon, or (b) which will change any of the provisions of Section 2 in respect of optional prepayments or (c) which will change the percentage of holders of the Notes required to consent -33- to any such amendment, waiver, alteration or modification or any of the provisions of this Section 8 or Section 7. SECTION 8.2. SOLICITATION OF HOLDERS. So long as there are any Notes outstanding, the Company will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement or the Notes unless each holder of Notes (irrespective of the amount of Notes then owned by it) shall be informed thereof by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of Notes as consideration for or as an inducement to entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions of this Agreement or the Notes unless such remuneration is concurrently offered and paid, on the same terms, ratably to the holders of all Notes then outstanding. SECTION 8.3. BINDING EFFECT. Any such amendment or waiver shall apply equally to all the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Company, whether or not such Note shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon. SECTION 9. MISCELLANEOUS. SECTION 9.1. REGISTERED NOTES. The Company shall cause to be kept at its principal office a register for the registration and transfer of the Notes (hereinafter called the "NOTE REGISTER"), and the Company will register or transfer or cause to be registered or transferred, as hereinafter provided and under such reasonable regulations as it may prescribe, any Note issued pursuant to this Agreement. At any time and from time to time the registered holder of any Note which has been duly registered as hereinabove provided may transfer such Note, upon surrender thereof at the principal office of the Company duly endorsed or accompanied by a written instrument of transfer duly executed by such registered holder or its attorney authorized in writing. The Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes of this Agreement and the Company shall not be affected by any notice or knowledge to the contrary. Payment of or on account of the principal, premium, if any, and interest on any such Note shall be made to or upon the written order of such registered holder. -34- SECTION 9.2. EXCHANGE FOR DIFFERENT DENOMINATIONS. The Company will, at any time and from time to time, upon not less than 30 days notice to that effect given by the holder of any Note initially delivered or of any Note substituted therefor pursuant to Section 9.1, this Section 9.2 or to Section 9.3, and, upon surrender of such Note at its office, deliver in exchange therefor, without expense to the holder, except as set forth below, Notes for the same aggregate principal amount as the then unpaid principal amount of the Note so surrendered and, as nearly as possible, in the denomination of $100,000 or any amount in excess thereof as such holder shall specify, dated as of the date to which interest has been paid on the Note so surrendered or, if such surrender is prior to the payment of any interest thereon, then dated the date of original issuance of Notes hereunder, registered in the name of such Person or Persons as may be designated by such holder, and otherwise of the same form and tenor as the Notes so surrendered for exchange. The Company may require the payment of a sum sufficient to cover any stamp tax or governmental charge imposed upon such exchange or transfer. SECTION 9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence satisfactory to the Company of the loss, theft, mutilation or destruction of any Note, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company, or in the event of such mutilation upon surrender and cancellation of the Note, the Company will make and deliver a new Note, of like tenor, in lieu of such lost, stolen, destroyed or mutilated Note. The Company may require the payment of a sum sufficient to cover any stamp tax or governmental charge imposed upon such reissuance. If a Purchaser or any subsequent institutional holder is the owner of any such lost, stolen or destroyed Note, then the affidavit of the President, a Vice President or other responsible officer of such owner, setting forth the fact of loss, theft or destruction and of its ownership of the Note at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof and no indemnity shall be required as a condition to execution and delivery of a new Note other than the written agreement of such owner to indemnify and hold the Company harmless. SECTION 9.4. EXPENSES, STAMP TAX INDEMNITY. The Company agrees to pay all expenses in connection with the issuance, sale and delivery to you of the Notes, including the cost of shipping the same to you at your home office or such other place as you may specify. Whether or not the purchase herein contemplated shall be consummated, the Company agrees to reimburse you for all of your out-of-pocket expenses, including, but not limited to, the reasonable charges and disbursements of Chapman and Cutler, your special counsel in connection with the transaction contemplated by this Agreement and all of your out-of-pocket expenses relating to any proposed or actual amendments of this Agreement or waivers or consents pursuant to the provisions hereof or thereof, including, without limitation, any proposed or actual amendments, waivers or consents resulting from any work-out, restructuring or similar proceedings relating to the performance by the Company of its obligations under this Agreement and the Notes. The Company agrees to indemnify and hold you harmless from any liability on -35- account of stamp and other taxes, if any, which may be payable or which may be determined to be payable in connection with the execution and delivery of this Agreement or the Notes. The Company further agrees to protect and indemnify you against any liability for any and all brokerage fees and commissions payable or claimed to be payable to any Person in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, the Company agrees to pay the cost of obtaining a private placement number for the Notes and authorizes the submission of such information as may be required by Standard & Poor's Corporation for the purpose of obtaining such number. SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; Remedies Cumulative. No delay or failure on the part of the holder of any Note in the exercise of any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of the same preclude any other or further exercise thereof, or the exercise of any other power or right, and the rights and remedies of the holder of any Note are cumulative to and are not exclusive of any rights or remedies any such holder would otherwise have, and no waiver or consent, given or extended pursuant to Section 8 hereof shall extend to or affect any obligation or right not expressly waived or consented to. SECTION 9.6. NOTICES. All communications provided for hereunder shall be in writing and sent by confirmed facsimile transmission (with hard copy sent concurrently by nationally recognized overnight carrier) or by nationally recognized overnight carrier in each case prepaid and if to you, addressed to you at your address appearing on Schedule I to this Agreement or such other address as you or the subsequent holder of any Note initially issued to you, may designate to the Company in writing, or if to the Company, addressed to the Company, at 7600 France Avenue South, Minneapolis, Minnesota 55435, Attention: Treasurer, or to such other address as you or the Company shall designate by written notice to the other. Notice properly sent under this Section 9.6 will be deemed given only when actually received by the Company or you, as the case may be, and without regard to receipt by the actual individual to whose attention such notice is sent. SECTION 9.7. SUCCESSORS AND ASSIGNS. This Agreement and all covenants herein contained shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereunder. SECTION 9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants, representations and warranties made by the Company herein and in any certificates delivered pursuant hereto, whether or not in connection with the closing, shall survive the closing and the delivery of this Agreement and the Notes. -36- SECTION 9.9. SEVERABILITY. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in force and effect as if this Agreement had been executed with the invalid portion thereof eliminated and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this Agreement without including therein any such part, parts, or portion which may, for any reason, be hereafter declared invalid. SECTION 9.10. GOVERNING LAW. THIS AGREEMENT AND THE NOTES ISSUED AND SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH MINNESOTA LAW. SECTION 9.11. CAPTIONS. The descriptive headings of the various Sections or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. -37- The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one Agreement. NASH-FINCH COMPANY BY ------------------------------- Its -38- Accepted as of March 22, 1996: THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By Its -31- Accepted as of March 22, 1996: INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY By Its -31- Accepted as of March 22, 1996: NORTHERN LIFE INSURANCE COMPANY By Its -31- Accepted as of March 22, 1996: NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY By Its -31- NAMES AND ADDRESSES OF PURCHASERS AND AMOUNTS OF COMMITMENTS NAME AND ADDRESS PRINCIPAL OF PURCHASER AMOUNT THE VARIABLE ANNUITY LIFE $17,000,000 INSURANCE COMPANY c/o American General Corporation 2929 Allen Parkway Houston, Texas 77019-2155 Attention: Investment Research Department, A37-01 Facsimile Number: (713) 831-1366 REGULAR MAIL: P.O. Box 3247 Houston, Texas 77253-3247 Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal, premium or interest) to: State Street Bank and Trust Company (ABA #011000028) Boston, Massachusetts 02101 Re: The Variable Annuity Life Insurance Company AC-0125-821-9 OBI=PPN Number and description of payment Fund Number PA 54 Notices All notices of payment on or in respect of the Notes and written confirmation of each such payment to: The Variable Annuity Life Insurance Company and PA 54 c/o State Street Bank and Trust Company SCHEDULE I (to Note Agreement) Insurance Services Custody (AH2) 1776 Heritage Drive North Quincy, Massachusetts 02171 Facsimile Number: (617) 985-4923 Duplicate payment notices and all other correspondences to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 74-1625348 Deliver securities by overnight courier to: State Street Bank and Trust Company Securities Services 225 Franklin Street Boston, Massachusetts 02105 Attention: Mr. David A. Kay--Receive and Deliver with a transmittal letter requesting that State Street confirm receipt of the securities to Caroline Lee and transmit by regular mail a photocopy of such securities to her attention at American General Corporation, P. O. Box 3247, Houston, Texas 77253-3247. I-44 NAME AND ADDRESS PRINCIPAL OF PURCHASER AMOUNT INDEPENDENT LIFE AND ACCIDENT $3,000,000 INSURANCE COMPANY c/o American General Corporation 2929 Allen Parkway Houston, Texas 77019-2155 Attention: Investment Research Department, A37-01 Facsimile Number: (713) 831-1366 REGULAR MAIL: P.O. Box 3247 Houston, Texas 77253-3247 Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal, premium or interest) to: State Street Bank and Trust Company (ABA #011000028) Boston, Massachusetts 02101 Re: Independent Life and Accident Insurance Company AC-34817924 OBI=PPN Number and description of payment Fund Number PA 88 Notices All notices of payment on or in respect of the Notes and written confirmation of each such payment to: Independent Life and Accident Insurance Company c/o State Street Bank and Trust Company Insurance Services Custody (AH2) 1776 Heritage Drive North Quincy, Massachusetts 02171 I-45 Facsimile Number: (617) 985-4923 Duplicate payment notices and all other correspondences to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 59-0302660 Deliver securities by overnight courier to: State Street Bank and Trust Company Securities Services 225 Franklin Street Boston, Massachusetts 02105 Attention: Mr. David A. Kay--Receive and Deliver with a transmittal letter requesting that State Street confirm receipt of the securities to Caroline Lee and transmit by regular mail a photocopy of such securities to her attention at American General Corporation, P. O. Box 3247, Houston, Texas 77253-3247. I-46 NAME AND ADDRESS PRINCIPAL OF PURCHASER AMOUNT NORTHERN LIFE INSURANCE COMPANY $6,000,000 c/o ReliaStar Investment Research, Inc. 100 Washington Avenue South, Suite 800 Minneapolis, Minnesota 55401-2121 Attention: Securities Department Telecopier Number: (612) 372-5368 Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal, premium or interest) to: First National Bank N.A./Mpls. (ABA #091000022) 601 2nd Avenue South Attention: Securities Accounting for credit to: Northern Life Insurance Company Account Number 1602-3237-6105 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: Var & Co. Taxpayer I.D. Number: 41-1295933 Deliver securities by overnight courier to: ReliaStar Investment Research, Inc. 100 Washington Avenue South, Suite 800 Minneapolis, Minnesota 55401-2121 Attention: Richell Waddick I-47 NAME AND ADDRESS PRINCIPAL OF PURCHASER AMOUNT NORTHWESTERN NATIONAL LIFE INSURANCE $4,000,000 COMPANY c/o ReliaStar Investment Research 100 Washington Square, Suite 800 Minneapolis, Minnesota 55401-2147 Attention: Securities Department Telecopier Number: (612) 372-5368 Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal, premium or interest) to: First National Bank N.A./Mpls. (ABA #091000022) 601 2nd Avenue South Minneapolis, Minnesota 55402 Attention: Securities Accounting for credit to: Northwestern National Life Insurance Company Account Number 1102-4001-4461 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: Var & Co. Taxpayer I.D. Number: 41-0451140 Deliver securities by overnight courier to: ReliaStar Investment Research 100 Washington Square, Suite 800 Minneapolis, Minnesota 55401-2147 I-48 Attention: Richell Waddick I-49 NASH-FINCH COMPANY 7.13% Senior Note Due October 1, 2011 PPN: 631158 D@ 8 No. R- [Date of Issue] $ NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to or registered assigns the principal amount of DOLLARS ($ ) on October 1, 2011 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 7.13% per annum from the date hereof until maturity (computed on the basis of a 360-day year of 12 consecutive 30-day months) in installments payable on October 1, 1996 and on the first day of each April and October thereafter to and including the date of maturity hereof. The Company further promises to pay interest on each overdue installment of principal, premium, if any, and (to the extent legally enforceable) upon each overdue installment of interest at the rate of 8.13% per annum in each case from and after the maturity of each such installment, whether by acceleration or otherwise, until paid. Subject only to SECTION 2.5 of the Note Agreements hereinafter referred to, both the principal hereof, premium, if any, and interest hereon are payable at the principal office of the Company in Minneapolis, Minnesota, in coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts. This Note is one of the 7.13% Senior Notes due October 1, 2011 of the Company in the aggregate principal amount of $30,000,000 issued or to be issued under and pursuant to the terms and provisions of separate and several Note Agreements each dated as of March 22, 1996 (collectively, the "NOTE AGREEMENTS") entered into by the Company with the institutional investors named in Schedule I thereto. This Note and the holder hereof are entitled equally and ratably with the holders of all other Notes outstanding under the Note Agreements to all the benefits provided for thereby or referred to therein, to which Note Agreements reference is hereby made for the statement thereof. EXHIBIT A (to Note Agreement) This Note and the other Notes outstanding under the Note Agreements may be declared due prior to their expressed maturity date and certain prepayments are required to be made thereon by the Company, all in the events, on the terms and in the manner and amounts as provided in the Note Agreements. The Notes are not subject to prepayment or redemption at the option of the Company prior to their expressed maturity dates except on the terms and conditions and in the amounts and with the premium, if any, set forth in the Note Agreements. This Note is registered on the books of the Company and is transferable only by surrender thereof at the principal office of the Company duly endorsed or accompanied by a written statement of transfer duly executed by the registered holder of this Note or his attorney duly authorized in writing. Payment of or on account of principal, premium, if any, and interest on this Note shall be made only to or upon the order in writing of the registered holder. NASH-FINCH COMPANY By Its A-51 NASH-FINCH COMPANY CLOSING CERTIFICATE To the Purchasers of the 7.13% Senior Notes due October 1, 2011 of Nash-Finch Company Re: $30,000,000 7.13% SENIOR NOTES DUE OCTOBER 1, 2011 OF NASH-FINCH COMPANY Ladies and Gentlemen: This certificate is delivered to you in compliance with the requirements of the separate and several Note Agreements each dated as of March 22, 1996 (collectively, the "NOTE AGREEMENTS") entered into by the undersigned, NASH- FINCH COMPANY, a Delaware corporation (the "COMPANY") with each of you, and as an inducement to and as part of the consideration for your purchase on this date of $30,000,000 aggregate principal amount of the 7.13% Senior Notes due October 1, 2011 (the "NOTES") of the Company pursuant to the Note Agreements. The terms which are capitalized herein shall have the same meanings as in the Note Agreements. The Company represents and warrants to each of you as follows: 1. SUBSIDIARIES. Annex A attached hereto states the name of each of the Company's Subsidiaries, its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and/or its Subsidiaries. The Company has good and marketable title to all of the shares it purports to own of the capital stock of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and non-assessable. 2. CORPORATE ORGANIZATION AND AUTHORITY. The Company and each Subsidiary, (a) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation; EXHIBIT B (to Note Agreement) (b) has all requisite power and authority and all necessary licenses and permits to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted; and (c) is duly licensed or qualified and in good standing as a foreign corporation in each jurisdiction wherein the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary and in which the failure to so qualify could have a material adverse effect on the Properties, business prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. 3. BUSINESS AND PROPERTY. You have heretofore been furnished with a copy of the Private Placement Memorandum dated January 28, 1996 (the "MEMORANDUM") prepared by Norwest Bank Minnesota, National Association, which generally sets forth the business conducted and proposed to be conducted by the Company and its Subsidiaries. 4. FINANCIAL STATEMENTS. (a) The consolidated balance sheets of the Company and its Subsidiaries as of December 28, 1991, January 2, 1993, January 1, 1994, December 31, 1994 and December 30, 1995 each inclusive, and the consolidated statements of stockholders' equity and changes in financial position or cash flows, as the case may be, for the fiscal years ended on said dates, each accompanied by a report thereon containing an opinion unqualified as to scope limitations imposed by the Company and otherwise without qualification, except as noted therein, by KPMG Peat Marwick LLP and, in the case of December 30, 1995, Ernst & Young LLP, have been prepared in accordance with generally accepted accounting principles consistently applied, except as therein noted, are correct and complete and present fairly, in all material respects, the financial position of the Company and its Subsidiaries as of such dates and the results of its operations and changes in financial position or and cash flows, as the case may be, for such periods. (b) Since December 30, 1995, there has been no change in the condition, financial or otherwise, of the Company and its Subsidiaries including, without limitation, any change in Liens securing Funded Debt of the Company or any Subsidiary, as shown on the balance sheet as of such date except changes in the ordinary course of business, none of which individually or in the aggregate has been materially adverse. 5. FULL DISCLOSURE. Neither the financial statements referred to in paragraph 4 hereof, nor the Note Agreements, the Memorandum as modified by subsequent information provided by the Company, or any other written statement furnished by the B-53 Company to you, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no fact peculiar to the Company which the Company has not disclosed to you in writing which materially affects adversely nor, so far as the Company can now foresee, will materially affect adversely the Properties, business prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or the ability of the Company to perform the terms and conditions of the Note Agreements and the Notes. 6. PENDING LITIGATION. There are no proceedings pending or, to the knowledge of the Company threatened, against or affecting the Company or any Subsidiary in any court or before any governmental authority or arbitration board or tribunal which if adversely determined would materially and adversely affect the Properties, business, prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is in default with respect to any order of any court or governmental authority or arbitration board or tribunal. 7. TITLE TO PROPERTIES. The Company and each Subsidiary has good and marketable title in fee simple (or its equivalent under applicable law) to all the real Property and has good title to all the other Property it purports to own, including that reflected in the most recent balance sheet referred to in paragraph 4 except as sold or otherwise disposed of in the ordinary course of business and except for Liens disclosed in notes to the financial statements referred to in paragraph 4 hereof or such Liens which are not material in the aggregate and do not materially and adversely affect the value of such Property or interfere with the conduct of the business of the Company and its Subsidiaries. 8. PATENTS AND TRADEMARKS. The Company and each Subsidiary owns or possesses adequate rights to use all material patents, trademarks, trade names, service marks, copyright, licenses and rights with respect to the foregoing necessary for the present and planned future conduct of its business, without any known material conflict with the rights of others. 9. SALE IS LEGAL AND AUTHORIZED. The sale of the Notes and compliance by the Company with all of the provisions of the Note Agreements and the Notes: (a) are within the corporate powers of the Company and have been duly authorized by proper corporate action on the part of the Company; and B-54 (b) will not violate any provisions of any law or any order of any court or governmental authority or agency and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under the Restated Certificate of Incorporation or By-laws of the Company or any indenture or other agreement or instrument to which the Company is a party or by which it may be bound or result in the imposition of any Liens or encumbrances on any Property of the Company. 10. NO DEFAULTS. No Default or Event of Default has occurred and is continuing. The Company is not in default in the payment of principal or interest on any indebtedness for borrowed money and is not in default under any instrument or agreement under and subject to which any indebtedness for borrowed money has been issued and no event has occurred and is continuing under the provisions of any such instrument or agreement which with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder. 11. GOVERNMENTAL CONSENT. No approval, consent or withholding of objection on the part of any regulatory body, state, Federal or local, is necessary in connection with the execution and delivery by the Company of the Note Agreements or the Notes or compliance by the Company with any of the provisions of the Note Agreements or the Notes. 12. TAXES. All tax returns required to be filed by the Company or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes, assessments, fees and other governmental charges upon the Company or any Subsidiary or upon any of their respective Properties, income or franchises which are shown to be due and payable in such returns have been paid. For all taxable years ending on or before December 31, 1991, the Federal income tax liability of the Company and its Subsidiaries has been satisfied and either the period of limitations on assessment of additional Federal Income Tax has expired or the Company and its Subsidiaries have entered into an agreement with the Internal Revenue Service closing conclusively the total tax liability for the taxable year. The Company does not know of any proposed additional tax assessment against it for which added provision has not been made in its accounts, and no material controversy in respect of additional Federal or state income taxes is pending or is to the knowledge of the Company threatened. The provisions for taxes on the books of the Company and each Subsidiary are adequate for all open years and for its current fiscal period. 13. USE OF PROCEEDS. The proceeds from the sale of the Notes will be used to repay bank borrowings incurred to fund the acquisition and other expenses related thereto of the Military Distributors of Virginia. None of the transactions contemplated in the B-55 Note Agreements (including, without limitation thereof, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Company does not own or intend to carry or purchase any "MARGIN SECURITY" within the meaning of said Regulation G. None of the proceeds from the sale of the Notes will be used to purchase, or refinance any borrowing, the proceeds of which were used to purchase any "SECURITY" within the meaning of the Securities Exchange Act of 1934, as amended. 14. COMPLIANCE WITH LAW. The Company and each Subsidiary is in compliance with all laws, ordinances, governmental rules or regulations to which it is subject, including without limitation, the Occupational Safety and Health Act of 1970, as amended, the Employee Retirement Income Security Act of 1974, as amended, and all Environmental Legal Requirements, the violation of which would materially and adversely affect the Properties, business, prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is the owner or operator of property, nor has the Company or any Subsidiary arranged for the disposal of Hazardous Substances at a property, where there has been a release or threat of release of Hazardous Substances, the response or corrective action for which could have a material adverse effect on the Properties, business prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. 15. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The consummation of the transactions provided for in the Note Agreements and compliance by the Company with the provisions of the Note Agreements and the Notes will not involve any prohibited transaction within the meaning of the Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as amended. 16. PRIVATE OFFERING. Neither the Company, directly or indirectly, nor Norwest Bank Minnesota, National Association (the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering or sale of the Notes or any similar Security of the Company related to this transaction) has offered or will offer the Notes or any similar Security related to this transaction or has solicited or will solicit an offer to acquire the Notes or any similar Security related to this transaction from or has otherwise approached or negotiated or will approach or negotiate in respect of the Notes or any similar Security related to this transaction with any Person other than you and not more than ten (10) other institutional investors, each of whom was offered a portion of the Notes at private sale for investment. Neither the Company, B-56 directly or indirectly, nor any agent on its behalf has offered or will offer the Notes or any similar Security related to this transaction or has solicited or will solicit an offer to acquire the Notes or any similar Security related to this transaction from any Person so as to bring the issuance and sale of the Notes within the provisions of Section 5 of the Securities Act of 1933, as amended. Dated March ____, 1996 NASH-FINCH COMPANY By Its B-57 SUBSIDIARIES OF THE COMPANY AS OF MARCH 22, 1996 PERCENTAGE OF VOTING STOCK JURISDICTION OF OWNED BY COMPANY AND EACH INCORPORATION OTHER SUBSIDIARY NAME OF SUBSIDIARY Nash-DeCamp Company California 100% Subsidiaries: Agricola Nadco Chile 99% Limitada Forrest Transportation California 100% Service, Inc. Piggly Wiggly Northland Minnesota 100% Corporation GTL Truck Lines, Inc. Nebraska 100% Nebraska Dairies, Inc. Nebraska 66-2/3% Gillette Dairy of the Black South Dakota 66-2/3% Hills, Inc. ANNEX A (to Closing Certificate) DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION The closing opinion of Chapman and Cutler, special counsel to the Purchasers, called for by SECTION 4.2 of the Note Agreements, shall be dated as of the Closing Date and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that: (1) The Company is a corporation validly existing and in good standing under the laws of the State of Delaware, has the corporate power and the corporate authority to execute and deliver the Note Agreements and to issue the Notes; (2) The Note Agreements have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding contracts of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); (3) The Notes have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and (4) The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Agreements do not under existing law require the registration of such Notes under the Securities Act of 1933, as amended, or the qualification of an indenture in respect thereof under the Trust Indenture Act of 1939. In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler may rely solely upon an examination of the Restated Certificate of Incorporation certified by, and a Certificate of good standing of the Company from, the Secretary of State of the State of Delaware, and the By-laws of the Company. Chapman and Cutler's opinion shall be limited to the laws of the State of Illinois, the Delaware General Corporate Law, the general corporate law of the State of Minnesota and the Federal law of the United States. EXHIBIT C (to Note Agreement) With respect to matters of fact upon which such opinion is based, Chapman and Cutler may rely on appropriate certificates of public officials and officers of the Company. C-60 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of Norman R. Soland, Esq., General Counsel for the Company, which is called for by SECTION 4.2 of the Agreements, shall be dated the Closing Date and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall also be to the effect that: (1) The Company is a corporation, duly incorporated, validity existing and in good standing under the laws of the State of Delaware, has the corporate power and the corporate authority to execute and perform the Note Agreements and to issue the Notes and incur the indebtedness to be evidenced thereby; (2) The Company has full corporate power and corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the Properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary; (3) Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary and all of the issued and outstanding shares of capital stock of each such Subsidiary have been duly issued, are fully paid and non-assessable and those shares represented to be owned by the Company pursuant to the Company's Closing Certificate delivered concurrently herewith are owned by the Company, by one or more Subsidiaries, or by the Company and one or more Subsidiaries; (4) The Note Agreements have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding contracts of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); (5) The Notes have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in EXHIBIT D (to Note Agreement) accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); (6) No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal, state or local, is necessary in connection with the lawful execution, delivery and performance of the Agreements or the Notes; (7) The issuance and sale of the Notes and the execution, delivery and performance by the Company of the Note Agreements do not conflict with applicable laws, rules or regulations or result in any breach of the provisions of or constitute a default under or result in the creation or imposition of any Lien or encumbrance upon any of the Property of the Company pursuant to the provisions of the Restated Certificate of Incorporation or By-laws of the Company or any agreement or other instrument known to such counsel to which the Company is a party or by which the Company may be bound; and (8) The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Agreements do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture in respect thereof under the Trust Indenture Act of 1939 as amended. (9) Neither the issuance and sale of the Notes or the application of the proceeds thereof will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System. (10) There are no proceedings pending or, to the knowledge of such counsel, threatened, against or affecting the Company or any Subsidiary in any court or before any governmental authority or arbitration board or tribunal which could reasonably be expected to materially and adversely affect the Properties, business, prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. The opinion of Norman R. Soland, Esq., General Counsel to the Company shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and officers of the Company. The opinion of D-62 Norman R. Soland, Esq., General Counsel to the Company, shall state that it may be relied upon by permitted successors and assigns of the Purchasers. D-63 EX-10.7 4 EXHIBIT 10.7 CREDIT AGREEMENT by and between NASH-FINCH COMPANY, FIRST BANK NATIONAL ASSOCIATION, as Agent and as a Bank, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, PNC BANK, NATIONAL ASSOCIATION, MITSUBISHI BANK, LIMITED CHICAGO BRANCH and WACHOVIA BANK OF GEORGIA, N.A., as Banks Dated as of December 27, 1995 TABLE OF CONTENTS PAGE ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . 1 Section 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . 1 Section 1.2 Accounting Terms and Calculations. . . . . . . . . 10 Section 1.3 Computation of Time Periods. . . . . . . . . . . . 10 Section 1.4 Other Definitional Terms . . . . . . . . . . . . . 10 ARTICLE II TERMS OF THE CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . 11 Section 2.1 The Revolving Commitments. . . . . . . . . . . . . 11 Section 2.3 Revolving Notes. . . . . . . . . . . . . . . . . . 13 Section 2.4 Conversions and Continuations. . . . . . . . . . . 13 Section 2.5 Interest Rates, Interest Payments and Default Interest . . . . . . . . . . . . . . . . . . . . 14 Section 2.6 Repayment. . . . . . . . . . . . . . . . . . . . . 14 Section 2.7 Optional Prepayments . . . . . . . . . . . . . . . 14 Section 2.8 Optional Reduction of Revolving Commitment Amounts or Termination of Revolving Commitments. . . . . . . . . . . . . . . . . . . 15 Section 2.9 Revolving Commitment and Agent's Fees. . . . . . . 15 Section 2.10 Computation . . . . . . . . . . . . . . . . . . . 16 Section 2.11 Payments. . . . . . . . . . . . . . . . . . . . . 16 Section 2.12 Revolving Commitment Ending Date and Extension. . 16 Section 2.13 Use of Loan Proceeds. . . . . . . . . . . . . . . 17 Section 2.14 Interest Rate Not Ascertainable, Etc. . . . . . . 17 Section 2.15 Increased Cost. . . . . . . . . . . . . . . . . . 17 Section 2.16 Illegality. . . . . . . . . . . . . . . . . . . . 18 Section 2.17 Capital Adequacy. . . . . . . . . . . . . . . . . 19 Section 2.18 Funding Losses; LIBOR Advances. . . . . . . . . . 19 Section 2.19 Discretion of Banks as to Manner of Funding . . . 19 Section 2.20 Withholding Taxes . . . . . . . . . . . . . . . . 20 Section 2.21 The Swing-Line Loan Facility . . . . . . . . . . 21 Section 2.22 The Bid Loan Facility . . . . . . . . . . . . . . 22 ARTICLE III CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 3.1 Conditions of Initial Transaction. . . . . . . . . 30 Section 3.2 Conditions Precedent to all Loans. . . . . . . . . 32 -i- ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . 32 Section 4.1. Organization, Standing, Etc.. . . . . . . . . . . 32 Section 4.2. Authorization and Validity; No Conflict . . . . . 33 Section 4.3. Enforceability of Agreements and Loan Documents . 33 Section 4.4. No Default. . . . . . . . . . . . . . . . . . . . 33 Section 4.5. Financial Statements and Condition. . . . . . . . 33 Section 4.7. Regulation U. . . . . . . . . . . . . . . . . . . 34 Section 4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . 34 Section 4.9. Legal Requirements. . . . . . . . . . . . . . . . 34 Section 4.10. Litigation . . . . . . . . . . . . . . . . . . . 34 Section 4.11. Environmental, Health and Safety Laws. . . . . . 35 Section 4.12. Investment Company Act . . . . . . . . . . . . . 35 Section 4.13. Public Utility Holding Company Act . . . . . . . 35 Section 4.14. Retirement Benefits. . . . . . . . . . . . . . . 35 Section 4.15. Full Disclosure. . . . . . . . . . . . . . . . . 35 Section 4.16 Title to Property; Leases; Liens; Subordination . 36 Section 4.17 Trademarks, Patents. Except as set forth in Exhibit 4.17, each . . . . . . . . . . . . . . . 36 Section 4.18 Burdensome Restrictions . . . . . . . . . . . . . 36 Section 4.19 Force Majeure . . . . . . . . . . . . . . . . . . 36 Section 4.20 Subsidiaries. . . . . . . . . . . . . . . . . . . 36 ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 5.1. Financial Statements. . . . . . . . . . . . . . . 37 Section 5.2. Corporate Existence . . . . . . . . . . . . . . . 38 Section 5.3. Insurance . . . . . . . . . . . . . . . . . . . . 38 Section 5.4. Payment of Taxes and Claims . . . . . . . . . . . 38 Section 5.5. Books and Records . . . . . . . . . . . . . . . . 39 Section 5.6. Compliance. . . . . . . . . . . . . . . . . . . . 39 Section 5.7. Notice of Litigation. . . . . . . . . . . . . . . 39 Section 5.8. ERISA . . . . . . . . . . . . . . . . . . . . . . 39 Section 5.9. Environmental Matters; Reporting. . . . . . . . . 40 Section 5.10. Inspection . . . . . . . . . . . . . . . . . . . 40 Section 5.11 Maintenance of Properties . . . . . . . . . . . . 41 ARTICLE VI NEGATIVE COVENANTS 41 Section 6.1. Restrictions on Fundamental Changes . . . . . . . 41 Section 6.2. Accounting Changes. . . . . . . . . . . . . . . . 42 Section 6.3. Liens . . . . . . . . . . . . . . . . . . . . . . 42 Section 6.4. Net Worth . . . . . . . . . . . . . . . . . . . . 44 Section 6.5. Leverage Ratio. . . . . . . . . . . . . . . . . . 44 Section 6.6. Interest Coverage Ratio . . . . . . . . . . . . . 44 -ii- Section 6.7. Transactions with Affiliates. . . . . . . . . . . 44 Section 6.8. Restricted Payments . . . . . . . . . . . . . . . 44 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . 44 Section 7.1 Events of Default. . . . . . . . . . . . . . . . . 44 Section 7.2 Remedies . . . . . . . . . . . . . . . . . . . . . 46 Section 7.3 Offset . . . . . . . . . . . . . . . . . . . . . . 47 ARTICLE VIII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 8.1 Appointment and Authorization. . . . . . . . . . . 48 Section 8.2 Note Holders . . . . . . . . . . . . . . . . . . . 48 Section 8.3 Consultation With Counsel. . . . . . . . . . . . . 48 Section 8.4 Loan Documents . . . . . . . . . . . . . . . . . . 48 Section 8.5 First Bank and Affiliates. . . . . . . . . . . . . 48 Section 8.6 Action by Agent. . . . . . . . . . . . . . . . . . 48 Section 8.7 Credit Analysis. . . . . . . . . . . . . . . . . . 49 Section 8.8 Notices of Event of Default, Etc . . . . . . . . . 49 Section 8.9 Indemnification. . . . . . . . . . . . . . . . . . 49 Section 8.10 Payments and Collections . . . . . . . . . . . . . 49 Section 8.11 Sharing of Payments. . . . . . . . . . . . . . . . 50 Section 8.12 Advice to Banks. . . . . . . . . . . . . . . . . . 51 Section 8.13 Resignation. . . . . . . . . . . . . . . . . . . . 51 ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 9.1 Modifications. . . . . . . . . . . . . . . . . . . 51 Section 9.2 Expenses . . . . . . . . . . . . . . . . . . . . . 52 Section 9.3 Waivers, etc.. . . . . . . . . . . . . . . . . . . 52 Section 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . 52 Section 9.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . 53 Section 9.6 Successors and Assigns; Participations; Foreign and Purchasing Banks . . . . . . . . . . 53 Section 9.7 Confidentiality of Information . . . . . . . . . . 55 Section 9.8 Governing Law and Construction . . . . . . . . . . 56 Section 9.9 Consent to Jurisdiction. . . . . . . . . . . . . . 56 Section 9.10 Waiver of Jury Trial . . . . . . . . . . . . . . . 56 Section 9.11 Survival of Agreement. . . . . . . . . . . . . . . 56 Section 9.12 Indemnification. . . . . . . . . . . . . . . . . . 57 Section 9.13 Captions . . . . . . . . . . . . . . . . . . . . . 58 Section 9.14 Entire Agreement . . . . . . . . . . . . . . . . . 58 Section 9.15 Counterparts . . . . . . . . . . . . . . . . . . . 58 Section 9.16 Borrower Acknowledgements. . . . . . . . . . . . . 58 -iii- LIST OF EXHIBITS AND SCHEDULES EXHIBIT 1.1 - REVOLVING NOTE EXHIBIT 2.2 - FORM OF LOAN REQUEST EXHIBIT 2.21 - SWING-LINE NOTE EXHIBIT 2.22(b) - BID LOAN TENDER REQUEST NOTICE EXHIBIT 2.22(c) - INVITATION TO TENDER FOR BID LOANS EXHIBIT 2.22(g) - BID LOAN NOTE EXHIBIT 2.22(h) - WIRE TRANSFER INSTRUCTIONS EXHIBIT 3.1 - MATTERS TO BE COVERED BY OPINION OF COUNSEL TO THE BORROWER EXHIBIT 4.20 - LIST OF SUBSIDIARIES EXHIBIT 5.1 (d) - COMPLIANCE CERTIFICATE EXHIBIT 6.3 - EXISTING LIENS EXHIBIT 9.6 - ASSIGNMENT AGREEMENT CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of December 27, 1995, is by and between NASH-FINCH COMPANY, a Delaware corporation (the "Borrower"), the banks which are signatories hereto (individually, a "Bank" and, collectively, the "Banks") and FIRST BANK NATIONAL ASSOCIATION, a national banking association, one of the Banks, as agent for the Banks (in such capacity, the "Agent"). ARTICLE I DEFINITIONS AND ACCOUNTING TERMS Section 1.1 DEFINED TERMS. As used in this Agreement the following terms shall have the following respective meanings (and such meanings shall be equally applicable to both the singular and plural form of the terms defined, as the context may require): "ADJUSTED LIBOR": With respect to each Interest Period applicable to a LIBOR Advance, the rate (rounded upward, if necessary, to the next one hundredth of one percent) determined by dividing LIBOR for such Interest Period by 1.00 minus the LIBOR Reserve Percentage. "ADVANCE": Any portion of the outstanding Revolving Loans by a Bank as to which the Borrower elected one of the available interest rate options and, if applicable, an Interest Period. An Advance may be a LIBOR Advance or a Reference Rate Advance. "AFFILIATE": When used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common control with, the Person referred to, (b) each Person which beneficially owns or holds, directly or indirectly, twenty-five percent or more of any class of voting stock of the Person referred to (or if the Person referred to is not a corporation, twenty-five percent or more of the equity interest), (c) each Person, twenty-five percent or more of the voting stock (or if such Person is not a corporation, twenty-five percent or more of the equity interest) of which is beneficially owned or held, directly or indirectly, by the Person referred to, and (d) each of such Person's officers, directors, joint venturers and partners. The term control (including the terms "controlled by" and "under common control with") means the possession, directly, of the power to direct or cause the direction of the management and policies of the Person in question. "AGENT": As defined in the opening paragraph hereof. "AGGREGATE REVOLVING COMMITMENT AMOUNTS": As of any date, the sum of the Revolving Commitment Amounts of all the Banks. "APPLICABLE LENDING OFFICE": For each Bank and for each type of Advance, the office of such Bank identified pursuant to Section 9.4 or such other domestic or foreign office of such Bank (or of an Affiliate of such Bank) as such Bank may specify from time to time to the Agent and the Borrower as the office by which its Advances of such type are to be made and maintained. "APPLICABLE MARGIN": With respect to each Interest Period, the Applicable Margin set forth in the table below as in effect on the third day prior to the first day of such Interest Period:
Debt Rating Applicable Margin ----------- ----------------- A- or better 0.25% BBB+ 0.32% BBB 0.35% BBB- 0.50% Below BBB- 1.00%
For purposes of this definition, the "Debt Rating" means the rating assigned by Standard & Poor's Rating Group to senior, unsecured public debt issued by the Borrower that is not credit enhanced. If at any time of determination no such rating is available, the Applicable Margin shall be 1.00%. "BANK": As defined in the opening paragraph hereof. "BID LOAN": A loan made by a Bank pursuant to subsection 2.22 hereof. "BID LOAN BORROWING DATE": As defined in subsection 2.22(b). "BID LOAN FACILITY": The credit facility granted by the Banks to the Borrower pursuant to subsections 2.1 and 2.22 hereof. "BID LOAN FINANCING": A financing consisting of the simultaneous making of Bid Loans by each of the Banks whose offer to make a Bid Loan as part of such financing has been accepted by the Borrower under the auction bidding procedures described in subsection 2.22 hereof. "BID LOAN NOTE": As defined in subsection 2.22(g) hereof. "BID LOAN OBLIGATION": The obligation of the Borrower with respect to matured Bid Loans as set forth in subsection 2.22(h) hereof. "BID LOAN SCHEDULE": A schedule substantially in the form of the Bid Loan Schedule attached to Exhibit 2.22(g) hereto. -2- "BID LOAN TENDER": As defined in subsection 2.22(d) hereof. "BID LOAN TENDER DATE": As defined in subsection 2.22(d) hereof. "BID LOAN TENDER REQUEST NOTICE" shall mean a notice in the form of Exhibit 2.22(b) hereto given by the Borrower pursuant to subsection 2.22(b) hereof. "BOARD": The Board of Governors of the Federal Reserve System or any successor thereto. "BORROWER": As defined in the opening paragraph hereof. "BUSINESS DAY": Any day (other than a Saturday, Sunday or legal holiday in the State of Minnesota) on which national banks are permitted to be open in Minneapolis, Minnesota. "CHANGE OF CONTROL": The occurrence of any of the following circumstances: (a) any Person or two or more Persons acting in concert acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or other securities convertible into such securities) representing twenty-five percent or more of the combined voting power of all securities of the Borrower entitled to vote in the election of directors; or (b) during any period of up to twelve consecutive months, whether commencing before or after the Closing Date, the membership of the Board of Directors of the Borrower changes for any reason (other than by reason of death, disability or scheduled retirement) so that the majority of the Board of Directors is made up of Persons who were not directors at the beginning of such twelve month period. "CLOSING DATE": December 27, 1995. "CODE": The Internal Revenue Code of 1986, as amended. "CONTINGENT OBLIGATION": With respect to any Person at the time of any determination, without duplication, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the "primary obligor") in any manner, whether directly or otherwise; provided, that the term "Contingent Obligation" shall not include endorsements for collection or deposit, in each case in the ordinary course of business. "DEFAULT": Any event which, with the giving of notice (whether such notice is required under Section 7.1, or under some other provision of this Agreement, or otherwise) or lapse of time, or both, would constitute an Event of Default. -3- "EARNINGS BEFORE INTEREST AND INCOME TAXES": For any period of determination, the consolidated net income of the Borrower and its Subsidiaries before deductions for income taxes and Interest Expense. "ERISA": The Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE": Any trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and which is treated as a single employer under Section 414 of the Code. "ERISA EVENT": To the extent any of the following events result in a liability of Borrower under Title IV of ERISA: (a) a Reportable Event described in Section 4043 of ERISA which is subject to the provision for 30-day notice to the PBGC under ERISA; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041(c) of ERISA; (d) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA; (e) any other event or condition that would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; or (f) the withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan. "EVENT OF DEFAULT": Any event described in Section 7.1. "FINANCIAL OFFICER": With respect to the Borrower, the Chief Executive Officer, the Chief Financial Officer, the Vice President-Treasurer, the Treasurer or the Controller. "FIRST BANK": First Bank National Association in its capacity as one of the Banks hereunder. "GAAP": Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination. "GUARANTOR SUBSIDIARY": Any Subsidiary that guarantees the obligations of the Borrower to the Banks hereunder pursuant to a guaranty in form and substance satisfactory to the Agent and the Majority Banks. -4- "IMMEDIATELY AVAILABLE FUNDS": Funds with good value on the day and in the city in which payment is received. "INDEBTEDNESS": With respect to any Person at the time of any determination, without duplication, all obligations, contingent or otherwise, of such Person which in accordance with GAAP should be classified upon the balance sheet of such Person as liabilities, but in any event including: (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all capitalized lease obligations of such Person, (h) all obligations of such Person in respect of interest rate or currency protection agreements, (i) all obligations of such Person, actual or contingent, as an account party in respect of letters of credit or bankers' acceptances, (j) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, (k) all obligations of such person to purchase property owned by another Person, and (l) all Contingent Obligations of such Person. Accounts payable and accrued expenses incurred in the ordinary course of business by any Person shall not constitute "Indebtedness" for so long as such accounts payable are not past due. "INTEREST COVERAGE RATIO": For any period of determination, the ratio of (a) Earnings before Interest and Income Taxes to (b) Interest Expense, in each determined in accordance with GAAP. "INTEREST EXPENSE": For any period of determination, the aggregate amount of consolidated interest expense of the Borrower, determined in accordance with GAAP. "INTEREST PERIOD": With respect to each LIBOR Advance, the period commencing on the date of such Advance or on the last day of the immediately preceding Interest Period, if any, applicable to an outstanding Advance and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice of borrowing, continuation or conversion; PROVIDED THAT: (a) Any Interest Period that would otherwise end on a day which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day; -5- (b) Any Interest Period that begins on the last LIBOR Business Day of a calendar month (or a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last LIBOR Business Day of a calendar month; (c) Any Interest Period that would otherwise end after the Revolving Commitment Ending Date shall end on the Revolving Commitment Ending Date; and (d) No more than 10 Interest Periods may exist at any time. "INVITATION TO TENDER FOR BID LOANS": As defined in subsection 2.22(c) hereof. "LEVERAGE RATIO": On any date of determination, the ratio of (a) Indebtedness of the Borrower to (b) Total Capitalization, in each case determined in accordance with GAAP. "LIBOR BUSINESS DAY": A Business Day which is also a day for trading by and between banks in United States dollar deposits in the London interbank eurodollar market and a day on which banks are open for business in New York City. "LIBOR": With respect to each Interest Period applicable to a LIBOR Advance, the interest rate per annum (rounded upward, if necessary, to the next one-sixteenth of one percent) at which United States dollar deposits are offered to the Agent in the interbank eurodollar market three LIBOR Business Days prior to the first day of such Interest Period for delivery in Immediately Available Funds on the first day of such Interest Period and in an amount approximately equal to the Advance by the Agent to which such Interest Period is to apply as determined by the Agent and for a maturity comparable to the Interest Period; provided, that in lieu of determining the rate in the foregoing manner, the Agent may substitute the per annum Eurodollar rate (LIBOR) for United States dollars displayed on the Telerate Systems, Inc. screen, page 3750 (or other applicable page), on the first day of such Interest Period. "LIBOR ADVANCE": An Advance with respect to which the interest rate is determined by reference to the Adjusted LIBOR. "LIBOR RESERVE PERCENTAGE": As of any day, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board for determining the maximum reserve requirement (including any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System, with deposits comparable in amount to those held by the Agent, in respect of "Eurocurrency Liabilities" as such term is defined in Regulation D of the Board. The -6- rate of interest applicable to any outstanding LIBOR Advances shall be adjusted automatically on and as of the effective date of any change in the LIBOR Reserve Percentage. "LIEN": With respect to any Person, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of each lessor under any capitalized lease), in, of or on any assets or properties of such Person, now owned or hereafter acquired, whether arising by agreement or operation of law. "LOAN DOCUMENTS": This Agreement and the Notes. "LOANS": The Bid Loans, the Revolving Loans and the Swing-Line Loans. "MAJORITY BANKS": At any time, Banks holding at least 51% of the Aggregate Revolving Commitment Amounts. "MULTIEMPLOYER PLAN": A multiemployer plan, as such term is defined in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date, within the five years preceding the Closing Date, or at any time after the Closing Date) for employees of the Borrower or any ERISA Affiliate. "NET WORTH": On any date of determination, the consolidated assets of the Borrower at such date, determined in accordance with GAAP, after deducting all proper reserves (including reserves for depreciation, obsolescence and amortization), MINUS all liabilities of the Borrower and its Subsidiaries, determined in accordance with GAAP. "NOTES": Collectively, the Revolving Notes, the Swing-Line Note and the Bid Loan Notes; "NOTE" shall mean a Revolving Note, the Swing-Line Note or a Bid Loan Note, as the context may require. "OBLIGATIONS": The Borrower's obligations in respect of the due and punctual payment of principal and interest on the Notes when and as due, whether by acceleration or otherwise and all fees (including Revolving Commitment Fees), expenses, indemnities, reimbursements and other obligations of the Borrower under this Agreement or any other Loan Document, in all cases whether now existing or hereafter arising or incurred. "PARTIALLY ACCEPTED BID": As defined in subsection 2.22(f)(1). "PBGC": The Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof. -7- "PERSON": Any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity. "PLAN": Each employee benefit plan (whether in existence on the Closing Date or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of the Borrower or of any ERISA Affiliate, other than a Multiemployer Plan. "PROHIBITED TRANSACTION": The respective meanings assigned to such term in Section 4975 of the Code and Section 406 of ERISA. "REFERENCE RATE": The rate of interest from time to time publicly announced by the Agent as its "reference rate." The Agent may lend to its customers at rates that are at, above or below the Reference Rate. For purposes of determining any interest rate hereunder or under any other Loan Document which is based on the Reference Rate, such interest rate shall change as and when the Reference Rate shall change. "REFERENCE RATE ADVANCE": An Advance with respect to which the interest rate is determined by reference to the Reference Rate. "REGULATORY CHANGE": Any change after the Closing Date in federal, state or foreign laws or regulations or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks including any Bank under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "REPORTABLE EVENT": A reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, PROVIDED that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code. "RESTRICTED PAYMENTS": With respect to any Person, collectively, all dividends or other distributions of any nature (cash, securities, assets or otherwise), and all payments on any class of equity securities (including warrants, options or rights therefor) issued by that Person, whether such securities are authorized or -8- outstanding on the Closing Date or at any time thereafter and any redemption or purchase of, or distribution in respect of, any of the foregoing, whether directly or indirectly. "REVOLVING COMMITMENT": With respect to a Bank, the agreement of such Bank to make Revolving Loans to the Borrower in an aggregate principal amount outstanding at any time not to exceed such Bank's Revolving Commitment Amount upon the terms and subject to the conditions and limitations of this Agreement. "REVOLVING COMMITMENT AMOUNT": With respect to a Bank, initially the amount set opposite such Bank's name on the signature page hereof as its Revolving Commitment Amount, but as the same may be reduced from time to time pursuant to Sections 2.8 and 9.6. "REVOLVING COMMITMENT ENDING DATE": As defined in Section 2.12. "REVOLVING COMMITMENT FEES": As defined in Section 2.9. "REVOLVING LOAN": As defined in Section 2.1. "REVOLVING LOAN DATE": The date of the making of any Revolving Loans hereunder. "REVOLVING NOTE": A promissory note of the Borrower in the form of Exhibit 1.1 hereto. "REVOLVING PERCENTAGE": With respect to any Bank, the percentage equivalent of a fraction, the numerator of which is the Revolving Commitment Amount of such Bank and the denominator of which is the Aggregate Revolving Commitment Amounts. "SUBSIDIARY": Any corporation or other entity of which securities or other ownership interests having ordinary voting power for the election of a majority of the board of directors or other Persons performing similar functions are owned by the Borrower either directly or through one or more Subsidiaries. "SWING-LINE LOAN": As defined in subsection 2.21(a) hereof. "SWING-LINE LOAN FACILITY": The credit facility granted by the Banks to the Borrower pursuant to subsections 2.1 and 2.21 hereof. "SWING-LINE NOTE": As defined in Section 2.21(a) hereof. -9- "TERMINATION DATE": The earliest of (a) the Revolving Commitment Ending Date, (b) the date on which the Revolving Commitments are terminated pursuant to Section 7.2 hereof or (c) the date on which the Revolving Commitment Amounts are reduced to zero pursuant to Section 2.8 hereof. "TOTAL CAPITALIZATION": On any date of determination, the sum of Net Worth and Indebtedness of the Borrower. "TOTAL OUTSTANDINGS": At the time of any determination, the aggregate unpaid principal balance of all Revolving Loans, Swing-Line Loans and Bid Loans. "UNUSED REVOLVING COMMITMENT": With respect to any Bank as of any date of determination, the amount by which such Bank's Revolving Commitment Amount exceeds the principal amount of unpaid Revolving Loans owing to such Bank on such date. Bid Loans and Swing-Line Loans shall be disregarded for purposes of computing the Unused Revolving Commitment. Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP. To the extent any change in GAAP affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred unless the Borrower and Majority Banks agree in writing on an adjustment to such computation or determination to account for such change in GAAP. Section 1.3 COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of a period of time from a specified date to a later specified date, unless otherwise stated the word "from" means "from and including" and the word "to" or "until" each means "to but excluding". Section 1.4 OTHER DEFINITIONAL TERMS. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to Sections, Exhibits, schedules and like references are to this Agreement unless otherwise expressly provided. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". Unless the context in which used herein otherwise clearly requires, "or" has the inclusive meaning represented by the phrase "and/or". -10- ARTICLE II TERMS OF THE CREDIT FACILITIES Section 2.1 THE REVOLVING COMMITMENTS. Subject to the terms and conditions hereof, the Banks hereby establish credit facilities for the Borrower, consisting of a Revolving Loan Facility under which each Bank severally agrees to make loans (each, a "Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower on a revolving basis at any time and from time to time from the Closing Date to the Termination Date, during which period the Borrower may borrow, repay and reborrow in accordance with subsections 2.2 through 2.20 hereof, a Swing-Line Loan Facility under which the Agent may make Swing-Line Loans in accordance with subsection 2.21 hereof, and a Bid Loan Facility under which the Banks may make Bid Loans in accordance with subsection 2.22 hereof; PROVIDED, HOWEVER, that the Banks shall not make any Revolving Loans if, after giving effect thereto, the Total Outstandings would exceed the Aggregate Revolving Commitment Amounts. The unpaid principal amount of outstanding Revolving Loans of a Bank shall not at any time exceed the Revolving Commitment Amount of such Bank. Revolving Loans hereunder shall be made by the several Banks ratably in the proportion of their respective Revolving Commitment Amounts. Revolving Loans may be obtained and maintained, at the election of the Borrower but subject to the limitations hereof, as Reference Rate Advances or LIBOR Advances or any combination thereof. Section 2.2 PROCEDURE FOR REVOLVING LOANS. Any request by the Borrower for Revolving Loans hereunder shall be in writing or by telephone and must be given so as to be received by the Agent not later than 11:00 a.m. (Minneapolis time) three LIBOR Business Days prior to the requested Revolving Loan Date if the Revolving Loans are requested as LIBOR Advances and not later than 11:00 a.m. (Minneapolis time) on the requested Revolving Loan Date if the Revolving Loans are requested as Reference Rate Advances. Any written request for Revolving Loans shall be in the form of Exhibit 2.2 and shall be signed by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer. Any oral request for Revolving Loans shall be made by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer and shall be confirmed by a writing in the form of Exhibit 2.2 signed by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer, which written confirmation shall be delivered to the Agent not later than five Business Days after the date the Revolving Loans in question are made. The Revolving Commitments of the Banks shall be suspended from the fifth Business Day after the date the Agent notifies the Borrower that such written confirmation is past due until any such past due written confirmation has been delivered. Each request for Revolving Loans hereunder shall be irrevocable and shall be deemed a -11- representation by the Borrower that on the requested Revolving Loan Date and after giving effect to the requested Revolving Loans the applicable conditions specified in Article III have been and will be satisfied. Each request for Revolving Loans hereunder shall specify (i) the requested Revolving Loan Date, (ii) the aggregate amount of Revolving Loans to be made on such date which shall be in a minimum amount of $2,000,000 or, if more, an integral multiple of $1,000,000, (iii) whether such Revolving Loans are to be funded as Reference Rate Advances or LIBOR Advances and (iv) in the case of LIBOR Advances, the duration of the initial Interest Period applicable thereto. The Agent may rely on any telephone request for Revolving Loans hereunder which it believes in good faith to be genuine; and the Borrower hereby waives the right to dispute the Agent's record of the terms of such telephone request. The Agent shall promptly notify each other Bank of the receipt of such request, the matters specified therein, and of such Bank's ratable share of the requested Revolving Loans. On the date of the requested Revolving Loans, each Bank shall provide its share of the requested Revolving Loans to the Agent in Immediately Available Funds not later than 2:00 p.m., Minneapolis time. Unless the Agent determines that any applicable condition specified in Article III has not been satisfied, the Agent will make available to the Borrower at the Agent's principal office in Minneapolis, Minnesota in Immediately Available Funds not later than 3:00 p.m. (Minneapolis time) on the requested Revolving Loan Date the amount of the requested Revolving Loans. If the Agent has made a Revolving Loan to the Borrower on behalf of a Bank but has not received the amount of such Revolving Loan from such Bank by the time herein required, such Bank shall pay interest to the Agent on the amount so advanced at the overnight Federal Funds rate from the date of such Revolving Loan to the date funds are received by the Agent from such Bank, such interest to be payable with such remittance from such Bank of the principal amount of such Revolving Loan (provided, however, that the Agent shall not make any Revolving Loan on behalf of a Bank if the Agent has received prior notice from such Bank that it will not make such Revolving Loan). If the Agent does not receive payment from such Bank by the next Business Day after the date of any Revolving Loan, the Agent shall be entitled to recover such Revolving Loan, with interest thereon at the rate then applicable to such Revolving Loan, on demand, from the Borrower, without prejudice to the Agent's and the Borrower's rights against such Bank. If such Bank pays the Agent the amount herein required with interest at the overnight Federal Funds rate before the Agent has recovered from the Borrower, such Bank shall be entitled to the interest payable by the Borrower with respect to the Revolving Loan in question accruing from the date the Agent made such Revolving Loan. Section 2.3 REVOLVING NOTES. The Advances of each Bank shall be evidenced by a single Revolving Note payable to the order of such Bank in a principal amount equal to such Bank's Revolving Commitment Amount originally in effect. Upon receipt of each Bank's Revolving Note from the Borrower, the Agent shall mail such Revolving Note to such Bank. Each Bank shall enter in its ledgers and records the amount of each Revolving Loan, the various Advances made, -12- converted or continued and the payments made thereon, and each Bank is authorized by the Borrower to enter on a schedule attached to its Revolving Note a record of such Revolving Loans, Advances and payments; provided, however that the failure by any Bank to make any such entry or any error in making such entry shall not limit or otherwise affect the obligation of the Borrower hereunder and on the Revolving Notes, and, in all events, the principal amounts owing by the Borrower in respect of the Revolving Notes shall be the aggregate amount of all Revolving Loans made by the Banks less all payments of principal thereof made by the Borrower. Section 2.4 CONVERSIONS AND CONTINUATIONS. On the terms and subject to the limitations hereof, the Borrower shall have the option at any time and from time to time to convert all or any portion of the Advances into Reference Rate Advances or LIBOR Advances, or to continue a LIBOR Advance as such; provided, however that a LIBOR Advance may be converted or continued only on the last day of the Interest Period applicable thereto and no Advance may be converted to or continued as a LIBOR Advance if a Default or Event of Default has occurred and is continuing on the proposed date of continuation or conversion. Advances may be converted to, or continued as, LIBOR Advances only in amounts, as to the aggregate amount of the Advances of all Banks so converted or continued, of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. The Borrower shall give the Agent written notice, in the form of Exhibit 2.2 attached hereto, of any continuation or conversion of any Advances and such notice must be given so as to be received by the Agent not later than 11:00 a.m. (Minneapolis time) three LIBOR Business Days prior to requested date of conversion or continuation in the case of the continuation of, or conversion to, LIBOR Advances and on the date of the requested conversion to Reference Rate Advances. Each such notice shall specify (a) the amount to be continued or converted, (b) the date for the continuation or conversion (which must be (i) the last day of the preceding Interest Period for any continuation or conversion of LIBOR Advances, and (ii) a LIBOR Business Day in the case of continuations as or conversions to LIBOR Advances and a Business Day in the case of conversions to Reference Rate Advances), and (c) in the case of conversions to or continuations as LIBOR Advances, the Interest Period applicable thereto. Any notice given by the Borrower under this Section shall be irrevocable. If the Borrower shall fail to notify the Agent of the continuation of any LIBOR Advances within the time required by this Section, such Advances shall, on the last day of the Interest Period applicable thereto, automatically be converted into Reference Rate Advances of the same principal amount. All conversions and continuation of Advances must be made uniformly and ratably among the Banks. (E.g., when continuing a two-month LIBOR Advance of one Bank to a three-month LIBOR Advance, the Borrower must simultaneously continue all two-month LIBOR Advances of all Banks having Interest Periods ending on the date of continuation as three-month LIBOR Advances.) -13- Section 2.5 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST. Interest shall accrue and be payable on the Revolving Loans as follows: (a) Subject to paragraph (c) below, each LIBOR Advance shall bear interest on the unpaid principal amount thereof during the Interest Period applicable thereto at a rate per annum equal to the sum of (i) the Adjusted LIBOR for such Interest Period, plus (ii) the Applicable Margin. (b) Subject to paragraph (c) below, each Reference Rate Advance shall bear interest on the unpaid principal amount thereof at a varying rate per annum equal to the Reference Rate. (c) Any Advance not paid when due, whether at the date scheduled therefor or earlier upon acceleration, shall bear interest until paid in full (i) during the balance of any Interest Period applicable to such Advance, at a rate per annum equal to the sum of the rate applicable to such Advance during such Interest Period plus 2.0%, and (ii) otherwise, at a varying rate per annum equal to the sum of (1) the Reference Rate, plus (2) two percent (2.0%) per annum. (d) Interest shall be payable (i) with respect to each LIBOR Advance having an Interest Period of three months or less, on the last day of the Interest Period applicable thereto; (ii) with respect to each LIBOR Advance having an Interest Period greater than three months, on the last day of the Interest Period applicable thereto and on each day that would have been the last day of the Interest Period for such Advance had successive Interest Periods of three months duration been applicable to each Advance; (iii) with respect to any Reference Rate Advance, on the last day of each month; (iv) with respect to all Advances, upon any permitted prepayment (on the amount prepaid); and (v) with respect to all Advances, on the Termination Date; provided that interest under Section 2.5 (c) shall be payable on demand. Section 2.6 REPAYMENT. The unpaid principal amount of all Advances, together with all accrued and unpaid interest thereon, shall be due and payable on the Termination Date. Section 2.7 OPTIONAL PREPAYMENTS. The Borrower may prepay Reference Rate Advances, in whole or in part, at any time, without premium or penalty, upon not less than one Business Day's prior written notice to the Agent. Any such prepayment must be accompanied by accrued and unpaid interest on the amount prepaid. Each partial prepayment shall be in an aggregate amount for all the Banks of $2,000,000 or an integral multiple of $1,000,000 in excess thereof. Except upon an acceleration following an Event of Default or upon termination of the Revolving Commitments in whole, the Borrower may pay LIBOR Advances only on the last day of the Interest Period applicable thereto. Amounts paid (unless -14- following an acceleration or upon termination of the Revolving Commitments in whole) or prepaid on Advances under this Section 2.7 may be reborrowed upon the terms and subject to the conditions and limitations of this Agreement. Amounts paid or prepaid on the Advances under this Section 2.7 shall be for the account of each Bank in proportion to its share of outstanding Revolving Loans. Section 2.8 OPTIONAL REDUCTION OF REVOLVING COMMITMENT AMOUNTS OR TERMINATION OF REVOLVING COMMITMENTS. The Borrower may, at any time, upon not less than five Business Days prior written notice to the Agent, reduce the Revolving Commitment Amounts, ratably, with any such reduction in a minimum aggregate amount for all the Banks of $5,000,000, or, if more, in an integral multiple of $1,000,000; PROVIDED, HOWEVER, that the Borrower may not at any time reduce the Aggregate Revolving Commitment Amounts below the aggregate unpaid principal balance of all the Bid Loan Notes, Revolving Notes and the Swing-Line Note. The Borrower may, at any time, upon not less than five Business Days prior written notice to the Agent, terminate the Revolving Commitments in their entirety. Upon termination of the Revolving Commitments pursuant to this Section, the Borrower shall pay to the Agent for the account of the Banks the aggregate unpaid principal amount of all outstanding Advances, the Swing-Line Loan and the Bid Loans, all accrued and unpaid interest thereon, all unpaid Revolving Commitment Fees accrued to the date of such termination, any indemnities payable with respect to Advances pursuant to Section 2.18, and all other unpaid obligations of the Borrower to the Agent and the Banks hereunder. Section 2.9 REVOLVING COMMITMENT AND AGENT'S FEES. (a) The Borrower shall pay to the Agent for the account of each Bank fees (the "Revolving Commitment Fees") in an amount determined by applying the applicable per annum rate from the table below to the average daily Unused Revolving Commitment of such Bank for the period from the Closing Date to the Termination Date. Such Revolving Commitment Fees are payable in arrears quarterly on the last day of each March, June, September and December and on the Termination Date. The per annum rate used in computing the Revolving Commitment Fees for any period shall be the rate set forth in the table below as in effect on the day payment of the Revolving Commitment Fees is due:
Debt Rating Per Annum Rate ----------- -------------- A- or better 0.10% BBB+ or BBB 0.12% BBB- 0.18% Below BBB- 0.27%
For purposes of this subsection, the "Debt Rating" means the rating assigned by Standard & Poor's Rating Group to senior, unsecured public debt issued by -15- the Borrower that is not credit enhanced. If at any time of determination no such rating is available, the per annum rate shall be 0.27%. (b) On the Closing Date, the Borrower shall pay to the Agent an arrangement fee in the amount specified in that certain side letter dated November 16, 1995 from the Agent to the Borrower. On the last day of each March, June, September and December, beginning December 31, 1996, the Borrower shall pay to the Agent an agency fee in the amount specified in such November 16, 1995 side letter. On the last day of each March, June, September and December, beginning March 31, 1996, the Borrower shall pay to the Agent a competitive bid agent fee in the amount specified in such November 16, 1995 side letter. No Bank (other than the Agent) shall be entitled to any portion of the arrangement, agency or competitive bid agent fees. Section 2.10 COMPUTATION. Revolving Commitment Fees and interest on Advances, the Swing-Line Loan and the Bid Loans shall be computed on the basis of actual days elapsed and a year of 360 days. Section 2.11 PAYMENTS. Payments and prepayments of principal of, and interest on, the Notes and all fees, expenses and other obligations under this Agreement payable to the Agent or the Banks shall be made without setoff or counterclaim in Immediately Available Funds not later than 11:00 a.m. (Minneapolis time) on the dates called for under this Agreement and the Revolving Notes to the Agent at its main office in Minneapolis, Minnesota. Funds received after such time shall be deemed to have been received on the next Business Day. The Agent will promptly distribute in like funds to each Bank its ratable share of each such payment of principal, interest and Revolving Commitment Fees by the Agent for the account of the Banks. Whenever any payment to be made hereunder or on the Notes shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time, in the case of a payment of principal, shall be included in the computation of any interest on such principal payment. Section 2.12 REVOLVING COMMITMENT ENDING DATE. The "Revolving Commitment Ending Date" is December 27, 2000. Section 2.13 USE OF LOAN PROCEEDS. The proceeds of the Loans shall be used for the Borrower's general business purposes (including but not limited to financing acquisitions, refinancing debt and working capital) in a manner not in conflict with any of the Borrower's covenants in this Agreement. Section 2.14 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or prior to the date for determining the Adjusted LIBOR in respect of the Interest Period for any LIBOR Advance, any Bank determines (which determination shall be conclusive and binding, absent error) that: -16- (a) deposits in dollars (in the applicable amount) are not being made available to such Bank in the relevant market for such Interest Period, or (b) the Adjusted LIBOR will not adequately and fairly reflect the cost to such Bank of funding or maintaining LIBOR Advances for such Interest Period, such Bank shall forthwith give notice to the Borrower and the other Banks of such determination, whereupon the obligation of such Bank to make or continue, or to convert any Advances to, LIBOR Advances shall be suspended until such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist. While any such suspension continues, all further Advances by such Bank shall be made as Reference Rate Advances. No such suspension shall affect the interest rate then in effect during the applicable Interest Period for any LIBOR Advance outstanding at the time such suspension is imposed. Section 2.15 INCREASED COST. If any Regulatory Change: (a) shall subject any Bank (or its Applicable Lending Office) to any tax, duty or other charge with respect to its LIBOR Advances, its Revolving Note or its obligation to make LIBOR Advances or shall change the basis of taxation of payment to any Bank (or its Applicable Lending Office) of the principal of or interest on its LIBOR Advances or any other amounts due under this Agreement in respect of its LIBOR Advances or its obligation to make LIBOR Advances (except for changes in the rate of tax on the overall net income of such Bank or its Applicable Lending Office imposed by the jurisdiction in which such Bank's principal office or Applicable Lending Office is located); or (b) shall impose, modify or deem applicable any reserve, special deposit, capital requirement or similar requirement (including, without limitation, any such requirement imposed by the Board, but excluding with respect to any LIBOR Advance any such requirement to the extent included in calculating the applicable Adjusted LIBOR) against assets of, deposits with or for the account of, or credit extended by, any Bank's Applicable Lending Office or shall impose on any Bank (or its Applicable Lending Office) or the interbank eurodollar market any other condition affecting its LIBOR Advances, its Revolving Note or its obligation to make LIBOR Advances; and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any LIBOR Advance, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Revolving Note, then, within fifteen days after demand by such Bank (with a copy to the Agent), the Borrower -17- shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. Each Bank will promptly notify the Borrower and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank; provided, however, that the Borrower's liability for additional amounts computed in accordance with this Section shall be neither changed nor waived by the failure to give such notice. If any Bank fails to give such notice within 45 days after it obtains knowledge of such an event, such Bank shall, with respect to compensation payable pursuant to this Section, only be entitled to payment under this Section for costs incurred from and after the date 45 days prior to the date that such Bank does give such notice. A certificate of any Bank claiming compensation under this Section, setting forth the additional amount or amounts to be paid to it hereunder and stating in reasonable detail the basis for the charge and the method of computation, shall be rebuttable presumptive evidence of the matters stated therein. In determining such amount, any Bank may use any reasonable averaging and attribution methods. Failure on the part of any Bank to demand compensation for any increased costs or reduction in amounts received or receivable with respect to any Interest Period shall not constitute a waiver of such Bank's rights to demand compensation for any increased costs or reduction in amounts received or receivable in any subsequent Interest Period. Section 2.16 ILLEGALITY. If any Regulatory Change shall make it unlawful or impossible for any Bank to make, maintain or fund any LIBOR Advances, such Bank shall notify the Borrower and the Agent, whereupon the obligation of such Bank to make or continue, or to convert any Advances to, LIBOR Advances shall be suspended until such Bank notifies the Borrower and the Agent that the circumstances giving rise to such suspension no longer exist. Before giving any such notice, such Bank shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank determines that it may not lawfully continue to maintain any LIBOR Advances to the end of the applicable Interest Periods, all of the affected Advances shall be automatically converted to Reference Rate Advances as of the date of such Bank's notice, and upon such conversion the Borrower shall indemnify such Bank in accordance with Section 2.18. Section 2.17 CAPITAL ADEQUACY. In the event that any Regulatory Change reduces or shall have the effect of reducing the rate of return on any Bank's capital or the capital of its parent corporation (by an amount such Bank deems material) as a consequence of its Revolving Commitment and/or Advances to a level below that which such Bank or its parent corporation could have achieved but for such Regulatory Change (taking into account such Bank's policies and the -18- policies of its parent corporation with respect to capital adequacy), then the Borrower shall, within thirty days after written notice and demand from such Bank (with a copy to the Agent), pay to such Bank additional amounts sufficient to compensate such Bank or its parent corporation for such reduction. Any determination by such Bank under this Section and any certificate as to the amount of such reduction given to the Borrower by such Bank shall be rebuttable presumptive evidence of the matters stated therein. Each Bank shall promptly give the Borrower written notice of any Regulatory Change or other circumstances which may result in increased costs under this Section with respect to that Bank; PROVIDED, HOWEVER, that the Borrower's liability for additional amounts computed in accordance with this Section shall be neither changed nor waived by any failure to give such notice. Section 2.18 FUNDING LOSSES; LIBOR ADVANCES. The Borrower shall compensate each Bank, upon its written request, for all losses, expenses and liabilities (including any interest paid by such Bank to lenders of funds borrowed by it to make or carry LIBOR Advances to the extent not recovered by such Bank in connection with the re-employment of such funds and including loss of anticipated profits) which such Bank may sustain: (i) if a funding of a LIBOR Advance does not occur on the date specified therefor in the Borrower's request or notice as to such Advance under Section 2.2 or 2.4 for any reason (such as the Borrower's refusal to accept the LIBOR Advance) other than a default by such Bank, or (ii) if, for whatever reason (including, but not limited to, acceleration of the maturity of Advances following an Event of Default), any repayment of a LIBOR Advance, or a conversion pursuant to Section 2.16, occurs on any day other than the last day of the Interest Period applicable thereto. A Bank's request for compensation shall set forth the basis for the amount requested and shall be rebuttable presumptive evidence of the matters stated therein. Section 2.19 DISCRETION OF BANKS AS TO MANNER OF FUNDING. Each Bank shall be entitled to fund and maintain its funding of LIBOR Advances in any manner it may elect, it being understood, however, that for the purposes of this Agreement all determinations hereunder (including, but not limited to, determinations under Section 2.18, but excluding determinations that the Agent may elect to make from the Telerate screen) shall be made as if such Bank had actually funded and maintained each LIBOR Advances during the Interest Period for such Advance through the purchase of deposits having a maturity corresponding to the last day of the Interest Period and bearing an interest rate equal to LIBOR for such Interest Period. Section 2.20 WITHHOLDING TAXES. (a) BANKS TO SUBMIT FORMS. Each Bank represents to the Borrower and the Agent that it is either (i) a corporation organized under the laws of the United States or any State thereof or (ii) is entitled to complete exemption from United States withholding tax imposed on or with respect to any payments, including fees, -19- to be made pursuant to this Agreement (x) under an applicable provision of a tax convention to which the United States is a party or (y) because it is acting through a branch, agency or office in the United States and any payment to be received by it hereunder is effectively connected with a trade or business in the United States. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Agent, on or before the Effective Date or the day on which such Bank becomes a Bank by assignment under Section 9.6, duly completed and signed copies of either Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding on all payments to be received by such Bank hereunder) or Form 4224 (relating to all payments to be received by such Bank hereunder) of the United States Internal Revenue Service. Thereafter and from time to time, each such Bank shall submit to the Borrower and the Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor Forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) reasonably requested by the Borrower or the Agent and (ii) required and permitted under then-current United States law or regulations to avoid United States withholding taxes on payments in respect of all payments to be received by such Bank hereunder. Upon the request of the Borrower or the Agent, each Bank that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Agent a certificate in such form as is reasonably satisfactory to the Borrower and the Agent to the effect that it is such a United States person. (b) INABILITY OF A BANK. If the Borrower shall be required by law or regulation to make any deduction, withholding or backup withholding of any taxes, levies, imposts, duties, fees, liabilities or similar charges of the United States of America, any possession or territory of the United States of America (including the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the United States of America ("U.S. TAXES") from any payments to a Bank pursuant to any Loan Document in respect of the Obligations payable to such Bank then or thereafter outstanding, the Borrower shall make such withholdings or deductions and pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law. Section 2.21. THE SWING-LINE LOAN FACILITY. (a) SWING-LINE COMMITMENTS. Upon the terms and subject to the conditions hereof, the Agent, in its capacity as a Bank, agrees, at any time and from time to time from the Closing Date to the Termination Date, to make loans ("Swing-Line Loans") on a revolving credit basis in an aggregate principal amount at any time outstanding not to exceed $10,000,000; PROVIDED, HOWEVER, that the Agent shall not be obligated to make a Swing-Line Loan if, after giving effect to the making of such Swing-Line Loan and any payment of Total Outstandings made directly by the Agent, for the account of the Borrower, from the proceeds of such Swing-Line Loan, the Total Outstandings would exceed the Aggregate Revolving Commitment -20- Amounts. The Swing-Line Loans shall be evidenced by a promissory note of the Borrower substantially in the form of Exhibit 2.21 hereto (the "Swing-Line Note"), shall bear interest on the aggregate unpaid principal balance thereof outstanding from time to time at a fluctuating rate per annum equal to the Reference Rate (as such rate may change from time to time), and shall mature on the Termination Date, when all amounts then outstanding under the Swing-Line Note shall be due and payable in full. Interest on any Swing-Line Loan shall be payable on the last day of each month and at maturity. Principal of any Swing- Line Loan may be prepaid at any time in whole or in part and without premium or penalty of any kind. The Agent, in its capacity as a Bank, is hereby authorized to record the date and amount of each Swing-Line Loan and the date and amount of each payment or prepayment of principal thereof on the schedules annexed to and constituting part of the Swing-Line Note; provided, however that the failure by the Agent to make any such entry or any error in making such entry shall not limit or otherwise affect the obligation of the Borrower hereunder and on the Swing-Line Note, and, in all events, the principal amounts owing by the Borrower in respect of the Swing-Line Note shall be the aggregate amount of all Swing- Line Loans made by the Agent less all payments of principal thereof made by the Borrower. (b) PROCEDURE FOR BORROWING. The Borrower may borrow Swing-Line Loans from the Closing Date to the Termination Date on any Business Day; PROVIDED, that the Borrower shall give the Agent irrevocable notice in writing or orally, which notice must be received by the Agent prior to 2:00 p.m., Minneapolis, Minnesota time, on the requested Borrowing Date, specifying in each case the amount thereof and the requested Borrowing Date. Any written request for a Swing-Line Loan shall be in the form of Exhibit 2.2 and shall be signed by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer. Any oral request for a Swing-Line Loan shall be made by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer and shall be confirmed by a writing in the form of Exhibit 2.2 signed by a Financial Officer or a person designated as authorized to make such requests in a writing signed by a Financial Officer, which written confirmation shall be delivered to the Agent weekly, each Friday (or the next succeeding Business Day, if a Friday is not a Business Day) not later than five Business Days after the date the Swing- Line Loan in question is made. The Revolving Commitments of the Banks shall be suspended from the fifth Business Day after the date the Agent notifies the Borrower that such written confirmation is past due until any such past due written confirmation has been delivered. Each borrowing of Swing-Line Loans shall be in an aggregate principal amount of $100,000 or an integral multiple of $100,000 in excess thereof. Upon receipt of such notice from the Borrower, the Agent will make the requested Swing-Line Loan available to the Borrower on such date by crediting the account of the Borrower on the books of the Agent with the aggregate of such amounts or in such manner as the Borrower may request in writing. -21- (c) REFINANCING OF SWING-LINE LOANS BY BANKS. Except as provided in the last sentence of this Section 2.21(c), the Agent, at any time and in its sole discretion, may, upon notice given to each Bank, request that each Bank make a Revolving Loan in an amount equal to its Revolving Percentage of the aggregate unpaid principal amount of any outstanding Swing-Line Loans for the purpose of refinancing such Swing-Line Loans. In such case, each Bank shall, upon receipt of such notice from the Agent, make a Revolving Loan (regardless of noncompliance with subsections 2.2, 3.2 or any other provision of this Agreement) in an amount equal to that Bank's respective Revolving Percentage of the aggregate unpaid principal amount of the outstanding Swing- Line Loans as specified in such notice and make the proceeds of such Revolving Loan available to the Agent, in same day funds, at the office of the Agent specified in such notice, not later than 1:00 P.M. (Minneapolis time) on the Business Day after the date that Bank was notified by the Agent, which payments by the Banks shall be applied by the Agent to the payment of principal of the Swing-Line Loans. In the event that any Bank fails to make the proceeds of its Revolving Loan available to the Agent as provided in this subsection 2.21(c), the Agent shall be entitled to recover such amount on demand from such Bank together with interest at the overnight Federal Funds rate for three Business Days and thereafter at the Reference Rate. Notwithstanding the provisions of this Section 2.21(c) or any other section of this Agreement, no Bank shall be obligated to make a Revolving Loan with respect to any portion of the outstanding Swing-Line Loans that was made available to the Borrower after the Agent's receipt of written notice of the existence, and during the continuation, of an Event of Default (but this sentence shall not limit any Bank's obligations with respect to that portion of any outstanding Swing-Line Loans made available to the Borrower prior to the Agent's receipt of such notice or after any such Event of Default has been cured). Section 2.22 THE BID LOAN FACILITY. (a) ESTABLISHMENT OF BID LOAN FACILITY. The Banks agree to make available to the Borrower a Bid Loan Facility, pursuant to which the Borrower may, as provided in this subsection 2.22, request the Banks, through the Agent, to make offers to make Bid Loans to the Borrower; PROVIDED, HOWEVER, that a Bank shall not make a Bid Loan if, after giving effect thereto and any payment of Total Outstandings made directly by the Agent, for the account of the Borrower, from the proceeds of such Bid Loan, either: (i) the total unpaid principal amount of all Bid Loans outstanding would exceed $50,000,000; or (ii) the Total Outstandings would exceed the Aggregate Revolving Commitment Amounts. (b) BID LOAN TENDER REQUEST NOTICE. When the Borrower wishes to request offers to make Bid Loans, it shall transmit to the Agent written notice in the form attached hereto as Exhibit 2.22(b) (a "Bid Loan Tender Request Notice") so as to be received no later than 10:00 a.m. (Minneapolis time) on or before: -22- (x) the second Business Day prior to the date proposed in such Notice for a Bid Loan (the "Bid Loan Borrowing Date"), if the applicable interest rate for the Bid Loan Financing is to be specified as an absolute percentage, or (y) the fourth Business Day prior to the proposed Bid Loan Borrowing Date, if the applicable interest rate for the Bid Loan Financing is to be specified as LIBOR plus a specified margin, in either case specifying: (1) the proposed Bid Loan Borrowing Date, which shall be any Business Day thirty days or more prior to the Termination Date; (2) the aggregate principal amount of the proposed Bid Loan Financing which shall be a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof; (3) the maturity dates (which shall not exceed four) of such Bid Loans to be made as part of such Bid Loan Financing (each of which maturity dates shall be a Business Day and may not be earlier than the date occurring thirty days after the proposed Bid Loan Borrowing Date or later than the date occurring the earlier of the Termination Date or 180 days after the proposed Bid Loan Borrowing Date); (4) whether the interest rate applicable to each Bid Loan should be specified as an absolute percentage or as LIBOR plus a specified margin; and (5) any other terms to be applicable to such Bid Loan Financing. Each Bid Loan Tender Request Notice shall be given or signed on behalf of the Borrower by an officer or employee of the Borrower previously identified to the Agent in a writing satisfactory to the Agent as authorized to give Bid Loan Tender Request Notices. (c) INVITATION TO TENDER FOR BID LOANS. Promptly upon receipt of each Bid Loan Tender Request Notice and in any event not later than 3:00 p.m. (Minneapolis time) on: (x) the second Business Day prior to the proposed Bid Loan Borrowing Date, if the applicable interest rate for the Bid Loan Financing is to be specified as an absolute percentage, or (y) the fourth Business Day prior to the proposed Bid Loan Borrowing Date, if the applicable interest rate for the Bid Loan Financing is to be specified as LIBOR plus a specified margin, -23- provided that the aggregate principal amount of the proposed Bid Loan Financing does not exceed the limitations set forth in subsection 2.22(a), the Agent shall send to the Banks by telex or telecopier a notice in the form attached hereto as Exhibit 2.22(c) (an "Invitation to Tender for Bid Loans") which shall constitute an invitation by the Borrower to each Bank to submit Bid Loan Tenders offering to make Bid Loans to which such Bid Loan Tender Request Notice relates in accordance with subsection 2.22(d) hereof. Each Bid Loan Tender Request Notice shall be irrevocable. (d) SUBMISSION AND CONTENTS OF BID LOAN TENDERS. (1) Each Bank may submit one or more bids (each, a "BID LOAN TENDER") containing an offer or offers to make Bid Loans in response to any Invitation to Tender for Bid Loans. Each Bid Loan Tender must comply with the requirements of this subsection 2.22(d) and must be submitted to the Agent by telephone so as to be received not later than 8:45 a.m. (Minneapolis time) on: (x) the proposed Bid Loan Borrowing Date, if the applicable interest rate for the Bid Loan Financing is to be specified as an absolute percentage, or (y) the third Business Day prior to the proposed Bid Loan Borrowing Date, if the applicable interest rate for the Bid Loan Financing is to be specified as LIBOR plus a specified margin; (whichever of such dates is applicable, the "BID LOAN TENDER DATE") PROVIDED, that if the Agent in its capacity as a Bank shall, in its sole discretion, elect to submit a Bid Loan Tender, it shall submit the same to the Borrower by telephone not later than 8:30 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date. No Bank shall discuss the proposed or actual terms of any Bid Loan Tender with any other Bank before 9:00 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date. Subject to satisfaction of the applicable conditions set forth in subsection 3.2 hereof, any Bid Loan Tender shall be irrevocable prior to 9:30 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date, except (A) with the written consent of the Agent given on the written instructions of the Borrower, and (B) except to the extent specifically set forth below in the event of a Partially Accepted Bid. (2) Each Bid Loan Tender shall specify: (A) the applicable Bid Loan Borrowing Date; (B) the principal amount of Bid Loans for which each offer is being made for each maturity date, which face amount shall be -24- $5,000,000 or an integral multiple of $1,000,000 in excess thereof and may not exceed, in the aggregate as to all such Bid Loans, the principal amount of Bid Loans for which offers were requested (although such Bid Loan Tender may include any number of separate offers to make Bid Loans for the same or different maturity dates at different interest rates, each of which offers shall be capable of acceptance hereunder by the Borrower); (C) either (i) the per annum (based on actual days elapsed and a year of 360 days) fixed interest rate (which shall include any facility or other fee) offered on each such principal amount of Bid Loans (expressed to three decimal places) or (ii) the margin over LIBOR offered on each such principal amount of Bid Loans (expressed to three decimal places), as appropriate; and (D) the identity of the tendering Bank. (3) any Bid Loan Tender shall be disregarded that: (A) does not specify all the information required by subsection 2.22(d)(2) hereof; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation to Tender for Bid Loans; or (D) is received by the Agent after the time set forth in subsection 2.22(d)(1) hereof on the applicable Bid Loan Tender Date. (e) NOTICE TO THE BORROWER. As soon as reasonably practicable, and in no event later than 9:00 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date, the Agent shall notify the Borrower by telephone of the terms of each Bid Loan Tender submitted by a Bank that complies with subsection 2.22(d) hereof. (f) ACCEPTANCE AND REJECTION OF BID LOAN TENDERS. (1) ACCEPTANCE AND NOTICE BY THE BORROWER. As soon as reasonably practicable and in no event later than 9:15 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date, the Borrower shall notify the Agent by telephone of its acceptance or rejection of the offers contained in the Bid Loan Tenders of which it was notified pursuant to subsection 2.22(e) hereof. Such notification from the Borrower shall specify the aggregate principal amount of offers at each interest rate for each maturity date that are accepted. -25- The Borrower may accept any of the Bid Loan Tenders in whole or in part; PROVIDED, that: (A) the aggregate principal amount of the Bid Loans in respect of which offers are accepted may not exceed the aggregate principal amount requested in the related Bid Loan Tender Request Notice; and (B) acceptances of Bid Loan Tenders made in response to the same Invitation to Tender for Bid Loans may only be made on the basis of ascending interest rates, PROVIDED THAT each resulting Bid Loan must be in a principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. If the Borrower rejects all Bid Loan Tenders, the proposed Bid Loan Financing shall be canceled and the Agent shall give the Banks prompt notice to that effect. If (x) the aggregate principal amount of the Bid Loans offered by the Banks in their Bid Loan Tenders aggregate less than, or (y) the Borrower does not accept offers contained in Bid Loan Tenders in an aggregate face amount equal to, the aggregate face amount requested in the related Bid Loan Tender Request Notice (either such event, a "PARTIALLY ACCEPTED BID"), the Banks whose offers are accepted shall have the right (but not the obligation) to revoke those offers as hereinafter set forth. In the event that a Partially Accepted Bid has occurred, the Borrower shall notify the Agent by telephone prior to 9:15 a.m. on the applicable Bid Loan Tender Date of the occurrence and of which Bid Loan Tenders the Borrower accepts. By 9:30 a.m. on the applicable Bid Loan Tender Date, the Agent shall notify by telephone those Banks whose offers have been accepted that a Partially Accepted Bid has occurred, and shall inform those Banks of the sum of the accepted Bid Loan Tenders and whether that Bank's offer or offers have been accepted, and whether in whole or in part, specifying the date, principal amount and maturity date of each Bid Loan to be made by such Bank as part of the applicable Bid Loan Financing and the interest rate applicable to each such Bid Loan to be created by such Bank. Each Bank whose offer has been accepted but which wishes to revoke that offer must do so by informing the Agent by telephone no later than 9:45 a.m. on the applicable Bid Loan Tender Date. The Agent shall then notify the Borrower by telephone of any bids which have been revoked prior to 10:00 a.m. on the applicable Bid Loan Tender Date and shall subsequently notify by telephone those Banks whose bids were accepted and have not been revoked (collectively, the "Second Round Bids") of the sum of the Second Round Bids prior to 10:15 a.m. on the applicable Bid Loan Tender Date. If any Bank whose bid was accepted as part of a Partially Accepted Bid revokes its offer before 9:45 on the applicable Bid Loan Tender -26- Date, as described in the second preceding sentence, then each Bank whose bid has not previously been revoked may revoke its Second Round Bid by notifying the Agent by telephone prior to 10:30 a.m. on the applicable Bid Loan Tender Date. If any Second Round Bid is revoked by any Bank, or if the Borrower fails to notify the Agent by 9:15 a.m. on the applicable Bid Loan Tender Date that a Partially Accepted Bid occurred, all Bid Loan Tenders submitted in response to the related Bid Loan Tender Request Notice shall be deemed withdrawn. If any Second Round Bid is revoked, the Agent shall notify the Borrower by telephone prior to 10:45 a.m. on the applicable Bid Loan Tender Date and shall notify those Banks whose offers have not previously been revoked by telephone prior to 11:00 a.m. on the applicable Bid Loan Tender Date. (2) If offers to make Bid Loans are made by two or more of the Banks at the same interest rate for the same maturity date for a greater aggregate face amount of Bid Loans than the amount in respect of which offers to make Bid Loans are accepted at that interest rate for that maturity date, the principal amount of Bid Loans in respect of which such offers are accepted at such interest rate for such maturity date shall be allocated between or among such Banks as nearly as possible PROVIDED THAT each resulting Bid Loan must be in a face amount of $1,000,000 or an integral multiple of $100,000 in excess thereof. (3) NOTIFICATION OF BID LOANS TO BANKS. Prior to 9:30 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date, the Agent shall notify by telephone each Bank that has made a Bid Loan Tender whether a Partially Accepted Bid has occurred and whether that Bank's offer or offers have been accepted, and whether in whole or in part, specifying the date, principal amount and maturity date of each Bid Loan to be made by such Bank as part of the applicable Bid Loan Financing and the interest rate applicable to each such Bid Loan to be made by such Bank. Any Bank not receiving such notification by the time indicated in the second preceding sentence may conclusively presume that its offer or offers were not accepted. (g) FUNDING OF BID LOANS; NOTES TO EVIDENCE BID LOANS. Upon receipt of the telephonic notification contemplated by subsection 2.22(f)(3) by a Bank whose offer or offers to make a Bid Loan or Bid Loans have been accepted, such Bank shall make the aggregate principal amount of such Bid Loan or Bid Loans available to the Agent for the account of the Borrower in Immediately Available Funds prior to 2:00 p.m., Minneapolis, Minnesota time on the applicable Bid Loan Borrowing Date as the Agent may direct. The amounts so made available to the Agent shall be made available on such date to the Borrower by the Agent by crediting the account of the Borrower on the books of such office of the Agent with the aggregate of such amounts in like funds as received by the Agent or in such manner as the Borrower may request in writing. Bid Loans made by a Bank shall be evidenced by a master -27- promissory note of the Borrower in form of Exhibit 2.22(g) hereto (individually, a "Bid Loan Note," and collectively as to all the Banks, the "Bid Loan Notes") payable to the order of such Bank. Promptly after giving the telephonic notifications to the Banks contemplated by subsection 2.22(f)(3), the Agent shall complete and transmit by telecopier to each Bank whose offer or offers have been accepted one or more Bid Loan Schedules, substantially in the form thereof as attached to Exhibit 2.22(g), showing for each such Bid Loan the name of such Bank, the amount of such Bid Loan, the applicable Borrowing Date and maturity date therefor and the interest rate applicable thereto. Each such Bid Loan Schedule shall be attached by such Bank to its applicable Bid Loan Note and shall constitute a part of such Bid Loan Note. Each Bank is hereby authorized to record the date and amount of each payment and prepayment of a Bid Loan on the applicable Bid Loan Schedule attached to its Bid Loan Note, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded; provided, however that the failure by any Bank to make any such entry or any error in making such entry shall not limit or otherwise affect the obligation of the Borrower hereunder and on that Bank's Bid Loan Note, and, in all events, the principal amounts owing by the Borrower in respect of a Bid Loan Note held by a Bank shall be the aggregate amount of all Bid Loans made by that Bank less all payments of principal thereof made by the Borrower. Interest on each Bid Loan shall be computed on the basis of actual days elapsed and a year of 360 days and shall be payable: (i) on the maturity date of such Bid Loan; (i) on the date of earlier repayment in full of such Bid Loan; and (iii) the 90th day after such Bid Loan is made available to the Borrower, if prior to the maturity date of such Bid Loan. Principal of each Bid Loan shall be payable on the maturity date therefor as specified in the applicable Bid Loan Schedule. (h) REPAYMENT OBLIGATION OF THE BORROWER; PREPAYMENTS. The Borrower hereby unconditionally agrees to pay to each Bank that has made a Bid Loan the principal amount of such Bid Loan not later than 12:00 noon (Minneapolis time) on the maturity date thereof or such earlier date as may be required pursuant to any other provision of this Agreement. In the absence of instructions from such Bank to the contrary, such payments shall be made by wire transfer of immediately available funds in accordance with the payment instructions set forth in Exhibit 2.22(h), hereto as such instructions may from time to time be changed by written notice from a Bank to the Agent and the Borrower. The Borrower shall have no right to prepay any Bid Loan in whole or in part unless, and then only on the terms, specified by the Borrower in the applicable Bid Loan Tender Request Notice. (i) NOTICE OF PAYMENT DEFAULT. Each Bank that has made a Bid Loan pursuant to this subsection 2.22 shall notify the Agent and the Borrower as soon as practicable, and in no event later than 9:00 a.m. (Minneapolis time) on the Business Day immediately following the date payment is due with respect to such Bid Loan pursuant to paragraph (h) of this subsection 2.22, of any failure by the Borrower to remit the amounts payable pursuant to subparagraph (h) of this subsection 2.22, and PROVIDED, HOWEVER, that failure by any Bank to give notice as required by this -28- sentence shall not release the Borrower from, nor have any other effect on, such obligation to remit. (j) EFFECT ON COMMITMENTS. Although each Bid Loan shall reduce the amount available to the Borrower in the form of Revolving Loans by the principal amount of such Bid Loan during the period in which said Bid Loan is outstanding, each Bank's obligation to make its Revolving Percentage of any subsequently requested Revolving Loans shall not in any way be affected by that Bank's making of Bid Loans. (k) NO PRO RATA SHARING. NO BANK SHALL BE OBLIGATED OR ENTITLED TO PARTICIPATE IN ANY WAY IN ANY BID LOAN MADE BY ANY OTHER BANK. (l) ADDITIONAL PAYMENTS. If by reason of (a) any Regulatory Change or (b) compliance by the Bank making a Bid Loan with any direction, request or requirement (whether or not having the force of law) of any governmental authority or monetary authority including, without limitation, Regulation D of the Board: (1) that Bank shall be subject to any tax, levy, charge or withholding of any nature or to any variation thereof or to any penalty with respect to the maintenance or fulfillment of its obligations under this subsection 2.22; (2) any reserve, deposit, or capital adequacy or similar requirement is or shall be applicable, imposed or modified in respect of any Bid Loan made by that Bank; or (3) there shall be imposed on that Bank any other condition regarding this subsection 2.22, or any Bid Loan; and the result of the foregoing is directly or indirectly to increase the cost to that Bank of making or maintaining any Bid Loan, or to reduce the amount receivable in respect thereof by that Bank, or in the case of capital adequacy requirements, the result is to increase the amount of capital required to be maintained by that Bank with respect to any Bid Loan above the amount of capital which would otherwise be required to be maintained by that Bank with respect thereto (taking into account such Bank's internal policies and practices with respect to capital maintenance as of the date hereof), then and in any such case such Bank may, at any time within a reasonable period after the additional cost is incurred or additional capital is required or the amount received is reduced, notify the Borrower, and the Borrower shall pay on demand such amounts as such Bank may specify to be necessary to compensate such Bank for such additional cost or additional capital or reduced receipt, together with interest on such amount from the date demanded until -29- payment in full thereof at a rate equal at all times to the Reference Rate. The determination by any Bank of any amount due pursuant to this subsection 2.22(l) as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall be rebuttable presumptive evidence of the matters stated therein. Each Bank, upon determining in good faith that any additional amounts will be payable pursuant to this subsection, will give prompt written notice thereof to the Borrower, which notice shall show the basis for calculation of such additional amounts, although the failure to give any such notice shall not release or diminish any of the Borrower' obligations to pay additional amounts pursuant to this subsection. (m) INDEMNIFICATION AND EXCULPATION OF THE BID LOAN BANKS. In addition to amounts payable as elsewhere provided in this subsection 2.22, the Borrower hereby agrees to protect, indemnify, pay and save each Bank that makes a Bid Loan harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees and allocated costs of internal counsel) which that Bank may incur or be subject to as a consequence, direct or indirect, of the making of the Bid Loan, other than as a result of the gross negligence or willful misconduct of that Bank as determined by a court of competent jurisdiction. In furtherance and not in limitation of the foregoing, no Bank shall be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and making of any such Bid Loan, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Bid Loan or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (iv) for errors in interpretation of technical terms; (v) for any loss or delay in the transmission or other handling of any document related to any such Bid Loan or of the proceeds thereof; and (vi) for any consequences arising from causes beyond the control of that Bank. In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by any Bank under or in connection with the Bid Loans made by it or the related documents, if taken or omitted in good faith, shall not put that Bank under any resulting liability to any Borrower. The Borrower further agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of a default by any of the Borrower in borrowing a Bid Loan after the Borrower has given notice of its acceptance of a Bid Loan Tender as provided in the last paragraph of subsection 2.22(f)(1) or in the event of any prepayment of a Bid Loan on a day which is not a maturity date therefor, including, but not limited to, any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Bid Loans hereunder and any loss or expense incurred in liquidating or redeploying deposits from which such -30- funds were obtained. This covenant shall survive termination of this Agreement and payment of the outstanding Notes. ARTICLE III CONDITIONS PRECEDENT Section 3.1 CONDITIONS OF INITIAL TRANSACTION. The making of the initial Revolving Loans shall be subject to the prior or simultaneous fulfillment of the following conditions: 3.1(a) DOCUMENTS. The Agent shall have received the following in sufficient counterparts (except for the Notes) for each Bank: (i) A Revolving Note drawn to the order of each Bank executed by a duly authorized officer (or officers) of the Borrower and dated the Closing Date. (ii) A Bid Loan Note drawn to the order of each Bank executed by a duly authorized officer (or officers) of the Borrower and dated the Closing Date. (iii) The Swing-Line Note drawn to the order of the Agent executed by a duly authorized officer (or officers) of the Borrower and dated the Closing Date. (iv) A copy of the corporate resolution of the Borrower authorizing the execution, delivery and performance of the Loan Documents, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower. (v) An incumbency certificate showing the names and titles and bearing the signatures of the officers of the Borrower authorized to execute the Loan Documents and to request Bid Loans, Revolving Loans and Swing-Line Loans and conversions and continuations of Advances hereunder, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower. (vi) A copy of the Certificate of Incorporation of the Borrower with all amendments thereto, certified by the appropriate governmental official of the jurisdiction of its incorporation as of a date not more than fifteen days prior to the Closing Date. -31- (vii) A long-form certificate of good standing for the Borrower in the jurisdiction of its incorporation, certified by the appropriate governmental officials as of a date not more than fifteen days prior to the Closing Date. (viii) A copy of the bylaws of the Borrower, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower. (ix) A certificate dated the Closing Date of the chief executive officer or chief financial officer of the Borrower certifying as to the matters set forth in Sections 3.2 (a) and 3.2 (b) below. 3.1(b) OPINION. The Borrower shall have requested Jon J. Solberg, Esq., its Corporate Counsel, to prepare a written opinion, addressed to the Banks and dated the Closing Date, covering the matters set forth in Exhibit 3.1 hereto, and such opinion shall have been delivered to the Agent in sufficient counterparts for each Bank. 3.1(c) COMPLIANCE. The Borrower shall have performed and complied with all agreements, terms and conditions contained in this Agreement required to be performed or complied with by the Borrower prior to or simultaneously with the Closing Date. 3.1(d) OTHER MATTERS. All corporate and legal proceedings relating to the Borrower and all instruments and agreements in connection with the transactions contemplated by this Agreement shall be satisfactory in scope, form and substance to the Agent, the Banks and the Agent's special counsel, and the Agent shall have received all information and copies of all documents, including records of corporate proceedings, as any Bank or such special counsel may reasonably have requested in connection therewith, such documents where appropriate to be certified by proper corporate or governmental authorities. 3.1(e) FEES AND EXPENSES. The Agent shall have received for itself and for the account of the Banks all fees and other amounts due and payable by the Borrower on or prior to the Closing Date, including the reasonable fees and expenses of counsel to the Agent payable pursuant to Section 9.2. Section 3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Banks to make any Loans hereunder (including the initial Bid Loans, Revolving Loans and Swing-Line Loans) shall be subject to the fulfillment of the following conditions: 3.2(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Article IV shall be true and correct on and as of the Closing Date and on the date of each Loan, with the same force and effect as if made on such date. -32- 3.2(b) NO DEFAULT. No Default or Event of Default shall have occurred and be continuing on the Closing Date and on the date of each Loan or will exist after giving effect to the Loans made on such date so issued. 3.2(c) NOTICES AND REQUESTS. The Agent shall have received the Borrower's request for such Loans as required under Section 2.2, 2.21 or 2.22, as appropriate. ARTICLE IV REPRESENTATIONS AND WARRANTIES To induce the Banks to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Banks: Section 4.1. ORGANIZATION, STANDING, ETC. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly licensed or qualified to do business in every jurisdiction where the nature of the business requires it to be so qualified and where failure to do so might materially affect its business or properties, or the validity or enforceability of the Loan Documents. Borrower has full corporate power and authority to carry on its business as presently conducted and has complied with all applicable laws and regulations in the conduct of its business. Section 4.2. AUTHORIZATION AND VALIDITY; NO CONFLICT. Borrower's execution, delivery and performance of this Agreement, the Loan Documents contemplated hereby and each other instrument and document to be delivered by Borrower hereunder: (a) are within Borrower's corporate power; (b) have been duly authorized by all necessary or proper corporate action; (c) do not or will not conflict with or result in a breach of or a default under (i) any provision of law, (ii) Borrower's certificate of incorporation or bylaws, (iii) any court or administrative regulation, order or ruling to which Borrower or its property is subject or (iv) any contract, agreement, instrument, indenture, decree, injunction, order or judgment to which Borrower is a party or by which its property is bound; and (d) do not require the order, consent or approval of, or registration with, any governmental body, agency, authority or any other Person which has not been obtained and a copy thereof furnished to the Agent. Section 4.3. ENFORCEABILITY OF AGREEMENTS AND LOAN DOCUMENTS. This Agreement has been duly executed and delivered by Borrower and is a valid and binding agreement of Borrower enforceable in accordance with its terms. Each Note, upon delivery to the Agent, will have been duly executed and delivered by Borrower and will constitute a valid and binding obligation of the Borrower enforceable against Borrower in accordance with its terms. -33- Section 4.4. NO DEFAULT. Borrower is not in default under any loan agreement, indenture or other contract or agreement to which it is a party or by which its property is bound. Section 4.5. FINANCIAL STATEMENTS AND CONDITION. The Borrower's audited consolidated financial statements as at December 31, 1994 and its unaudited financial statements as at October 7, 1995, as heretofore furnished to the Agent, have been prepared in accordance with GAAP on a consistent basis (except for year-end audit adjustments as to the interim statements) and fairly present the financial condition of the Borrower and its Subsidiaries as at such dates and the results of their operations and changes in financial position for the respective periods then ended. As of the dates of such financial statements, neither the Borrower nor any Subsidiary had any material obligation, contingent liability, liability for taxes or long-term lease obligation which is not reflected in such financial statements or in the notes thereto. Since December 31, 1994, there has been no material adverse change in the business, operations, property, assets or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole. Section 4.6. ERISA. Each Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements. No Reportable Event has occurred and is continuing with respect to any Plan. All of the minimum funding standards applicable to such Plans have been satisfied and there exists no event or condition which would reasonably be expected to result in the institution of proceedings to terminate any Plan under Section 4042 of ERISA. With respect to each Plan subject to Title IV of ERISA, as of the most recent valuation date for such Plan, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan and previously furnished in writing to the Banks) of such Plan's projected benefit obligations did not exceed the fair market value of such Plan's assets. Section 4.7. REGULATION U. Neither the Borrower nor any Subsidiary is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board). The value of all margin stock owned by the Borrower does not constitute more than 25% of the value of the assets of the Borrower. None of the proceeds of the Loans hereunder will be used, whether immediately, incidentally or ultimately, for any purpose violative of or inconsistent with any of the provisions of Regulation U of the Board. Section 4.8. TAXES. Each of the Borrower and the Subsidiaries has filed all federal, state and local tax returns required to be filed and has paid or made provision for the payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made against it or any of its property and all other -34- taxes, fees and other charges imposed on it or any of its property by any governmental authority (other than taxes, fees or charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the Borrower). No tax Liens have been filed with respect to any such taxes, fees or charges. The charges, accruals and reserves on the books of the Borrower in respect of taxes and other governmental charges are adequate and the Borrower knows of no proposed material tax assessment against it or any Subsidiary, or any basis therefor. Section 4.9. LEGAL REQUIREMENTS. To the best of its knowledge, the Borrower and each of its Subsidiaries is in compliance with all applicable laws, statutes, ordinances, decrees, requirements, orders, judgments, rules, regulations of, and the terms of any license or permit issued by, any governmental authority, the failure to comply with which might have a material adverse effect on the Borrower or such Subsidiary. Section 4.10. LITIGATION. There are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or any of their properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to the Borrower or such Subsidiary would have a material adverse effect on the business, operations, property or condition (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole, or on the ability of the Borrower to perform its obligations under this Agreement. Section 4.11. ENVIRONMENTAL, HEALTH AND SAFETY LAWS. To the best knowledge of the Financial Officers of the Borrower, there does not exist any violation by the Borrower or any Subsidiary of any applicable federal, state or local law, rule or regulation or order of any government, governmental department, board, agency or other instrumentality relating to environmental, pollution, health or safety matters which will or threatens to impose a material liability on the Borrower or a Subsidiary or which would require a material expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower nor any Subsidiary has received any notice to the effect that any part of its operations or properties is not in material compliance with any such law, rule, regulation or order or notice that it or its property is the subject of any governmental investigation evaluating whether any remedial action is needed to respond to any release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a material adverse effect on the business, operations, properties, assets or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole. Section 4.12. INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary is an "investment company" or a company "controlled" by an -35- investment company within the meaning of the Investment Company Act of 1940, as amended. Section 4.13. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of a holding company or an "affiliate" of a holding company or of a subsidiary company of a holding company within the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 4.14. RETIREMENT BENEFITS. Except as required under Section 4980B of the Code, Section 601 of ERISA or applicable state law, neither the Borrower nor any Subsidiary is obligated to provide post-retirement medical or insurance benefits with respect to employees or former employees. Section 4.15. FULL DISCLOSURE. Subject to the following sentence, neither the financial statements referred to in Section 4.5 nor any other certificate, written statement, exhibit or report furnished by or on behalf of the Borrower in connection with or pursuant to this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein not misleading. Certificates or statements furnished by or on behalf of the Borrower to the Agent or the Banks consisting of projections or forecasts of future results or events have been prepared in good faith and based on good faith estimates and assumptions of the management of the Borrower, and the Borrower has no reason to believe that such projections or forecasts are not reasonable. Section 4.16 TITLE TO PROPERTY; LEASES; LIENS; SUBORDINATION. Each of the Borrower and the Subsidiaries has (a) good and marketable title to its real properties and (b) good and sufficient title to, or valid, subsisting and enforceable leasehold interest in, its other material properties, including all real properties, other properties and assets, referred to as owned by the Borrower and its Subsidiaries in the most recent financial statement referred to in Section 4.5 (other than property disposed of since the date of such financial statements in the ordinary course of business and minor defects in title that do not interfere with the Borrower's and its Subsidiaries' use and proposed use of such properties). None of such properties is subject to a Lien, except as allowed under Section 6.3. The Borrower has not subordinated any of its rights under any obligation for borrowed money owing to it to the rights of any other person, except that certain loans to customers that do not evidence or replace accounts receivable, in an aggregate amount that does not exceed $30,000,000, may be subordinated to the claims of other lenders to such customers. Section 4.17 TRADEMARKS, PATENTS. Each of the Borrower and the Subsidiaries possesses or has the right to use all of the patents, trademarks, trade names, service marks and copyrights, and applications therefor, and all technology, -36- know-how, processes, methods and designs used in or necessary for the conduct of its business, without known conflict with the rights of others. Section 4.18 BURDENSOME RESTRICTIONS. Neither the Borrower nor any Subsidiary is a party to or otherwise bound by any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter, corporate or partnership restriction which would foreseeably have a material adverse effect on the business, properties, assets, operations or condition (financial or otherwise) of the Borrower or such Subsidiary or on the ability of the Borrower or any Subsidiary to carry out its obligations under any Loan Document. Section 4.19 FORCE MAJEURE. Since the date of the most recent audited financial statement referred to in Section 4.5, the business, properties and other assets of the Borrower and the Subsidiaries have not been materially and adversely affected in any way as the result of any fire or other casualty, strike, lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity of armed forces or act of God. Section 4.20 SUBSIDIARIES. Exhibit 4.20 sets forth as of the date of this Agreement a list of all Subsidiaries and the percentage of the shares of each class of capital stock or percentage of general and limited partnership interests owned beneficially or of record by the Borrower or any Subsidiary therein, and the jurisdiction of incorporation or organization of each Subsidiary. ARTICLE V AFFIRMATIVE COVENANTS Until any obligation of the Banks hereunder to make the Revolving Loans and the Swing-Line Loans shall have expired or been terminated and the Bid Loan Notes, the Revolving Notes, the Swing-Line Note and all of the other Obligations have been paid in full, unless the Majority Banks shall otherwise consent in writing: Section 5.1. FINANCIAL STATEMENTS. Borrower shall deliver to the Banks: 5.1(a) As soon as available and in any event within 110 days after the end of each fiscal year of the Borrower, the consolidated financial statements of the Borrower and its consolidated Subsidiaries consisting of at least statements of income, cash flow and changes in stockholders' equity, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding figures from the previous annual audit, certified without qualification by Ernst & Young or other independent certified public accountants of recognized national standing selected by the Borrower and acceptable to the Majority Banks. -37- 5.1(b) As soon as available and in any event within 60 days after the end of each fiscal quarter of the Borrower, unaudited consolidated statements of income and stockholder's equity for the Borrower and its Subsidiaries for such quarter and cash flow for the period from the beginning of such fiscal year to the end of such quarter, and a consolidated balance sheet of the Borrower as at the end of such quarter, setting forth in comparative form income and cash flow for the corresponding period for the preceding fiscal year, and a consolidated balance sheet of the Borrower as of the end of the preceding fiscal year, accompanied by a certificate signed by a Financial Officer of the Borrower stating that such financial statements present fairly the financial condition of the Borrower and its Subsidiaries and that the same have been prepared in accordance with GAAP. 5.1(c) As soon as practicable and in any event within 60 days after the end of each fiscal quarter of the Borrower, a compliance certificate signed by a Financial Officer of the Borrower demonstrating in reasonable detail compliance (or noncompliance, as the case may be) with Sections 6.4 through 6.6 as at the end of such quarter and stating that as at the end of such quarter there did not exist any Default or Event of Default or, if such Default or Event of Default existed, specifying the nature and period of existence thereof and what action the Borrower proposes to take with respect thereto. 5.1(d) As soon as practicable and in any event within 90 days after the beginning of each fiscal year of the Borrower, consolidated statements of forecasted income, forecasted cash flow and forecasted changes in stockholders' equity and a forecasted balance sheet of the Borrower and the Subsidiaries for such fiscal year, together with supporting assumptions. 5.1(e) Immediately upon any officer of the Borrower becoming aware of any Default or Event of Default, a notice describing the nature thereof and what action the Borrower proposes to take with respect thereto. 5.1(f) Immediately upon any officer of the Borrower becoming aware of the occurrence, with respect to any Plan, of any Reportable Event or any Prohibited Transaction, a notice specifying the nature thereof and what action the Borrower proposes to take with respect thereto, and, when received, copies of any notice from PBGC of intention to terminate or have a trustee appointed for any Plan. 5.1(g) Promptly upon the mailing or filing thereof, copies of all financial statements, reports and proxy statements mailed to the Borrower's shareholders, and copies of all registration statements, periodic reports and other documents filed with the Securities and Exchange Commission (or any successor thereto) or any national securities exchange. -38- 5.1(h) From time to time, such other information regarding the business, operation and financial condition of the Borrower and the Subsidiaries as the Bank may reasonably request. Section 5.2. CORPORATE EXISTENCE. The Borrower will maintain its corporate existence in good standing under the laws of its jurisdiction of incorporation and its qualification to transact business in each jurisdiction where failure so to qualify would permanently preclude the Borrower from enforcing its rights with respect to any material asset or would expose the Borrower to any material liability. Section 5.3. INSURANCE. The Borrower shall maintain, and shall cause each Subsidiary to maintain, with financially sound and reputable insurance companies such insurance as may be required by law and such other insurance in such amounts and against such hazards as is customary in the case of reputable firms engaged in the same or similar business and similarly situated. Section 5.4. PAYMENT OF TAXES AND CLAIMS. The Borrower shall file, and cause each Subsidiary to file, all tax returns and reports which are required by law to be filed by it and will pay, and cause each Subsidiary to pay, before they become delinquent all taxes, assessments and governmental charges and levies imposed upon it or its property and all claims or demands of any kind (including but not limited to those of suppliers, mechanics, carriers, warehouses, landlords and other like Persons) which, if unpaid, might result in the creation of a Lien upon its property; provided that the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as the Borrower's or such Subsidiary's title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on the Borrower's or such Subsidiary's books in accordance with GAAP. Section 5.5. BOOKS AND RECORDS. The Borrower will keep, and will cause each Subsidiary to keep, adequate and proper records and books of account in which full and correct entries will be made of its dealings, business and affairs. Section 5.6. COMPLIANCE. The Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject; provided, however, that failure so to comply shall not be a breach of this covenant if such failure does not have, or is not reasonably expected to have, a materially adverse effect on the properties, business, prospects or condition (financial or otherwise) of the Borrower or such Subsidiary and the Borrower or such Subsidiary is acting in good faith and with reasonable dispatch to cure such noncompliance. -39- Section 5.7. NOTICE OF LITIGATION. The Borrower will give prompt written notice to the Agent of the commencement of (a) any action, suit or proceeding before any court in which the uninsured damages claimed exceed $2,000,000 or (b) any action, suit or proceeding before any other governmental department, board, agency or other instrumentality or before an arbitrator affecting the Borrower or any Subsidiary or any property of the Borrower or a Subsidiary or to which the Borrower or a Subsidiary is a party in which an adverse determination or result could have a material adverse effect on the business, operations, property or condition (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole or on the ability of the Borrower to perform its obligations under this Agreement, stating the nature and status of such action, suit or proceeding. Section 5.8. ERISA. The Borrower will maintain, and cause each ERISA Affiliate to maintain, each Plan in compliance with all material applicable requirements of ERISA and of the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and of the Code and will not and not permit any of the ERISA Affiliates to (a) engage in any transaction in connection with which the Borrower or any of the ERISA Affiliates would be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code in an amount in excess of $1,000,000, (b) fail to make full payment when due of all amounts which, under the provisions of any Plan, the Borrower or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any Plan, in an amount in excess of $1,000,000 for all Plans, or (c) fail to make any payments to any Multiemployer Plan that the Borrower or any of the ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto in an amount in excess of $1,000,000. The Borrower will not permit, and will not allow any Subsidiary to permit, any event to occur or condition to exist which would permit any Plan to terminate under any circumstances which would cause the Lien provided for in Section 4068 of ERISA to attach to any assets of the Borrower or any Subsidiary; and the Borrower will not permit, as of the most recent valuation date for any Plan subject to Title IV of ERISA, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan and previously furnished in writing to the Banks) of such Plan's projected benefit obligations to exceed the fair market value of such Plan's assets. Section 5.9. ENVIRONMENTAL MATTERS; REPORTING. The Borrower will observe and comply with, and cause each Subsidiary to observe and comply with, all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non-compliance could result in a material liability or otherwise have a material adverse effect on the Borrower and the Subsidiaries taken as a whole. The Borrower will give the Agent prompt written notice of any -40- violation as to any environmental matter by the Borrower or any Subsidiary and of the commencement of any judicial or administrative proceeding relating to health, safety or environmental matters (a) in which an adverse determination or result could result in the revocation of or have a material adverse effect on any operating permits, air emission permits, water discharge permits, hazardous waste permits or other permits held by the Borrower or any Subsidiary which are material to the operations of the Borrower or such Subsidiary, or (b) which will or threatens to impose a material liability on the Borrower or such Subsidiary to any Person or which will require a material expenditure by the Borrower or such Subsidiary to cure any alleged problem or violation. Section 5.10. INSPECTION. The Borrower shall permit any Person designated by the Agent or any Bank to visit and inspect any of the financial records of the Borrower and the Subsidiaries, to examine the financial records of the Borrower and the Subsidiaries, to make copies of all records of the Borrower and the Subsidiaries relating to the Loan Documents, and to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with, and to be advised as to the same by, its officers at such reasonable times and intervals as the Agent or any Bank may designate. So long as no Event of Default exists, the expenses of the Agent or the Banks for such visits, inspections and examinations shall be at the expense of the Agent or the Banks, but any such visits, inspections and examinations made while any Event of Default is continuing shall be at the expense of the Borrower. Section 5.11 MAINTENANCE OF PROPERTIES. The Borrower will maintain, and cause each Subsidiary to maintain (except to the extent a landlord of the Borrower or a Subsidiary is required to maintain), its properties used or useful in the conduct of its business in good condition, repair and working order, and supplied with all necessary equipment, and make all necessary repairs, renewals, replacements, betterments and improvements thereto, all as may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. ARTICLE VI NEGATIVE COVENANTS Until any obligation of the Banks hereunder to make the Revolving Loans and the Swing-Line Loans shall have expired or been terminated and the Bid Loan Notes, the Revolving Notes, the Swing-Line Note and all of the other Obligations have been paid in full, unless the Majority Banks shall otherwise consent in writing: Section 6.1. RESTRICTIONS ON FUNDAMENTAL CHANGES. The Borrower will not, and will not permit any Subsidiary to: -41- 6.1(a) engage in any business activities or operations substantially different from or unrelated to those in which it is engaged on the Closing Date; 6.1(b) enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except for the merger of any Subsidiary with and into the Borrower or any other Subsidiary, or for any merger or consolidation to effectuate an acquisition permitted by Section 6.1(d), as long as the Borrower or a wholly-owned Subsidiary of the Borrower is the surviving corporation; 6.1(c) convey, sell, lease, transfer or otherwise dispose of (or enter into any commitment to convey, sell, lease, transfer or otherwise dispose of), in one or more transactions, all or any part of its business or assets, whether now owned or hereafter acquired, other than the sale of inventory in the ordinary course of business, except the Borrower and its Subsidiaries may dispose of any of their respective assets as long as the aggregate book value of all assets disposed of by the Borrower and its Subsidiaries in any fiscal year of the Borrower does not exceed $25,000,000; 6.1(d) acquire by purchase or otherwise all or substantially all the business or property of, or stock or other evidence of beneficial ownership of, any Person, if the aggregate amount of the Borrower's investment (including the amount of Indebtedness incurred) in connection with all such acquisitions entered into in any fiscal year of the Borrower would exceed $125,000,000; 6.1(e) enter into any partnership, joint venture or other combination with any other Person, if (A) the amount of the Borrower's investment (including the amount of any Indebtedness incurred) in connection with any such combination would exceed twenty percent (20%) of Borrower's Net Worth as of the end of its most recently completed fiscal year, or (B) the aggregate amount of the Borrower's investments (including the amount of any Indebtedness incurred) in connection with all such combinations entered into after the Closing Date would exceed thirty percent (30%) of Borrower's Net Worth as of the end of its most recently completed fiscal year; or 6.1(f) own (in the case of all Subsidiaries, other than the Guarantor Subsidiaries, if any), in the aggregate, more than twenty-five percent (25%) of the consolidated assets of the Borrower and its Subsidiaries. Section 6.2. ACCOUNTING CHANGES. The Borrower will not, and will not permit any Subsidiary to, make any change in accounting treatment or reporting practices, except as required by GAAP, that would have a significant effect on any determination made or required to be made hereunder, or change its fiscal year or the fiscal year of any Subsidiary. -42- Section 6.3. LIENS. The Borrower will not create, incur, assume or suffer to exist any Lien, or enter into, or make any commitment to enter into, any arrangement for the acquisition of any property through conditional sale, lease-purchase or other title retention agreements, with respect to any property now owned or hereafter acquired by the Borrower, except: 6.3(a) Liens granted to the Banks or to the Agent for the benefit of the Banks. 6.3(b) Liens existing on the date of this Agreement disclosed on Schedule 6.3 hereto, and Liens securing any extension or refinancing thereof that do not secure Indebtedness in an amount greater than the amount secured by such Liens, or cover any property other than the property subject to such Liens, in each case immediately prior to such extension or refinancing. 6.3(c) Deposits or pledges to secure payment of workers' compensation, unemployment insurance, old age pensions or other social security obligations, in the ordinary course of business of the Borrower. 6.3(d) Liens for taxes, fees, assessments and governmental charges not delinquent or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4. 6.3(e) Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens arising in the ordinary course of business, for sums not due or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4. 6.3(f) Liens incurred or deposits or pledges made or given in connection with, or to secure payment of, indemnity, performance or other similar bonds. 6.3(g) Liens arising solely by virtue of any statutory or common law provision relating to buyer's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; PROVIDED THAT (i) such deposit account is not a dedicated cash collateral account and is not subject to restriction against access by the Borrower in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended by the Borrower to provide collateral to the depository institution. 6.3(h) Encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property and landlord's Liens under leases on the premises rented, which do not materially -43- detract from the value of such property or impair the use thereof in the business of the Borrower. 6.3(i) The interest of any lessor under any capitalized lease entered into after the Closing Date or purchase money Liens on property acquired after the Closing Date; provided, that, such Liens are limited to the property acquired and do not secure Indebtedness other than the related capitalized lease obligations or the purchase price of such property. 6.3(j) Liens securing other Indebtedness of the Borrower, provided the aggregate principal amount of Indebtedness secured by Liens permitted under Sections 6.3(b), 6.3(i) and this Section 6.3(j) does not at any time exceed twenty five percent (25%) of the Borrower's Indebtedness. Section 6.4. NET WORTH. Not at any time permit Net Worth to be less than the sum of (i) $100,000,000 PLUS (ii) twenty-five percent of the Borrower's consolidated net income for each fiscal year ended after October 7, 1995, if positive, PLUS (iii) one hundred percent of the amount added to Net Worth of the Borrower as a result of the issuance and sale by the Borrower of additional shares of its capital stock after the Closing Date. Section 6.5. LEVERAGE RATIO. Not at any time permit the Leverage Ratio to exceed 0.60 to 1.00. Section 6.6. INTEREST COVERAGE RATIO. Not permit the Interest Coverage Ratio for any period of four consecutive fiscal quarters ending on the last day of any fiscal quarter to be less than 1.25 to 1.00. Section 6.7. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction with any Affiliate of the Borrower, except upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Borrower or such Subsidiary. Section 6.8. RESTRICTED PAYMENTS. The Borrower will not, and will not permit any Subsidiary to, make any Restricted Payments, except that: (a) the Borrower and any wholly-owned Subsidiary may declare and make dividend payments or other distributions payable solely in its common stock; (b) any Subsidiary may pay cash dividends to the Borrower; and (c) the Borrower may declare or pay cash dividends to its shareholders and purchase, redeem or otherwise acquire shares of its capital stock or -44- warrants or options to acquire any such shares for cash PROVIDED that, before and immediately after giving effect to such action, no Default or Event of Default exists or would exist; and PROVIDED FURTHER that the aggregate of all cash paid by the Borrower pursuant to this clause 6.8(c) may not exceed the sum of (i) $50,000,000 PLUS (ii) seventy- five percent of the Borrower's consolidated net income for each fiscal year ended after October 7, 1995, if positive. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an Event of Default: 7.1(a) Borrower shall fail to pay when due any amounts required to be paid to the Agent or any Bank pursuant hereto. 7.1(b) Borrower shall fail to perform or observe any other term, covenant or agreement contained in Section 5.2 or any Section of Article VI of this Agreement on its part to be performed or observed. 7.1(c) The Borrower shall fail to comply with any other agreement, covenant, condition, provision or term contained in this Agreement (other than those hereinabove set forth in this Section 7.1) and such failure to comply shall continue for fifteen calendar days after whichever of the following dates is the earliest: (i) the date the Borrower gives notice of such failure to the Agent or the Banks, (ii) the date the Borrower should have given notice of such failure to the Agent or the Banks pursuant to Section 6.1, or (iii) the date the Agent or the Majority Banks gives notice of such failure to the Borrower. 7.1(d) This Agreement shall, at any time after the execution and delivery hereof, cease to be in full force and effect or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower, or Borrower shall deny that it has any or further liability or obligation under this Agreement. 7.1(e) Any representation or warranty made by or on behalf of the Borrower or any Subsidiary in this Agreement or by or on behalf of the Borrower or any Subsidiary in any certificate, statement, report or document herewith or hereafter furnished to the Banks or the Agent pursuant to this Agreement shall prove to have been false or misleading in any material respect on the date as of which the facts set forth are stated or certified. -45- 7.1(f) The Borrower or any Subsidiary shall become insolvent or shall generally not pay its debts as they mature or shall apply for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee or receiver of the Borrower or such Subsidiary or for a substantial part of the property thereof or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver shall be appointed for the Borrower or a Subsidiary or for a substantial part of the property thereof and shall not be discharged within 45 days, or the Borrower or any Subsidiary shall make an assignment for the benefit of creditors. 7.1(g) Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law shall be instituted by or against the Borrower or any Subsidiary, and, if instituted against the Borrower or any Subsidiary, shall have been consented to or acquiesced in by the Borrower or such Subsidiary, or shall remain undismissed for 60 days, or an order for relief shall have been entered against the Borrower or such Subsidiary. 7.1(h) Any dissolution or liquidation proceeding not permitted by Section 6.1 shall be instituted by or against the Borrower or a Subsidiary, and, if instituted against the Borrower or any Subsidiary, shall be consented to or acquiesced in by the Borrower or such Subsidiary or shall remain for 45 days undismissed. 7.1(i) A judgment or judgments for the payment of money in excess of the sum of $10,000,000 in the aggregate shall be rendered against the Borrower or a Subsidiary and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than 60 days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal from such judgment. 7.1(j) The maturity of any material Indebtedness of the Borrower (other than Indebtedness under this Agreement) or a Subsidiary shall be accelerated, or the Borrower or a Subsidiary shall fail to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period), or any event shall occur or condition shall exist and shall continue for more than the period of grace, if any, applicable thereto and shall have the effect of causing, or permitting the holder of any such Indebtedness or any trustee or other Person acting on behalf of such holder to cause, such material Indebtedness to become due prior to its stated maturity or to realize upon any collateral given as security therefor. For purposes of this Section, Indebtedness of the Borrower or a Subsidiary shall be deemed "material" if it exceeds $5,000,000 as to any item of Indebtedness or in the aggregate for all items of Indebtedness with respect to which any of the events described in this Section 11(j) has occurred. -46- 7.1(k) Any execution or attachment shall be issued whereby any substantial part of the property of the Borrower or any Subsidiary shall be taken or attempted to be taken and the same shall not have been vacated or stayed within 30 days after the issuance thereof. 7.1(l) One or more ERISA Events shall occur and, in connection therewith, the Borrower shall be obligated to make aggregate payments in excess of $5,000,000. 7.1(m) A Change of Control shall occur. Section 7.2 REMEDIES. If (a) any Event of Default described in Sections 7.1(f), (g) or (h) shall occur with respect to the Borrower , the Revolving Commitments shall automatically terminate and the Bid Loan Notes, the Revolving Notes, the Swing-Line Note and all other Obligations shall automatically become immediately due and payable; or (b) any other Event of Default shall occur and be continuing, then the Agent may, and upon receipt by the Agent of a request in writing from the Majority Banks, the Agent shall, take any of the following actions so requested: (i) declare the Revolving Commitments terminated, whereupon the Revolving Commitments shall terminate and (ii) declare the outstanding unpaid principal balance of the Bid Loan Notes, the Revolving Notes, the Swing-Line Note, the accrued and unpaid interest thereon and all other Obligations to be forthwith due and payable, whereupon the Bid Loan Notes, the Revolving Notes, the Swing-Line Note, all accrued and unpaid interest thereon and all such Obligations shall immediately become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or in the Notes to the contrary notwithstanding. Upon the occurrence of any of the events described in clause (a) of the preceding sentence, or upon the occurrence of any of the events described in clause (b) of the preceding sentence, the Agent may exercise all rights and remedies under any of the Loan Documents, and enforce all rights and remedies under any applicable law. Section 7.3 OFFSET. In addition to the remedies set forth in Section 7.2, upon the occurrence of any Event of Default and thereafter while the same be continuing, the Borrower hereby irrevocably authorizes each Bank and any Affiliate thereof to set off any Obligations owed to such Bank against all deposits and credits of the Borrower with, and any and all claims of the Borrower against, such Bank or any Affiliate thereof. Such right shall exist whether or not such Bank shall have made any demand hereunder or under any other Loan Document, whether or not the deposits and credits held for the account of the Borrower is or are matured or unmatured, and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to such Bank or the Banks. Each Bank agrees that, as promptly as is reasonably possible after the exercise of any such setoff right, it shall notify the Borrower of its or its Affiliate's exercise of such setoff right; -47- provided, however, that the failure of such Bank to provide such notice shall not affect the validity of the exercise of such setoff rights. Nothing in this Agreement shall be deemed a waiver or prohibition of or restriction on any Bank or any Affiliate thereof to all rights of banker's Lien, setoff and counterclaim available pursuant to law. ARTICLE VIII THE AGENT The following provisions shall govern the relationship of the Agent with the Banks. Section 8.1 APPOINTMENT AND AUTHORIZATION. Each Bank appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such respective powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto. Neither the Agent nor any of its directors, officers or employees shall be liable for any action taken or omitted to be taken by it under or in connection with the Loan Documents, except for its own gross negligence or willful misconduct. The Agent shall act as an independent contractor in performing its obligations as Agent hereunder and nothing herein contained shall be deemed to create any fiduciary relationship among or between the Agent, the Borrower or the Banks. Section 8.2 NOTE HOLDERS. The Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with it, signed by such payee and in form satisfactory to the Agent. Section 8.3 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel selected by it and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. Section 8.4 LOAN DOCUMENTS. The Agent shall not be under a duty to examine or pass upon the validity, effectiveness, genuineness or value of any of the Loan Documents or any other instrument or document furnished pursuant thereto, and the Agent shall be entitled to assume that the same are valid, effective and genuine and what they purport to be. Section 8.5 FIRST BANK AND AFFILIATES. With respect to its Revolving Commitment and the Revolving Loan made by it, First Bank shall have the same rights and powers under the Loan Documents as any other Bank and may exercise the same as though it were not the Agent consistent with the terms thereof, and First Bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower as if it were not the Agent. -48- Section 8.6 ACTION BY AGENT. Except as may otherwise be expressly stated in this Agreement, the Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, or with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, the Loan Documents. The Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all holders of Notes; provided, however, that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to the Loan Documents or applicable law. The Agent shall incur no liability under or in respect of any of the Loan Documents by acting upon any notice, consent, certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to be signed by the proper party or parties and to be consistent with the terms of this Agreement. Section 8.7 CREDIT ANALYSIS. Each Bank has made, and shall continue to make, its own independent investigation or evaluation of the operations, business, property and condition, financial and otherwise, of the Borrower in connection with entering into this Agreement and has made its own appraisal of the creditworthiness of the Borrower. Except as explicitly provided herein, the Agent has no duty or responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information with respect to such operations, business, property, condition or creditworthiness, whether such information comes into its possession on or before the first Event of Default or at any time thereafter. Section 8.8 NOTICES OF EVENT OF DEFAULT, ETC. In the event that the Agent shall have acquired actual knowledge of any Event of Default or Default, the Agent shall promptly give notice thereof to the Banks. Section 8.9 INDEMNIFICATION. Each Bank agrees to indemnify the Agent, as Agent (to the extent not reimbursed by the Borrower), ratably according to such Bank's share of the aggregate Revolving Commitment Amounts from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on or incurred by the Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Agent under the Loan Documents, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. No payment by any Bank under this Section shall relieve the Borrower of any of its obligations under this Agreement. Section 8.10 PAYMENTS AND COLLECTIONS. All funds received by the Agent prior to the termination of the Revolving Commitments in respect of any -49- payments made by the Borrower on the Revolving Notes or Revolving Commitment Fees shall be distributed forthwith by the Agent among the Banks, in like currency and funds as received, ratably according to each Bank's Revolving Percentage. After termination of the Revolving Commitments, all funds received by the Agent or any of the Banks (except funds received by any Bank as a result of a purchase pursuant to the provisions of subsection 8.11 hereof) shall be remitted to the Agent if received by any Bank and applied by the Agent in the following manner and order: (a) first, to reimburse the Agent and the Banks for any expenses due from the Borrower pursuant to the provisions of subsection 9.6 hereof; (b) second, to the payment to the Agent, of the outstanding principal balance of, and accrued but unpaid interest on, any outstanding Swing-Line Loans; (c) third, to the payment to each Bank of accrued and unpaid interest on the outstanding Loans and fees, ratably in the proportion which the aggregate accrued and unpaid interest on the outstanding Loans and fees payable to such Bank bears to the aggregate accrued and unpaid interest on all outstanding Loans and fees payable to any and all of the Banks; (d) fourth, to the payment to each Bank of the outstanding unpaid principal balance of the Loans, ratably in accordance with the proportion which the Loans payable to each Bank have to the Total Outstandings, in such order as the Agent in its sole discretion may determine; and (e) fifth, to the payment to each Bank and the Agent of any other amount owing under this Agreement or any of the Loan Documents. Section 8.11 SHARING OF PAYMENTS. If any Bank shall receive and retain any payment, voluntary or involuntary, whether by setoff, application of deposit balance or security, or otherwise, (i) in respect of the Revolving Notes, or (ii) in respect of the Bid Loan Notes at any time after termination of the Revolving Commitments, in excess of such Bank's share thereof as determined under this Agreement, then such Bank shall purchase from the other Banks for cash and at face value and without recourse, such participation in the Revolving Notes or Bid Loan Notes held by such other Banks, as appropriate, as shall be necessary to cause such excess payment to be shared ratably as aforesaid with such other Banks; provided, that if such excess payment or part thereof is thereafter recovered from such purchasing -50- Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. Subject to the participation purchase obligation above, each Bank agrees to exercise any and all rights of setoff, counterclaim or banker's lien first fully against any Notes and participations therein held by such Bank, next to any other Indebtedness of the Borrower to such Bank arising under or pursuant to this Agreement and to any participations held by such Bank in Indebtedness of the Borrower arising under or pursuant to this Agreement, and only then to any other Indebtedness of the Borrower to such Bank. Section 8.12 ADVICE TO BANKS. The Agent shall forward to the Banks copies of all notices, financial reports and other communications received hereunder from the Borrower by it as Agent, excluding, however, notices, reports and communications which by the terms hereof are to be furnished by the Borrower directly to each Bank. Section 8.13 RESIGNATION. If at any time First Bank shall deem it advisable, in its sole discretion, it may submit to each of the Banks and the Borrower a written notification of its resignation as Agent under this Agreement, such resignation to be effective upon the appointment of a successor Agent, but in no event later than 30 days from the date of such notice. Upon submission of such notice, the Majority Banks may appoint a successor Agent. ARTICLE IX MISCELLANEOUS Section 9.1 MODIFICATIONS. Any term of this Agreement may be amended with the written consent of the Borrower; provided that no amendment, modification or waiver of any provision of this Agreement or any other Loan Document or consent to any departure therefrom by the Borrower or other party thereto shall in any event be effective unless the same shall be in writing and signed by the Majority Banks, and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the purpose for which given. (The Agent may enter into amendments or modifications of, and grant consents and waivers to departure from the provisions of, those Loan Documents to which the Banks are not signatories without the Banks joining therein, PROVIDED the Agent has first obtained the separate prior written consent to such amendment, modification, consent or waiver from the Majority Banks.) Notwithstanding the forgoing, no such amendment, modification, waiver or consent shall: 9.1(a) Reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or modify any of the provisions of any Note with respect to the payment or repayment thereof, without the consent of all the Banks; or -51- 9.1(b) Increase the amount or extend the time of any Revolving Commitment of any Bank, without the consent of all the Banks, or increase the amount or extend the time of the Swing-Line Loan Facility, without the consent of the Agent and all the Banks; or 9.1(c) Reduce the rate or extend the time of payment of any fee payable to a Bank, without the consent of all the Banks; or 9.1(d) Except as may otherwise be expressly provided in any of the other Loan Documents, release any material portion of collateral securing, or any guaranties for, all or any part of the Obligations without the consent of all the Banks; or 9.1(e) Amend the definition of Majority Banks or otherwise reduce the percentage of the Banks required to approve or effectuate any such amendment, modification, waiver, or consent, without the consent of all the Banks; or 9.1(f) Amend any of the foregoing Sections 9.1 (a) through (e) or this Section 9.1 (f) without the consent of all the Banks; or 9.1(g) Amend any provision of this Agreement relating to the Agent in its capacity as Agent without the consent of the Agent. Section 9.2 EXPENSES. Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to reimburse the Agent upon demand for all reasonable out-of-pocket expenses paid or incurred by the Agent (including filing and recording costs and fees and expenses of Dorsey & Whitney P.L.L.P., counsel to the Agent) in connection with the negotiation, preparation, approval, review, execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto. The Borrower shall also reimburse the Agent and each Bank upon demand for all reasonable out-of-pocket expenses (including expenses of legal counsel) paid or incurred by the Agent or any Bank in connection with the collection and enforcement of this Agreement and any other Loan Document. The obligations of the Borrower under this Section shall survive any termination of this Agreement. Section 9.3 WAIVERS, ETC. No failure on the part of the Agent or the holder of a Note to exercise and no delay in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right. The remedies herein and in the -52- other Loan Documents provided are cumulative and not exclusive of any remedies provided by law. Section 9.4 NOTICES. Except when telephonic notice is expressly authorized by this Agreement, any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, telegram, telex, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by telegram, telex or facsimile transmission, from the first Business Day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed; provided, however, that any notice to the Agent or any Bank under Article II hereof shall be deemed to have been given only when received by the Agent or such Bank. Section 9.5 TAXES. The Borrower agrees to pay, and save the Agent and the Banks harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Agreement or the issuance of the Notes, which obligation of the Borrower shall survive the termination of this Agreement. Section 9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; FOREIGN AND PURCHASING BANKS. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Banks, the Agent, all future holders of the Notes, and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Bank. (b) Any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities ("PARTICIPANTS") participating interests in any Revolving Loan, Bid Loan or other Obligation owing to such Bank, any Revolving Note or Bid Loan Note held by such Bank, and any Revolving Commitment of such Bank, or any other interest of such Bank hereunder. In the event of any such sale by a Bank of participating interests to a Participant, (i) such Bank's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible for the performance thereof, (iii) such Bank shall remain the holder of any such Revolving Note or Bid Loan Note for all purposes under this Agreement, (iv) the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement and (v) the agreement pursuant to which such -53- Participant acquires its participating interest herein shall provide that such Bank shall retain the sole right and responsibility to enforce the Obligations, including, without limitation the right to consent or agree to any amendment, modification, consent or waiver with respect to this Agreement or any other Loan Document, PROVIDED that such agreement may provide that such Bank will not consent or agree to any such amendment, modification, consent or waiver with respect to the matters set forth in Sections 9.1(a) - (c) without the prior consent of such Participant. The Borrower agrees that if amounts outstanding under this Agreement, the Revolving Notes, the Bid Loan Notes and the Loan Documents are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have, to the extent permitted by applicable law, the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Revolving Note or other Loan Document to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement or any Revolving Note, Bid Loan Note or other Loan Document; PROVIDED, that such right of setoff shall be subject to the obligation of such Participant to share with the Banks, and the Banks agree to share with such Participant, as provided in subsection 8.11. The Borrower also agrees that each Participant shall be entitled to the benefits of subsections 2.14, 2.15, 2.16, 2.17, 2.18 and 9.2 with respect to its participation in the Revolving Commitments and the Revolving Loans; PROVIDED, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Bank would have been entitled to receive in respect of the amount of the participation transferred by such transferor Bank to such Participant had no such transfer occurred. (c) Each Bank may, from time to time, with the consent of the Agent and the Borrower (neither of which consents shall be unreasonably withheld), assign to other lenders ("ASSIGNEES") part of the Indebtedness evidenced by any Revolving Note then held by that Bank, together with an equivalent proportion of its Revolving Commitments, then held by that Bank, pursuant to written agreements executed by such assigning Bank, such Assignee(s), the Borrower and the Agent in substantially the form of Exhibit 9.6, which agreements shall specify in each instance the portion of the Obligations evidenced by the Revolving Notes which is to be assigned to each Assignee and the portion of the Revolving Commitments of such Bank to be assumed by each Assignee (each, an "Assignment Agreement"); PROVIDED, HOWEVER, that unless the Agent otherwise consents, (i) the amount of the Revolving Commitment of the assigning Bank being assigned pursuant to each such assignment, and the amount of the Revolving Commitment (if any) retained by the assigning Bank (determined in each case as of the effective date of the relevant Assignment Agreement), shall each in no event be less than $5,000,000, (ii) the amount of Revolving Commitment assigned to each Assignee (determined in each case as of the effective date of the relevant Assignment Agreement) shall be an integral multiple of $1,000,000 and (iii) the assigning Bank must pay to the Agent a processing and recordation fee of $2,500. Upon the -54- execution of each Assignment Agreement by the assigning Bank, the relevant Assignee, the Borrower and the Agent, payment to the assigning Bank by such Assignee of the purchase price for the portion of the Obligations being acquired by it and receipt by the Borrower of a copy of the relevant Assignment Agreement, (x) such Assignee lender shall thereupon become a "Bank" for all purposes of this Agreement with a Revolving Commitment in the amount set forth in such Assignment Agreement and with all the rights, powers and obligations afforded a Bank under this Agreement, (y) such assigning Bank shall have no further liability for funding the portion of its Revolving Commitment assumed by such Assignee and (z) the address for notices to such Assignee shall be as specified in the Assignment Agreement executed by it. Concurrently with the execution and delivery of each Assignment Agreement, the assigning Bank shall surrender to the Agent the Revolving Note a portion of which is being assigned, and the Borrower shall execute and deliver a Revolving Note to the Assignee in the amount of its Revolving Commitment, and a new Revolving Note to the assigning Bank in the amount of its Revolving Commitment after giving effect to the reduction occasioned by such assignment, all such Notes to constitute "Revolving Notes" for all purposes of this Agreement and of the other Loan Documents (d) The Borrower shall not be liable for any costs incurred by the Banks in effecting any participation or assignment under subparagraphs (b) or (c) of this subsection. (e) Each Bank may disclose to any Assignee or Participant and to any prospective Assignee or Participant any and all financial information in such Bank's possession concerning the Borrower or any of its Subsidiaries which has been delivered to such Bank by or on behalf of the Borrower or any of its Subsidiaries pursuant to this Agreement or which has been delivered to such Bank by or on behalf of the Borrower or any of its Subsidiaries in connection with such Bank's credit evaluation of the Borrower or any of its Subsidiaries prior to entering into this Agreement, PROVIDED that prior to disclosing such information, such Bank shall first obtain the agreement of such prospective Assignee or Participant to comply with the provisions of Section 9.7 and the Confidentiality Agreement in connection with such Bank's receipt from the Agent of the Information Memorandum regarding the Borrower. Section 9.7 CONFIDENTIALITY OF INFORMATION. Each Bank will comply with the terms of the Confidentiality Agreement in connection with its receipt from the Agent of the Information Memorandum regarding the Borrower. The Agent and each Bank shall use reasonable efforts to assure that information about the Borrower and its operations, affairs and financial condition, not generally disclosed to the public or to trade and other creditors, which is furnished to the Agent or such Bank pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between any Bank and the Borrower and shall not be divulged to any Person other than the Banks, their Affiliates and their -55- respective officers, directors, employees and agents, except: (a) to their attorneys and accountants, (b) in connection with the enforcement of the rights of the Banks hereunder and under the Notes or otherwise in connection with applicable litigation, (c) in connection with assignments and participations and the solicitation of prospective assignees and participants referred to in the immediately preceding Section, and (d) as may otherwise be required or requested by any regulatory authority having jurisdiction over any Bank or by any applicable law, rule, regulation or judicial process, the opinion of such Bank's counsel concerning the making of such disclosure to be binding on the parties hereto. No Bank shall incur any liability to the Borrower by reason of any disclosure permitted by this Section 9.7. Section 9.8 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision of this Agreement and the other Loan Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto. Section 9.9 CONSENT TO JURISDICTION. AT THE OPTION OF THE AGENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN OR RAMSEY COUNTY, MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. -56- Section 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER , THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Section 9.11 SURVIVAL OF AGREEMENT. All representations, warranties, covenants and agreement made by the Borrower herein or in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be deemed to have been relied upon by the Banks and shall survive the making of the Loans by the Banks and the execution and delivery to the Banks by the Borrower of the Notes, regardless of any investigation made by or on behalf of the Banks, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid and so long as the Revolving Commitments have not been terminated; provided, however, that the obligations of the Borrower under Section 9.2, 9.5 and 9.12 shall survive payment in full of the Obligations and the termination of the Revolving Commitments. Section 9.12 INDEMNIFICATION. The Borrower hereby agrees to defend, protect, indemnify and hold harmless the Agent and the Banks and their respective Affiliates and the directors, officers, employees, attorneys and agents of the Agent and the Banks and their respective Affiliates (each of the foregoing being an "Indemnitee" and all of the foregoing being collectively the "Indemnitees") from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel which may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or foreign laws or regulations (including securities laws, environmental laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise: (a) by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document, any commitments relating thereto, or any transaction contemplated by any Loan Document; or (b) by reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by any Person under or with respect to any Loan Document or any such credit, or the exercise of any rights or remedies thereunder, including the acquisition of any collateral by the Banks by way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise; -57- provided, however, that the Borrower shall not be liable to any Indemnitee for any portion of such claims, damages, liabilities and expenses: (i) resulting from such Indemnitee's gross negligence or willful misconduct; or (ii) relating to any Bank's claims against such Indemnitee. In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law. This indemnification applies, without limitation, to any act, omission, event or circumstance existing or occurring on or prior to the later of the Termination Date or the date of payment in full of the Obligations, including specifically Obligations arising under clause (b) of this Section. The indemnification provisions set forth above shall be in addition to any liability the Borrower may otherwise have. Without prejudice to the survival of any other obligation of the Borrower hereunder the indemnities and obligations of the Borrower contained in this Section shall survive the payment in full of the other Obligations. Section 9.13 CAPTIONS. The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement. Section 9.14 ENTIRE AGREEMENT. This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrower, the Agent and the Banks with respect to the subject matter hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof. Nothing contained in this Agreement or in any other Loan Document, expressed or implied, is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder. Section 9.15 COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. Section 9.16 BORROWER ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (b) neither the Agent nor any Bank has any fiduciary relationship to the Borrower, the relationship being solely that of debtor and creditor, (c) no joint venture exists between the Borrower and the Agent or any Bank, and (d) neither the Agent nor any Bank undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the business or operations of the Borrower and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information -58- supplied to, the Borrower by the Agent or any Bank is for the protection of the Banks and neither the Borrower nor any third party is entitled to rely thereon. THE REMAINING OF THIS PAGE IS INTENTIONALLY LEFT BLANK -59- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. NASH-FINCH COMPANY By /s/ Robert F. Nash ---------------------------------- Robert F. Nash Treasurer and Vice President Address for Borrower: 7600 France Avenue South Minneapolis, Minnesota 55435 Attention: Ms. Suzanne Allen Telecopier No: (612)844-1239 SIGNATURE PAGE TO CREDIT AGREEMENT S-1 REVOLVING COMMITMENT AMOUNT: $30,000,000 FIRST BANK NATIONAL ASSOCIATION, As a Bank and as Agent By /s/ Mark R. Olmon ---------------------------------- Mark R. Olmon Vice President Address: First Bank Place 601 Second Avenue South Minneapolis, MN 55402-4302 Attention: Mark R. Olmon, MPFP 0702 Telecopier No: (612) 973-0825 SIGNATURE PAGE TO CREDIT AGREEMENT S-2 $20,000,000 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By /s/ Jeffrey S. Sjolander ---------------------------------- Jeffrey S. Sjolander Vice President Address: Bloomington Office 7900 Xerxes Avenue South Bloomington, MN 55431-2206 Attention: Jeffrey S. Sjolander Telecopier No: (612) 830-8924 SIGNATURE PAGE TO CREDIT AGREEMENT S-3 $20,000,000 PNC BANK, NATIONAL ASSOCIATION By /s/ Karen C. Brogan ---------------------------------- Karen C. Brogan Commercial Banking Officer Address: 500 W. Madison Street Suite 3140 Chicago, IL 60661 Attention: Karen C. Brogan Telecopier No: (312) 906-3420 SIGNATURE PAGE TO CREDIT AGREEMENT S-4 $15,000,000 MITSUBISHI BANK, LIMITED CHICAGO BRANCH By /s/ Jeffrey R. Arnold ---------------------------------- Jeffrey R. Arnold Vice President Address: 5100 Norwest Center 90 South Seventh Street Minneapolis, MN 55402-4222 Attention: Jeffrey R. Arnold Telecopier No: (612) 333-3735 SIGNATURE PAGE TO CREDIT AGREEMENT S-5 $15,000,000 WACHOVIA BANK OF GEORGIA, N.A. By /s/ Terry L. Akins ---------------------------------- Terry L. Akins Senior Vice President Address: 191 Peachtree Street N. E., 28th Floor Atlanta, GA 30303 Attention: Terry L. Akins Telecopier No: (404) 332-6898 SIGNATURE PAGE TO CREDIT AGREEMENT S-6 EXHIBIT 1.1 TO CREDIT AGREEMENT REVOLVING NOTE $[ ] December 27, 1995 Minneapolis, Minnesota FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation, hereby promises to pay to the order of [ ] (the "Bank") at the main office of First Bank National Association in Minneapolis, Minnesota, in lawful money of the United States of America in Immediately Available Funds (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) on the Revolving Commitment Ending Date, the principal amount of [ ] AND NO/100 DOLLARS ($[ .00]) or, if less, the aggregate unpaid principal amount of all Advances made by the Bank under the Credit Agreement, and to pay interest (computed on the basis of actual days elapsed and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding at the rates and times set forth in the Credit Agreement. This note is one of the Revolving Notes referred to in the Credit Agreement dated as of December 27, 1995 (as the same may hereafter be from time to time amended, restated or otherwise modified, the "Credit Agreement") among the undersigned, the Bank and the other banks named therein. This note is subject to certain permissive prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Credit Agreement. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including reasonable attorneys' fees. The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. NASH-FINCH COMPANY By ---------------------------------- Robert F. Nash Treasurer and Vice President 1-1 EXHIBIT 2.2 FORM OF LOAN REQUEST _____________________, 199_ First Bank National Association, as Agent First Bank Place 601 Second Avenue South Minneapolis, MInnesota 55402-4302 Ladies and Gentlemen: Reference is made to the Credit Agreement (the "Agreement") dated as of December 27, 1995, among Nash-Finch Company, certain Banks and First Bank National Association as Agent for the Banks (as the same may be amended, supplemented or modified, the "Agreement"). Pursuant to the Agreement, the undersigned Financial Officer of the Borrower hereby certifies as follows: 1. All of the representations and warranties of the Borrower that were made in connection with the Agreement and the Loan Documents, including but not limited to the Notes executed thereunder, are true and correct as of the date hereof to the same extent as if made and given on the date hereof. All conditions and covenants to the Agreement have been satisfied or complied with. 2. No Default or Event of Default exists on the date hereof. 3. There has been no material adverse change in the condition, financial or otherwise, of any of the Borrowers or its Subsidiaries. 2.2-1 [ ] The Borrower hereby requests that on _____________, 199__, the Banks (make, continue or convert) a (LIBOR Advance or Reference, Rate Advance) to the Borrower in the principal amount of ______________ dollars ($ ____ ), which Loan constitutes all or part of Revolving Loan. If the request relates to a LIBOR Advance, the Borrower agrees that it be (made, continued, converted) for the following Interest Period: ___________________. [ ] The Borrower hereby requests that on _______, 199_ the Agent make a Swing-Line Loan in the principal amount of ______________ dollars ($ __________). [ ] The Borrower hereby confirms that on _______, 199_, _______, 199_ and _______, 199_, the Borrower requested that the Agent make Swing-Line Loan(s) in the principal amount of ______________ dollars ($ __________), = ______________ dollars ($ __________) and ______________ dollars ($ __________). Very truly yours, NASH-FINCH COMPANY By:____________________________ Name:__________________________ Title: __________________________ 2.2-2 EXHIBIT 2.21 TO CREDIT AGREEMENT SWING-LINE NOTE $10,000,000.00 December 27, 1995 Minneapolis, Minnesota FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation, hereby promises to pay to the order of FIRST BANK NATIONAL ASSOCIATION, a national banking association (the "Bank") at the main office of First Bank National Association in Minneapolis, Minnesota, in lawful money of the United States of America in Immediately Available Funds (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) on the dates set forth in the Credit Agreement, but in any event no later than the Revolving Commitment Ending Date, the principal amount of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) or, if less, the aggregate unpaid principal amount of all Swing-Line Loans made by the Bank under the Credit Agreement, and to pay interest (computed on the basis of actual days elapsed and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding at the rates and times set forth in the Credit Agreement. This note is the Swing-Line Note referred to in the Credit Agreement dated as of December 27, 1995 (as the same may hereafter be from time to time amended, restated or otherwise modified, the "Credit Agreement") among the undersigned, the Bank and the other banks named therein. This note is subject to certain permissive prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Credit Agreement. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including reasonable attorneys' fees. The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. NASH-FINCH COMPANY By ---------------------------------- Robert F. Nash Treasurer and Vice President 2.21-1 EXHIBIT 2.22(b) TO CREDIT AGREEMENT [FORM OF BID LOAN TENDER REQUEST NOTICE] BID LOAN TENDER REQUEST NOTICE [Date] To: First Bank National Association (the "Agent") From: Nash-Finch Company (the "Borrower") Re: Credit Agreement (the "Agreement") dated as of December 27, 1995 among the Borrower, the Banks named therein and the Agent We hereby give notice pursuant to subsection 2.22(b) of the Agreement that we propose a Bid Loan Financing as follows: Bid Loan Borrowing Date: Aggregate Principal Amount of Loans MATURITY DATES (not more than four) FOR EACH MATURITY DATE* $ **____________ 2.22(b)-1 Interest to be: ___ at a margin over LIBOR, or ___ at a fixed rate. We confirm that at the date hereof the applicable conditions precedent set forth in subsections 2.22 and 3.2 of the Agreement relating to, or to be satisfied by, the Borrower are satisfied as of the date hereof. NASH-FINCH COMPANY By:____________________________ Name:__________________________ Title: __________________________ * Aggregate face amount of all Bid Loans for each maturity date may not be less than $2,000,000 or an integral multiple of $1,000,000 in excess thereof. ** Aggregate face amount of all Bid Loans may not be less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof. 2.22(b)-2 EXHIBIT 2.22(c) TO CREDIT AGREEMENT [FORM OF INVITATION TO TENDER FOR BID LOANS] First Bank National Association First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402-4302 To: [Name of Addressee Bank] Re: Invitation to Tender for Bid Loans to Nash-Finch Company (the "Borrower") Pursuant to Subsection 2.22 of the Credit Agreement (the "Agreement") dated as of December 27, 1995 among the Borrower, the Banks named therein and ourselves as Agent, we are pleased to invite you on behalf of the Borrower to tender for some or all of the Bid Loans proposed to be made to the Borrower upon the following terms: Bid Loan Borrowing Date: ____________ Principal Amount of Loans Maturity Date for each Maturity Date* - ------------- ------------------------- $ Interest to be: ___ at a margin over LIBOR, or ___ at a fixed rate. 2.22(c)-1 All bids made in response to this invitation must comply with the provisions of Subsection 2.20 of the Agreement and be submitted to the Agent by telephone so as to be received by the Agent no later than 8:45 a.m. (Minneapolis time) on the applicable Bid Loan Tender Date at one of the following telephone numbers: (612) 973- (612) 973- In fairness to all participants and due to the competitive aspect of the proposed Bid Loan Financing, compliance with the 9:00 a.m. (Minneapolis time) deadline for receipt will be strictly enforced. If you have any questions regarding the above, please contract: _______ (612) 973-___, or ________ at (612) 973-____. Capitalized terms used herein have the meanings assigned to them in the Agreement. Very truly yours, FIRST BANK NATIONAL ASSOCIATION, as Agent Dated: _______ By:____________________________________ Title:_____________________________ * Face amount bid at each interest rate may not exceed face amount requested for such maturity date. Bids must be made for $2,000,000 or an integral multiple of $1,000,000 in excess thereof. 2.22(c)-2 EXHIBIT 2.22(g) TO CREDIT AGREEMENT BID LOAN NOTE $50,000,000.00 December 27, 1995 Minneapolis, Minnesota FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation, hereby promises to pay to the order of [ ] (the "Bank") at the main office of First Bank National Association in Minneapolis, Minnesota, in lawful money of the United States of America in Immediately Available Funds (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) on the dates set out in the Credit Agreement, but in any event no later than the Revolving Commitment Ending Date, the principal amount of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if less, the aggregate unpaid principal amount of all Bid Loans made by the Bank under the Credit Agreement, and to pay interest (computed on the basis of actual days elapsed and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding at the rates and times set forth in the Credit Agreement. This note is one of the Bid Loan Notes referred to in the Credit Agreement dated as of December 27, 1995 (as the same may hereafter be from time to time amended, restated or otherwise modified, the "Credit Agreement") among the undersigned, the Bank and the other banks named therein. This note is subject to certain permissive prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Credit Agreement. The holder of this Note is hereby authorized to attach to this Note the separate Bid Loan Schedules delivered to the holder by the Agent and to record thereon the date and amount of each prepayment of principal, which Bid Loan Schedules and recordation shall thereupon become a part hereof and shall constitute prima facie evidence of the accuracy of the information contained therein; PROVIDED, HOWEVER, that the failure to attach any such Bid Loan Schedule to the Notes or to make such recordation shall not affect the obligations of the Borrower under this Note. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including reasonable attorneys' fees. The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor. 2.22(g)-1 THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. NASH-FINCH COMPANY By ---------------------------------- Robert F. Nash Treasurer and Vice President 2.22(g)-2 BID LOAN SCHEDULE (TO BE ATTACHED TO THE BID LOAN NOTE OF * ) ----------------- BORROWING DATE: ------------------ INITIAL PRINCIPAL AMOUNT OF BID LOAN: $ ----------------- INTEREST RATE: % per annum ------ MATURITY DATE: ----------------- RECORD OF PREPAYMENTS Principal Amount Unpaid Notation Date Prepaid Principal Balance Made By - ---- ------- ----------------- ------- - ---------- --------------- ----------------- --------------- - ---------- --------------- ----------------- --------------- - ---------- --------------- ----------------- --------------- - ---------- --------------- ----------------- --------------- 2.22(g)-3 - ---------- --------------- ----------------- --------------- - ---------- --------------- ----------------- --------------- *Insert name of Bank 2.22(g)-4 EXHIBIT 2.22(h) TO CREDIT AGREEMENT WIRE TRANSFER INSTRUCTIONS First Bank National Association Minneapolis, MN ABA No. 091000022 Credit: Commercial Loans Service Center Account No. 30000472160600 Reference: Nash-Finch Norwest Bank Minnesota, National Association Minneapolis, MN ABA No. 091000019 Commercial Loan Clearing Account Ref: Nash-Finch PNC Bank, National Asssociation Pittsburgh, PA ABA No. 043000096 Attn: Commercial Loan Department Re: Nash-Finch Company Mitsubishi Bank, Ltd. Chicago Branch A/C FRB of Chicago Chicago, IL ABA No. 071002341 Attention: Loan Administration Reference: Nash-Finch Wachovia Bank of Georgia, N.A. Atlanta, GA ABA No. 061000010 Account No. 18171498 U.S. Corp. MTS Ref: Nash-Finch 2.22(h)-1 EXHIBIT 3.1 TO CREDIT AGREEMENT MATTERS TO BE COVERED BY OPINION OF COUNSEL TO THE BORROWER The opinion of counsel to the Borrower which is called for by Article III of the Credit Agreement (the "Credit Agreement") shall be addressed to the Banks and dated the Closing Date. It shall be satisfactory in form and substance to the Banks and shall cover the matters set forth below, subject to such assumptions, exceptions and qualifications as may be acceptable to the Banks and counsel to the Banks. Capitalized terms used herein have the respective meanings given such terms in the Credit Agreement. (i) The Borrower is a corporation duly incorporated and validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted, to enter into the Loan Documents and to perform all of its obligations under each and all of the foregoing. (ii) The execution, delivery and performance by the Borrower of the Loan Documents have been duly authorized by all necessary corporate action by the Borrower. (iii) The Loan Documents constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms. (iv) The execution, delivery and performance by the Borrower of the Loan Documents will not (i) violate any provision of any law, statute, rule or regulation or, to the best knowledge of such counsel, any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to the Borrower, (ii) violate or contravene any provision of the Certificate of Incorporation or bylaws of the Borrower, or (iii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument known to such counsel to which the Borrower is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder. (v) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of the Borrower to 3.1-1 authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents. (vi) To the best knowledge of such counsel, there are no actions, suits or proceedings pending or threatened against or affecting the Borrower or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which (i) challenge the legality, validity or enforceability of the Loan Documents, or (ii) if determined adversely to the Borrower, would have a material adverse effect on the business, operations, property or condition (financial or otherwise) of the Borrower and the Subsidiaries as a consolidated enterprise or on the ability of the Borrower to perform its obligations under the Loan Documents. 3.1-2 EXHIBIT 4.20 SUBSIDIAIRIES OF NASH FINCH COMPANY (which subsidiaries are included in the Consolidated Financial Statements of Nash Finch Company) A. Diret 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 Norfolk, Nebraska B. Direct subsidiaries of Nash Finch Company (the voting stock of which is owned, with respect to each subsidiary, 66.6 percent by Nash Finch Company): Subsidiary State of Corporation Incorporation ----------- ------------- Gillette Dairy of the Black Hills, Inc. South Dakota Rapid City, South Dakota Nebraska Dairies, Inc. Nebraska Norfolk, Nebraska C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned, with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent by Nash-DeCamp Company): Subsidiary State/Country of Corporation Incorporation ----------- ------------- Forrest Transportation Service, Inc. California Visalia, California Agricola Nadco Limitada* Chile - ------------- *Ninety-nine percent (99%) of Agricola Nadco Limitada is owned by Nash-DeCamp Company. EXHIBIT 5.1 (d) TO CREDIT AGREEMENT [FORM OF COMPLIANCE CERTIFICATE] To: First Bank National Association THE UNDERSIGNED HEREBY CERTIFIES THAT: (1) I am the duly elected chief financial officer of NASH-FINCH COMPANY (the "Borrower"); (2) I have reviewed the terms of the Credit Agreement dated as of December 27, 1995 among the Borrower, First Bank National Association and certain Banks named therein (the "Credit Agreement") and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower during the accounting period covered by the Attachment hereto; (3) The examination described in paragraph (2) did not disclose, and I have no knowledge, whether arising out of such examinations or otherwise, of the existence of any condition or event which constitutes a Default or an Event of Default (as such terms are defined in the Credit Agreement) during or at the end of the accounting period covered by the Attachment hereto or as of the date of this Certificate, except as described below (or on a separate attachment to this Certificate). The exceptions listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking or proposes to take with respect to each such condition or event are as follows: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The foregoing certification, together with the computations in the Attachment hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this _ day of ___________, 199__, pursuant to Section 5.1 (d) of the Credit Agreement. NASH-FINCH COMPANY By______________________________ Name____________________________ Title __________________________ 5.1(d)-1 ATTACHMENT TO COMPLIANCE CERTIFICATE AS OF ___________, 199__ WHICH PERTAINS TO THE PERIOD FROM ___________, 199__ TO ____________, 199__ 1. Minimum Net Worth (Section 6.4) $__________ (Sum of $100,000,000, plus $________________ (25% of consolidated net income since October 7, 1995) plus $_____________ (all additions to Net Worth due to sales of stock after Closing Date) 2. Actual Net Worth $__________ 3. Net Worth In Excess (Below) Requirement $__________ (Line 2 minus Line 1) 4. Indebtedness $__________ (Sum of interest bearing debt ($_____________________), capitalized leases ($__________), Contingent Obligations ($_____________) and other Indebtedness ($__________)). 5. Total Capitalization $__________ (Sum of Line 2 plus Line 4) 6. Leverage Ratio (Maximum 0.60 to 1.0) __ to 1.0 (Section 6.5; ratio of Line 4 to Line 5) 7. Earnings Before Interest and Taxes $__________ 8. Interest Expense $__________ 3. Interest Coverage Ratio (Minimum 1.25 to 1.0) __ to 1.0 (Section 6.6; ratio of Line 7 to Line 8) EXHIBIT 6.3 LIENS AGAINST NASH FINCH COMPANY PROPERTY MORTGAGE LOANS: Metropolitan Life Ins. (Dubuque) $1,295,925 Royal Neighbors (Cedar Rapids) 3,415,501 Schuft Trust (Rapid City) 345,499 Evleco (Fargo Warehouse) 2,812,543 American Federal S&L (Marion, IA) 14,754 Spooner, WI 392,247 Nash DeCamp Company 199,008 Food Folks (North Carolina) 209,695 TOTAL MORTGAGE LOAN $8,685,172 ---------- ---------- INDUSTRIAL DEVELOPMENT BONDS: City of Appleton, WI $ 600,000 City of Bluefield, VA 600,000 City of Minot, ND 1,100,000 City of Rapid City, SD 2,385,000 City of Spooner, WI 940,000 TOTAL IRB $5,625,000 ---------- ----------
Amounts are as of October 7, 1995. EXHIBIT 9.6 ASSIGNMENT AGREEMENT ASSIGNMENT AGREEMENT, dated as of 199 , among ____________ (the "TRANSFEROR BANK"), _____________ (the "PURCHASING BANK"), Nash-Finch Company, a Delaware corporation (the "BORROWER") and First Bank National Association, as Agent for the Banks under the Credit Agreement described below (in such capacity, the "AGENT"). W I T N E S S E T H WHEREAS, this Assignment Agreement is being executed and delivered in accordance with subsection 9.6(c) of the Credit Agreement, dated as of December 27, 1995, among the Borrower, the Transferor Bank and the other Banks parties thereto, and the Agent (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein being used herein as therein defined); WHEREAS, the Purchasing Bank (if it is not already a Bank party to the Credit Agreement) wishes to become a Bank party to the Credit Agreement; and WHEREAS, the Transferor Bank is selling and assigning to the Purchasing Bank rights, obligations and commitments under the Credit Agreement; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Upon the execution and delivery of this Assignment Agreement by the Purchasing Bank, the Transferor Bank, the Agent [and the Borrower], the Purchasing Bank [shall be] [shall continue to be] a Bank party to the Credit Agreement for all purposes thereof. 2. Prior to the execution and delivery of this Assignment Agreement, the Transferor Bank's and the Purchasing Bank's Revolving Commitment Amounts were $____________ and $___________, respectively (the "Original Revolving Commitments"). Upon the execution and delivery of this Assignment Agreement, the Revolving Commitment Amounts of the Transferor Bank and the Purchasing Bank shall be $________ and $__________, respectively, and the sum of their Revolving Commitment Amounts shall equal the Original Revolving Commitments. Prior to the execution and delivery of this Assignment Agreement, the Transferor Bank's and the Purchasing Bank's Revolving Percentages were 9.6-1 _____ and _____, respectively (the "Original Revolving Percentages"). Upon the execution and delivery of this Assignment Agreement, the Revolving Percentages of the Transferor Bank and the Purchasing Bank shall be ______ and ______, respectively, and the sum of their Revolving Percentages shall equal the Original Revolving Percentages. The Transferor Bank acknowledges receipt from the Purchasing Bank of an amount equal to the purchase price, as agreed between the Transferor Bank and such Purchasing Bank, of the portion of the Transferor Bank's Revolving Commitment being purchased by such Purchasing Bank (the "PURCHASED COMMITMENT"). The Transferor Bank hereby irrevocably sells, assigns and transfers to the Purchasing Bank, without recourse, representation or warranty, and the Purchasing Bank hereby irrevocably purchases, takes and assumes from the Transferor Bank, the Purchased Commitment and the appropriate portion of all presently outstanding Revolving Loans and other amounts owing to the Transferor Bank under the Credit Agreement and the Transferor Bank's Revolving Note, together with all guarantees thereof and all collateral security therefor and all instruments and documents pertaining thereto. 3. The Transferor Bank has made arrangements with the Purchasing Bank with respect to the portion, if any, to be paid by the Transferor Bank to the Purchasing Bank of fees heretofore received by the Transferor Bank pursuant to the Credit Agreement. 4. From and after the date hereof, principal, interest, fees and other amounts that would otherwise be payable to or for the account of the Transferor Bank pursuant to the Credit Agreement and the Transferor Bank's Revolving Note shall, instead, be payable to or for the account of the Transferor Bank and the Purchasing Bank, as the case may be, in accordance with their respective interests as reflected in this Assignment Agreement, whether such amounts have accrued prior to the date hereof or accrue subsequent to the date hereof. 5. Concurrently with the execution and delivery hereof, (i) the Borrower, the Transferor Bank and the Purchasing Bank shall make appropriate arrangements so that a replacement Revolving Note is issued to the Transferor Bank (unless it has transferred its entire Revolving Commitment), and a new Revolving Note is issued to the Purchasing Bank, in each case in principal amounts reflecting, in accordance with the Credit Agreement, their Revolving Commitments (as adjusted pursuant to this Assignment Agreement), and (ii) the Transferor Bank shall pay to the Agent a processing and recordation fee of [$2,500]. 6. Concurrently with the execution and delivery hereof, the Agent will, at the expense of the Transferor Bank, provide to the Purchasing Bank (if it is not already a Bank party to the Credit Agreement) conformed copies of all documents delivered to the Agent on the date of the initial Loans under the Credit Agreement in satisfaction of the conditions precedent set forth in the Credit Agreement. 9.6-2 7. Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement. 8. The address for notices to the Purchasing Bank as well as administrative information with respect to the Purchasing Bank is as set out below: 9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA. IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers as of the date first set forth above. __________________________________, Transferor Bank By:________________________________ Name:______________________________ Title: ____________________________ __________________________________, as Purchasing Bank By:_______________________________ Name:_____________________________ Title: ___________________________ 9.6-3 FIRST BANK NATIONAL ASSOCIATION, as Agent By:_______________________________ Name:_____________________________ Title: ___________________________ CONSENTED AND ACKNOWLEDGED NASH-FINCH COMPANY By:_______________________________ Name:_____________________________ Title: ___________________________ [Required only when Purchasing Bank is not already a Bank] 9.6-4 EX-10.10 5 EXHIBIT 10.10 EXHIBIT 10.10 NASH-FINCH COMPANY PROFIT SHARING PLAN 1994 REVISION SECOND DECLARATION OF AMENDMENT Pursuant to the retained power of amendment contained in Section 11.1 of the Nash-Finch Company Profit Sharing Plan -- 1994 Revision, in conjunction with the sale by the Company of all of the issued and outstanding capital stock of Thomas & Howard Company of Hickory, Inc. (Thomas & Howard), the undersigned hereby amends the Plan in the following manner: "Notwithstanding any other provision of Section 3.2 of the Plan to the contrary if the sale by the Company of all of the issued and outstanding capital stock of Thomas & Howard closes before December 31, 1995 - (1) Each individual who had entered the Plan as a Participant for the purpose of being eligible to share in his or her Participating Employers Profit Sharing Contribution on or before October 1, 1995 and received Eligible Earnings from Thomas & Howard for the portion of the 1995 Plan Year ending on December 2, 1995 will be eligible to share in Thomas & Howard's Profit Sharing Contribution, if any, for the 1995 Plan Year if he or she (a) either actually satisfied as of December 2, 1995 the condition set forth in Section 3.2(B)(3) of the Plan or would have satisfied such condition had he or she continued to perform services for an Affiliated Organization through December 31, 1995 in accordance with his or her regular work schedule in effect as of December 2, 1995 and (b) would satisfy the condition set forth in Section 3.2(B)(4) of the Plan if 'December 2, 1995' were substituted for 'last day of the Plan Year' therein; and (2) Any Thomas & Howard Profit Sharing Contribution for the 1995 Plan Year will be allocated among the Profit Sharing Accounts of eligible Participants so that each such Participant's share of the contribution bears the same ratio to the total contribution as his or her Eligible Earnings from Thomas & Howard for the portion of the 1995 Plan Year ending on December 2, 1995 bears to the aggregate Eligible Earnings from Thomas & Howard for such portion of the Plan Year for all such eligible Participants." The foregoing amendment is effective as of the date of this instrument. In light of the nature of the amendment, the amendment will not be permanently incorporated into the Plan document but this instrument nevertheless constitutes part of the Plan document. IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 1st day of December, 1995. NASH-FINCH COMPANY Attest: By ------------------------------ ------------------------------ Secretary President EX-10.13 6 EXHIBIT 10.13 EXHIBIT 10.13 EXCERPTS FROM MINUTES OF BOARD OF DIRECTORS MEETING OF NASH FINCH COMPANY ON FEBRUARY 13, 1996 WHEREAS, the Arbitrary Pension Plan No. 1 Supplement (the "Unfunded Plan") to the Nash Finch Company Profit Sharing Plan, as restated by resolution adopted by this Board of Directors on November 11, 1996, and amended by resolution adopted by this Board of Directors on April 25, 1995, provides for the payment of benefits to certain eligible retirees; and WHEREAS, the Compensation Committee of this Board of Directors (the "Compensation Committee") has concluded that the underlying purposes for which the Unfunded Plan was established have basically been or are being satisfied, and has recommended that this Board of Directors take certain actions regarding eligibility for participation in the Unfunded Plan and the determination of annual additional payments thereunder; RESOLVED, that the following rules be and hereby are adopted, effective immediately, concerning interpretation and administration of the Unfunded Plan: 1. Concerning Paragraph 1 of the Unfunded Plan, as amended, eligibility for participation shall be limited to (a) those persons who have retired and are receiving, or are eligible to receive, benefits under the Unfunded Plan, and (b) any person who, if still employed, has previously been determined to be eligible to participate upon retirement based upon the position held by such person on January 2, 1966. 2. Concerning the additional annual payment provided for in Paragraphs 3(c) and 5 of the Unfunded Plan, the amount of such payment for 1996 and future years shall not be increased, as compared to the amount paid for the prior year, by a factor greater than the percentage increase in the Consumer Price Index (All Items) for the appropriate period. RESOLVED FURTHER, that this Board of Directors hereby delegates to the chief executive officer of the Company the authority to exercise its right to declare additional payments under the Unfunded Plan, as provided in Paragraph 6 thereof, in accordance with the foregoing policy concerning such payments. EX-13.1 7 EXHIBIT 13.1 NASH FINCH COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- This discussion of the Company's results of operations and financial condition should be read in conjunction with the Consolidated Financial Statements and accompanying notes.
RESULTS OF OPERATIONS - ----------------------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------- Total Revenues . . . . . . . . . . 100.0% 100.0% 100.0% ----- ----- ----- ----- ----- ----- Gross Margin . . . . . . . . . . . 14.5 14.9 14.6 Operating Expense. . . . . . . . . 12.1 12.5 12.2 Depreciation and Amortization. . . 1.0 1.1 1.1 Interest Expense . . . . . . . . . .4 .4 .4 Earnings before Income Taxes . . . 1.0 .9 .9 Income Taxes . . . . . . . . . . . .4 .4 .4 ----- ----- ----- Net Earnings . . . . . . . . . . . .6 .5 .5 ----- ----- ----- ----- ----- -----
REVENUES Total revenues increased 2.0% during fiscal 1995 to $2.889 billion compared to $2.832 billion in 1994 and $2.724 billion in 1993. The increase in 1995 is largely attributable to continued growth of the military wholesale business from two distribution centers on the east coast and the addition of several new independent retail accounts during the year. Wholesale segment revenues increased 6.2% to $1.969 billion from $1.855 billion in 1994. The sale of Thomas & Howard of Hickory, Inc. ("T & H"), the Company's convenience store distributor, on December 2, 1995, had a negative effect on revenue gains for the year. Had the sale taken place as of year end, revenues would have been $20 million higher. The volume lost as a result of the T & H divestiture is expected to be more than offset in fiscal 1996 by the acquisition of Military Distributors of Virginia ("MDV"), which was completed January 2, 1996. Fiscal 1994 wholesale revenues increased 1.0% over 1993 due to the addition of new store accounts in the Southeast. Retail segment revenues declined 7.1% from $926 million in fiscal 1994 to $860 million in 1995. The reduction is primarily the result of the sale of three stores to existing independent customers and the closing of eight stores which were not meeting the Company's revenue and profit expectations. In spite of low food price inflation, deflation in some product groups and increasing competitive pressures in certain market areas, same store sales remained constant compared to last year. Retail revenues during 1994 increased 10% over 1993 largely due to the the acquisition of 23 Food Folks stores in North Carolina and six supermarkets in eastern Kentucky. GROSS MARGINS Gross margins were 14.5% in 1995 compared to 14.9% in 1994 and 14.6% in 1993. The decline reflects a growing proportion of wholesale revenues which achieve lower margins than retail. Wholesale revenues represented 68.4% of total revenues compared to 65.7% of total revenues last year. Although consolidated gross margins are lower, both wholesale and retail margins have improved compared to last year. Centralization of buying functions for several warehouses and increased margins on perishable products contributed to improved margins at the wholesale level. Further centralization of buying functions in fiscal 1996 should result in operational efficiencies and lower product costs. Overall retail margin improvements resulted from a greater sales mix of higher margin specialty departments in the stores. In 1994, retail margin improvements were attributed to the acquisition of a number of smaller conventional stores which operate at higher margins than larger warehouse-type stores. The LIFO charge for the year was $.1 million compared to $1.4 million in 1994 and a credit of $2.0 million in 1993. The current year charge is net of a $1.5 million credit related to a reduction in inventory levels by T & H prior to the sale of this subsidiary. The credit recognized in fiscal 1993 reflected the price declines initiated by tobacco companies during that year. OPERATING EXPENSES Operating expenses as a percent of total revenues were 12.1% in 1995 compared to 12.5% and 12.2% in 1994 and 1993, respectively. Expense levels this year were favorably impacted by an increasing proportion of wholesale business which typically operates at lower expense levels than retail. Productivity gains and tighter cost controls at the wholesale level also contributed to a reduction in overall expenses compared to last year. Operating expenses were negatively affected by a pretax provision of $1.6 million for continuing lease costs related to two closed stores. In addition, when comparing 1995 to 1994, the Company incurred an additional $3.6 million in information systems costs, largely related to preliminary research and initial project development of new computer systems. The upward trend in these computer-related costs is expected to continue through fiscal 1996 as further development occurs and the project moves toward implementation in late 1996 and throughout fiscal 1997. In 1994, operating expenses increased over 1993 due to a higher proportion of business by the Company owned retail stores. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense decreased 7.6% from 1994 expense levels. The decline reflects the reduction in the number of corporate stores owned, lower capital expenditures and several significant projects still in progress at the end of the fiscal year. The increase in 1994 compared to 1993 was primarily due to the full year depreciation and amortization costs resulting from the acquisition of the Easter supermarket chain in mid-year 1993. INTEREST EXPENSE Interest expense decreased 5.2% in 1995 due to a reduction in average short-term borrowings. Although average borrowing rates increased compared to last year, proceeds from both the sale of notes receivables and the T & H operation significantly reduced borrowing requirements in the second half of the year. As a percent of revenues, interest expense was .37%, .40% and .37% for 1995, 1994 and 1993, respectively. EARNINGS BEFORE TAXES Earnings before income taxes increased 10.8% compared to fiscal 1994. Wholesale performance improved due to the growth in military business, new independent customers and better expense controls. Retail segment results were negatively impacted by continuing competitive pressures and store closing costs. Nash DeCamp, the Company's produce marketing subsidiary showed improved earnings from both its domestic and South American farming operations over last year, when an excessive supply of quality product depressed product prices. Also, the sale of T & H capital stock resulted in the recognition of a pretax gain of $1.8 million this year, with an additional $1.7 million in consulting fees to be recognized over the next three years. 14 NASH FINCH COMPANY AND SUBSIDIARIES INCOME TAXES The effective tax rate decreased to 39.1% in 1995 from 40.0% in 1994 and 40.5% in 1993. The reduction was due to the utilization of available capital loss carryforwards to partially offset the taxable gain from the sale of T & H. The effective tax rate is expected to return to previous levels in 1996. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its capital needs through a combination of internal and external sources. These sources include cash flow from operations, 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 debt structure and financial position will continue to support its ability to obtain the required funds. Cash provided from operating activities was $85.8 million in 1995, an increase of $45.1 million over 1994. Improved asset management as well as the sale of T & H for cash, contributed largely to an overall reduction in the non-cash elements of working capital. As a result, working capital at December 30, 1995 of $104.0 million included cash and cash equivalents of $26.0 million. In addition, the sale or closing of a number of corporate stores during 1995 also contributed to the increase in positive cash flow from operations. In fiscal 1994, cash provided from operations decreased $46.6 million from the 1993 levels due primarily to the net increase in working capital, particularly inventories. At December 30, 1995 the Company had no outstanding short-term borrowings compared to $41.4 million and $38.3 million at the end of 1994 and 1993, respectively. The Company has committed lines of credit totaling $7.5 million and uncommitted lines of $47.5 million with a number of banks. On December 27, 1995, the Company entered into a 5-year, $100.0 million revolving credit facility with several participating banks. This financing was placed to provide sufficient funding for acquisitions, capital projects and working capital requirements. Management believes the Company will continue to have adequate access to short-term and long-term credit to meet its needs in the foreseeable future. Capital projects designed to maintain operating capacity, expand operations or improve efficiency totaled $33.3 million in 1995 compared to $34.9 and $36.4 in 1994 and 1993, respectively. These projects have typically been funded through operating cash flows. For 1996, capital spending is projected to be $62.1 million, a substantial increase over 1995 due to several retail store replacements, expansions and remodels, and information systems improvements. During 1995, the Company provided financial assistance in the form of secured loans totaling $9.2 million to new or existing independent retailers. These loans are generally used to maintain and grow their businesses. In September 1995, the Company established an on-going agreement with a bank to sell qualified customer notes at face value with recourse. Dividend payments in 1995 were $.74 per share, up from $.73 in 1994. These amounts represented 46% and 51% of net earnings in each year, respectively. Return on average stockholders' equity was 8.3% in 1995, up from 7.6% in 1994. 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 December 31, 1995 there were 1,940 stockholders of record. - -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------- Dividends 1995 1994 Per Share -------------- ---------------- ------------------- HIGH LOW High Low 1995 1994 - -------------------------------------------------------------------------------------------------- First Quarter. . . . . . . . . . . 16 3/4 15 1/4 18 1/4 16 .18 .18 Second Quarter . . . . . . . . . . 16 3/4 15 5/8 18 16 .18 .18 Third Quarter. . . . . . . . . . . 20 1/2 16 18 16 1/4 .18 .18 Fourth Quarter . . . . . . . . . . 19 15/16 17 1/4 17 15 3/8 .20 .19 - --------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- ------------------------------------------------------------------------------------------------- A SUMMARY OF QUARTERLY FINANCIAL FIRST QUARTER SECOND QUARTER INFORMATION IS PRESENTED. 12 WEEKS 12 WEEKS ----------------------- ------------------------ (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------- Net sales and other revenues . . . $ 623,598 618,165 676,514 670,362 Cost of sales. . . . . . . . . . . 534,312 527,696 575,582 566,167 Earnings before income taxes . . . 4,519 4,320 9,835 8,761 Income taxes . . . . . . . . . . . 1,830 1,749 3,983 3,549 Net earnings . . . . . . . . . . . 2,689 2,571 5,852 5,212 Percent to sales and revenues. . . .43 .41 .86 .78 Net earnings per share . . . . . . $ .25 .24 .54 .48 Average number of shares outstanding. . . . . . . 10,874 10,872 10,875 10,872 - -------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------- A SUMMARY OF QUARTERLY FINANCIAL THIRD QUARTER FOURTH QUARTER INFORMATION IS PRESENTED. 16 WEEKS 12 Weeks -------------------- ------------------------ (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------- Net sales and other revenues . . . 918,825 886,956 669,899 656,517 Cost of sales. . . . . . . . . . . 785,623 754,113 574,324 562,316 Earnings before income taxes . . . 8,491 6,806 5,750 5,923 Income taxes . . . . . . . . . . . 3,439 2,756 1,929 2,276 Net earnings . . . . . . . . . . . 5,052 4,050 3,821 3,647 Percent to sales and revenues. . . .55 .46 .57 .56 Net earnings per share . . . . . . .46 .37 .35 .33 Average number of shares outstanding . . . . . . . . 10,875 10,874 10,877 10,874 - -------------------------------------------------------------------------------------------------
15 NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------------------------------------- Fiscal years ended December 30, 1995, December 31, 1994 and January 1, 1994 1995 1994 1993 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - -------------------------------------------------------------------------------------------------------------- INCOME: Net sales . . . . . . . . . . . . . . . . . . . . . . . . . $2,831,114 2,779,330 2,679,410 Other revenues. . . . . . . . . . . . . . . . . . . . . . . 57,722 52,670 44,125 ---------- ---------- ---------- Total revenues. . . . . . . . . . . . . . . . . . . . . 2,888,836 2,832,000 2,723,535 COST AND EXPENSES: Cost of sales . . . . . . . . . . . . . . . . . . . . . . . 2,469,841 2,410,292 2,325,249 Selling, general and administrative, and other operating expenses. . . . . . . . . . . . . . 350,201 352,683 332,349 Depreciation and amortization . . . . . . . . . . . . . . . 29,406 31,831 29,145 Interest expense. . . . . . . . . . . . . . . . . . . . . . 10,793 11,384 10,114 ---------- ---------- ---------- Total costs and expenses. . . . . . . . . . . . . . . . 2,860,241 2,806,190 2,696,857 Earnings before income taxes. . . . . . . . . . . . . . 28,595 25,810 26,678 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 11,181 10,330 10,804 ---------- ---------- ---------- Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $ 17,414 15,480 15,874 ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding . . . . . 10,875 10,873 10,872 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share . . . . . . . . . . . . . . . . . . . . . . $ 1.60 1.42 1.46 ---------- ---------- ---------- ---------- ---------- ---------- - --------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. INDEPENDENT AUDITORS' REPORT [LOGO] ERNST & YOUNG LLP - ------------------------------------------------------------------------------- The Board of Directors and Stockholders Nash Finch Company We have audited the accompanying consolidated balance sheet of Nash Finch Company and Subsidiaries as of December 30, 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Nash Finch Company for the years ended December 31, 1994 and January 1, 1994, were audited by other auditors whose report dated March 3, 1995, expressed an unqualified opinion on those statements. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the 1995 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nash Finch Company and subsidiaries at December 30, 1995, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, MN February 19, 1996 16 NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------- Fiscal years ended December 30, 1995, December 31, 1994, and January 1, 1994 1995 1994 1993 (IN THOUSANDS) - --------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $17,414 15,480 15,874 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . 29,406 31,831 29,145 Provision for bad debts . . . . . . . . . . . . . . . . 3,997 2,187 10,146 Provision for (recovery from) losses on closed lease locations. . . . . . . . . . . . . . . . 1,361 366 (499) Deferred income taxes . . . . . . . . . . . . . . . . . (4,187) 2,874 (4,395) Deferred compensation . . . . . . . . . . . . . . . . . (901) (539) (573) Earnings of equity investments. . . . . . . . . . . . . (501) (902) (1,534) Other . . . . . . . . . . . . . . . . . . . . . . . . . (157) (545) 65 Changes in operating assets and liabilities: Accounts and notes receivable . . . . . . . . . . . . . 8,115 (9,418) (161) Inventories . . . . . . . . . . . . . . . . . . . . . . 14,680 (6,880) 26,464 Prepaid expenses. . . . . . . . . . . . . . . . . . . . (3,441) (1,087) (411) Accounts payable and outstanding checks . . . . . . . . 15,339 6,979 649 Accrued expenses. . . . . . . . . . . . . . . . . . . . 2,160 2,553 5,385 Income taxes. . . . . . . . . . . . . . . . . . . . . . 2,508 (2,172) (2,785) -------- --------- -------- Net cash provided by operating activities . . . . . . 85,793 40,727 77,370 -------- --------- -------- INVESTING ACTIVITIES: Dividends received. . . . . . . . . . . . . . . . . . . 890 618 506 Disposals of property, plant and equipment. . . . . . . 14,858 12,501 13,435 Additions to property, plant and equipment excluding capital leases . . . . . . . . . . . . . . . (33,264) (34,965) (36,382) Businesses acquired . . . . . . . . . . . . . . . . . . -- (8,614) (27,087) Investment in an affiliate. . . . . . . . . . . . . . . (1,379) -- -- Loans to customers. . . . . . . . . . . . . . . . . . . (9,199) (7,958) (15,942) Payments from customers on loans. . . . . . . . . . . . 8,788 8,093 8,286 Loans sold including current portion. . . . . . . . . . 13,744 -- -- Other . . . . . . . . . . . . . . . . . . . . . . . . . (137) (902) (261) -------- --------- -------- Net cash used in investing activities . . . . . . . (5,699) (31,227) (57,445) -------- --------- -------- FINANCING ACTIVITIES: Dividends paid. . . . . . . . . . . . . . . . . . . . . (8,048) (7,938) (7,828) Proceeds (payments) of short-term debt. . . . . . . . . (41,400) 3,100 (9,200) Proceeds from long-term debt. . . . . . . . . . . . . . 352 -- -- Payments of long-term debt. . . . . . . . . . . . . . . (5,568) (2,933) (2,352) Payments of capitalized lease obligations . . . . . . . (540) (1,576) (458) Other . . . . . . . . . . . . . . . . . . . . . . . . . 56 35 14 -------- --------- -------- Net cash used in financing activities. . . . . . . . (55,148) (9,312) (19,824) -------- --------- -------- Net increase in cash and cash equivalents. . . . . . $24,946 188 101 -------- --------- -------- -------- --------- -------- - ---------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 17 NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------------------------- DECEMBER 30, 1995 AND DECEMBER 31, 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ASSETS 1995 1994 - ---------------------------------------------------------------------------------------------- CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 26,024 1,078 Accounts and notes receivable, net. . . . . . . . . . . . . 85,968 98,859 Inventories . . . . . . . . . . . . . . . . . . . . . . . . 183,957 198,637 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . 12,067 8,626 Deferred tax assets . . . . . . . . . . . . . . . . . . . . 3,674 2,322 -------- -------- Total current assets. . . . . . . . . . . . . . . . . . 311,690 309,522 Investments in affiliates. . . . . . . . . . . . . . . . . . . 8,421 7,432 Notes receivable, noncurrent . . . . . . . . . . . . . . . . . 5,051 16,441 PROPERTY, PLANT AND EQUIPMENT: Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,638 27,556 Buildings and improvements. . . . . . . . . . . . . . . . . 110,887 107,149 Furniture, fixtures, and equipment. . . . . . . . . . . . . 204,054 214,564 Leasehold improvements. . . . . . . . . . . . . . . . . . . 25,786 28,205 Construction in progress. . . . . . . . . . . . . . . . . . 6,538 2,039 Assets under capitalized leases . . . . . . . . . . . . . . 12,923 12,423 -------- -------- 388,826 391,936 Less accumulated depreciation and amortization. . . . . . . (210,787) (204,985) -------- -------- Net property, plant and equipment . . . . . . . . . . . 178,039 186,951 Intangible assets, net. . . . . . . . . . . . . . . . . . . 6,282 7,810 Deferred tax asset -- net . . . . . . . . . . . . . . . . . 2,835 -- Other assets. . . . . . . . . . . . . . . . . . . . . . . . 1,942 3,448 -------- -------- Total assets. . . . . . . . . . . . . . . . . . . . . . $514,260 531,604 -------- -------- -------- -------- - ----------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 18 NASH FINCH COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 - -------------------------------------------------------------------------------------------------- CURRENT LIABILITIES: Outstanding checks, net of cash in banks. . . . . . . . . . $ 28,998 18,649 Short-term debt payable to banks. . . . . . . . . . . . . . -- 41,400 Current maturities of long-term debt and capitalized lease obligations . . . . . . . . . . . . . . 14,701 5,685 Accounts payable. . . . . . . . . . . . . . . . . . . . . . 127,592 122,602 Accrued expenses. . . . . . . . . . . . . . . . . . . . . . 31,745 29,585 Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 4,652 2,144 -------- -------- Total current liabilities. . . . . . . . . . . . . . . . 207,688 220,065 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 71,030 85,289 Capitalized lease obligations. . . . . . . . . . . . . . . . . 10,158 10,671 Deferred compensation. . . . . . . . . . . . . . . . . . . . . 7,625 8,526 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,446 784 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 in 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 18,706 18,706 Additional paid-in capital. . . . . . . . . . . . . . . . . 12,013 11,977 Foreign currency translation adjustment-- net of a $623 deferred tax benefit. . . . . . . . . . . . (950) (572) Retained earnings . . . . . . . . . . . . . . . . . . . . . 188,578 179,212 -------- -------- 218,347 209,323 Less cost of 346 shares and 349 shares of common stock in treasury, respectively. . . . . . . . . . (3,034) (3,054) -------- -------- Total stockholders' equity. . . . . . . . . . . . . . . 215,313 206,269 -------- -------- Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -------- -------- Total liabilities and stockholders' equity. . . . . . . $514,260 531,604 -------- -------- -------- -------- - ----------------------------------------------------------------------------------------------------
19 NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Fiscal period ended December 30, 1995 December 31, 1994 and January 1, 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Common stock Additional ------------------- paid-in Retained Shares Amount capital earnings - -------------------------------------------------------------------------------------------------- BALANCE AT JANUARY 2, 1993 . . . . . . . . . 11,224 $18,706 11,944 163,624 Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,874 Dividend declared of $.72 per share. . . . . -- -- -- (7,828) Treasury stock issued upon exercise of options . . . . . . . . . . . -- -- 10 -- ------- ------- -------- -------- BALANCE AT JANUARY 1, 1994 . . . . . . . . . 11,224 18,706 11,954 171,670 Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,480 Dividend declared of $.73 per share. . . . . -- -- -- (7,938) Treasury stock issued upon exercise of options . . . . . . . . . . . -- -- 23 -- Foreign currency translation adjustment -- net of a $381 deferred tax benefit . . . . . . . . -- -- -- -- ------- ------- -------- -------- BALANCE AT DECEMBER 31, 1994 . . . . . . . . 11,224 18,706 11,977 179,212 Net earnings . . . . . . . . . . . . . . . . -- -- -- 17,414 Dividend declared of $.74 per share. . . . . -- -- -- (8,048) Treasury stock issued upon exercise of options . . . . . . . . . . . -- -- 36 -- Foreign currency translation adjustment --net of a $252 deferred tax benefit . . . . . . . . -- -- -- -- ------- ------- -------- -------- BALANCE AT DECEMBER 30, 1995 . . . . . . . . 11,224 $18,706 12,013 188,578 ------- ------- -------- -------- ------- ------- -------- -------- - -------------------------------------------------------------------------------------------------- Foreign currency Treasury stock Total translation ---------------------- stockholders' adjustment Shares Amount equity - -------------------------------------------------------------------------------------------------- BALANCE AT JANUARY 2, 1993 . . . . . . . . . -- (352) $(3,070) 191,204 Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,874 Dividend declared of $.72 per share. . . . . -- -- -- (7,828) Treasury stock issued upon exercise of options . . . . . . . . . . . -- 1 4 14 ------- ------- -------- -------- BALANCE AT JANUARY 1, 1994 . . . . . . . . . -- (351) (3,066) 199,264 Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,480 Dividend declared of $.73 per share. . . . . -- -- -- (7,938) Treasury stock issued upon exercise of options . . . . . . . . . . . -- 2 12 35 Foreign currency translation adjustment --net of a $381 deferred tax benefit . . . . . . . . (572) -- -- (572) ------- ------- -------- -------- BALANCE AT DECEMBER 31, 1994 . . . . . . . . (572) (349) (3,054) 206,269 Net earnings . . . . . . . . . . . . . . . . -- -- -- 17,414 Dividend declared of $.74 per share. . . . . -- -- -- (8,048) Treasury stock issued upon exercise of options . . . . . . . . . . . -- 3 20 56 Foreign currency translation adjustment -- net of a $252 deferred tax benefit . . . . . . . . (378) -- -- (378) ------- ------- -------- -------- BALANCE AT DECEMBER 30, 1995 . . . . . . . . (950) (346) $(3,034) 215,313 ------- ------- -------- -------- ------- ------- -------- -------- - --------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ----------------------------------------------- (1) ACCOUNTING POLICIES FISCAL YEAR Nash Finch Company's fiscal year ends on the Saturday nearest to December 31. Fiscal years 1995, 1994 and 1993 consisted of 52 weeks. PRINCIPLES OF CONSOLIDATION The accompanying financial statements include the accounts of Nash Finch Company (the Company), its majority-owned subsidiaries and the 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. CASH AND CASH EQUIVALENTS In the accompanying financial statements, and 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. INVENTORIES Inventories are stated at the lower of cost or market. At both December 30, 1995 and December 31, 1994, approximately 89% of the Company's inventories are valued on the last-in, first-out (LIFO) method. During fiscal 1995 the Company recorded a LIFO charge of $.1 million compared to $1.4 million in 1994. During 1995, inventory quantities were reduced prior to the sale of a subsidiary. The reduction resulted in a liquidation of LIFO inventory, the effect of which increased pretax income by approximately $1.5 million. 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 $40.0 million and $43.9 million higher at December 30, 1995 and December 31, 1994, 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. 20 NASH FINCH COMPANY AND SUBSIDIARIES 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 December 30, 1995, December 31, 1994 and January 1, 1994 was $1.8 million, $2.2 million and $1.3 million, respectively. The accumulated amortization of intangible assets was $5.1 million and $3.7 million at December 30, 1995 and December 31, 1994, 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 Deferred income taxes 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. 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. FOREIGN CURRENCY TRANSLATION Adjustments resulting from the translation of assets and liabilities of a foreign investment are included in stockholders' equity. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NEW PRONOUNCEMENTS The Company will adopt Statement of Financial Accounting Standards (SFAS) No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, effective December 31, 1995. The Company does not expect the adoption of this standard to have a material impact on the Company's financial position or results of operations. (2) TROUBLED DEBT RESTRUCTURE On January 31, 1994, the Company acquired the assets of Food Folks, Inc. a former customer with twenty-three stores located primarily in North Carolina, as part of a troubled debt restructuring agreement. Under the terms of the agreement, assets with a fair market value of approximately $12.1 million were transferred to the Company in exchange for $1.6 million in cash, the assumption of liabilities of $3.3 million and the forgiveness of $7.2 million in debt, net of a bad debt reserve established by the Company. The notes representing this debt were sold with limited recourse on April 2, 1992 . On December 1, 1994, the Company acquired certain operating assets and real estate of six supermarkets, with a fair market value of $4.6 million. The supermarkets, located in eastern Kentucky, were acquired from the bankrupt estates of Paintsville Foods, Inc., a former customer, and Wal-Lyn Management, Inc., one of its affiliates. The settlement, net of the fair market value of the assets transferred, resulted in a bad debt write-off of $5.5 million, substantially all of which was provided for as of January 1, 1994. (3) ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable at the end of fiscal years 1995 and 1994 are comprised of the following components (in thousands):
- ------------------------------------------------------------------------- 1995 1994 - ------------------------------------------------------------------------- Customer notes receivable -- current portion. . . . . . . . . . . . . $ 2,232 2,861 Customer accounts receivable . . . . . . . 73,153 82,394 Other receivables. . . . . . . . . . . . . 11,992 15,173 Allowance for doubtful accounts. . . . . . (1,409) (1,569) ------- ------- Net current accounts and notes receivable . . . . . . . . . . . . $85,968 98,859 ------- ------- ------- ------- Noncurrent customer notes receivable . . . . . . . . . . . . 8,522 19,492 Allowance for doubtful accounts. . . . . . (3,471) (3,051) ------- ------- Net noncurrent notes receivable. . . . . . $ 5,051 16,441 ------- ------- ------- -------
Operating results include bad debt expense totaling $4.0 million, $2.2 million, and $10.1 million during fiscal years 1995, 1994 and 1993, respectively. On September 8, 1995, the Company entered into an agreement with a financial institution whereby the Company initially sold $13.7 million in customer notes and can continue to sell on an ongoing basis additional customer notes receivable. The notes, which have maturities through the year 2002, were sold at face value with recourse. 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 $15.0 million and $2.7 million at December 30, 1995 and December 31, 1994, respectively. The Company is contingently liable should these notes become uncollectible. 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) LONG-TERM DEBT AND CREDIT FACILITIES Long-term debt at the end of the fiscal years 1995 and 1994 is summarized as follows (in thousands):
- ----------------------------------------------------------------------- 1995 1994 - ----------------------------------------------------------------------- Industrial development bonds, 5.4% to 7.8% due in various installments through 2009. . . . . . . . $ 5,385 5,875 Term loans, 7.5% to 9.9% due in various installments through 2008 . . . . . . . . . . . . . . 71,167 75,000 Notes payable and mortgage notes, 9.3% to 12.0% due in various installments through 2003 . . . . . . . . . . . . . . 8,666 9,559 ------- ------- 85,218 90,434 Less current maturities. . . . . . . . . . 14,188 5,145 ------- ------- $71,030 85,289 ------- ------- ------- -------
21 NASH FINCH COMPANY AND SUBSIDIARIES At December 30, 1995, 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 $5.7 million and $4.8 million, respectively. On December 27, 1995, the Company finalized a 5-year revolving credit facility commitment with five participating banks in the amount of $100 million. Borrowings under this agreement will bear interest at variable rates generally equal to the London Interbank Offered Rate (LIBOR) plus .35%. The revolving credit will be used to fund acquisitions and working capital requirements. There were no borrowings under this agreement at December 30, 1995. Aggregate annual maturities of long-term debt for the five fiscal years after December 30, 1995 are as follows (in thousands):
- --------------------------------------------------- 1996 . . . . . . . . . . . . . . . . . . $14,188 1997 . . . . . . . . . . . . . . . . . . 6,061 1998 . . . . . . . . . . . . . . . . . . 6,627 1999 . . . . . . . . . . . . . . . . . . 17,105 2000 and thereafter. . . . . . . . . . . 41,237 - ---------------------------------------------------
Interest paid was $10.8 million, $11.4 million and $10.1 million, for the fiscal years 1995, 1994 and 1993, respectively. The Company entered into a three-year swap agreement with a major financial institution as a means of managing its interest expense. The agreement which is based on a notional amount of $25 million, calls for an exchange of interest payments with the company receiving payments based on fixed rate and making payments based on a LIBOR floating rate. The differential to be paid or received is accrued as interest rates change and recognized as an adjustment to interest expense related to the debt. The related amount payable to or receivable from counterparties is included in other liabilities or assets. The agreement expires in December 1996. The fair values of the swap agreements are not recognized in the financial statements. In addition, the Company maintains formal and informal lines of credit at various banks. Generally banks are compensated through fees on used and unused lines of credit. At December 30, 1995 unused formal lines of credit amounted to $7.5 million. 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 $90.1 million. (5) INCOME TAXES Effective January 3, 1993, the Company adopted the provisions of SFAS No. 109, ACCOUNTING FOR INCOME TAXES. The effect of this change in accounting for income taxes was not material. Prior years' financial statements were not restated to apply the provisions of SFAS No. 109. Income tax expense for fiscal years 1995, 1994 and 1993 is made up of the following components (in thousands):
- ----------------------------------------------------------------------------------------------- 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Current: Federal . . . . . . . . . . . . . . $12,244 5,799 12,344 State . . . . . . . . . . . . . . . 2,872 1,296 2,865 Deferred: Federal . . . . . . . . . . . . . . (3,145) 2,691 (3,558) State . . . . . . . . . . . . . . . (790) 564 (837) ------- ------ ------- Total. . . . . . . . . . . . . . $11,181 10,330 10,804 ------- ------ ------- ------- ------ -------
Total income tax expense represents effective tax rates of 39.1%, 40.0% and 40.5%, for the fiscal years 1995, 1994, and 1993, respectively. The reasons for differences compared with the U.S. federal statutory tax rate (expressed as a percentage of pretax income) are as follows:
- --------------------------------------------------------------------------------------------------- 1995 1994 1993 - -------------------------------------------------------------------------------------------------- Federal statutory tax rate . . . . . . . . . . . . . 35.0% 35.0% 35.0% Items affecting federal income tax rate: State taxes, net of federal income tax benefit. . . . . . . . . . . . . . . . 4.9 4.7 4.9 Other net. . . . . . . . . . . . . . . . . . . . . . (.8) .3 .6 ---- ---- ---- Effective tax rate . . . . . . . . . . . . . . . . . 39.1% 40.0% 40.5% ---- ---- ---- ---- ---- ----
Income taxes paid were $10.8 million, $9.2 million and $18.0 million during fiscal years 1995, 1994 and 1993, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 30, 1995, December 31, 1994 and January 1, 1994, are presented below (in thousands):
1995 1994 1993 - -------------------------------------------------------------------------------------------------- Deferred tax assets: Accounts and notes receivable, principally due to allowance for doubtful accounts. . . . . . . . . . . . . . $ 1,964 1,412 6,235 Inventories, principally due to additional costs inventoried for tax purposes pursuant to the Tax Reform Act of 1986 . . . . . . . . . . . 1,654 1,745 1,653 Health care claims, principally due to accrual for financial reporting purposes . . . . . . . . . . . . . . . 1,073 684 345 Deferred compensation, principally due to accrual for financial reporting purposes . . . . . . . . . . 3,173 3,329 3,608 Compensated absences, principally due to accrual for financial reporting purposes . . . . . . . . . . 1,379 1,263 1,124 Compensation and casualty loss, principally due to accrual for financial reporting purposes . . . . . . . . . . 2,135 1,842 1,407 Purchased intangibles . . . . . . . . . . . . . . 1,958 846 424 Closed locations. . . . . . . . . . . . . . . . . 1,110 500 589 Other . . . . . . . . . . . . . . . . . . . . . . 1,193 757 359 -------- -------- -------- Total gross deferred tax assets. . . . . . . 15,639 12,378 15,744 Less valuation allowance. . . . . . . . . . . . . -- -- -- -------- -------- -------- Net deferred tax assets. . . . . . . . . . . 15,639 12,378 15,744 -------- -------- -------- Deferred tax liabilities: Plant and equipment, principally due to differences in depreciation. . . . . . . . . . . 5,978 6,402 7,255 Inventories, principally due to differences in LIFO basis. . . . . . . . . . . . 2,070 2,661 2,724 Other . . . . . . . . . . . . . . . . . . . . . . 1,082 993 569 -------- -------- -------- Total gross deferred tax liabilities . . . . . . . . . . . . . . 9,130 10,056 10,548 -------- -------- -------- Net deferred tax asset . . . . . . . . . . . $ 6,509 2,322 5,196 -------- -------- -------- -------- -------- --------
Since it is more likely than not that the deferred tax asset of $15,639, $12,378 and $15,744 at December 30, 1995, December 31, 1994 and January 1, 1994, respectively, 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 22 NASH FINCH COMPANY AND SUBSIDIARIES there is no need to establish a valuation allowance for the deferred tax asset at December 30, 1995, December 31, 1994 and January 1, 1994, as required by Statement 109. (6) 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. On February 13, 1996, the Board of Directors adopted a 1996 Stockholder Rights Plan, which will be effective April 1, 1996. The terms of the new plan are essentially the same as the 1986 Stockholder Rights Plan, as amended. The Company follows Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related interpretations in accounting for its employee stock options. Under APB 25, when the exercise price of employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. On May 10, 1994, the stockholders approved a new stock incentive plan for officers and key employees. As a result of this action, a previous plan was terminated. For purposes of the new plan, a total of 645,296 shares (including 245,296 shares remaining from the previous plan) were reserved for the granting of stock options, restricted stock awards and performance unit awards. Stock options are granted at 100% of fair market value at date of grant and are exercisable over a term which may not exceed 10 years from date of grant. Restricted stock awards are subject to restrictions on transferability and such conditions for vesting, including continuous employment for specified periods of time, as may be determined at the date of grant. Performance unit awards are grants of rights to receive shares of stock if certain performance goals or criteria, determined at the time of grant, are achieved in accordance with the terms of the grants. All stock options granted under the former plan expired August 15, 1994. These options were also granted at 100% of fair market value at date of grant and were exercisable over a term of five years. No restricted stock awards were granted under the previous plan. On May 9, 1995 the stockholders approved a stock option plan for non-employee directors. Under this plan, for which a total of 40,000 shares were reserved, annual grants of options to purchase 500 shares are made automatically to each eligible director following each annual meeting of stockholders. The stock options are granted at 100% of fair market value at date of grant, become exercisable six months following the date of grant and may be exercised over a term of five years from the date of grant. At December 30, 1995 under the 1994 plan, options to purchase 253,089 shares of common stock of the Company at an average price of $16.86 per share and exercisable over a term of five years from the dates of grant, have been granted and are outstanding. No restricted stock awards have been granted. Performance unit awards having a maximum potential payout of 139,702 shares have also been granted and are outstanding. Reserved for the granting of future stock options, restricted stock awards and performance unit awards are 248,814 shares. At December 30, 1995 under the Director Plan, options to purchase 3,500 shares of common stock of the Company, at a price of $16.06 per share and exercisable over a term of five years from the date of grant, have been granted and are outstanding. Reserved for the granting of future stock options are 36,000 shares. Changes in outstanding options during the three fiscal years ended December 30, 1995 are summarized as follows (in thousands):
- -------------------------------------------------------------------------- Average Option Price Shares Per Share - ------------------------------------------------------------------------- Options outstanding January 2, 1993. . . . 110 $ 25.34 Exercised . . . . . . . . . . . . . . . -- Surrendered . . . . . . . . . . . . . . (109) 25.37 Granted . . . . . . . . . . . . . . . . -- - ------------------------------------------------------------------------- Options outstanding January 1, 1994. . . . 1 23.00 Exercised . . . . . . . . . . . . . . . (1) 16.88 Surrendered . . . . . . . . . . . . . . (7) 18.19 Granted . . . . . . . . . . . . . . . . 298 16.86 - ------------------------------------------------------------------------- Options outstanding December 31 1994 . . . 291 16.86 Exercised . . . . . . . . . . . . . . . (3) 16.72 Surrendered . . . . . . . . . . . . . . (36) 16.88 Granted . . . . . . . . . . . . . . . . 4 16.06 - ------------------------------------------------------------------------- Options outstanding December 30 1995 . . . 256 16.85 - ------------------------------------------------------------------------- - ------------------------------------------------------------------------- Options Exercisable At December 30, 1995 . . . . . . . . . . . 105 16.83 December 31, 1994 . . . . . . . . . . . 65 16.86
(7) 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):
- -------------------------------------------------------------------------------- 1995 1994 - -------------------------------------------------------------------------------- Buildings and improvements . . . . . . . . $12,923 12,423 Less accumulated amortization. . . . . . . (4,011) (4,103) ------- ------- Net assets under capitalized leases . . $ 8,912 8,320 ------- ------- - --------------------------------------------------------------------------------
23 NASH FINCH COMPANY AND SUBSIDIARIES At December 30, 1995, future minimum rental payments under noncancelable leases and subleases are as follows (in thousands):
- ------------------------------------------------------------------------- Operating Capital leases leases - ------------------------------------------------------------------------- 1996 . . . . . . . . . . . . . . . . . . . $ 16,816 1,535 1997 . . . . . . . . . . . . . . . . . . . 14,219 1,511 1998 . . . . . . . . . . . . . . . . . . . 12,625 1,475 1999 . . . . . . . . . . . . . . . . . . . 10,957 1,439 2000 and thereafter. . . . . . . . . . . . 56,250 15,242 -------- -------- Total minimum lease payments (a) . . . . . $110,867 21,202 -------- -------- -------- Less imputed interest (rates ranging from 7.9% to 11.5%). . . . . . . (10,531) -------- Present value of net minimum lease payments . . . . . . . . . . . . . 10,671 Less current maturities. . . . . . . . . . (513) -------- Capitalized lease obligations. . . . . . . 10,158 -------- --------
(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 December 30, 1995 are $42 million and $1 million, respectively. Total rental expense under operating leases for fiscal years 1995, 1994 and 1993 is as follows (in thousands):
- -------------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------------- Total rentals. . . . . . . . . . . . . . $27,533 28,978 27,706 Less real estate taxes, insurance and other occupancy costs. . . . . . . (2,095) (2,429) (2,312) ------- ------- ------- Minimum rentals. . . . . . . . . . . . . 25,438 26,549 25,394 Contingent rentals . . . . . . . . . . . 312 148 248 Sublease rentals . . . . . . . . . . . . (7,964) (7,716) (7,060) ------- ------- ------- $17,786 18,981 18,582 ------- ------- -------
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 $16.6 million. (8) 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 December 30, 1995, the Company has guaranteed outstanding promissory note obligations of one customer in the amount of $8.9 million and of another customer in the amount of $3.9 million. 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 December 30, 1995, $8.0 million in notes and growers advances were 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. (9) 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 1995, 1994 and 1993 was $3.8 million, $3.5 million and $3.6 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. (10) 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 1994, the cost of retiree health care benefits was recognized as expense as claims were paid. During the fourth quarter of 1994, the Company adopted SFAS No. 106, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The Company has adopted this Statement on a prospective basis, electing to amortize the liability of $4.9 million over the next twenty years. The periodic postretirement benefit costs under SFAS No. 106 were as follows (in thousands):
- ---------------------------------------------------------------------- 1995 1994 - ---------------------------------------------------------------------- Service costs. . . . . . . . . . . . . . $273 235 Interest costs . . . . . . . . . . . . . 382 361 Amortization of unrecognized transition obligation. . . . . . . . . 249 248 ---- --- Net postretirement costs . . . . . . . . $904 844 ---- --- ---- ---
The actuarial present value of benefit obligations at December 30, 1995 and December 31, 1994 are as follows (in thousands):
- ----------------------------------------------------------------------- 1995 1994 - ---------------------------------------------------------------------- Retirees eligible for benefits . . . . . $1,903 1,612 Active employees fully eligible. . . . . 493 466 Active employees not fully eligible. . . 3,147 3,191 ------ ------ $5,543 5,269 ------ ------ ------ ------
The assumed annual rate of future increases in per capita cost of health care benefits was 11.5% in fiscal 1995 declining at a rate of .5% per year to 6.5% in 2005 and thereafter. Increasing the health care cost trend by 1% in each year would increase the accumulated benefit obligation by $277,000 at December 30, 1995 and the service and interest costs by $48,000 for fiscal 1995. The discount rate used in determining the accumulated benefit obligation was 7.5%. (11) 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, 24 NASH FINCH COMPANY AND SUBSIDIARIES packing and marketing operations. The Company's market areas are in the Midwest, West, Mid-Atlantic and Southeastern United States. 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. MAJOR SEGMENTS OF BUSINESS (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------------------------------------- Net sales and other operating revenues: Wholesale distribution . . . . . . . . . . . . . . $1,968,982 1,854,629 1,836,405 Retail distribution. . . . . . . . . . . . . . . . 859,956 925,772 841,664 Produce marketing and other . . . . . . . . . . . . . . . . . . . . 48,154 41,861 37,718 ---------- ---------- ---------- Total net sales and other operating revenues. . . . . . . . . . . . . . . . . . . . $2,877,092 2,822,262 2,715,787 ---------- ---------- ---------- ---------- ---------- ---------- Operating profit: Wholesale distribution . . . . . . . . . . . . . . $ 30,047 24,593 23,697 Retail distribution. . . . . . . . . . . . . . . . 4,143 8,804 7,704 Produce marketing and other.. . . . . . . . . . . . . . . . . . . . 2,439 1,122 2,786 ---------- ---------- ---------- Total operating profit . . . . . . . . . . . . . 36,629 34,519 34,187 ---------- ---------- ---------- Interest income. . . . . . . . . . . . . . . . . . . 2,759 2,675 2,604 Interest expense . . . . . . . . . . . . . . . . . . (10,793) (11,384) (10,113) ---------- ---------- ---------- Earnings before income taxes. . . . . . . . . . . . . . . . . . $ 28,595 25,810 26,678 ---------- ---------- ---------- ---------- ---------- ---------- Identifiable assets: Wholesale distribution . . . . . . . . . . . . . . $ 205,289 240,415 237,554 Retail distribution. . . . . . . . . . . . . . . . 201,493 203,317 195,454 Produce marketing and other . . . . . . . . . . . . . . . . . . . . 45,662 42,597 37,394 Corporate 61,817 45,275 51,252 ---------- ---------- ---------- $ 514,261 531,604 521,654 ---------- ---------- ---------- ---------- ---------- ---------- Capital Expenditures: Wholesale distribution . . . . . . . . . . . . . . $ 8,704 8,372 9,199 Retail distribution. . . . . . . . . . . . . . . . 15,517 25,821 18,947 Produce marketing and other . . . . . . . . . . . . . . . . . . . . 5,259 2,072 5,564 Corporate. . . . . . . . . . . . . . . . . . . . . 3,784 1,913 2,672 ---------- ---------- ---------- $ 33,264 38,178 36,382 ---------- ---------- ---------- ---------- ---------- ---------- Depreciation and amortization: Wholesale distribution . . . . . . . . . . . . . . $ 11,121 11,660 11,641 Retail distribution. . . . . . . . . . . . . . . . 14,454 16,600 14,093 Produce marketing and other . . . . . . . . . . . . . . . . . . . . 1,597 1,513 1,396 Corporate. . . . . . . . . . . . . . . . . . . . . 2,234 2,058 2,015 ---------- ---------- ---------- $ 29,406 31,831 29,145 ---------- ---------- ---------- ---------- ---------- ----------
(12) SALE OF SUBSIDIARY On December 2, 1995, the Company sold the outstanding stock of Thomas & Howard Company of Hickory, Inc., a wholly owned subsidiary located in Newton, North Carolina, and T & H Service Merchandisers, Inc., a wholly-owned subsidiary of Thomas & Howard, to H. T. Hackney Co. of Knoxville, Tennessee. The sale, which netted proceeds of approximately $22.3 million in cash resulted in the recognition of a pretax gain of $1.8 million. (13) SUBSEQUENT EVENT On January 2, 1996 the Company acquired substantially all of the business and assets of Military Distributors of Virginia, Inc., (MDV) located in Norfolk, Virginia for approximately $56.0 million in cash and the assumption of certain liabilities totaling approximately $54.0 million. MDV is a major distributor of grocery products to military commissaries in the eastern United States and Europe. The purchase price exceeded the fair value of the net assets acquired by approximately $43 million. The resulting goodwill is being amortized on a straight line basis over 15 years. Funding of the acquisition was financed through cash on hand and borrowing under a new credit facility (Note 4). The following unaudited pro forma summary presents information as if the acquisition had occurred at the beginning of each fiscal year. The pro forma information is provided for information purposes only. It is based on historical information and does not necessarily reflect results that would have occurred had the acquisition been made as of those dates or results which may occur in the future. PRO FORMA INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------- 1995 1994 - --------------------------------------------------------------------------- Net revenues . . . . . . . . . . . . . . . . $3,305,292 3,183,337 Earnings before income taxes . . . . . . . . 33,172 28,620 Net income . . . . . . . . . . . . . . . . . 20,160 17,166 Earnings per share . . . . . . . . . . . . . $ 1.85 1.58 ---------- ----------
25 NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------ Eleven years ended December 30, 1995 (not covered by Independent Auditors' Report) 1995 1994 1993 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (52 WEEKS) (52 weeks) (52 weeks) - ------------------------------------------------------------------------------------------------------------ Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,877,092 2,822,262 2,715,787 Other income . . . . . . . . . . . . . . . . . . . . . . . 11,744 9,738 7,748 ---------- --------- --------- Total sales, revenues and other income . . . . . . . . . . 2,888,836 2,832,000 2,723,535 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 2,469,841 2,410,292 2,325,249 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . . . . . 346,442 349,190 328,703 Interest expense . . . . . . . . . . . . . . . . . . . . . 10,793 11,384 10,114 Depreciation and amortization. . . . . . . . . . . . . . . 29,406 31,831 29,145 Profit sharing contribution. . . . . . . . . . . . . . . . 3,759 3,493 3,646 Provision for income taxes . . . . . . . . . . . . . . . . 11,181 10,330 10,804 ---------- --------- --------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 17,414 15,480 15,874 ---------- --------- --------- ---------- --------- --------- Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.60 1.42 1.46 ---------- --------- --------- ---------- --------- --------- Cash dividends declared per common share . . . . . . . . . $ .74 .73 .72 ---------- --------- --------- ---------- --------- --------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,875 10,873 10,872 ---------- --------- --------- ---------- --------- --------- Pre-tax earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .99 .91 .98 Net earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .60 .55 .58 Effective income tax rate. . . . . . . . . . . . . . . . . 39.1 40.0 40.5 Current assets . . . . . . . . . . . . . . . . . . . . . . $ 311,690 309,522 294,925 Current liabilities. . . . . . . . . . . . . . . . . . . . $ 207,688 220,065 215,021 Net working capital. . . . . . . . . . . . . . . . . . . . $ 104,002 89,457 79,904 Ratio of current assets to current liabilities . . . . . . 1.50 1.41 1.37 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 514,260 531,604 521,654 Capital expenditures . . . . . . . . . . . . . . . . . . . $ 33,264 34,965 36,382 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . . . . . $ 81,188 95,960 97,887 Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 215,313 206,269 199,264 Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 19.80 18.97 18.33 Return on average stockholders' equity . . . . . . . . . . 8.26 7.63 8.13 Number of common stockholders of record at year-end. . . . . . . . . . . . . . . . . . 1,940 2,074 2,074 Common stock high price,(2),(3). . . . . . . . . . . . . . 20 1/2 18 1/4 23 1/4 Common stock low price,(2),(3) . . . . . . . . . . . . . . 15 3/4 15 3/8 17 - ----------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Eleven years ended December 30, 1995 (not covered by Independent Auditors' Report) 1992 1991 1990 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (53 weeks) (52 weeks) (52 weeks) - --------------------------------------------------------------------------------------------------------- Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,509,464 2,337,560 2,369,054 Other income . . . . . . . . . . . . . . . . . . . . . . . 5,974 5,718 5,799 ---------- --------- --------- Total sales, revenues and other income . . . . . . . . . . 2,515,438 2,343,278 2,374,853 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 2,147,845 1,997,462 2,036,335 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . . . . . 294,700 276,144 271,735 Interest expense . . . . . . . . . . . . . . . . . . . . . 9,294 8,966 8,670 Depreciation and amortization. . . . . . . . . . . . . . . 27,038 26,124 25,551 Profit sharing contribution. . . . . . . . . . . . . . . . 3,963 3,789 3,603 Provision for income taxes . . . . . . . . . . . . . . . . 12,530 11,738 11,129 ---------- --------- --------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 20,068 19,055 17,830 ---------- --------- --------- ---------- --------- --------- Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.85 1.75 1.64 ---------- --------- --------- ---------- --------- --------- Cash dividends declared per common share . . . . . . . . . $ .71 .70 .69 ---------- --------- --------- ---------- --------- --------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,872 10,871 10,870 ---------- --------- --------- ---------- --------- --------- Pre-tax earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . 1.30 1.31 1.22 Net earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .80 .81 .75 Effective income tax rate. . . . . . . . . . . . . . . . . 38.4 38.1 38.4 Current assets . . . . . . . . . . . . . . . . . . . . . . $ 310,170 239,850 234,121 Current liabilities. . . . . . . . . . . . . . . . . . . . $ 213,691 154,993 159,439 Net working capital. . . . . . . . . . . . . . . . . . . . $ 96,479 84,857 74,682 Ratio of current assets to current liabilities . . . . . . 1.45 1.55 1.47 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 513,615 429,648 416,233 Capital expenditures . . . . . . . . . . . . . . . . . . . $ 42,991 36,836 36,129 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . . . . . $ 94,145 82,532 74,333 Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 191,204 178,846 167,388 Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 17.59 16.45 15.40 Return on average stockholders' equity . . . . . . . . . . 10.85 11.01 10.99 Number of common stockholders of record at year-end. . . . . . . . . . . . . . . . . . 2,087 2,122 2,138 Common stock high price,(2),(3). . . . . . . . . . . . . . 19 3/4 20 1/4 25 1/4 Common stock low price,(2),(3) . . . . . . . . . . . . . . 16 1/4 16 1/2 16 1/4 - 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26 NASH FINCH COMPANY AND SUBSIDIARIES
- ----------------------------------------------------------------------------------------------------------- Eleven years ended December 30, 1995 (not covered by Independent Auditors' Report) 1989 1988 1987 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (52 weeks) (52 weeks) (52 weeks) - ----------------------------------------------------------------------------------------------------------- Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,219,451 2,091,822 1,938,758 Other income . . . . . . . . . . . . . . . . . . . . . . . 4,312 6,012 4,590 ---------- --------- ---------- Total sales, revenues and other income . . . . . . . . . . 2,223,763 2,097,834 1,943,348 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 1,904,041 1,807,448 1,682,667 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . . . . . 264,024 230,221 198,553 Interest expense . . . . . . . . . . . . . . . . . . . . . 8,277 8,106 8,087 Depreciation and amortization. . . . . . . . . . . . . . . 23,170 20,193 18,389 Profit sharing contribution. . . . . . . . . . . . . . . . 3,089 2,832 2,734 Provision for income taxes . . . . . . . . . . . . . . . . 8,010 10,859 14,416 ---------- --------- ---------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 13,152 18,175 18,502 ---------- --------- ---------- ---------- --------- ---------- Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.21 1.67 1.75 ---------- --------- ---------- ---------- --------- ---------- Cash dividends declared per common share . . . . . . . . . $ .67 .65 .57 ---------- --------- ---------- ---------- --------- ---------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,868 10,881 10,576 ---------- --------- ---------- ---------- --------- ---------- Pre-tax earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .95 1.38 1.69 Net earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .59 .87 .95 Effective income tax rate. . . . . . . . . . . . . . . . . 37.9 37.4 43.8 Current assets . . . . . . . . . . . . . . . . . . . . . . $ 212,264 219,956 209,305 Current liabilities. . . . . . . . . . . . . . . . . . . . $ 128,159 153,068 127,608 Net working capital. . . . . . . . . . . . . . . . . . . . $ 84,105 66,888 81,697 Ratio of current assets to current liabilities . . . . . . 1.66 1.44 1.64 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 380,771 388,269 352,187 Capital expenditures . . . . . . . . . . . . . . . . . . . $ 34,635 52,019 29,680 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . . . . . $ 77,950 66,216 66,988 Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 157,024 151,043 140,850 Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 14.45 13.90 12.97 Return on average stockholders' equity . . . . . . . . . . 8.54 12.45 14.38 Number of common stockholders of record at year-end. . . . . . . . . . . . . . . . . . 2,146 2,227 2,234 Common stock high price,(2),(3). . . . . . . . . . . . . . 25 3/4 27 1/2 26 1/2 Common stock low price,(2),(3) . . . . . . . . . . . . . . 21 1/4 18 14 3/4 - ---------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------- Eleven years ended December 30, 1995 (not covered by Independent Auditors' Report) 1986 1985 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (53 weeks) (52 weeks) - --------------------------------------------------------------------------------------------- Sales and revenues . . . . . . . . . . . . . . . . . . . . $1,573,717 1,323,294 Other income . . . . . . . . . . . . . . . . . . . . . . . 3,640 4,106 ---------- --------- Total sales, revenues and other income . . . . . . . . . . 1,577,357 1,327,400 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 1,360,537 1,142,464 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . . . . . 165,713 140,798 Interest expense . . . . . . . . . . . . . . . . . . . . . 6,497 5,732 Depreciation and amortization. . . . . . . . . . . . . . . 16,249 14,279 Profit sharing contribution. . . . . . . . . . . . . . . . 2,349 2,101 Provision for income taxes . . . . . . . . . . . . . . . . 12,178 10,020 ---------- --------- Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 13,834 12,006 ---------- --------- ---------- --------- Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.35 1.18 ---------- --------- ---------- --------- Cash dividends declared per common share . . . . . . . . . $ .52 .50 ---------- --------- ---------- --------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,244 10,196 ---------- --------- ---------- --------- Pre-tax earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . 1.65 1.66 Net earnings as a percent of sales and revenues. . . . . . . . . . . . . . . . . . .88 .90 Effective income tax rate. . . . . . . . . . . . . . . . . 46.8 45.5 Current assets . . . . . . . . . . . . . . . . . . . . . . $ 182,676 125,051 Current liabilities. . . . . . . . . . . . . . . . . . . . $ 120,687 77,867 Net working capital. . . . . . . . . . . . . . . . . . . . $ 61,989 47,183 Ratio of current assets to current liabilities . . . . . . 1.51 1.61 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 313,908 239,767 Capital expenditures . . . . . . . . . . . . . . . . . . . $ 26,969 25,438 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . . . . . $ 61,588 42,250 Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 116,416 107,384 Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 11.34 10.51 Return on average stockholders' equity . . . . . . . . . . 12.36 11.57 Number of common stockholders of record at year-end. . . . . . . . . . . . . . . . . . 1,829 1,868 Common stock high price,(2),(3). . . . . . . . . . . . . . 19 1/8 15 5/8 Common stock low price,(2),(3) . . . . . . . . . . . . . . 14 3/4 9 1/4 - 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(1) Based on outstanding shares at year-end. (2) Adjusted to reflect 2-for-1 stock split 1987. (3) High and low closing sale price. Prior to February 1985 high and low bid quotation. [GRAPHIC] 27 EX-21.1 8 EXHIBIT 21.1 SUBSIDIARIES OF NASH FINCH COMPANY A. Direct subsidiaries of Nash Finch Company (the voting stock of which is owned, with respect to each subsidiary, 100 percent by Nash Finch Company):
Subsidiary State of Corporation Incorporation ----------- ------------- Nash-DeCamp Company California Visalia, California Piggly Wiggly Northland Corporation Minnesota Edina, Minnesota GTL Truck Lines, Inc. Nebraska Norfolk, Nebraska
B. Direct subsidiaries of Nash Finch Company (the voting stock of which is owned, with respect to each subsidiary, 66.6 percent by Nash Finch Company):
Subsidiary State of Corporation Incorporation ----------- ------------- Gillette Dairy of the Black Hills, Inc. South Dakota Rapid City, South Dakota Nebraska Dairies, Inc. Nebraska Norfolk, Nebraska
C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned, with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent by Nash-DeCamp Company):
Subsidiary State/Country of Corporation Incorporation ----------- ------------- Forrest Transportation Service, Inc. California Visalia, California Agricola Nadco Limitada* Chile *Ninety-nine percent (99%) of Argicola Nadco Limitada is owned by Nash-DeCamp Company.
EX-23.1 9 EXHIBIT 23.1 EXHIBIT 23.1 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Nash Finch Company of our report dated February 19, 1996, included in the 1995 Annual Report to Shareholders of Nash Finch Company. Our audit also included the financial statement schedule of Nash Finch Company listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein in so far as such information relates to periods covered by our report. We also consent to the incorporation by reference in Registration Statement No. 33-64313 and Registration Statement No. 33-54487 on Form S-8 of our report dated February 19, 1996, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Nash Finch Company. Minneapolis, Minnesota March 27, 1996 EX-23.2 10 EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT The Board of Directors Nash Finch Company: We consent to incorporation by reference in the Registration Statements (no. 33-54487 and no. 33-64313) on Form S-8 of Nash Finch Company of our reports dated March 3 ,1995, relating to the consolidated balance sheets of Nash Finch Company and subsidiaries as of December 31, 1994 and January 1, 1994 and the related consolidated statements of earnings, stockholders' equity, and cash flows and the related consolidated financial statement schedule for each of the years in the three-year period ended December 31, 1994, which reports are included or incorporated by reference in the December 31, 1995 annual report on Form 10-K of Nash Finch Company. Minneapolis, Minnesota KPMG Peat Marwick LLP March 27, 1996 EX-23.3 11 EXHIBIT 23.3 EXHIBIT 23.3 INDEPENDENT AUDITORS' CONSENT The Board of Directors Nash Finch Company: We consent to incorporation by reference in the Registration Statements (no. 33-54487 and no. 33-64313) on Form S-8 of Nash Finch Company of our reports dated March 3 ,1995, relating to the consolidated balance sheets of Nash Finch Company and subsidiaries as of December 31, 1994 and January 1, 1994 and the related consolidated statements of earnings, stockholders' equity, and cash flows and the related consolidated financial statement schedule for each of the years in the three-year period ended December 31, 1994, which reports are included or incorporated by reference in the December 31, 1995 annual report on Form 10-K/A of Nash Finch Company. Minneapolis, Minnesota KPMG Peat Marwick LLP November 1, 1996 EX-23.4 12 EXHIBIT 23.4 Exhibit 23.4 Consent of Independent Auditors We consent to the use of our report dated February 19, 1996, incorporated by reference in the Annual Report on Form 10-K of Nash Finch Company and subsidiaries for the year ended December 30, 1995, with respect to the consolidated financial statements and schedule, as amended, included in this Form 10-K/A. We also consent to the incorporation by reference in Registration Statement No. 33-64313 and Registration Statement No. 33-54478 on Form S-8 of our report dated February 19, 1996 with respect to the consolidated financial statements and schedule included herein. /s/ Ernst & Young LLP Minneapolis, Minnesota November 4, 1996 EX-27.1 13 EXHIBIT 27.1
5 1,000 12-MOS DEC-30-1995 JAN-01-1995 DEC-30-1995 26,024 0 87,377 1,409 183,957 311,690 388,826 210,787 514,260 207,688 71,030 0 0 18,706 199,641 514,260 2,831,114 2,888,836 2,469,841 375,610 0 3,997 10,793 28,595 11,181 17,414 0 0 0 17,414 1.60 1.60
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