-----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, OefxHn/6n+9tgavR/vKL1po7zitvfeftY40pV7h2fikF0b6aoSR8JWOJpDMISMNH bzdzPTlB/7S8VnLyrSY9QA== 0000912057-97-010827.txt : 19970329 0000912057-97-010827.hdr.sgml : 19970329 ACCESSION NUMBER: 0000912057-97-010827 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970328 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-00785 FILM NUMBER: 97567851 BUSINESS ADDRESS: STREET 1: 7600 FRANCE AVE STREET 2: PO BOX 355 CITY: SOUTH MINNEAPOLIS STATE: MN ZIP: 55435-0355 BUSINESS PHONE: 6128320534 FORMER COMPANY: FORMER CONFORMED NAME: NASH CO DATE OF NAME CHANGE: 19710617 10-K 1 FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: Commission file number: December 28, 1996 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 No X ---- --- 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 24, 1997, 11,300,488 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), excluding outstanding shares deemed beneficially owned by directors and officers, was approximately $202,780,250. --------------------- 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 28, 1996 (the "1996 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 13, 1997 (the "1997 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. Furthermore, the information contained in this document includes the applicable figures of corporations which have been acquired by the Company during fiscal year 1996. The Company is one of the largest food wholesalers in the United States, serving approximately 2,350 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 28, 1996. No one customer accounts for a significant portion of the Company's sales. The Company also operates and supplies, as of December 28, 1996, 104 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-, SAX FOOD & DRUG -Registered Trademark- and IGA -Registered Trademark- (a registered trademark of IGA, INC.). The Company's market areas are in approximately 30 states in the Midwest, West, Mid-Atlantic and Southeast and are serviced through 20 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. 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 has been consolidated with the Company's existing military distribution operations in Baltimore, Maryland, and Chesapeake, Virginia, into a single military division. Currently, this military division is operating from two distribution centers - - one in Norfolk and the other in Baltimore. In July 1996, the Company acquired all of the outstanding shares of capital stock of T. J. Morris Company, a Georgia corporation based in Statesboro, Georgia. T. J. Morris Company is a wholesale distributor of a full-line of food and related non-food products to independent grocery retailers, including IGA Stores. The Company's existing operations based in Macon, Georgia have been consolidated with the operations of T. J. Morris Company at its Statesboro facility. Currently, the Company is operating T. J. Morris Company as a wholly-owned subsidiary. In December 1996, the Company completed the acquisition of all of the outstanding shares of capital stock of Super Food Services, Inc. ("Super Food"), a Delaware corporation based in Dayton, Ohio. Super Food was incorporated in 1957 and, prior to the acquisition by the Company, was ranked as the 14th largest grocery wholesaler in the United States, with sales for its fiscal year ended August 31, 1996 of of approximately $1.2 billion. Super Food services independent stores, including IGA stores, across six states, including primarily Ohio, Michigan and Kentucky. Super Foods has four distribution centers located in Bellefontaine, Ohio, Cincinnati, Ohio, Bridgeport, Michigan, and Lexington, Kentucky, which provide a full line of groceries and related products, other than produce. The distribution center in Bellefontaine, Ohio also has a portion of its space dedicated to distributing general merchandise to the other distribution centers. Since the completion of the acquisition, the Company has been engaged in the process of coordinating the distribution operations of Super Food with existing distribution operations of the Company and consolidating the general and administrative functions of Super Food with the general and administrative functions of the Company in Edina, Minnesota. In connection with the acquisition of Super Food, the Company obtained a $500 million credit facility provided by a syndicate of banks for whom Harris Trust and Savings Bank acts as the administrative agent and Bank of Montreal and PNC Bank, National Association, act as co-syndication agents. This credit facility is a $500 million senior credit unsecured revolving facility maturing in five years, with a mandatory commitment reduction to $400 million by December 31, 1998. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Financial information about the Company's business segments for the most recent three fiscal years is contained on page 25 of the 1996 Annual Report (Note 12 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 1996, 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. 2 The Company also distributes and sells private label products using the Company's own trademarks. A wide variety of grocery, dairy, packaged meat, frozen foods, health and beauty 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 20 distribution centers, as of December 28, 1996, located in Colorado, Georgia, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Nebraska (2), North Carolina (2), North Dakota (2), Ohio (2), South Dakota, Virginia (2), and Wisconsin. 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 products, general merchandise and specialty grocery products from a dedicated area of the distribution center located in Bellefontaine, Ohio, and from a warehouse facility located in Sioux Falls, South Dakota. In addition, the Company distributes produce from a separate warehouse facility in Wilmington, 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 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, (except Super Food) 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 500 tractors, 1,200 semi-trailers, and 75 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 market price-plus-fee and freight basis, with the fee based on the type of commodity and quantity purchased. Selling prices are changed promptly, based on the latest market 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 3. WHOLESALE OPERATIONS. As of December 28, 1996, the Company distributed food products and non-food items, on a wholesale basis, to approximately 2,350 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 products 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 65,000 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 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 28, 1996, the Company had outstanding $33,858,000 in such secured loans to 171 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 4 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 28, 1996, the Company owned and operated 108 retail outlets, including 74 supermarkets, 30 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, reduce shrinkage and increase labor efficiency. The Company operates its supermarkets principally under the names SUN MART-TM-, EASTER FOODS-TM- and FOOD FOLKS-Registered Trademark-. These stores, thirteen 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 products, 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 30 warehouse stores principally under the names ECONOFOODS-Registered Trademark- and FOOD BONANZA-Registered Trademark-. These stores, seven 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 wide variety of high quality groceries, fresh fruits and vegetables, dairy products, frozen foods, fresh fish, fresh and processed meat and health and beauty products, 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, three 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 products 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 5 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, 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. 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 28, 1996, the Company employed approximately 12,775 persons (approximately 7,000 full-time and 5,775 part-time). 6 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 in a building owned by the Company. In addition to the executive offices, the Company leases an additional 15,275 square feet of office space in Edina, Minnesota. The locations and sizes of the Company's distribution centers, as of December 28, 1996, 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 $5,868,813. Approx. Size Location (Square Feet) --------- ------------ Midwest/West: Denver, Colorado (1) 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 (2) 252,400 Appleton, Wisconsin 430,900 Southeast: Stateboro, Georgia (1)(3) 287,800 Baltimore, Maryland (1)(4) 234,500 Lumberton, North Carolina (1)(5) 256,600 Rocky Mount, North Carolina (1) 191,800 Bluefield, Virginia 186,400 Norfolk, Virginia (1)(6) 567,900 Super Food Services, Inc. Lexington, Kentucky (1) 319,400 Bellefontaine, Ohio (7) 773,700 Cincinnati, Ohio (8) 572,750 Bridgeport, Michigan (1) 581,300 Total Square Footage 6,909,050 - -------------- (1) Leased facility. (2) Includes 79,300 square feet of warehouse space which is leased by the Company. (3) Includes 46,400 square feet of space which is owned by the Company. 7 (4) Includes 60,000 square feet of refrigerated warehouse space located in Jessup, Maryland. Since year-end, the operations have been consolidated with those in Norfolk, Virginia and the Company no longer operates from the Jessup facility. (5) Includes 16,100 square feet of produce warehouse space located in Wilmington, North Carolina which is owned by the Company. (6) Includes 49,645 square feet which is owned by the Company. (7) Includes 162,700 square feet which is leased by the Company. General merchandising services utilizes approximately 480,000 square feet of the total space (owned and leased). (8) Includes 151,600 square feet which was leased by the Company as of year-end. As of February 14, 1997, the Company no longer occupies 81,000 square feet of such leased space. The following table shows the number and aggregate size of Company-owned and operated supermarkets and warehouse stores operated at December 28, 1996: Supermarkets: Number of stores 74 Total square feet 1,641,670 Warehouse stores: Number of stores 30 Total square feet 1,288,000 Combination General Merchandise/Food: Number of stores 4 Total square feet 172,000 Totals: Number of stores 108 Total square feet 3,101,670 The Company leases 61 of its supermarket store buildings and one (1) combination general merchandise/food store building (the remainder are owned), which range in size up to approximately 60,000 square feet. The Company also leases 23 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 1996 for store buildings was approximately $8,834,000. Further information about the lease obligations of the Company is given in Note 7 to the Consolidated Financial Statements on page 24 of the 1996 Annual Report, incorporated herein by reference. Nash-DeCamp Company has executive offices comprising approximately 9,000 square feet of leased space in an office building located in Visalia, California. It 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. In addition to such storage facilities, Nash-DeCamp Company also owns approximately 713 acres for the production 8 of table grapes, 40 acres for the production of kiwi fruit, 903 acres for the production of peaches, plums, apricots and nectarines, 614 acres for the production of citrus, and 198 acres of open ground for future development, all in San Joaquin Valley of California. Nash-DeCamp Company also leases 123 acres of tree fruit located in the San Joaquin Valley and, through a wholly-owned Chilean subsidiary, approximately 740 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 the jury verdict will not be reinstated and that the reserves it has established are reasonably adequate to cover its liability. 9 On April 2, 1996 an individual engaged in growing citrus crops in Fresno County commenced an action entitled EMILIANO MORENO V. NASH-DECAMP COMPANY, ET. AL., against Nash-DeCamp 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 plaintiff relating to the packing, marketing and distribution of produce grown by the plaintiff, and advanced financing to assist the plaintiff in growing and harvesting his crops. Plaintiff's complaint alleges that the defendants engaged in various acts of misconduct relating to the handling, packaging and pricing of such produce in violation of various federal and state laws, resulting in unspecified damages to the plaintiff. In his complaint, plaintiff sought unspecified compensatory damages, punitive and exemplary damages, treble damages, attorneys' fees and costs of suit, as well as injunctive relief. The defendants filed an answer raising various defenses to and denying the allegations set forth in the complaint. In addition, Nash-DeCamp Company has filed a counterclaim to recover monies owed to it by plaintiff, costs of suit, attorneys' fees, all proceeds from any disposition of the 1995-1996 citrus crops, and other damages and interest. As of March 24, 1997, this matter was still in the discovery stages. Nash-DeCamp Company intends to vigorously defend plantiff's claims and to pursue the recovery of sums owed to it by plaintiff. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers of the Company, their ages, the year first elected or appointed as an executive officer and the offices held as of March 1, 1997 are as follows:
Year First Elected or Appointed as an Name (Age) Executive Officer Title --------- ----------------- ----- Alfred N. Flaten (62) 1991 President and Chief Executive Officer William T. Bishop (56) 1994 Senior Vice President, Sales and Logistics William E. May, Jr. (48) 1996 Vice President, Strategic Technology Programs and Marketing Services David J. Richards (48) 1996 Vice President, Corporate Retail Stores Norman R. Soland (56) 1986 Vice President, Secretary and General Counsel 10 Clarence T. Walters (60) 1988 Vice President, Management Information Systems Charles F. Ramsbacher (54) 1991 Vice President, Marketing Steven L. Lumsden (51) 1992 Vice President, Warehouse and Transportation Gerald D. Maurice (63) 1993 Vice President, Store Development John R. Scherer (46) 1994 Vice President and Chief Financial Officer Charles M. Seiler (49) 1995 Vice President, Corporate Retail Operations Edgar F. Timberlake (49) 1995 Vice President, Human Resources John M. McCurry (48) 1996 Vice President, Independent Store Operations Lawrence A. Wojtasiak (51) 1990 Controller Suzanne S. Allen (32) 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. 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. 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. May was elected as Vice President, Strategic Technology Programs and Marketing Services in July 1996 joining the Company in June. He was previously employed by Spartan Stores Inc., a wholesale food distribution company, serving as its Senior Vice President, Operations, Procurement, MIS and Customer Service from July 1988 to June 1996. 11 Mr. Richards was elected as Vice President, Corporate Retail Stores in July 1996. He previously served as operating Vice President, Southeast Division from December 1994 to June 1996. Prior to joining the Company, he was employed by Scrivner, Inc., a wholesale and retail food distribution company, serving as its Senior Vice President, Store Development from July 1993 to August 1994 and its Executive Vice President, Corporate Stores from January 1992 to July 1993. 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 and Iowa Division Manager from June 1991 to May 1993. Mr. Timberlake was elected as Vice President, Human Resources in November 1995. He previously served as Director of Human Resources from January 1993 to November 1995 and Director of Training and Management Development from February 1988 to January 1993. Mr. McCurry was elected as Vice President, Independent Store Operations in May 1996. He previously served as Director of Independent Store Operations from August 1993 to May 1996 and as Distribution Center Manager, Sioux Falls, South Dakota, from January 1991 to August 1993. Ms. Allen was elected as Treasurer effective as of January 1996. She previously served as Assistant Treasurer from May 1995 to January 1996, Treasury Manager from January 1993 to May 1995, and Treasury Assistant from September 1987 to January 1993. 12 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 1996 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 1996 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 1996 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 1996 Annual Report are incorporated herein by reference, as is the unaudited information set forth under the caption "Quarterly Financial Information" on page 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. A. Directors of the Registrant. The information under the captions "Election of Directors--Information About Directors and Nominees" and "Election of Directors--Other Information About Directors and Nominees" in the Company's 1997 Proxy Statement is incorporated herein by reference. 13 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 "Compliance with Section 16(a) of the Exchange Act" in the Company's 1997 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 1997 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 1997 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 1997 Proxy Statement is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K A. Financial Statements. The following Financial Statements are incorporated herein by reference from the pages indicated in the Company's 1996 Annual Report: Independent Auditors' Report -- page 16 Consolidated Statements of Earnings for the years ended December 28, 1996, December 30, 1995, and December 31, 1994 -- page 16 14 Consolidated Statements of Stockholders' Equity for the years ended December 28, 1996, December 30, 1995, and December 31, 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. Other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. 3. EXHIBITS. The exhibits to this Report are listed in the Exhibit Index on pages E-1 to E-7 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 24, 1997, 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 (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785)). 15 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. Excerpts 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. Excerpts from minutes of the Board of Directors regarding Nash Finch Pension Plan, as amended (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785)). G. Excerpts from minutes of the Board of Directors regarding director compensation (filed herewith as Exhibit 10.22). H. Excerpts from minutes of the Board of Directors regarding director compensation (filed herewith as Exhibit 10.23). 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)). 16 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: On November 22, 1996, the Company filed a Form 8-K with the Securities and Exchange Commission to report the Company's purchase of shares of outstanding common stock of Super Food Services, Inc. pursuant to a cash tender offer and the consummation of the merger of Super Food Services, Inc. with NFC Acquisition Corporation. On January 31, 1997, Amendment No. 1 on Form 8-K/A, amending the November 22, 1996 filing to include financial statements for the most recent fiscal year of Super Food Services, Inc. and required pro forma financial information, was filed. 17
NASH FINCH COMPANY AND SUBSIDIARIES SCHEDULE II Valuation and Qualifying Accounts Fiscal years ended December 28, 1996, December 30, 1995, and December 31, 1994 (In thousands) Additions ------------------------- Charged Balance at Charged to (credited) Balance beginnning costs and Due to to other at end Description of year expenses acquisitions accounts Deductions of year - ----------------------------- ---------- --------- ------------ --------- ---------- ------- 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 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- 52 weeks ended December 28, 1996: Allowance for doubtful receiveables (d) $4,880 1,893 23,314 126 (a) 2,120 (b) 28,093 Provision for losses relating to leases on closed locations 1,895 195 - 21 (c) 674 1,437 -------- -------- -------- -------- -------- -------- $6,775 2,088 23,314 147 2,794 29,530 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(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. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 28, 1997 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 March 28, 1997 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 Chief Executive Officer (Principal Executive (Principal Accounting Officer) Officer) and Director /s/ John R. Scherer /s/ Carole F. Bitter - ---------------------------------- --------------------------------- John R. Scherer, Vice President and Chief Carole F. Bitter, Director Financial Officer (Principal Financial Officer) /s/ Richard A. Fisher /s/ Allister P. Graham - ---------------------------------- --------------------------------- Richard A. Fisher, Director Allister P. Graham, Director /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 - ---------------------------------- --------------------------------- 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 28, 1996
Item No. Item Method of Filing - --- ---- ---------------- 2.1 Agreement and Plan of Merger dated as of October 8, 1996 among the Company, NFC Acquisition Corporation, and Super Food Services, Inc. Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated November 22, 1996 (File No. 0-785). 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. . . . . . . . . Incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785).
E-1
Item No. Item Method of Filing - --- ---- ---------------- 4.1 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 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 ("1987 Note Agreements"). . . . . 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). 10.2 Note Agreements, dated September 29, 1989, between the Company and Nationwide Life Insurance Company, and between the Company and West Coast Life Insurance Company ("1989 Note Agreements"). . . . . Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 7, 1989 (File No. 0-785). 10.3 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 ("1991 Note Agreements") . . . . . 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).
E-2
Item No. Item Method of Filing - --- ---- ---------------- 10.4 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 ("1993 Note Agreements"). . . . . . 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). 10.5 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 ("1996 Note Agreements"). . . . . . . Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785). 10.6 First Amendment to the 1987 Note Agreements, 1989 Note Agreements, 1991 Note Agreements, 1993 Note Agreements and 1996 Note Agreements dated as of November 15, 1996 . . . . . . . . . . Filed herewith. 10.7 Second Amendment to the 1987 Note Agreements, 1989 Note Agreements, 1991 Note Agreement, 1993 Note Agreements and 1996 Note Agreements dated as of November 15, 1996 . . . . . . . . . . Filed herewith. 10.8 Third Amendment to the 1987 Note Agreements dated as of January 15, 1997. . . . . Filed herewith. 10.9 Third Amendment to the 1989 Note Agreements dated as of January 15, 1997 . . . . Filed herewith. 10.10 Third Amendment to the 1991 Note Agreements dated as of January 15, 1997 . . . . Filed herewith.
E-3
Item No. Item Method of Filing - --- ---- ---------------- 10.11 Third Amendment to the 1993 Note Agreements dated as of January 15, 1997 . . . . Filed herewith. 10.12 Third Amendment to the 1996 Note Agreements dated as of January 15, 1997 . . . . Filed herewith. 10.13 Note Agreements dated November 1, 1989, between Super Food Services, Inc. and Nationwide Life Insurance Co., Employers Life Insurance Company of Wausau, and West Coast Life Insurance Company . . . . . . . . . . . . . . Filed herewith. 10.14 Credit Agreement dated as of October 8, 1996 among the Company, NFC Acquisition Corp., Harris Trust and Savings Bank, as Adminstrative Agent, and Bank of Montreal and PNC Bank, N.A., as Co-Syndication Agents ("Credit Agreement") . . . . . . . . Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 5, 1996 (File No. 0-785). 10.15 First Amendment to Credit Agreement dated as of December 18, 1996 . . . . . . . . . Filed herewith. 10.16 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).
E-4
Item No. Item Method of Filing - --- ---- ---------------- 10.17 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). 10.18 Nash Finch Profit Sharing Plan -- 1994 Revision -- Second Declaration of Amendment. . . . . . . . . . . . . . Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785). 10.19 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). 10.20 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). 10.21 Excerpts from minutes of the Board of Directors regarding Nash Finch Pension Plan, as amended . . . . . . . . . . . . . Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-785).
E-5
Item No. Item Method of Filing - --- ---- ---------------- 10.22 Excerpts from minutes of the Board of Directors regarding director compensation . . . . . . Filed herewith. 10.23 Excerpts from minutes of the Board of Directors regarding director compensation . . . . . . Filed herewith. 10.24 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). 10.25 Form of Letter Agreement Specifying Benefits in the Event of Temination 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). 10.26 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). 10.27 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).
E-6
Item No. Item Method of Filing - --- ---- ---------------- 10.28 Nash Finch 1995 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 1996 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. 27.1 Financial Data Schedule. . . . . Filed herewith.
E-7 EX-10.6 2 EXHIBIT 10.6 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY ---------------------------------- FIRST AMENDMENT Dated as of November 15, 1996 to NOTE AGREEMENTS Dated as of September 15, 1987, Re: $10,000,000 9.9% Senior Notes Due September 30, 2002 NOTE AGREEMENTS Dated as of September 29, 1989, Re: $15,000,000 9.0% Senior Notes Due September 29, 1999 NOTE AGREEMENTS Dated as of March 22, 1991, Re: $15,000,000 8.98% Senior Notes Due March 22, 2006 NOTE AGREEMENTS Dated as of March 17, 1993, Re: $25,000,000 7.54% Senior Notes Due March 17, 2008 and NOTE AGREEMENTS Dated as of March 22, 1996 Re: $30,000,000 7.13% Senior Notes Due October 1, 2011 ---------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- -2- FIRST AMENDMENT TO NOTE AGREEMENTS THIS FIRST AMENDMENT dated as of November 15, 1996 (the or this "FIRST AMENDMENT") to the following Note Agreements between the Company and the respective purchasers listed on Schedule I thereto: (i) Note Agreements dated as of September 15, 1987; (ii) Note Agreements dated as of September 29, 1989; (iii) Note Agreements dated as of March 22, 1991; (IV) Note Agreements dated as of March 17, 1993; AND (v) Note Agreements dated as of March 22, 1996, (collectively, the "NOTE AGREEMENTS") is between NASH-FINCH COMPANY, INC., a Delaware corporation (the "COMPANY"), and each of the institutions which is a signatory to this First Amendment (collectively, the "NOTEHOLDERS"). RECITALS: A. The Company has heretofore entered the Note Agreements with the respective purchasers listed on Schedule I thereto pursuant to which the Company has heretofore respectively issued the $10,000,000 9.9% Senior Notes due September 30, 2002, the $15,000,000 9.0% Senior Notes due September 29, 1999, the $15,000,000 8.98% Senior Notes due March 22, 2006, the $25,000,000 7.54% Senior Notes due March 17, 2008 and $30,000,000 7.13% Senior Notes due October 1, 2011. B. The Company and the Noteholders now desire to amend the Note Agreements in the respects, but only in the respects, hereinafter set forth. C. Terms used herein shall have the respective meanings ascribed thereto in the Note Agreements unless herein defined or the context shall otherwise require. D. All requirements of law have been fully complied with and all other acts and things necessary to make this First Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. NOW, THEREFORE, the Company and the Noteholders, in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, do hereby agree as follows: -4- SECTION 1. AMENDMENTS. 1.1 Section 6.8(a)(4) (or Section 6.8(a)(iv) as the case may be) of each of the Note Agreements is hereby amended by deleting the reference to "60%" set forth therein and inserting in its place the following: "60% (or 70% during the period from November 15, 1996 to December 27, 1996)". Section 2 of the Existing Note Agreements is hereby amended by inserting as the last Section (either Section 2.5 or Section 2.6) of Section 2 the following: PREPAYMENT AT OPTION OF HOLDERS. At any time after November 15, 1996 and prior to December 27, 1996, the holder of any Notes may give the Company notice (the "NOTICE OF ELECTION") at its address set forth in SECTION 9.6 hereof of the election of such holder to require the Company to redeem all, but not less than all, of the outstanding Notes held by such holder (an "ELECTING HOLDER"). The Company shall redeem the Notes of each Electing Holder on the date which is five (5) business days after receipt of such Notice of Election by payment of an amount equal to 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of such prepayment. Upon any prepayment of less than all of the Notes pursuant to this Section, the principal amount of each required prepayment of the Notes, if any, becoming due under Section 2.1 on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such prepayment. The Company will at all times maintain amounts permitted to be actually borrowed under its Bank Facility equal to or greater than the amount necessary to prepay all of the Notes pursuant to this Section. Section 5.1 of the Existing Note Agreements is hereby amended by inserting the following definition in alphabetical order: "BANK FACILITY" shall mean Credit Agreement dated as of October 8, 1996 among Nash-Finch Company and the banks signatory thereto. SECTION 2. MISCELLANEOUS 2.1 This First Amendment shall be construed in connection with and as part of each of the Note Agreements, and except as modified and expressly amended by this First -5- Amendment, all terms, conditions and covenants contained in the Note Agreements and the Notes are hereby ratified and shall be and remain in full force and effect. 2.2 Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Note Agreements without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires. 2.3 In accordance with the Note Agreements, the Company hereby agrees to pay, concurrently with the execution and delivery of this First Amendment, the fees and disbursements of Chapman and Cutler, special counsel to the Noteholders. 2.4 The descriptive headings of various sections or parts of this First Amendment are for convenience only, and shall not affect the meaning or construction of any of the provisions hereof. 2.5 This First Amendment shall be governed by and construed in accordance with Minnesota law. 2.6 The execution of this First Amendment shall constitute a contract between us for the uses and purposes hereinabove set forth, and this First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one agreement. 2.7 The Company hereby represents and warrants that as of the date hereof, and after giving effect to the amendments set forth herein, no Default or Event of Default under any of the Note Agreements has occurred and is continuing. -6- IN WITNESS WHEREOF, the Company and the Noteholders have caused this instrument to be executed, all as of the day and year first above written. NASH-FINCH COMPANY By Its ------------------------------------ Accepted and Agreed to as of the date aforesaid, and the Undersigned hereby confirms that on November 15, 1996 it held Notes of the Company as indicated on Schedule I attached hereto and that on the date of actual execution hereof it continues to hold such Notes: IDS LIFE INSURANCE COMPANY By Its ------------------------------------ IDS LIFE INSURANCE COMPANY OF NEW YORK By Its ------------------------------------ NATIONWIDE LIFE INSURANCE COMPANY By Its ------------------------------------ -7- WEST COAST LIFE INSURANCE COMPANY By Its ------------------------------------ THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY By Its ------------------------------------ THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY-SEPARATE ACCOUNT F By Its ------------------------------------ By Its ------------------------------------ AID ASSOCIATION FOR LUTHERANS By Its ------------------------------------ -8- PRINCIPAL MUTUAL LIFE INSURANCE COMPANY By Its ------------------------------------ By: Its ------------------------------------ THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By Its ------------------------------------ INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY By Its ------------------------------------ -9- NORTHERN LIFE INSURANCE COMPANY By Its ------------------------------------ NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY By Its ------------------------------------ -10- SCHEDULE I IDS Life Insurance Company $5,400,000 9.9% Senior Notes IDS Life Insurance Company of New York $600,000 9.9% Senior Notes Nationwide Life Insurance Company $14,000,000 9.0% Senior Notes West Coast Life Insurance Company $1,000,000 9.0% Senior Notes The Minnesota Mutual Life Insurance Company $11,261,047 8.98% Senior Notes The Minnesota Mutual Life Insurance Company $405,553 8.98% Senior Notes Principal Mutual Life Insurance Company $13,000,000 7.54% Senior Notes Principal Mutual Life Insurance Company $2,000,000 7.54% Senior Notes Aid Association for Lutherans $10,000,000 7.54% Senior Notes The Variable Annuity Life Insurance Company $17,000,000 7.13% Senior Notes Independent Life and Accident Insurance Company $3,000,000 7.13% Senior Notes Northern Life Insurance Company $6,000,000 7.13% Senior Notes Northwestern National Life Insurance Company $4,000,000 7.13% Senior Notes -12- EX-10.7 3 EXHIBIT 10.7 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY ----------------------------------- SECOND AMENDMENT Dated as of November 15, 1996 to NOTE AGREEMENTS Dated as of September 15, 1987, Re: $10,000,000 9.9% Senior Notes Due September 30, 2002 NOTE AGREEMENTS Dated as of September 29, 1989, Re: $15,000,000 9.0% Senior Notes Due September 29, 1999 NOTE AGREEMENTS Dated as of March 22, 1991, Re: $15,000,000 8.98% Senior Notes Due March 22, 2006 NOTE AGREEMENTS Dated as of March 17, 1993, Re: $25,000,000 7.54% Senior Notes Due March 17, 2008 and NOTE AGREEMENTS Dated as of March 22, 1996 Re: $30,000,000 7.13% Senior Notes Due October 1, 2011 ----------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ -2- SECOND AMENDMENT TO NOTE AGREEMENTS THIS SECOND AMENDMENT dated as of November 15, 1996 (the or this "SECOND AMENDMENT") to the following Note Agreements between the Company and the respective purchasers listed on Schedule I thereto: (i) Note Agreements dated as of September 15, 1987; (ii) Note Agreements dated as of September 29, 1989; (iii) Note Agreements dated as of March 22, 1991; (IV) Note Agreements dated as of March 17, 1993; AND (v) Note Agreements dated as of March 22, 1996, (collectively, as amended pursuant to that certain First Amendment dated as of November 15, 1996 between the Company (as defined hereinbelow) and the Noteholders (as defined hereinbelow), (the "NOTE AGREEMENTS") is between NASH-FINCH COMPANY, INC., a Delaware corporation (the "COMPANY"), and each of the institutions which is a signatory to this Second Amendment (collectively, the "NOTEHOLDERS"). RECITALS: A. The Company has heretofore entered into the Note Agreements with the respective purchasers listed on Schedule I thereto pursuant to which the Company has heretofore respectively issued the $10,000,000 9.9% Senior Notes due September 30, 2002, the $15,000,000 9.0% Senior Notes due September 29, 1999, the $15,000,000 8.98% Senior Notes due March 22, 2006, the $25,000,000 7.54% Senior Notes due March 17, 2008 and $30,000,000 7.13% Senior Notes due October 1, 2011. B. The Company and the Noteholders now desire to amend the Note Agreements in the respects, but only in the respects, hereinafter set forth. C. Terms used herein shall have the respective meanings ascribed thereto in the Note Agreements unless herein defined or the context shall otherwise require. D. All requirements of law have been fully complied with and all other acts and things necessary to make this Second Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. NOW, THEREFORE, the Company and the Noteholders, in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, do hereby agree as follows: SECTION 1. AMENDMENTS. 1.1 Section 6.8(a)(4) (or Section 6.8(a)(iv) as the case may be) of each of the Note Agreements is hereby amended by deleting the reference to "December 27, 1996" set forth therein and inserting in its place the following: "January 17, 1997". The last section of Section 2 of the Note Agreements (either Section 2.5 or Section 2.6 thereof) is hereby amended by deleting the reference to "December 27, 1996" set forth therein and inserting in its place the following: "January 17, 1997" SECTION 2. MISCELLANEOUS 2.1 This Second Amendment shall be construed in connection with and as part of each of the Note Agreements, and except as modified and expressly amended by this Second Amendment, all terms, conditions and covenants contained in the Note Agreements and the Notes are hereby ratified and shall be and remain in full force and effect. 2.2 Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Second Amendment may refer to the Note Agreements without making specific reference to this Second Amendment but nevertheless all such references shall include this Second Amendment unless the context otherwise requires. 2.3 In accordance with the Note Agreements, the Company hereby agrees to pay, concurrently with the execution and delivery of this Second Amendment, the fees and disbursements of Chapman and Cutler, special counsel to the Noteholders. 2.4 The descriptive headings of various sections or parts of this Second Amendment are for convenience only, and shall not affect the meaning or construction of any of the provisions hereof. 2.5 This Second Amendment shall be governed by and construed in accordance with Minnesota law. 2.6 The execution of this Second Amendment shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Second Amendment may be -4- executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one agreement. 2.7 The Company hereby represents and warrants that as of the date hereof, and after giving effect to the amendments set forth herein, no Default or Event of Default under any of the Note Agreements has occurred and is continuing. -5- IN WITNESS WHEREOF, the Company and the Noteholders have caused this instrument to be executed, all as of the day and year first above written. NASH-FINCH COMPANY By Its ----------------------------------- Accepted and Agreed to as of the date aforesaid, and the Undersigned hereby confirms that on December 16, 1996 it held Notes of the Company as indicated on Schedule I attached hereto and that on the date of actual execution hereof it continues to hold such Notes: IDS LIFE INSURANCE COMPANY By Its ----------------------------------- IDS LIFE INSURANCE COMPANY OF NEW YORK By Its ----------------------------------- NATIONWIDE LIFE INSURANCE COMPANY By Its ----------------------------------- -6- WEST COAST LIFE INSURANCE COMPANY By Its ----------------------------------- THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY By Its ----------------------------------- THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY-SEPARATE ACCOUNT F By Its ----------------------------------- By Its ----------------------------------- AID ASSOCIATION FOR LUTHERANS By Its ----------------------------------- -7- PRINCIPAL MUTUAL LIFE INSURANCE COMPANY By Its ----------------------------------- By: Its ----------------------------------- THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By Its ----------------------------------- INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY By Its ----------------------------------- -8- NORTHERN LIFE INSURANCE COMPANY By Its ----------------------------------- NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY By Its ----------------------------------- -9- SCHEDULE I IDS Life Insurance Company $5,400,000 9.9% Senior Notes IDS Life Insurance Company of New York $600,000 9.9% Senior Notes Nationwide Life Insurance Company $14,000,000 9.0% Senior Notes West Coast Life Insurance Company $1,000,000 9.0% Senior Notes The Minnesota Mutual Life Insurance Company $11,261,047 8.98% Senior Notes The Minnesota Mutual Life Insurance Company $405,553 8.98% Senior Notes Principal Mutual Life Insurance Company $13,000,000 7.54% Senior Notes Principal Mutual Life Insurance Company $2,000,000 7.54% Senior Notes Aid Association for Lutherans $10,000,000 7.54% Senior Notes The Variable Annuity Life Insurance Company $17,000,000 7.13% Senior Notes Independent Life and Accident Insurance Company $3,000,000 7.13% Senior Notes Northern Life Insurance Company $6,000,000 7.13% Senior Notes Northwestern National Life Insurance Company $4,000,000 7.13% Senior Notes -11- EX-10.8 4 EXHIBIT 10.8 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Dated as of January 15, 1997 Re: Note Agreements Dated as of September 15, 1987 and $10,000,000 original principal amount of 9.9% Senior Notes Due September 30, 2002 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS (Not a part of the Agreement) SECTION HEADING PAGE SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2 Section 1.1. General Reference Amendment 2 Section 1.2. Amendments to Section 1.1 2 Section 1.3. Amendments to Section 2 2 Section 1.4. Amendments to Section 5.1 5 Section 1.5. Amendment to Section 6.7 6 Section 1.6. Amendment to Section 6.8 6 SECTION 2. AMENDMENT OF EXISTING NOTES 7 Section 2.1. Amendment of Existing Notes. 7 Section 3. Exchange of Notes 7 Section 3.1. Issuance of Notes 7 Section 3.2. Form and Registration 8 Section 3.3. Delivery of Notes 8 Section 3.4. Exchange Not Deemed Prepayment 8 Section 4. Conditions Precedent and Additional Agreements 8 Section 4.1. Conditions Precedent 8 Section 5. Representations 9 Section 5.1. Representations of the Company 9 Section 6. Miscellaneous 9 Section 6.1. Capitalized Terms 9 Section 6.2. Existing Note Agreements 10 Section 6.3. References 10 Section 6.4. Successors and Assigns 10 Section 6.5. Governing Law 10 Section 6.6. Expenses 10 Section 6.7. Counterparts 11 -2- Signature 11 -3- NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Re: Note Agreements Dated as of September 15, 1987 and $10,000,000 original principal amount of 9.9% Senior Notes Due September 30, 2002 Dated as of January 15, 1997 (the "EFFECTIVE DATE") To Each of the Holders of Notes listed in Schedule I to the Note Agreements described below Gentlemen: Reference is made to (i) the separate Note Agreements each dated as of September 15, 1987 between NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by that certain First Amendment dated as of November 15, 1996 and that certain Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING NOTE AGREEMENTS"), and (ii) the $10,000,000 original principal amount of 9.9% Senior Notes due September 30, 2002 issued pursuant to the Existing Note Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended hereby, shall be referred to as the "NOTES." For good and valuable consideration, the Company requests the amendment of certain provisions of the Existing Note Agreements and the Existing Notes as hereinafter provided. Upon your acceptance hereof and the satisfaction of all conditions precedent hereto, this Third Amendment Agreement shall constitute a contract between us amending the Existing Note Agreements and the Existing Notes, but only in the respects hereinafter set forth: SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS. SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15, 1997, each reference in the Existing Note Agreements and the Existing Notes to the "$10,000,000 9.9% Senior Notes Due September 30, 2002", is hereby amended to refer to the "$10,000,000 First Amended and Restated 10.9% Senior Notes Due September 30, 2004"; SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to change the references in such section from "9.9%" and "10.9" to "10.9%" and "11.9%", respectively and to change the references in such section from "September 30, 2002" to "September 30, 2004" . (b) Section 1.1 of the Existing Note Agreements is hereby amended by inserting the following paragraph at the end thereof: Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period. SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that it will prepay and apply, and there shall become due and payable an amount equal to $750,000 on October 1 in each year beginning September 30, 1997 up to and including September 30, 2003 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 September 30, 2004. No premium shall be payable in connection with any required prepayment made pursuant to this SECTION 2.1. Upon any -5- repurchase of less than all of the outstanding Notes pursuant to SECTION 2.6, SECTION 2.7 or SECTION 6.13, the principal amount of each required principal prepayment of the Notes becoming due under this SECTION 2.1 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such repurchase. For purposes of this SECTION 2.1, any prepayment of less than all of the outstanding Notes pursuant to SECTION 2.2 shall be deemed to be applied first to the amount of principal scheduled to remain unpaid on September 30, 2004, and then to the remaining scheduled principal payments in inverse chronological order. (b) Section 2 of the Existing Note Agreements is hereby amended to insert the following new Section 2.7 at the end thereof: SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will, within 3 days after any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes UNLESS notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this SECTION 2.7. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7 and shall be accompanied by the certificate described in subparagraph (g) of this SECTION 2.7. (b) CONDITION TO COMPANY ACTION. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 45 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7, accompanied by the certificate described in subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this SECTION 2.7. (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this SECTION 2.7 shall be an offer to prepay, in accordance with and subject to this SECTION 2.7, all, but -6- not less than all, of the Notes held by each holder (in this case only, "HOLDER" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this SECTION 2.7, such date shall be not less than 30 days and not more than 45 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the date of such offer). (d) ACCEPTANCE. A holder of Notes may accept the offer to prepay made pursuant to this SECTION 2.7 by causing a notice of such acceptance to be delivered to the Company at least 5 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this SECTION 2.7 shall be deemed to constitute an acceptance of such offer by such holder. (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this SECTION 2.7 shall be at 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. On the business day preceding the date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make Whole Premium due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this SECTION 2.7. (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this SECTION 2.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely -7- informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this SECTION 2.7 in respect of such Change in Control shall be deemed rescinded). (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this SECTION 2.7 shall be accompanied by a certificate, executed by a senior financial officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this SECTION 2.7; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make Whole Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this SECTION 2.7 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of the following events or circumstances: if any person (as such term is used in section 13(d) and section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 35% of the total voting power of all classes then outstanding of the Company's voting stock. (i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means: -8- (i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the Existing Note Agreements is hereby amended as follows: (a) by inserting the following definitions in alphabetical order: "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 -9- (d) all Guarantees of Debt of others, whether or not reflected in the balance sheet of such Person. "INTEREST RATE EVENT PERIOD" shall mean any period during which the Company fails to have outstanding unsecured long-term Indebtedness which has a then current rating of BBB- or higher by Standard & Poor's Corporation. (b) by amending the definition of "Make Whole Premium" so that the reference to "the original yield to maturity of the Notes" contained therein shall read "10.9%" as and after the effective date hereof. SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any time, permit Stockholders' Equity to be less than the sum of (a) $170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal year beginning with the fiscal year ended January 3, 1998. SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Debt, except: (i) the Notes; (ii) 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 June 20, 1987; (iii) additional unsecured 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: -10- PERCENTAGE OF DEBT TO FISCAL YEAR TOTAL CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (iv) additional Debt of the Company and its Subsidiaries secured by Liens permitted by and incurred within the limitations of SECTION 6.9(a)(8) or SECTION 6.9(a)(9); PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO TOTAL FISCAL YEAR CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (v) Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary. SECTION 2. AMENDMENT OF EXISTING NOTES. SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be and are hereby amended to be in the form of Exhibit A hereto. SECTION 3. EXCHANGE OF NOTES. -11- SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver on the Effective Date of this Third Amendment Agreement the new Notes in the form of Exhibit A hereto to the Noteholders in exchange for their outstanding Existing Notes. The Noteholders agree to surrender their Existing Notes to the Company in exchange for the new Notes, and the Existing Notes shall be canceled by the Company and shall be void. The Company shall pay any stamp tax or governmental charge imposed upon such exchange (including, without limitation, any income or similar tax that is imposed upon the gain, if any, that is realized by such Noteholder in connection with the exchange). Notwithstanding anything contained herein to the contrary, the Notes shall bear interest at the rate of 9.9% per annum for the period from September 30, 1996 to and including January 14, 1997. SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a single registered Note, shall be registered in the name of the Noteholder surrendering such Existing Note as reflected on the books and records of the Company, shall be issued for the same principal amount (after giving effect to all prepayments of Notes prior to January 15, 1997) as the outstanding principal amount of the Existing Note surrendered in exchange therefor, and shall be dated September 30, 1996. SECTION 3.3. DELIVERY OF NOTES . The Company shall deliver the Notes in proper form at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, to be held by such firm for delivery against surrender by the Noteholders in exchange therefor of the Existing Notes. SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and the Company agrees that the amendments affected pursuant to this Third Amendment Agreement and the exchange of Notes for Existing Notes pursuant to this Third Amendment Agreement shall not be deemed a prepayment, redemption or repurchase of the Existing Notes for any purpose, including Section 2 or Section 6.13 of the Note Agreements. SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS. SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set forth in Section 1 of this Third Amendment Agreement are effective subject to the satisfaction of the following conditions precedent: (a) Each Noteholder shall have received this Third Amendment Agreement, duly executed by the Company. -12- (b) The holders of 100% of the outstanding principal amount of the Notes shall have consented to this Third Amendment Agreement as evidenced by their execution hereof. (c) The Company shall have provided to the holders of the Notes an opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in the form Exhibit B hereto and otherwise in form and substance satisfactory to the holders of the Notes. (d) The fees and disbursements of special counsel to the holders of the Notes incurred through the Closing Date shall have been satisfied by the Company. SECTION 5. REPRESENTATIONS. SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants that as of the date of execution and delivery of this Third Amendment Agreement and as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. (b) The Company has the requisite power to own its property and to carry on its business as now being conducted. (c) The Company is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the failure to do so would, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, operations, properties or prospects of the Company. (d) This Third Amendment Agreement and the Note Agreements and Notes (as amended hereby) are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and constitute (or, in the case of this Third Amendment Agreement, when executed and delivered by holders of 100% of the outstanding principal amount of the Notes will constitute) legal, valid and binding obligations of the Company enforceable in accordance with their respective terms. (e) The execution, delivery and performance of this Third Amendment Agreement by the Company does not and will not result in a violation of or default under (A) the certificate of incorporation or bylaws of the Company, (B) any agreement to which the Company is a party or by which it is bound or to which the Company or any of -13- its properties is subject, (C) any order, writ, injunction or decree binding on the Company, or (D) any statute, regulation, rule or other law applicable to the Company. (f) No material authorization, consent, approval, exemption or action by or notice to or filing with any court or administrative or governmental body is required in connection with the execution and delivery of this Third Amendment Agreement or the consummation of the transactions contemplated hereby. SECTION 6. MISCELLANEOUS. SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third Amendment Agreement shall have the respective meanings specified in the Existing Note Agreements unless otherwise herein defined or the context hereof shall otherwise require. SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all terms and provisions of the Existing Note Agreements are hereby ratified, confirmed and approved in all respects. SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and other instruments, including the Notes, may refer to the "Note Agreements," or the "Note Agreements each dated as of September 15, 1987" without making specific reference to this Third Amendment Agreement, but nevertheless all such references shall be deemed to include this Third Amendment Agreement unless the context shall otherwise require. SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment 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. All covenants made by the Company and the Noteholders herein shall survive the closing and the delivery of this Third Amendment Agreement. SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be governed by and construed in accordance with Minnesota law. SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all reasonable expenses of the Noteholders in connection with the negotiation, preparation, execution and delivery of this Amendment and the transactions contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements. -14- SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one instrument. NASH-FINCH COMPANY By: Its -------------------------------- -- -15- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. IDS LIFE INSURANCE COMPANY By: Its IDS LIFE INSURANCE COMPANY OF NEW YORK By: Its -16- NASH-FINCH COMPANY First Amended and Restated 10.9% Senior Note Due September 30, 2004 PPN: _________________ No. R- September 30, 1996 $ 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 September 30, 2004 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 9.9% per annum from and after the date hereof through and including January 14, 1997 and at the rate of 10.9% per annum from January 15, 1997 until maturity (computed on the basis of a 360-day year of 12 consecutive 30-day months) in installments payable on March 31, 1997 and on the last day of each March and September 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 11.9% 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 at the rate of 10.9% per annum 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 First Amended and Restated 10.9% Senior Notes due September 30, 2004 of the Company in the aggregate principal amount of $10,000,000 issued or to be issued under and pursuant to the terms and provisions of separate and several Note Agreements each dated as of September 15, 1987 (collectively, the "NOTE AGREEMENTS") entered into by the Company with the institutional investors named in Schedule I thereto as amended by that certain First Amendment dated as of November 15, 1996, as amended by that certain Second Amendment dated as of November 15, 1996 and as amended by that certain Third Amendment Agreement dated as of January 15, 1997. This Note and the holder hereof are entitled equally Exhibit A (to Third Amentment Agreement) 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. This Note amends and restates in its entirety that certain 9.9% Senior Note Number R-___, in the original principal amount of $__________ issued by the Company on ____ and registered in the name of __________________. 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. Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period (as defined in the Note Agreements). A-18 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-19 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of counsel for the Company called for by SECTION 4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date and addressed to the Noteholders, shall be satisfactory in scope and form to the Noteholders and shall be to the effect that: 1. The Company is a corporation that is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the requisite power and the authority to execute and perform the Note Agreements, as amended, and to issue the Notes, as amended, and has the full requisite power and the authority to conduct the activities in which it is now engaged. 2. Each Note Agreement, as amended, has been duly authorized by all necessary action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its 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, as amended, have been duly authorized by all necessary 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). The opinion of Jon J. Solberg, Esq. shall cover such other matters relating to the Third Amendment Agreement as the holders of the Notes 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. EXHIBIT B (to Third Amendment Agreement) SCHEDULE I SHER CO. (AS NOMINEE OF IDS $5,400,000 R-1 Life Insurance Company) 9.9% Senior Notes Wallar & Co. (as nominee of $600,000 R-2 IDS Life Insurance Company 9.9% Senior Notes of New York) Schedule I EX-10.9 5 EXHIBIT 10-9 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Dated as of January 15, 1997 Re: Note Agreements Dated as of September 29, 1989 and $15,000,000 original principal amount of 9.0% Senior Notes Due September 29, 1999 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS (Not a part of the Agreement) SECTION HEADING PAGE SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2 Section 1.1. General Reference Amendment 2 Section 1.2. Amendments to Section 1.1 2 Section 1.3. Amendment to Section 2 2 Section 1.4. Amendment to Section 5.1 5 Section 1.5. Amendment to Section 6.7 6 Section 1.6. Amendment to Section 6.8 6 SECTION 2. AMENDMENT OF EXISTING NOTES 7 Section 2.1. Amendment of Existing Notes 7 SECTION 3. EXCHANGE OF NOTES 7 Section 3.1. Issuance of Notes 7 Section 3.2. Form and Registration 8 Section 3.3. Delivery of Notes 8 Section 3.4. Exchange Not Deemed Prepayment 8 SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 8 Section 4.1. Conditions Precedent 8 SECTION 5. REPRESENTATIONS 9 Section 5.1. Representations of the Company 9 SECTION 6. MISCELLANEOUS 9 Section 6.1. Capitalized Terms 9 Section 6.2. Existing Note Agreements 10 Section 6.3. References 10 Section 6.4. Successors and Assigns 10 Section 6.5. Governing Law 10 Section 6.6. Expenses 10 Section 6.7. Counterparts 11 Signature 11 -3- NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Re: NOTE AGREEMENTS DATED AS OF SEPTEMBER 29, 1989 and $15,000,000 original principal amount of 9.0% Senior Notes Due September 29, 1999 Dated as of January 15, 1997 (the "EFFECTIVE DATE") To Each of the Holders of Notes listed in Schedule I to the Note Agreements described below Gentlemen: Reference is made to (i) the separate Note Agreements each dated as of September 29, 1989 between NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by that certain First Amendment dated as of November 15, 1996 and that certain Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING NOTE AGREEMENTS"), and (ii) the $15,000,000 original principal amount of 9.0% Senior Notes due September 29, 1999 issued pursuant to the Existing Note Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended hereby, shall be referred to as the "NOTES." For good and valuable consideration, the Company requests the amendment of certain provisions of the Existing Note Agreements and the Existing Notes as hereinafter provided. Upon your acceptance hereof and the satisfaction of all conditions precedent hereto, this Third Amendment Agreement shall constitute a contract between us amending the Existing Note Agreements and the Existing Notes, but only in the respects hereinafter set forth: SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS. SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15, 1997, each reference in the Existing Note Agreements and the Existing Notes to the "$15,000,000 9.0% Senior Notes Due September 29, 1999", is hereby amended to refer to the "$15,000,000 First Amended and Restated 10.0% Senior Notes Due September 29, 2001"; SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to change the references in such section from "9.0%" and "10.0" to "10.0%" and "11.0%", respectively and to change the references in such section from "September 29, 1999" to "September 29, 2001" . (b) Section 1.1 of the Existing Note Agreements is hereby amended by inserting the following paragraph at the end thereof: Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period. SECTION 1.3. AMENDMENT TO SECTION 2. Section 2 of the Existing Note Agreements is hereby amended to insert the following new Section 2.6 at the end thereof: SECTION 2.6. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will, within 3 days after any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes UNLESS notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this SECTION 2.6. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.6 and shall be accompanied by the certificate described in subparagraph (g) of this SECTION 2.6. -5- (b) CONDITION TO COMPANY ACTION. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 45 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.6, accompanied by the certificate described in subparagraph (g) of this SECTION 2.6, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this SECTION 2.6. (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this SECTION 2.6 shall be an offer to prepay, in accordance with and subject to this SECTION 2.6, all, but not less than all, of the Notes held by each holder (in this case only, "HOLDER" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this SECTION 2.6, such date shall be not less than 30 days and not more than 45 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the date of such offer). (d) ACCEPTANCE. A holder of Notes may accept the offer to prepay made pursuant to this SECTION 2.6 by causing a notice of such acceptance to be delivered to the Company at least 5 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this SECTION 2.6 shall be deemed to constitute an acceptance of such offer by such holder. (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this SECTION 2.6 shall be at 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. On the business day preceding the date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make Whole Premium due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this SECTION 2.6. (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this SECTION 2.6 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in -6- respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this SECTION 2.6 in respect of such Change in Control shall be deemed rescinded). (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this SECTION 2.6 shall be accompanied by a certificate, executed by a senior financial officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this SECTION 2.6; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make Whole Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this SECTION 2.6 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of the following events or circumstances: if any person (as such term is used in section 13(d) and section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 35% of the total voting power of all classes then outstanding of the Company's voting stock. (i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means: (i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or -7- (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. SECTION 1.4. AMENDMENT TO SECTION 5.1. Section 5.1 of the Existing Note Agreements is hereby amended as follows: (a) by inserting the following definitions in alphabetical order: "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. "INTEREST RATE EVENT PERIOD" shall mean any period during which the Company fails to have outstanding unsecured long-term Indebtedness which has a then current rating of BBB- or higher by Standard & Poor's Corporation. (b) by amending the definition of "Make Whole Premium" so that the reference to "the original yield to maturity of the Notes" contained therein shall read 10.0% as and after the effective date hereof. Section 1.5. Amendment to Section 6.7. Section 6.7 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any time, permit Stockholders' Equity to be less than the sum of (a) $170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal year beginning with the fiscal year ended January 3, 1998. -8- SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Debt, except: (i) the Notes; (ii) 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 June 17, 1989; (iii) additional unsecured 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO FISCAL YEAR TOTAL CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (iv) additional Debt of the Company and its Subsidiaries secured by Liens permitted by and incurred within the limitations of SECTION 6.9(a)(8) or SECTION 6.9(a)(9); PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF -9- DEBT TO TOTAL FISCAL YEAR CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (v) Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary. SECTION 2. AMENDMENT OF EXISTING NOTES. SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be and are hereby amended to be in the form of Exhibit A hereto. SECTION 3. EXCHANGE OF NOTES. SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver on the Effective Date of this Third Amendment Agreement the new Notes in the form of Exhibit A hereto to the Noteholders in exchange for their outstanding Existing Notes. The Noteholders agree to surrender their Existing Notes to the Company in exchange for the new Notes, and the Existing Notes shall be canceled by the Company and shall be void. The Company shall pay any stamp tax or governmental charge imposed upon such exchange (including, without limitation, any income or similar tax that is imposed upon the gain, if any, that is realized by such Noteholder in connection with the exchange). Notwithstanding anything contained herein to the contrary, the Notes shall bear interest at the rate of 9.0% per annum for the period from September 30, 1996 to and including January 14, 1997. SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a single registered Note, shall be registered in the name of the Noteholder surrendering such Existing Note as reflected on the books and records of the Company, shall be issued for the same principal amount (after giving effect to all prepayments of Notes prior to January 15, 1997) as the outstanding principal amount of the Existing Note surrendered in exchange therefor, and shall be dated September 30, 1996. SECTION 3.3. DELIVERY OF NOTES . The Company shall deliver the Notes in proper form at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, to be -10- held by such firm for delivery against surrender by the Noteholders in exchange therefor of the Existing Notes. SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and the Company agrees that the amendments affected pursuant to this Third Amendment Agreement and the exchange of Notes for Existing Notes pursuant to this Third Amendment Agreement shall not be deemed a prepayment, redemption or repurchase of the Existing Notes for any purpose, including Section 2 or Section 6.13 of the Note Agreements. SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS. SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set forth in Section 1 of this Third Amendment Agreement are effective subject to the satisfaction of the following conditions precedent: (a) Each Noteholder shall have received this Third Amendment Agreement, duly executed by the Company. (b) The holders of 100% of the outstanding principal amount of the Notes shall have consented to this Third Amendment Agreement as evidenced by their execution hereof. (c) The Company shall have provided to the holders of the Notes an opinion of John J. Solberg, Esq., counsel to the Company, substantially in the form Exhibit B hereto and otherwise in form and substance satisfactory to the holders of the Notes. (d) The fees and disbursements of special counsel to the holders of the Notes incurred through the Closing Date shall have been satisfied by the Company. SECTION 5. REPRESENTATIONS. SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants that as of the date of execution and delivery of this Third Amendment Agreement and as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. (b) The Company has the requisite power to own its property and to carry on its business as now being conducted. -11- (c) The Company is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the failure to do so would, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, operations, properties or prospects of the Company. (d) This Third Amendment Agreement and the Note Agreements and Notes (as amended hereby) are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and constitute (or, in the case of this Third Amendment Agreement, when executed and delivered by holders of 100% of the outstanding principal amount of the Notes will constitute) legal, valid and binding obligations of the Company enforceable in accordance with their respective terms. (e) The execution, delivery and performance of this Third Amendment Agreement by the Company does not and will not result in a violation of or default under (A) the certificate of incorporation or bylaws of the Company, (B) any agreement to which the Company is a party or by which it is bound or to which the Company or any of its properties is subject, (C) any order, writ, injunction or decree binding on the Company, or (D) any statute, regulation, rule or other law applicable to the Company. (f) No material authorization, consent, approval, exemption or action by or notice to or filing with any court or administrative or governmental body is required in connection with the execution and delivery of this Third Amendment Agreement or the consummation of the transactions contemplated hereby. SECTION 6. MISCELLANEOUS. SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third Amendment Agreement shall have the respective meanings specified in the Existing Note Agreements unless otherwise herein defined or the context hereof shall otherwise require. SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all terms and provisions of the Existing Note Agreements are hereby ratified, confirmed and approved in all respects. SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and other instruments, including the Notes, may refer to the "Note Agreements," or the "Note Agreements each dated as of September 29, 1989" without making specific reference to this Third Amendment Agreement, but nevertheless all such references shall be deemed to include this Third Amendment Agreement unless the context shall otherwise require. -12- SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment 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. All covenants made by the Company and the Noteholders herein shall survive the closing and the delivery of this Third Amendment Agreement. SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be governed by and construed in accordance with Minnesota law. SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all reasonable expenses of the Noteholders in connection with the negotiation, preparation, execution and delivery of this Amendment and the transactions contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements. -13- SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one instrument. NASH-FINCH COMPANY By: Its --------------------------- -14- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. NATIONWIDE LIFE INSURANCE COMPANY By: Its WEST COAST LIFE INSURANCE COMPANY By: Its -15- NASH-FINCH COMPANY First Amended and Restated 10.0% Senior Note Due September 29, 2001 PPN: _________________ No. R- September 30, 1996 $ 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 September 29, 2001 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 9.0% per annum from and after the date hereof through and including January 14, 1997 and at the rate of 10.0% per annum from January 15, 1997 until maturity (computed on the basis of a 360-day year of 12 consecutive 30-day months) in installments payable on March 31, 1997 and on the last day of each March and September 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 11.0% 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 2.4 of the Note Agreements hereinafter referred to, both the principal hereof, premium, if any, and interest at the rate of 10.0% per annum 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 First Amended and Restated 10.0% Senior Notes due September 29, 2001 of the Company in the aggregate principal amount of $15,000,000 issued or to be issued under and pursuant to the terms and provisions of separate and several Note Agreements each dated as of September 29, 1989 (collectively, the "NOTE AGREEMENTS") entered into by the Company with the institutional investors named in Schedule I thereto as amended by that certain First Amendment dated as of November 15, 1996, as amended by that certain Second Amendment dated as of November 15, 1996 and as amended by that certain Third Amendment Agreement dated as of January 15, 1997. This Note and the holder hereof are entitled equally EXHIBIT A (to Third Amendment Agreement) 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. This Note amends and restates in its entirety that certain 9.0% Senior Note Number R-___, in the original principal amount of $__________ issued by the Company on ____ and registered in the name of __________________. This Note and the other Notes outstanding under the Note Agreements may be declared due prior to their expressed maturity date and voluntary prepayments may 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. Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period (as defined 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-17 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of counsel for the Company called for by SECTION 4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date and addressed to the Noteholders, shall be satisfactory in scope and form to the Noteholders and shall be to the effect that: 1. The Company is a corporation that is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the requisite power and the authority to execute and perform the Note Agreements, as amended, and to issue the Notes, as amended, and has the full requisite power and the authority to conduct the activities in which it is now engaged. 2. Each Note Agreement, as amended, has been duly authorized by all necessary action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its 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, as amended, have been duly authorized by all necessary 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). The opinion of __________________ shall cover such other matters relating to the Third Amendment Agreement as the holders of the Notes 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. EXHIBIT B (to Third Amendment Agreement) SCHEDULE I Nationwide Life Insurance Company $14,000,000 9.0% Senior Notes West Coast Life Insurance Company $1,000,000 9.0% Senior Notes Schedule I EX-10.10 6 EXHIBIT 10-10 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Dated as of January 15, 1997 Re: Note Agreements Dated as of March 22, 1991 and $15,000,000 original principal amount of 8.98% Senior Notes Due March 22, 2006 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS (Not a part of the Agreement) SECTION HEADING PAGE SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2 Section 1.1. General Reference Amendment 2 Section 1.2. Amendments to Section 1.1 2 Section 1.3. Amendment to Section 2.1 2 Section 1.4. Amendment to Section 5.1 3 Section 1.5. Amendment to Section 6.7 3 Section 1.6. Amendment to Section 6.8 3 SECTION 2. AMENDMENT OF EXISTING NOTES 5 Section 2.1. Amendment of Existing Notes 5 SECTION 3. EXCHANGE OF NOTES 5 Section 3.1. Issuance of Notes 5 Section 3.2. Form and Registration 5 Section 3.3. Delivery of Notes 5 Section 3.4. Exchange Not Deemed Prepayment 5 SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 5 Section 4.1. Conditions Precedent 5 SECTION 5. REPRESENTATIONS. 6 Section 5.1. Representations of the Company 6 SECTION 6. MISCELLANEOUS 7 Section 6.1. Capitalized Terms 7 Section 6.2. Existing Note Agreements 7 Section 6.3. References 7 Section 6.4. Successors and Assigns 7 Section 6.5. Governing Law 7 Section 6.6. Expenses 7 Section 6.7. Counterparts 8 -2- Signature 8 -3- NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Re: Note Agreements Dated as of March 22, 1991 and $15,000,000 original principal amount of 8.98% Senior Notes Due March 22, 2006 Dated as of January 15, 1997 (the "EFFECTIVE DATE") To Each of the Holders of Notes listed in Schedule I to the Note Agreements described below Gentlemen: Reference is made to (i) the separate Note Agreements each dated as of March 22, 1991 between NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by that certain First Amendment dated as of November 15, 1996 and that certain Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING NOTE AGREEMENTS"), and (ii) the $15,000,000 original principal amount of 8.98% Senior Notes due March 22, 2006 issued pursuant to the Existing Note Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended hereby, shall be referred to as the "NOTES." For good and valuable consideration, the Company requests the amendment of certain provisions of the Existing Note Agreements and the Existing Notes as hereinafter provided. Upon your acceptance hereof and the satisfaction of all conditions precedent hereto, this Third Amendment Agreement shall constitute a contract between us amending the Existing Note Agreements and the Existing Notes, but only in the respects hereinafter set forth: SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS. SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15, 1997, each reference in the Existing Note Agreements and the Existing Notes to the "$15,000,000 8.98% Senior Notes Due March 22, 2006", is hereby amended to refer to the "$15,000,000 First Amended and Restated 9.98% Senior Notes Due March 22, 2002"; SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to change the references in such section from "8.98%" and "9.98" to "9.98%" and "10.98%", respectively and to change the references in such section from "March 22, 2006" to "March 22, 2002" . (b) Section 1.1 of the Existing Note Agreements is hereby amended by inserting the following paragraph at the end thereof: Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period. SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that it will prepay and apply, and there shall become due and payable an amount equal to the amounts set forth hereinbelow on March 22 in each year beginning March 22, 1997 up to and including March 22, 2001 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 March 22, 2002. PRINCIPAL PRINCIPAL PAYMENT DATE AMOUNT -5- March 22, 1997 $1,972,300 March 22, 1998 $2,472,300 March 22, 1999 $ 0 March 22, 2000 $2,472,200 March 22, 2001 $2,472,200 No premium shall be payable in connection with any required prepayment made pursuant to this SECTION 2.1. Upon any repurchase of less than all of the outstanding Notes pursuant to SECTION 2.6, SECTION 2.7 or SECTION 6.13, the principal amount of each required principal prepayment of the Notes becoming due under this SECTION 2.1 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such repurchase. (b) Section 2 of the Existing Note Agreements is hereby amended to insert the following new Section 2.7 at the end thereof: SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will, within 3 days after any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes UNLESS notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this SECTION 2.7. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7 and shall be accompanied by the certificate described in subparagraph (g) of this SECTION 2.7. (b) CONDITION TO COMPANY ACTION. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 45 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7, accompanied by the certificate described in subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this SECTION 2.7. -6- (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this SECTION 2.7 shall be an offer to prepay, in accordance with and subject to this SECTION 2.7, all, but not less than all, of the Notes held by each holder (in this case only, "HOLDER" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this SECTION 2.7, such date shall be not less than 30 days and not more than 45 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the date of such offer). (d) ACCEPTANCE. A holder of Notes may accept the offer to prepay made pursuant to this SECTION 2.7 by causing a notice of such acceptance to be delivered to the Company at least 5 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this SECTION 2.7 shall be deemed to constitute an acceptance of such offer by such holder. (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this SECTION 2.7 shall be at 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. On the business day preceding the date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make Whole Premium due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this SECTION 2.7. (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this SECTION 2.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect -7- thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this SECTION 2.7 in respect of such Change in Control shall be deemed rescinded). (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this SECTION 2.7 shall be accompanied by a certificate, executed by a senior financial officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this SECTION 2.7; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make Whole Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this SECTION 2.7 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of the following events or circumstances: if any person (as such term is used in section 13(d) and section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 35% of the total voting power of all classes then outstanding of the Company's voting stock. -8- (i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means: (i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. SECTION 1.4. AMENDMENT TO SECTION 5.1. Section 5.1 of the Existing Note Agreements is hereby amended as follows: (a) by inserting the following definitions in alphabetical order: "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. -9- "INTEREST RATE EVENT PERIOD" shall mean any period during which the Company fails to have outstanding unsecured long-term Indebtedness which has a then current rating of BBB- or higher by Standard & Poor's Corporation. (b) by amending the definition of "Make Whole Premium" so that the reference to "the original yield to maturity of the Notes" contained therein shall read "9.98%" as and after the effective date hereof. SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any time, permit Stockholders' Equity to be less than the sum of (a) $170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal year beginning with the fiscal year ended January 3, 1998. SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Debt, except: (i) the Notes; (ii) 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 October 6, 1990; (iii) additional unsecured 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO FISCAL YEAR TOTAL CAPITALIZATION -10- 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (iv) additional Debt of the Company and its Subsidiaries secured by Liens permitted by and incurred within the limitations of SECTION 6.9(a)(viii) OR SECTION 6.9(a)(ix); PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO TOTAL FISCAL YEAR CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (v) Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary. SECTION 2. AMENDMENT OF EXISTING NOTES. SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be and are hereby amended to be in the form of Exhibit A hereto. SECTION 3. EXCHANGE OF NOTES. SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver on the Effective Date of this Third Amendment Agreement the new Notes in the form of Exhibit A hereto to the Noteholders in exchange for their outstanding Existing Notes. The Noteholders agree to surrender their Existing Notes to the Company in exchange for the new Notes, and the -11- Existing Notes shall be canceled by the Company and shall be void. The Company shall pay any stamp tax or governmental charge imposed upon such exchange (including, without limitation, any income or similar tax that is imposed upon the gain, if any, that is realized by such Noteholder in connection with the exchange). Notwithstanding anything contained herein to the contrary, the Notes shall bear interest at the rate of 8.98% per annum for the period from September 22, 1996 to and including January 14, 1997. SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a single registered Note, shall be registered in the name of the Noteholder surrendering such Existing Note as reflected on the books and records of the Company, shall be issued for the same principal amount (after giving effect to all prepayments of Notes prior to January 15, 1997) as the outstanding principal amount of the Existing Note surrendered in exchange therefor, and shall be dated September 22, 1996. SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in proper form at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, to be held by such firm for delivery against surrender by the Noteholders in exchange therefor of the Existing Notes. SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and the Company agrees that the amendments affected pursuant to this Third Amendment Agreement and the exchange of Notes for Existing Notes pursuant to this Third Amendment Agreement shall not be deemed a prepayment, redemption or repurchase of the Existing Notes for any purpose, including Section 2 or Section 6.13 of the Note Agreements. SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS. SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set forth in Section 1 of this Third Amendment Agreement are effective subject to the satisfaction of the following conditions precedent: (a) Each Noteholder shall have received this Third Amendment Agreement, duly executed by the Company. (b) The holders of 100% of the outstanding principal amount of the Notes shall have consented to this Third Amendment Agreement as evidenced by their execution hereof. -12- (c) The Company shall have provided to the holders of the Notes an opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in the form Exhibit B hereto and otherwise in form and substance satisfactory to the holders of the Notes. (d) The fees and disbursements of special counsel to the holders of the Notes incurred through the Closing Date shall have been satisfied by the Company. SECTION 5. REPRESENTATIONS. SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants that as of the date of execution and delivery of this Third Amendment Agreement and as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. (b) The Company has the requisite power to own its property and to carry on its business as now being conducted. (c) The Company is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the failure to do so would, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, operations, properties or prospects of the Company. (d) This Third Amendment Agreement and the Note Agreements and Notes (as amended hereby) are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and constitute (or, in the case of this Third Amendment Agreement, when executed and delivered by holders of 100% of the outstanding principal amount of the Notes will constitute) legal, valid and binding obligations of the Company enforceable in accordance with their respective terms. (e) The execution, delivery and performance of this Third Amendment Agreement by the Company does not and will not result in a violation of or default under (A) the certificate of incorporation or bylaws of the Company, (B) any agreement to which the Company is a party or by which it is bound or to which the Company or any of its properties is subject, (C) any order, writ, injunction or decree binding on the Company, or (D) any statute, regulation, rule or other law applicable to the Company. -13- (f) No material authorization, consent, approval, exemption or action by or notice to or filing with any court or administrative or governmental body is required in connection with the execution and delivery of this Third Amendment Agreement or the consummation of the transactions contemplated hereby. SECTION 6. MISCELLANEOUS. SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third Amendment Agreement shall have the respective meanings specified in the Existing Note Agreements unless otherwise herein defined or the context hereof shall otherwise require. SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all terms and provisions of the Existing Note Agreements are hereby ratified, confirmed and approved in all respects. SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and other instruments, including the Notes, may refer to the "Note Agreements," or the "Note Agreements each dated as of March 22, 1991" without making specific reference to this Third Amendment Agreement, but nevertheless all such references shall be deemed to include this Third Amendment Agreement unless the context shall otherwise require. SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment 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. All covenants made by the Company and the Noteholders herein shall survive the closing and the delivery of this Third Amendment Agreement. SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be governed by and construed in accordance with Minnesota law. SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all reasonable expenses of the Noteholders in connection with the negotiation, preparation, execution and delivery of this Amendment and the transactions contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements. -14- SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one instrument. NASH-FINCH COMPANY By: Its ---------------------------- --- -15- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY By: Its THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY -- Separate Account F By: Its -16- NASH-FINCH COMPANY First Amended and Restated 9.98% Senior Note Due March 22, 2002 PPN: _________________ No. R- September 22, 1996 $ 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 March 22, 2002 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 8.98% per annum from and after the date hereof through and including January 14, 1997 and at the rate of 9.98% per annum from January 15, 1997 until maturity (computed on the basis of a 360-day year of 12 consecutive 30-day months) in installments payable on March 22, 1997 and on the twenty-second day of each March and September 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 10.98% 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 at the rate of 9.98% per annum 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 First Amended and Restated 9.98% Senior Notes due March 22, 2002 of the Company in the aggregate principal amount of $15,000,000 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, 1991 (collectively, the "NOTE AGREEMENTS") entered into by the Company with the institutional investors named in Schedule I thereto as amended by that certain First Amendment dated as of November 15, 1996, as amended by that certain Second Amendment dated as of November 15, 1996 and as amended by that certain Third Amendment Agreement dated as of January 15, 1997. This Note and the holder hereof are entitled equally and ratably EXHIBIT A (to Third Amendment Agreement) 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. This Note amends and restates in its entirety that certain 8.98% Senior Note Number R-___, in the original principal amount of $__________ issued by the Company on ____ and registered in the name of __________________. 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. Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period (as defined in the Note Agreements). A-18 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-19 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of counsel for the Company called for by SECTION 4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date and addressed to the Noteholders, shall be satisfactory in scope and form to the Noteholders and shall be to the effect that: 1. The Company is a corporation that is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the requisite power and the authority to execute and perform the Note Agreements, as amended, and to issue the Notes, as amended, and has the full requisite power and the authority to conduct the activities in which it is now engaged. 2. Each Note Agreement, as amended, has been duly authorized by all necessary action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its 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, as amended, have been duly authorized by all necessary 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). The opinion of Jon J. Solberg. Esq. shall cover such other matters relating to the Third Amendment Agreement as the holders of the Notes 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. EXHIBIT B (to Third Amendment Agreement) SCHEDULE I The Minnesota Mutual Life Insurance Company $10,000,000 R- 1 8.98% Senior Notes Schedule I EX-10.11 7 EXHIBIT 10.11 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Dated as of January 15, 1997 Re: Note Agreements Dated as of February 15, 1993 and $25,000,000 original principal amount of 7.54% Senior Notes Due March 17, 2008 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS (Not a part of the Agreement) SECTION HEADING PAGE SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2 Section 1.1. General Reference Amendment. 2 Section 1.2. Amendments to Section 1.1 2 Section 1.3. Amendments to Section 2 2 Section 1.4. Amendments to Section 5.1 6 Section 1.5. Amendment to Section 6.7 6 Section 1.6. Amendment to Section 6.8 7 SECTION 2. AMENDMENT OF EXISTING NOTES 8 Section 2.1. Amendment of Existing Notes 8 SECTION 3. EXCHANGE OF NOTES 8 Section 3.1. Issuance of Notes 8 Section 3.2. Form and Registration 8 Section 3.3. Delivery of Notes 8 Section 3.4. Exchange Not Deemed Prepayment 9 SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 9 Section 4.1. Conditions Precedent 9 SECTION 5. REPRESENTATIONS. 9 Section 5.1. Representations of the Company 9 SECTION 6. MISCELLANEOUS 10 Section 6.1. Capitalized Terms 10 Section 6.2. Existing Note Agreements 10 Section 6.3. References 10 Section 6.4. Successors and Assigns 10 Section 6.5. Governing Law 10 Section 6.6. Expenses 11 Section 6.7. Counterparts 12 -2- Signature 12 -3- NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Re: Note Agreements Dated as of February 15, 1993 and $25,000,000 original principal amount of 7.54% Senior Notes Due March 17, 2008 Dated as of January 15, 1997 (the "EFFECTIVE DATE") To Each of the Holders of Notes listed in Schedule I to the Note Agreements described below Gentlemen: Reference is made to (i) the separate Note Agreements each dated as of February 15, 1993 between NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by that certain First Amendment dated as of November 15, 1996 and that certain Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING NOTE AGREEMENTS"), and (ii) the $25,000,000 original principal amount of 7.54% Senior Notes due March 17, 2008 issued pursuant to the Existing Note Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended hereby, shall be referred to as the "NOTES." For good and valuable consideration, the Company requests the amendment of certain provisions of the Existing Note Agreements and the Existing Notes as hereinafter provided. Upon your acceptance hereof and the satisfaction of all conditions precedent hereto, this Third Amendment Agreement shall constitute a contract between us amending the Existing Note Agreements and the Existing Notes, but only in the respects hereinafter set forth: SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS. SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15, 1997, each reference in the Existing Note Agreements and the Existing Notes to the "$25,000,000 7.54% Senior Notes Due March 17, 2008", is hereby amended to refer to the "$25,000,000 First Amended and Restated 8.54% Senior Notes Due March 17, 2008"; SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to change the references in such section from "7.54%" and "8.54" to "8.54%" and "9.54%", respectively. (b) Section 1.1 of the Existing Note Agreements is hereby amended by inserting the following paragraph at the end thereof: Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period. SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that it will prepay and apply, and there shall become due and payable an amount equal to the amounts set forth hereinbelow on March 17 in each year beginning March 17, 1997 up to and including March 17, 2007 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 March 17, 2008. PRINCIPAL PRINCIPAL PAYMENT DATE AMOUNT March 17, 1997 $2,000,000 -5- March 17, 1998 $2,000,000 March 17, 1999 $0 March 17, 2000 $2,000,000 March 17, 2001 $2,000,000 March 17, 2002 $2,000,000 March 17, 2003 $2,000,000 March 17, 2004 $3,000,000 March 17, 2005 $3,000,000 March 17, 2006 $3,000,000 March 17, 2007 $2,000,000 No premium shall be payable in connection with any required prepayment made pursuant to this SECTION 2.1. Upon any repurchase of less than all of the outstanding Notes pursuant to SECTION 2.6, SECTION 2.7 OR SECTION 6.13, the principal amount of each required principal prepayment of the Notes becoming due under this SECTION 2.1 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such repurchase. (b) Section 2 of the Existing Note Agreements is hereby amended to insert the following new Section 2.7 at the end thereof: SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will, within 3 days after any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes UNLESS notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this SECTION 2.7. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7 and shall be accompanied by the certificate described in subparagraph (g) of this SECTION 2.7. (b) CONDITION TO COMPANY ACTION. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 45 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph -6- (c) of this SECTION 2.7, accompanied by the certificate described in subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this SECTION 2.7. (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this SECTION 2.7 shall be an offer to prepay, in accordance with and subject to this SECTION 2.7, all, but not less than all, of the Notes held by each holder (in this case only, "HOLDER" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this SECTION 2.7, such date shall be not less than 30 days and not more than 45 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the date of such offer). (d) ACCEPTANCE. A holder of Notes may accept the offer to prepay made pursuant to this SECTION 2.7 by causing a notice of such acceptance to be delivered to the Company at least 5 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this SECTION 2.7 shall be deemed to constitute an acceptance of such offer by such holder. (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this SECTION 2.7 shall be at 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. On the business day preceding the date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make Whole Premium due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this SECTION 2.7. (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the Company to prepay Notes pursuant to the offers -7- required by subparagraph (b) and accepted in accordance with subparagraph (d) of this SECTION 2.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this SECTION 2.7 in respect of such Change in Control shall be deemed rescinded). (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this SECTION 2.7 shall be accompanied by a certificate, executed by a senior financial officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this SECTION 2.7; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make Whole Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this SECTION 2.7 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of the following events or circumstances: if any person (as such term is used in section 13(d) and section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is -8- used in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 35% of the total voting power of all classes then outstanding of the Company's voting stock. (i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means: (i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the Existing Note Agreements is hereby amended as follows: (a) by inserting the following definitions in alphabetical order: "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; -9- (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. "INTEREST RATE EVENT PERIOD" shall mean any period during which the Company fails to have outstanding unsecured long-term Indebtedness which has a then current rating of BBB- or higher by Standard & Poor's Corporation. (b) by amending the definition of "Make Whole Premium" so that the reference to "7.54%" contained therein shall read "8.54%" as and after the effective date hereof. SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any time, permit Stockholders' Equity to be less than the sum of (a) $170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal year beginning with the fiscal year ended January 3, 1998. SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Debt, except: (1) the Notes; (2) 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 October 3, 1992; -10- (3) additional unsecured 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO FISCAL YEAR TOTAL CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (4) additional Debt of the Company and its Subsidiaries secured by Liens permitted by and incurred within the limitations of SECTION 6.9(a)(8) or SECTION 6.9(a)(9); PROVIDED that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO TOTAL FISCAL YEAR CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (5) Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary. SECTION 2. AMENDMENT OF EXISTING NOTES. -11- SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be and are hereby amended to be in the form of Exhibit A hereto. SECTION 3. EXCHANGE OF NOTES. SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver on the Effective Date of this Third Amendment Agreement the new Notes in the form of Exhibit A hereto to the Noteholders in exchange for their outstanding Existing Notes. The Noteholders agree to surrender their Existing Notes to the Company in exchange for the new Notes, and the Existing Notes shall be canceled by the Company and shall be void. The Company shall pay any stamp tax or governmental charge imposed upon such exchange (including, without limitation, any income or similar tax that is imposed upon the gain, if any, that is realized by such Noteholder in connection with the exchange). Notwithstanding anything contained herein to the contrary, the Notes shall bear interest at the rate of 7.54% per annum for the period from September 17, 1996 to and including January 14, 1997. SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a single registered Note, shall be registered in the name of the Noteholder surrendering such Existing Note as reflected on the books and records of the Company, shall be issued for the same principal amount (after giving effect to all prepayments of Notes prior to January 15, 1997) as the outstanding principal amount of the Existing Note surrendered in exchange therefor, and shall be dated September 17, 1996. SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in proper form at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, to be held by such firm for delivery against surrender by the Noteholders in exchange therefor of the Existing Notes. SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and the Company agrees that the amendments affected pursuant to this Third Amendment Agreement and the exchange of Notes for Existing Notes pursuant to this Third Amendment Agreement shall not be deemed a prepayment, redemption or repurchase of the Existing Notes for any purpose, including Section 2 or Section 6.13 of the Note Agreements. SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS. SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set forth in Section 1 of this Third Amendment Agreement are effective subject to the satisfaction of the following conditions precedent: -12- (a) Each Noteholder shall have received this Third Amendment Agreement, duly executed by the Company. (b) The holders of 100% of the outstanding principal amount of the Notes shall have consented to this Third Amendment Agreement as evidenced by their execution hereof. (c) The Company shall have provided to the holders of the Notes an opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in the form Exhibit B hereto and otherwise in form and substance satisfactory to the holders of the Notes. (d) The fees and disbursements of special counsel to the holders of the Notes incurred through the Closing Date shall have been satisfied by the Company. SECTION 5. REPRESENTATIONS. SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants that as of the date of execution and delivery of this Third Amendment Agreement and as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. (b) The Company has the requisite power to own its property and to carry on its business as now being conducted. (c) The Company is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the failure to do so would, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, operations, properties or prospects of the Company. (d) This Third Amendment Agreement and the Note Agreements and Notes (as amended hereby) are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and constitute (or, in the case of this Third Amendment Agreement, when executed and delivered by holders of 100% of the outstanding principal amount of the Notes will constitute) legal, valid and binding obligations of the Company enforceable in accordance with their respective terms. -13- (e) The execution, delivery and performance of this Third Amendment Agreement by the Company does not and will not result in a violation of or default under (A) the certificate of incorporation or bylaws of the Company, (B) any agreement to which the Company is a party or by which it is bound or to which the Company or any of its properties is subject, (C) any order, writ, injunction or decree binding on the Company, or (D) any statute, regulation, rule or other law applicable to the Company. (f) No material authorization, consent, approval, exemption or action by or notice to or filing with any court or administrative or governmental body is required in connection with the execution and delivery of this Third Amendment Agreement or the consummation of the transactions contemplated hereby. SECTION 6. MISCELLANEOUS. SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third Amendment Agreement shall have the respective meanings specified in the Existing Note Agreements unless otherwise herein defined or the context hereof shall otherwise require. SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all terms and provisions of the Existing Note Agreements are hereby ratified, confirmed and approved in all respects. SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and other instruments, including the Notes, may refer to the "Note Agreements," or the "Note Agreements each dated as of February 15, 1993" without making specific reference to this Third Amendment Agreement, but nevertheless all such references shall be deemed to include this Third Amendment Agreement unless the context shall otherwise require. SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment 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. All covenants made by the Company and the Noteholders herein shall survive the closing and the delivery of this Third Amendment Agreement. SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be governed by and construed in accordance with Minnesota law. SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all reasonable expenses of the Noteholders in connection with the negotiation, preparation, execution and -14- delivery of this Amendment and the transactions contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements. -15- SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one instrument. NASH-FINCH COMPANY By: Its -------------------------- -- -16- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. AID ASSOCIATION FOR LUTHERANS By: Its -17- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. PHOENIX AMERICAN LIFE INSURANCE COMPANY By: Its PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By: Its NASH-FINCH COMPANY First Amended and Restated 8.54% Senior Note Due March 17, 2008 PPN: _________________ No. R- September 17, 1996 $ 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 March 17, 2008 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 7.54% per annum from and after the date hereof through and including January 14, 1997 and at the rate of 8.54% per annum from January 15, 1997 until maturity (computed on the basis of a 360-day year of 12 consecutive 30-day months) in installments payable on March 17, 1997 and on the seventeenth day of each March and September 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 9.54% 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 at the rate of 8.54% per annum 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 First Amended and Restated 8.54% Senior Notes due March 17, 2008 of the Company in the aggregate principal amount of $25,000,000 issued or to be issued under and pursuant to the terms and provisions of separate and several Note Agreements each dated as of February 15, 1993 (collectively, the "NOTE AGREEMENTS") entered into by the Company with the institutional investors named in Schedule I thereto as amended by that certain First Amendment dated as of November 15, 1996, as amended by that certain Second Amendment dated as of November 15, 1996 and as amended by that certain Third Amendment Agreement dated as of January 15, 1997. This Note and the holder hereof are entitled equally EXHIBIT A (to Third Amendment Agreement) 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. This Note amends and restates in its entirety that certain 7.54% Senior Note Number R-___, in the original principal amount of $__________ issued by the Company on ____ and registered in the name of __________________. 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. Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period (as defined in the Note Agreements). A-20 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-21 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of counsel for the Company called for by SECTION 4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date and addressed to the Noteholders, shall be satisfactory in scope and form to the Noteholders and shall be to the effect that: 1. The Company is a corporation that is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the requisite power and the authority to execute and perform the Note Agreements, as amended, and to issue the Notes, as amended, and has the full requisite power and the authority to conduct the activities in which it is now engaged. 2. Each Note Agreement, as amended, has been duly authorized by all necessary action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its 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, as amended, have been duly authorized by all necessary 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). The opinion of Jon J. Solberg, Esq. shall cover such other matters relating to the Third Amendment Agreement as the holders of the Notes 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. EXHIBIT B (to Third Amendment Agreement) SCHEDULE I Phoenix American Life Insurance Company $5,000,000 7.54% Senior Notes Phoenix American Life Insurance Company $5,000,000 7.54% Senior Notes Phoenix Home Life Mutual Insurance Company $5,000,000 7.54% Senior Notes Aid Association for Lutherans $10,000,000 7.54% Senior Notes SCHEDULE I EX-10.12 8 EXHIBIT 10.12 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Dated as of January 15, 1997 Re: Note Agreements Dated as of March 22, 1996 and $30,000,000 original principal amount of 7.13% Senior Notes Due October 1, 2011 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS (Not a part of the Agreement) SECTION HEADING PAGE SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2 Section 1.1. General Reference Amendment. 2 Section 1.2. Amendments to Section 1.1 2 Section 1.3. Amendments to Section 2 2 Section 1.4. Amendments to Section 5.1 6 Section 1.5. Amendment to Section 6.7 6 Section 1.6. Amendment to Section 6.8 6 SECTION 2. AMENDMENT OF EXISTING NOTES 7 Section 2.1. Amendment of Existing Notes 7 SECTION 3. EXCHANGE OF NOTES 7 Section 3.1. Issuance of Notes 7 Section 3.2. Form and Registration 8 Section 3.3. Delivery of Notes 8 Section 3.4. Exchange Not Deemed Prepayment 8 SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 8 Section 4.1. Conditions Precedent 8 SECTION 5. REPRESENTATIONS. 9 Section 5.1. Representations of the Company 9 SECTION 6. MISCELLANEOUS 9 Section 6.1. Capitalized Terms 9 Section 6.2. Existing Note Agreements 10 Section 6.3. References 10 Section 6.4. Successors and Assigns 10 Section 6.5. Governing Law 10 Section 6.6. Expenses 10 Section 6.7. Counterparts 11 -3- Signature 11 -4- NASH-FINCH COMPANY THIRD AMENDMENT AGREEMENT Re: Note Agreements Dated as of March 22, 1996, and $30,000,000 original principal amount of 7.13% Senior Notes Due October 1, 2011 Dated as of January 15, 1997 (the "EFFECTIVE DATE") To Each of the Holders of Notes listed in Schedule I to the Note Agreements described below Gentlemen: Reference is made to (i) the separate Note Agreements each dated as of March 22, 1996 between NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by that certain First Amendment dated as of November 15, 1996 and that certain Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING NOTE AGREEMENTS"), and (ii) the $30,000,000 original principal amount of 7.13% Senior Notes due October 1, 2011 issued pursuant to the Existing Note Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended hereby, shall be referred to as the "NOTES." For good and valuable consideration, the Company requests the amendment of certain provisions of the Existing Note Agreements and the Existing Notes as hereinafter provided. Upon your acceptance hereof and the satisfaction of all conditions precedent hereto, this Third Amendment Agreement shall constitute a contract between us amending the Existing Note Agreements and the Existing Notes, but only in the respects hereinafter set forth: SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS. SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15, 1997, each reference in the Existing Note Agreements and the Existing Notes to the "$30,000,000 7.13% Senior Notes Due October 1, 2011", is hereby amended to refer to the "$30,000,000 First Amended and Restated 8.13% Senior Notes Due October 1, 2006"; SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to change the references in such section from "7.13%" and "8.13" to "8.13%" and "9.13%", respectively and to change the references in such section from "OCTOBER 1, 2011" to "OCTOBER 1, 2006". (b) Section 1.1 of the Existing Note Agreements is hereby amended by inserting the following paragraph at the end thereof: Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period. SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that it will prepay and apply, and there shall become due and payable an amount equal to the amounts set forth hereinbelow on October 1 in each year beginning October 1, 2000 up to and including October 1, 2005 (each such payment and the payment on October 1, 2006 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, 2006. -6- PRINCIPAL PRINCIPAL PAYMENT DATE AMOUNT October 1, 2000 $2,500,000 October 1, 2001 $4,000,000 October 1, 2002 $4,500,000 October 1, 2003 $4,500,000 October 1, 2004 $4,500,000 October 1, 2005 $5,000,000 No premium shall be payable in connection with any required prepayment made pursuant to this SECTION 2.1. Upon any repurchase of less than all of the outstanding Notes pursuant to SECTION 2.6, SECTION 2.7 or SECTION 6.13, the principal amount of each required principal prepayment of the Notes becoming due under this SECTION 2.1 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such repurchase. (b) Section 2 of the Existing Note Agreements is hereby amended to insert the following new Section 2.7 at the end thereof: SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will, within 3 days after any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes UNLESS notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this SECTION 2.7. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7 and shall be accompanied by the certificate described in subparagraph (g) of this SECTION 2.7. (b) CONDITION TO COMPANY ACTION. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 45 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this SECTION 2.7, accompanied by the certificate described in -7- subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this SECTION 2.7. (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this SECTION 2.7 shall be an offer to prepay, in accordance with and subject to this SECTION 2.7, all, but not less than all, of the Notes held by each holder (in this case only, "HOLDER" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this SECTION 2.7, such date shall be not less than 30 days and not more than 45 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 45th day after the date of such offer). (d) ACCEPTANCE. A holder of Notes may accept the offer to prepay made pursuant to this SECTION 2.7 by causing a notice of such acceptance to be delivered to the Company at least 5 days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this SECTION 2.7 shall be deemed to constitute an acceptance of such offer by such holder. (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this SECTION 2.7 shall be at 100% of the principal amount of such Notes, plus the Make Whole Premium determined for the date of prepayment with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. On the business day preceding the date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make Whole Premium due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this SECTION 2.7. (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with -8- subparagraph (d) of this SECTION 2.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this SECTION 2.7 in respect of such Change in Control shall be deemed rescinded). (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this SECTION 2.7 shall be accompanied by a certificate, executed by a senior financial officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this SECTION 2.7; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make Whole Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this SECTION 2.7 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of the following events or circumstances: if any person (as such term is used in section 13(d) and section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act), -9- directly or indirectly, of more than 35% of the total voting power of all classes then outstanding of the Company's voting stock. (i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means: (i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the Existing Note Agreements is hereby amended as follows: (a) by inserting the following definition in alphabetical order: "INTEREST RATE EVENT PERIOD" shall mean any period during which the Company fails to have outstanding unsecured long-term Indebtedness which has a then current rating of BBB- or higher by Standard & Poor's Corporation. (b) by amending the definition of "Make Whole Premium" so that the reference to "7.13%" contained therein shall read "8.13%" as and after the effective date hereof. -10- SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any time, permit Stockholders' Equity to be less than the sum of (a) $170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal year beginning with the fiscal year ended January 3, 1998. SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing Note Agreements is hereby amended to read in its entirety as follows: SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any Subsidiary will create, issue, assume, guarantee or otherwise incur or become liable in respect of any Debt, except: (1) the Notes; (2) 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 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO FISCAL YEAR TOTAL CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% -11- (4) additional 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 Debt of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP shall not, during any fiscal year set forth below, exceed the percent of Total Capitalization set forth opposite such period: PERCENTAGE OF DEBT TO TOTAL FISCAL YEAR CAPITALIZATION 1996 70% 1997 70% 1998 67.5% 1999 65% 2000 and thereafter 60% (5) Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary. SECTION 2. AMENDMENT OF EXISTING NOTES. SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be and are hereby amended to be in the form of Exhibit A hereto. SECTION 3. EXCHANGE OF NOTES. SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver on the Effective Date of this Third Amendment Agreement the new Notes in the form of Exhibit A hereto to the Noteholders in exchange for their outstanding Existing Notes. The Noteholders agree to surrender their Existing Notes to the Company in exchange for the new Notes, and the Existing Notes shall be canceled by the Company and shall be void. The Company shall pay any stamp tax or governmental charge imposed upon such exchange (including, without limitation, any income or similar tax that is imposed upon the gain, if any, that is realized by such Noteholder in connection with the exchange). Notwithstanding anything contained herein to the contrary, the Notes shall bear interest at the rate of 7.13% per annum for the period from October 1, 1996 to and including January 14, 1997. -12- SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a single registered Note, shall be registered in the name of the Noteholder surrendering such Existing Note as reflected on the books and records of the Company, shall be issued for the same principal amount (after giving effect to all prepayments of Notes prior to January 15, 1997) as the outstanding principal amount of the Existing Note surrendered in exchange therefor, and shall be dated October 1, 1996. SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in proper form at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, to be held by such firm for delivery against surrender by the Noteholders in exchange therefor of the Existing Notes. SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and the Company agrees that the amendments affected pursuant to this Third Amendment Agreement and the exchange of Notes for Existing Notes pursuant to this Third Amendment Agreement shall not be deemed a prepayment, redemption or repurchase of the Existing Notes for any purpose, including Section 2 or Section 6.13 of the Note Agreements. SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS. SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set forth in Section 1 of this Third Amendment Agreement are effective subject to the satisfaction of the following conditions precedent: (a) Each Noteholder shall have received this Third Amendment Agreement, duly executed by the Company. (b) The holders of 100% of the outstanding principal amount of the Notes shall have consented to this Third Amendment Agreement as evidenced by their execution hereof. (c) The Company shall have provided to the holders of the Notes an opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in the form Exhibit B hereto and otherwise in form and substance satisfactory to the holders of the Notes. (d) The fees and disbursements of special counsel to the holders of the Notes incurred through the Closing Date shall have been satisfied by the Company. SECTION 5. REPRESENTATIONS. -13- SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants that as of the date of execution and delivery of this Third Amendment Agreement and as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. (b) The Company has the requisite power to own its property and to carry on its business as now being conducted. (c) The Company is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the failure to do so would, individually or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, operations, properties or prospects of the Company. (d) This Third Amendment Agreement and the Note Agreements and Notes (as amended hereby) are within the corporate powers of the Company and have been duly authorized by all necessary corporate action on the part of the Company and constitute (or, in the case of this Third Amendment Agreement, when executed and delivered by holders of 100% of the outstanding principal amount of the Notes will constitute) legal, valid and binding obligations of the Company enforceable in accordance with their respective terms. (e) The execution, delivery and performance of this Third Amendment Agreement by the Company does not and will not result in a violation of or default under (A) the certificate of incorporation or bylaws of the Company, (B) any agreement to which the Company is a party or by which it is bound or to which the Company or any of its properties is subject, (C) any order, writ, injunction or decree binding on the Company, or (D) any statute, regulation, rule or other law applicable to the Company. (f) No material authorization, consent, approval, exemption or action by or notice to or filing with any court or administrative or governmental body is required in connection with the execution and delivery of this Third Amendment Agreement or the consummation of the transactions contemplated hereby. SECTION 6. MISCELLANEOUS. SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third Amendment Agreement shall have the respective meanings specified in the Existing Note Agreements unless otherwise herein defined or the context hereof shall otherwise require. -14- SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all terms and provisions of the Existing Note Agreements are hereby ratified, confirmed and approved in all respects. SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and other instruments, including the Notes, may refer to the "Note Agreements," or the "Note Agreements each dated as of November 15, 1993" without making specific reference to this Third Amendment Agreement, but nevertheless all such references shall be deemed to include this Third Amendment Agreement unless the context shall otherwise require. SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment 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. All covenants made by the Company and the Noteholders herein shall survive the closing and the delivery of this Third Amendment Agreement. SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be governed by and construed in accordance with Minnesota law. SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all reasonable expenses of the Noteholders in connection with the negotiation, preparation, execution and delivery of this Amendment and the transactions contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements. -15- SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one instrument. NASH-FINCH COMPANY By: Its --------------------------- --- -16- This foregoing Third Amendment Agreement is hereby accepted and agreed to as of the Effective Date and the undersigned hereby confirms that on January 15, 1997 and as of the date of execution and delivery hereof immediately prior to the exchange of Notes provided for herein it held Notes of the Company as indicated on Schedule I hereto. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By: Its INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY By: Its -17- NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY By: -18- NORTHERN LIFE INSURANCE COMPANY By: Its -19- NASH-FINCH COMPANY First Amended and Restated 8.13% Senior Note Due October 1, 2006 PPN: _________________ No. R- October 1, 1996 $ 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, 2006 together with interest on the principal amount from time to time remaining unpaid hereon at the rate of 7.13% per annum from and after the date hereof through and including January 14, 1997 and at the rate of 8.13% 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 April 1, 1997 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 9.13% 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 First Amended and Restated 8.13% Senior Notes due October 1, 2006 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 as amended by that certain First Amendment dated as of November 15, 1996, as amended by that certain Second Amendment dated as of November 15, 1996 and as amended by that certain Third Amendment Agreement dated as of January 15, 1997. 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 EXHIBIT A (to Third Amendment Agreement) provided for thereby or referred to therein, to which Note Agreements reference is hereby made for the statement thereof. This Note amends and restates in its entirety that certain 7.13% Senior Note Number R-___, in the original principal amount of $__________ issued by the Company on ____ and registered in the name of __________________. 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. Notwithstanding anything contained herein to the contrary, in addition to the stated interest rate applicable to the Notes (including, without limitation, the interest rate applicable to overdue payments in respect of the Notes), the Notes shall bear additional interest at the rate of .50% per annum during any Interest Rate Event Period (as defined in the Note Agreements). A-21 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-22 DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of counsel for the Company called for by SECTION 4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date and addressed to the Noteholders, shall be satisfactory in scope and form to the Noteholders and shall be to the effect that: 1. The Company is a corporation that is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the requisite power and the authority to execute and perform the Note Agreements, as amended, and to issue the Notes, as amended, and has the full requisite power and the authority to conduct the activities in which it is now engaged. 2. Each Note Agreement, as amended, has been duly authorized by all necessary action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its 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, as amended, have been duly authorized by all necessary 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). The opinion of Jon J. Solberg, Esq. shall cover such other matters relating to the Third Amendment Agreement as the holders of the Notes 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. EXHIBIT B (to Third Amendment Agreement) SCHEDULE I The Variable Annuity Life Insurance Company $17,000,000 7.13% Senior Notes Independent Life and Accident Insurance Company $3,000,000 7.13% Senior Notes Var & Co. (as nominee of Northwestern National $4,000,000 Life Insurance Company) 7.13% Senior Notes Var & Co. (as nominee of Northern Life $6,000,000 Insurance Company 7.13% Senior Notes Schedule I EX-10.13 9 EXHIBIT 10.13 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SUPER FOOD SERVICES, INC. NOTE AGREEMENT Dated as of November 1, 1989 Re: $25,000,000 9.20% Senior Notes Due January 10, 2000 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- TABLE OF CONTENTS (Not a part of the Agreement)
SECTION HEADING PAGE 1. DESCRIPTION OF NOTES AND COMMITMENT 1 1.1. Description of Notes 1 1.2. Commitment, Closing Date 1 1.3. Other Agreements 1 2. PREPAYMENT OF NOTES 2 2.1. Optional Prepayment 2 2.2. Prepayment on Failure of Holders to Grant Certain Consents 3 2.3. Prepayment on Restricted Change of Control 3 2.4. Notice of Prepayments 5 2.5. Allocation of Prepayments 5 2.6. Direct Payment 5 3. REPRESENTATIONS 5 3.1. Representations of the Company 6 3.2. Representations of the Purchasers 6 4. CLOSING CONDITIONS 6 4.1. Closing Certificate 6 4.2. Legal Opinions 6 4.3. Related Transactions 6 4.4. Satisfactory Proceedings 6 4.5. Legality 7 4.6. Waiver of Conditions 7 5. COMPANY COVENANTS 7 5.1. Corporate Existence, etc 7 5.2. Insurance 7 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws 7 5.4. Maintenance Properties 8 5.5. Nature of Business 8 5.6. Consolidated Tangible Net Worth 8 5.7. Limitations on Indebtedness 8 5.8. Limitations on Liens 9 -i- SECTION HEADING PAGE 5.9. Mergers, Consolidations and Sales of Assets 10 5.10. Guaranties 12 5.11. Repurchase of Notes 12 5.12. Designation of Joint Ventures 12 5.13. Transactions with Affiliates 12 5.14. Termination of Pension Plans 13 5.15. Reports and Rights of Inspection 13 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR 15 6.1. Events of Default 15 6.2. Notice to Holders 16 6.3. Acceleration of Maturities 16 6.4. Recission of Acceleration 16 7. AMENDMENTS, WAIVERS AND CONSENTS 17 7.1. Consent Required 17 7.2. Solicitation of Noteholders 17 7.3. Effect of Amendment or Waiver 18 8. INTERPRETATION OF AGREEMENT; DEFINITIONS 18 8.1. Definitions 18 8.2. Accounting Principles 23 8.3. Directly or Indirectly 23 9. MISCELLANEOUS 23 9.1. Registered Notes 23 9.2. Exchange of Notes 23 9.3. Loss, Theft, etc. of Notes 24 9.4. Expenses, Stamp Tax Indemnity 24 9.5. Powers and Rights Not Waived; Remedies Cumulative 25 9.6. Notices 25 9.7. Successors and Assigns 25 9.8. Survival of Covenants and Representations 25 9.9. Severability 25 9.10. Governing Law 25 9.11. Captions 25 Signature Page 26
-ii- ATTACHMENTS TO NOTE AGREEMENT: Schedule I - Names and Addresses of Purchasers Exhibit A - Form of 9.20% Senior Note due January 10,2000 Exhibit B - Closing Certificate of the Company Exhibit C - Description of Closing Opinion of Special Counsel Exhibit D - Description of Closing Opinion of Counsel to the Company -iii- SUPER FOOD SERVICES, INC. 3233 NEWMARK DRIVE MIAMISBURG, OHIO 45342 NOTE AGREEMENT Re: $25,000,000 9.20% Senior Notes Due January 10, 2000 Dated as of November 1, 1989 To the Purchaser named in Schedule I which is a signatory to this Agreement Gentlemen: The undersigned, SUPER FOOD SERVICES, INC., a Delaware corporation (the "COMPANY"), agrees with you as follows: SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT. 1.1. DESCRIPTION OF NOTES. The Company will authorize the issue and sale of $25,000,000 aggregate principal amount of its 9.20% Senior Notes (the "NOTES") to be dated the date of issue, to bear interest from such date at the rate of 9.20% per annum, payable quarterly on the tenth day of each January, April, July and October in each year (commencing April 10, 1990) and at maturity and to bear interest on overdue principal (including any overdue required or optional prepayment of principal) and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at the rate of 10.20% per annum after maturity, whether by acceleration or otherwise, until paid, to be expressed to mature of January 10, 2000, and to be substantially in the form attached hereto as Exhibit A. Interest on the Notes shall 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. You and the other purchases named in Schedule I are hereinafter sometimes referred to as the "PURCHASERS". 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 in the aggregate principal amount set forth oposite your name Super Food Services, Inc. Note Agreement in Schedule I, at a price of 100% of the principal amount thereof on the Closing Date hereinafter mentioned. Delivery of the Notes will be made at the offices of Chapman and Cutler, 111 West Monroe, Chicago, Illinois 60603, against payment therefor in Federal of other funds current and immediately available at the principal office of Society Bank, N.A., in Dayton, Ohio in the amount of the purchase price at 10:00 A.M., Chicago time, on February 6, 1990 or such later date (not later that February 15, 1990) as shall be mutually agreed upon by the Company and the Purchasers (the "CLOSING DATE"). The Notes delivered to you on the Closing Date will be delivered to you in the form of a single registered Note for the full amount of your purchase (unless different denominations are specified by you), registered in your name or in the name of such nominee as you may specify and in substantially the form attached hereto as Exhibit A, all as you may specify at any time prior to the date fixed for delivery. 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 obligation 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. 2.1. OPTIONAL PAYMENT. Upon compliance with Section 2.4, the Company shall have the privilege at any time and from time to time, on or after January 10, 1993, of prepaying the outstanding Notes, either in whole or in part (but if in part, then in units in excess of $100,000) 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 Make-Whole Premium, determined five business Days prior to the date of such prepayment. "MAKE-WHOLE PREMIUM" shall mean, in connection with a prepayment pursuant to this Section 2.1 (or a payment pursuant to an Event of Default), the excess, if any, of (i) the aggregate present value as of the date of such prepayment of each dollar of principal being prepaid and the amount of interest (exclusive of interest accrued to the date of prepayment) that would have been payable in respect of such dollar is such prepayment had not been made, determined by discounting such amounts at the Reinvestment Rate from January 10, 2000, over (ii) 100% of the principal amount of the outstanding Notes being prepaid. If the Reinvestment Rate is equal to or higher than 9.20%, the Make-Whole Premium shall be zero. "REINVESTMENT RATE" shall mean .60% plus the arithmetic mean of the yields under the respective headings "THIS WEEK" and "LAST WEEK" published in the Statistical Release under the caption "TREASURY CONSTANT MATURITIES" for the maturity (rounded to the nearest month) corresponding to the period from the date of determination of the premium hereunder up to but not including, January 10, 2000, (such -2- Super Food Services, Inc. Note Agreement period being referred to as the "NOTE MATURITY PERIOD"). If no maturity exactly corresponds to such Note Maturity Period, yields for the two published maturities most closely corresponding to such Note Maturity Period shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For the purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the premium hereunder shall be used. "STATISTICAL RELEASE" shall mean the statistical release designated "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which established 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. 2.2. PREPAYMENT ON FAILURE OF HOLDERS TO GRANT CERTAIN CONSENTS. In the event that the Company shall in good faith request in writing that the holders of the Notes consent to an amendment of waiver of the provisions of this Agreement to the extent necessary to permit a proposed bona fide merger, acquisition, investment, corporate reorganization, recapitalization or other transaction which would otherwise violate the provisions of this Agreement and, in any such case, the holders of less than 66-2/3% in aggregate principal amount of the Notes outstanding within a period of 30 days following the date of receipt of such request (the "30-Day Period) shall have irrevocably granted or irrevocably agreed to grant such consent, then the Company may, in order to permit such transaction, upon giving the notice required in Section 2.4 on any date within 90 days after the expiration of the 30-Day Period, prepay all (and not less than all) Notes held by each holder of a Note which has failed or refused to grant of agree to grant such consent of execute and deliver appropriate amendments, consents or waivers with respect thereto. Any such prepayment of Notes pursuant to this Section 2.2 shall be made by payment of the aggregate principal amount remaining unpaid on such Notes, and accrued interest thereon to the date of such prepayment, together with a premium equal to the Nonconsent Make-Whole Premium with respect to the principal amount of the Notes being prepaid, determined five Business Days prior to the date of such prepayment. The "NONCONSENT MAKE-WHOLE PREMIUM" shall be determined in the same manner as the Make-Whole Premium except that the reference to ".60%" contained in the definition of the term "REINVESTMENT RATE" shall read ".25%" in the case of a determination of the Non-Consent Make-Whole Premium. 2.3. PREPAYMENT ON RESTRICTED CHANGE OF CONTROL. (a) In the event that a Restricted Change of Control Date shall occur, the Company shall give written notice (the "COMPANY NOTICE") of such fact not more than five Business Days after any such Change in Control Date to all holders of the Notes. The Company Notice shall (i) describe the facts and circumstances of the Restricted Change of Control in reasonable detail, (ii) describe the Consolidated Total Capitalization, Consolidated Tangible Net Worth and Debt of the Company outstanding after such Restricted Change of Control, (iii) contain an offer by the Company to purchase all of the outstanding Notes in full -3- Super Food Services, Inc. Note Agreement together with accrued interest to the date of purchase and (iv) set forth the date which shall not be less than 30 nor more than 60 days following the date of the Company Notice, on which the Company will make such purchase. Each holder of the Notes shall have the right to accept such offer and require purchase of the Notes held by such holder in full by written notice to the Company given within 30 days following receipt of the Company Notice. (b) In the event the Company fails to give the Company Notice as required above, each holder of the Notes shall have the right to require the Company to purchase such holder's Notes in full, together with accrued interest thereon to the date of purchase. Notice of a required purchase pursuant to this paragraph of Section 2.3(b) shall be delivered by any holder of Notes to the Company not more than 90 days after such holder has actual knowledge of such Restricted Change of Control. On the date designated in such holder's notice (which shall be not less than 10 Business Days after the date such notice is delivered to the Company), the Company shall purchase all Notes held by such holder together with accrued interest thereon to the date of purchase. "CHANGE OF CONTROL" shall mean any event or happening which after the Closing Date results in the legal or beneficial ownership of more than 50% of the outstanding shares of Voting Stock of the Company being owned by any Control Group. "CONTROL GROUP" shall mean any Person or group of Persons acting in concert. "MANAGEMENT BUY-OUT" shall mean a Change of Control which satisfies the following conditions: (i) the Control Group includes, and is under the general direction and control of, a member or members of the Management Team; (ii) prior to the consummation of the Change of Control, (x) the Board of Directors shall have approved the proposed Change of Control and (y) a majority of the members of such Board of Directors shall have been duly elected or appointed prior to any public announcement or public filing relating to a proposed Change of Control; and (iii) immediately after giving effect to such Change of Control, members of the Control Group who are included in the Management Team are employed by the Company in positions of the same or greater responsibility as the positions held by such members of the Management Team immediately prior to the Change of Control. "MANAGEMENT TEAM" shall mean Jack Twyman, John Demos, Sam Robinson, I. James Potter, Al Bunshtan, Robert F. Koogler, George Gayda, Richard Metzgar, John Batista, Doug Koenig and any other person who may from time to time in the ordinary course of business be elected to serve as the Chairman of the Board, Vice Chairman of the Board or President of the Company by a majority vote of the Board of Directors PROVIDED, that those individuals voting in favor of such election who were also on the Board of Directors of the Company as of the Closing Date shall constitute a majority of the Board of Directors of the Company at the time of such election. "RESTRICTED CHANGE OF CONTROL" shall mean and include any Change of Control which is not a Management Buy-Out. "RESTRICTED CHANGE OF CONTROL DATE" shall mean any date upon which a Restricted Change of Control shall have occurred. -4- Super Food Services, Inc. Note Agreement 2.4. NOTICE OF PREPAYMENTS. The Company will give notice of any prepayment of the Notes pursuant to Section 2.1 or Section 2.2 to each holder thereof not less than 30 days nor more than 60 days before the date fixed for such optional prepayment specifying (i) such date, (ii) the section of this Agreement under which the prepayment is to be made, (iii) the entire principal amount of the holder's Notes to be prepaid on such date, and (iv) the estimated premium, if any, and (v) accrued interest applicable to the prepayment. Such notice of prepayment shall also certify all facts 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 thereon shall become due and payable on the prepayment date. The Company will also give written notice to each holder of the Notes, by telecopy or other same day written communication, setting forth the computation and amount of any premium payable in connection with such prepayment at least three Business Days prior to the date of such prepayment. 2.5. ALLOCATION OF PREPAYMENTS. All partial prepayments pursuant to Section 2.1 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 applications shall result in substantially ratable payments. 2.6. DIRECT PAYMENT. Notwithstanding anything to the contrary in this Agreement or the Notes, in the case of any Note owned by a Purchaser or its nominee or owned by any other institutional holder who has given written notice to the Company requesting that the provisions of this Section shall apply, the Company will promptly and punctually pay when due the principal thereof and premium, if any, and interest thereon, without any presentment thereof directly to such Purchaser or such subsequent holder at the address of such Purchaser set forth in Schedule I or at such other address as such Purchaser or such subsequent holder may from time to time designate in writing to the Company or, if a bank account is designated for such Purchaser on Schedule I hereto or in any written notice to the Company from such Purchaser or any such subsequent holder, the Company will make such payments in immediately available funds to such bank account, marked for attention as indicated, or in such other manner or to such other account of such 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. The holder of any Notes to which this Section applies agrees that in the event it shall sell or transfer any such Notes (i) it will, prior to the delivery of such Notes (unless it has already done so), make a notation thereon of all principal, if any, prepaid on such Notes and will also note thereon the date to which interest has been paid on such Notes, and (ii) it will promptly notify the Company of the name and address of the transferee of any Notes so transferred. With respect to Notes to which this Section applies, the Company shall be entitled to presume conclusively that the original or such subsequent institutional holder as shall have requested the provisions hereof to apply to its Notes remains the holder of such Notes until (y) the Company shall have received notice of the transfer of such Notes, and of the name and address of the transferee, or (z) such Notes shall have been presented to the Company as evidence of the transfer. -5- Super Food Services, Inc. Note Agreement SECTION 3. REPRESENTATIONS. 3.1. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants that all representations set forth in the form of certificate attached hereto as Exhibit B are true and correct as of the date hereof and are incorporated herein by reference with the same force and effect as though herein set forth in full. 3.2. REPRESENTATIONS OF THE PURCHASERS. 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 resale or 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. You further represent that you are acquiring the Notes for your own account and with your general corporate assets and not with the assets of any separate account in which any employee benefit plan has any interest. The acquisition of the Notes by the Purchasers on the Closing Date shall constitute the Purchasers reaffirmation of such representation. The acquisition of the Notes by the Purchasers on the Closing Date shall constitute the Purchasers reaffirmation of such representation. As used in this Section, the terms "separate account" and "employee benefit plan" shall have the respective meanings assigned to them in the Employee Retirement Income Security Act of 1974. SECTION 4. CLOSING CONDITIONS. Your obligation to purchase the Notes 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 further conditions precedent: 4.1. CLOSING CERTIFICATE. Concurrently with the delivery of Notes to you on the Closing Date, you shall have received a certificate dated the Closing Date, signed by the Chairman of the Board, the Vice Chairman of the Board, 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 purchase the Notes proposed to be sold to you. 4.2. LEGAL OPINIONS. Concurrently with the delivery of Notes to you on the Closing Date, you shall have received from Chapman and Cutler, who are acting as your special counsel in this transaction, and from John Demos, Esquire, Vice Chairman of the Board, Secretary and General Counsel of the Company, their respective opinions dated the Closing Date, in form and substance satisfactory to you, and covering the matters set forth in Exhibits C and D, respectively, hereto. 4.3. RELATED TRANSACTIONS. Prior to or concurrently with the issuance and sale of 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. 4.4. SATISFACTORY PROCEEDINGS. 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 -6- Super Food Services, Inc. Note Agreement special counsel, and you shall have received a copy (executed or certified as may be appropriate) of all legal documents or proceedings taken in connection with the consummation of said transactions. 4.5. LEGALITY. The Notes shall qualify as a legal investment for you under the laws and regulations of each jurisdiction to which you are subject (without reference to any so-called "basket" provision which permits the making of an investment without restrictions as to the character of the particular investment being made) and you shall have received such information as you shall reasonably request from the Company to establish such fact. 4.6. 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 4.6 shall operate to relieve the Company of any of its obligations hereunder or to waive any of your rights against the Company. SECTION 5. COMPANY COVENANTS. From and after the Closing Date and continuing so long as any amount remains unpaid on any Note: 5.1. 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 that the foregoing shall not prevent any transaction permitted by Section 5.9. 5.2. INSURANCE. The Company will maintain, and will cause each Subsidiary to maintain, insurance coverage by financially sound and reputable insurers in such forms and amounts 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. 5.3. 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 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 (i) 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, and (ii) the Company or such Subsidiary shall set aside on its books, reserves deemed by it to be adequate with respect thereto. -7- Super Food Services, Inc. Note Agreement The Company will promptly comply and will cause each Subsidiary to 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, the Employee Retirement Income Security Act of 1974 and all laws, ordinances, governmental rules and regulations relating to environmental protection in all applicable jurisdictions, the violation 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 any Subsidiary. 5.4. MAINTENANCE OF PROPERTIES. 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. 5.5. NATURE OF BUSINESS. The Company and its Subsidiaries are primarily engaged in the distribution of food products, health and beauty aids, general merchandise and non-food items. The Company and its Subsidiaries are also engaged from time to time in the operation of retail food stores, the distribution of institutional food service products and the manufacture and distribution of food products. Neither the Company nor any Subsidiary will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, 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. 5.6. CONSOLIDATED TANGIBLE NET WORTH. The Company will at all times keep and maintain Consolidated Tangible Net Worth at an amount not less than the sum of (i) $70,000,000 PLUS (ii) 50% of Consolidated Net Income for each fiscal year beginning on or after August 25, 1990; PROVIDED that for the purposes of any determination under this Section 5.6, if Consolidated Net Income for any particular fiscal year is a deficit figure, then Consolidated Net Income shall, for that particular fiscal year, be deemed to be zero. 5.7. LIMITATIONS ON INDEBTEDNESS. (a) The Company will not, and will not permit any Subsidiary to create, assume or incur or in any manner be or become liable in respect of any Funded Debt, except: (1) the Notes; (2) Funded Debt of the Company and its Subsidiaries outstanding on the date hereof and described in Annex B to Exhibit B hereto, and all extensions, renewals, refundings or replacements thereof, in each case, without increase in principal amount; (3) additional Funded Debt of the Company and its Subsidiaries, PROVIDED that at the time of the issuance thereof, and after giving effect thereto and to the application of the proceeds thereof, Consolidated Funded Debt shall not exceed 60% of Consolidated Total Capitalization; and -8- Super Food Services, Inc. Note Agreement (4) Funded Debt of the Company to a Subsidiary; and (5) Funded Debt of a Subsidiary to the Company or to another Subsidiary. (b) Any corporation which becomes a Subsidiary after the date hereof shall for all purposes of this Section 5.7 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. 5.8. LIMITATION ON LIENS. The Company will not, and will not permit any Subsidiary to, create or incur, or suffer to be incurred or to exist, any mortgage, pledge, security interest, encumbrance, lien or charge of any kind on its or their property or assets, whether now owned 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, expect: (a) liens for property taxes and assessments or governmental charges or levies and liens securing claims or demands of mechanics and materialmen, PROVIDED that payment thereof is not at the time required by Section 5.3; (b) liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Company or a Subsidiary shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured; (c) liens, charges, encumbrances and priority claims incidental to the conduct of business or the ownership of properties and assets (including warehousemen's and attorneys' liens and statutory landlords' liens) and deposits, pledges or liens to secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or appeal bonds or other liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money, PROVIDED in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings; (d) minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company and its Subsidiaries; (e) mortgages, liens or security interests securing Indebtedness of a Subsidiary to the Company or to another Subsidiary; -9- (f) mortgages, liens, conditional sale contracts, security interests or other arrangements for the retention of title (including Capitalized Leases) existing on the date hereof, securing Funded Debt of the Company or any Subsidiary outstanding on such date (including any renewals, extensions or replacements thereof, PROVIDED, that there is no increase in the aggregate principal amount of the Funded Debt secured thereby and no additional property is secured); (g) mortgages, liens, conditional sale contracts, security interests or other arrangements for the retention of title (including Capitalized Leases) incurred after the date hereof given to secure the payment of the purchase price incurred in connection with the acquisition of property useful and intended to be used in carrying on the business of the Company or a Subsidiary, including liens existing on such property 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 property, whether or not such existing liens were given to secure the payment of the purchase price of the property to which they attach so long as they were not incurred, extended or renewed in contemplation of such acquisition, PROVIDED that (i) the lien or charge shall attach solely to the property acquired or purchased, (ii) except for liens existing on property at the time of acquisition thereof or of any business entity then owning such property, the lien or charge shall attach at the time of acquisition of such property or, if such property is being constructed by the Company or a Subsidiary, within 150 days after completion of construction, (iii) at the time of acquisition of such property, the aggregate amount remaining unpaid on all Indebtedness secured by liens on such property whether or not assumed by the Company or a Subsidiary shall not exceed an amount equal to 100% of the lesser of the total purchase price of fair market value at the time of acquisition of such property (as determined in good faith by the Board of Directors of the Company), and (iv) all such Indebtedness shall consist of Funded Debt of the Company or any Subsidiary which shall have been incurred within the limitations set forth in SECTION5.7(a)(3); and (h) liens, in addition to the liens permitted by the preceding clauses (a) through (g) hereof, securing Funded Debt of the Company or any Subsidiary PROVIDED, that (i) all Funded Debt secured by such liens shall not at any time exceed an amount equal to 20% of Consolidated Tangible Net Worth and (ii) all such Funded Debt shall have been incurred within the limitations set forth in SECTION5.7(a)(3). 5.9. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. (a) The Company will not, and will not permit any Subsidiary to (i) consolidate with or be a party to a merger with any other corporation or (ii) sell, transfer or otherwise dispose of all or any substantial part (as defined in paragraph (d) of this SECTION5.9) of assets of the Company and Subsidiaries, PROVIDED, HOWEVER that: (1) any Subsidiary may merge or consolidate with or into (i) the Company or any Subsidiary so long as in any merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation or, if the Company is not the surviving or continuing corporation, the surviving or continuing corporation shall expressly assume in writing the obligations of the Company under this Agreement and under the Notes and, at the time of such -10- merger or consolidation, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing of (ii) any other corporation so long as (x) at the time of such merger or consolidation and after giving effect thereto no Default or Event of Default shall have occurred and be continuing and (y) if the surviving corporation shall not be a Subsidiary, the assets of such Subsidiary do not constitute a substantial part of the assets of the Company and its Subsidiaries; and (2) the Company may consolidate or merge with any other corporation if the Company shall be the surviving or continuing corporation or, if the Company is not the surviving or continuing corporation, the surviving or continuing corporation shall expressly assume in writing the obligations of the Company under this Agreement and under the Notes and, at the time of such merger or consolidation and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; and (3) any Subsidiary may sell, transfer or otherwise dispose of all or any substantial part of its assets to the Company or any Subsidiary. (b) The Company will not permit any Subsidiary to issue or sell any shares of stock of any class (including as "stock" for the purpose of this SECTION5.9, any warrants, rights or options to purchase or otherwise acquire stock or other Securities exchangeable for or convertible into stock) of such Subsidiary to any Person other than the Company or a Wholly-Owned Subsidiary, except (i) for the purpose of qualifying directors, or (ii) in satisfaction of the validly pre-existing preemptive rights of minority shareholders in connection with the simultaneous issuance of stock to the Company and/or a Subsidiary whereby the Company and/or such Subsidiary maintain their same proportionate interest in such subsidiary of (iii) sales of Minority Interests in Subsidiaries, but only if such Minority Interests could then be sold without violation of any of the terms or provision of this Agreement, including without limitation, limitations on the sale of assets contained in SECTION5.9(a). (c) The Company will not sell, transfer or otherwise dispose of any shares of stock in any Subsidiary (except to qualify directors), and will not permit any Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a Subsidiary) any shares of stock of any other Subsidiary, unless: (1) the Board of Directors of the Company shall have determined, as evidenced by resolution thereof, that the retention of such stock is no longer in the best interests of the Company; (2) such stock is sold, transferred or otherwise disposed of to a Person, for consideration and on terms reasonably deemed by the Board of Directors to be adequate and satisfactory; and (3) such sale or other disposition does not involve a substantial part of the assets of the Company and its Subsidiaries. (d) As used in this SECTION5.9, a sale, transfer or other disposition of assets shall be deemed to be or involve a "substantial part" of the assets of the Company and its Subsidiaries only if the book value of such assets (including Minority Interests issued or sold) when added to the book value of all other assets (including Minority Interests -11- issued or sold) sold, transferred or otherwise disposed of by the Company and its Subsidiaries (other than in the ordinary course of business and other than assets sold, transferred or disposed of to the Company or by a Subsidiary to another Subsidiary) during the same fiscal year, exceeds 10% of Consolidated Assets of the Company and its Subsidiaries determined as of the end of the immediately preceding fiscal quarter, PROVIDED, that any such sales or transfers shall be excluded from any determination hereunder if and to the extent that the proceeds thereof are applied within 6 months after such sale or transfer to the acquisition or construction of assets used and useful in the business of the Company and its Subsidiaries. (e) Notwithstanding the restrictions set forth in SECTION5.9(b) and SECTION5.9(c), the Company and any Subsidiary may, at any time, issue and sell shares of stock of any Joint Venture to any Person if at the time of any such sale and after giving effect thereto, no Default or Event of Default shall have occurred or be continuing (other than a Default or Event of Default which would have occurred as a result of such sale in the absence of the provisions of this SECTION5.9(e)). 5.10. GUARANTIES. The Company will not and will not permit any Subsidiary to become or be liable in respect of any Guaranty except Guaranties of the Company or any Subsidiary which are limited in amount to stated maximum dollar exposure and either (i) are included in Consolidated Funded Debt or (ii) consist of Retail Guaranties. 5.11. REPURCHASE OF NOTES. Neither the Company nor any Subsidiary or Affiliate, directly or indirectly, 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. 5.12. JOINT VENTURES. (a) The Company may designate any Subsidiary or investment as a Joint Venture by notifying, in writing, each holder of the Notes that the chief financial officer of the Company has made such designation, PROVIDED, that no Subsidiary or investment may be designated as a Joint Venture under this SECTION5.12(a) unless, at the time of designation, no Default or Event of Default shall have occurred and be continuing (including any Default or Event of Default under SECTION5.12(b)) and any Subsidiary which is to be designated as a Joint Venture shall have no investment in the Company or any other Restricted Subsidiary. (b) The Company shall not at any time permit the aggregate amount of assets of all Joint Ventures (determined in accordance with generally accepted accounting principles) to exceed an amount equal to $5,000,000. (c) Once a Subsidiary or investment has been designated as a Joint Venture in accordance with SECTION5.12(a), such designation shall be irrevocable. 5.13. 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 -12- Super Food Services, Inc. Note Agreement Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person other than an Affiliate. 5.14. TERMINATION OF PENSION PLANS. The Company will not and will not permit any Subsidiary to permit any employee benefit plan maintained by it to be terminated in a manner which could result in 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. 5.15. REPORTS AND RIGHTS OF INSPECTION. The Company will keep, and will cause each Subsidiary to keep, 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 principles of accounting consistently maintained (except for changes disclosed in the financial statements furnished to you pursuant to this Section 5.15 and concurred in by the independent public accountants referred to in Section 5.15(b) hereof), and will furnish to you so long as you are the holder of any Note and to each other institutional holder of the then outstanding Notes (in duplicate if so specified below or otherwise 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, duplicate copies of: (1) consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the close of such quarter setting forth in comparative form the consolidated figures for the end of the preceding fiscal year, (2) consolidated and consolidating statements of income and retained earnings of the company and its Subsidiaries for such quarterly period, setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year, and (3) consolidated and consolidating statements of cash flows of the Company and its Subsidiaries for the portion of the fiscal year ending with such quarter, setting forth in comparative form the consolidated figures for the corresponding period of the preceding fiscal year, all in reasonable detail and certified as complete and correct, by an authorized financial officer of the Company; (b) ANNUAL STATEMENTS. As soon as available and in any event within 120 days after the close of each fiscal year of the Company, duplicate copies of: (1) consolidated and consolidating balance sheets of the Company and its Subsidiaries as of the close of such fiscal year, and (2) consolidated and consolidating statements of income and retained earnings and cash flows of the Company and its Subsidiaries for such fiscal year, -13- Super Foods Services, Inc. Note Agreement 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 of a firm of independent public accountants of recognized national standing selected by the Company to the effect that the consolidated financial statements have been prepared in accordance with generally accepted accounting principles and present fairly, in all material respects, the financial condition of the Company and its Subsidiaries and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards and accordingly includes such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (c) AUDIT REPORTS. Promptly upon receipt thereof, one copy of each interim or special audit made by independent accountants of the books of the Company or any Subsidiary; (d) SEC AND OTHER REPORTS. Promptly upon their becoming available, one copy of each financial statement, report, notice or proxy statement sent by the Company to stockholders generally and of each regular or periodic report, and any registration statement or prospectus filed by the Company or any Subsidiary with any securities exchange or the Securities and Exchange Commission or any successor agency, and copies of any orders in any proceedings to which the Company or any of its Subsidiaries is a party, issued by any governmental agency, Federal or state, having jurisdiction over the Company or any of its Subsidiaries; (e) REQUESTED INFORMATION. Wish reasonable promptness, such other data and information as you or any such institutional holder may reasonably request; (f) OFFICER'S CERTIFICATES. Within the periods provided in paragraphs (9a) and (b) above, a certificate of an authorized financial officer of the Company stating that such officer has reviewed the provisions of the Agreement and setting forth: (i) the information and computations (in sufficient detail) required in order to establish whether the Company was in compliance with the requirements of Section 5.6 through Section 5.14, inclusive, at the end of the period covered by the financial statements then being furnished, and (ii) whether there existed as of the date of such financial statements and whether, to the best of such officer's knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Default or Event of Default and, if any such condition or event exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Company is taking and proposes to take with respect thereto; and (g) ACCOUNTANT'S CERTIFICATES. Within the period provided in paragraph (b) above, a certificate of the accountants who render an opinion with respect to such financial statements, stating that they have reviewed this Agreement and stating further whether, in making their audit, such accountants have become aware of any Default or Event of Default under any of the terms or provisions of this agreement insofar as any such terms or provisions pertain to or involve accounting matters or determinations, and if any such condition or event then exists, specifying the nature and period of existence thereof. -14- Super Food Services, Inc. Note Agreement 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), to visit and inspect, under the Company's guidance, any of the properties of the Company or any subsidiary, to examine all their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees, and independent public accountants (and by this provision the Company authorizes said accountants to discuss with you the finances and affairs of the Company and its Subsidiaries) all at such reasonable times and as often as may be reasonably requested. The Company shall not be required to pay or reimburse you or any such holder for expenses which you or any such holder may incur in connection with any such visitation or inspection. SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR. 6.1. EVENTS OF DEFAULT. Any one of more of the following shall constitute an "Event of Default" as the term is used herein: (a) Default shall occur in the payment of interest on any Note when the same shall have become due and payable and such default shall have continued for five business Days; or (b) Default shall occur in the making of any payment of principal on any Note or premium, if any, thereon at the expressed, or any accelerated, maturity date or at any date fixed for prepayment; or (c) Default shall be made in the payment of the principal of or interest on any Material Indebtedness, as and when the same shall become due and payable by the lapse of time, by declaration, by call for redemption or otherwise, and such default shall continue beyond the period of grace, if any, allowed with respect thereto; or (d) Any holder or holders of any Material Indebtedness shall demand payment of all or any portion or the principal amount of such Material Indebtedness at any time prior to the scheduled installment payments thereof, if any, or expressed maturity thereof, pursuant to the exercise by such holder or holders of any right of acceleration, right to "put" or other similar rights; or (e) Default shall occur in the observance or performance of any covenant, agreement or other provision of this Agreement which is not remedied within 30 days after written notice thereof to the Company by the holder of any Note; or (f) 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 delivery of the Notes or furnished by the Company pursuant hereto, is untrue in any material respect as of the date of the issuance or making thereof; or -15- Super Food Services, Inc. Note Agreement (g) The Company or any Subsidiary 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 or any Subsidiary applies for or consents to the appointment of a custodian, trustee or receiver for the Company or such Subsidiary or for the major part of the property of either; or (h) A custodian, trustee or receiver is appointed for the Company or any Subsidiary or for the major part of the property of either and is not discharged within 30 days after such appointment; or (i) Final judgement or judgments for the payment of money aggregating in excess of $5,000,000 is or are outstanding against the Company or any Subsidiary or against any property or assets of either and any one of such judgements has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 30 days 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 or any Subsidiary and, if instituted against the Company or any Subsidiary, are consented to or are not dismissed within 60 days after such institution. 6.2. NOTICE TO HOLDERS. When any Event of Default described in the foregoing SECTION 6.1 has occurred, or if the holder of any Note or of any other evidence of Indebtedness of the Company gives any notice or takes any other action with respect to a claimed default, the Company agrees to give notice within three business days of such event to all holders of the Notes then outstanding, such notice to be in writing and sent by registered mail, certified mail, telegram or overnight courier. 6.3. ACCELERATION OF MATURITIES. When any Event of Default described in paragraph (a) or (b) of SECTION 6.1 has happened and is continuing, any holder of any Note may, and when any Event of Default described in paragraphs (c) through (i), inclusive , of said SECTION 6.1 has happened and is continuing, the holder or holders of 51% or more of the principal amount of Notes at the time outstanding may, by notice in writing sent by registered or certified mail to the Company, 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 paragraph (j) of SECTION 6.1 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, a premium in the amount of the amount which would be payable if the Company then had elected to prepay the Notes pursuant to SECTION 2.1 determined as of the date of the declaration of acceleration. No course of dealing on the part of any Noteholder nor any delay or failure on the part of any Noteholder to exercise any right shall operate as a waive 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 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. -16- Super Food Services, Inc. Note Agreement 6.4. RESCISSION OF ACCELERATION. The provisions of SECTION 6.3 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 6.1, 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 6.3) shall have duly paid; and (c) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to SECTION 7.1; 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 7. AMENDMENTS, WAIVERS AND CONSENTS. 7.1. CONSENT REQUIRED. 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 that without the written consent of the holders of all of the Notes then outstanding, no such waiver, modification, alteration or amendment shall be effective (i) which will change the time of payment (including any prepayment required by SECTION 2.1) of the principal of or the interest on any Note or reduce the principal amount thereof or change the rate of interest theron, or (ii) which will change any of the provisions with respect to optional prepayments, or (iii) which will change the percentage of holders of the Notes required to consent to any such amendment, alteration or modification or any of the provisions of this SECTION 7. 7.2. SOLICITATION OF NOTEHOLDERS. 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 the 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 applied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this SECTION 7.2 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by the holder or holders of the requisite percentage of outstanding Notes. The Company will not, directly or indirectly, pay or -17- Super Food Services, Inc. Note Agreement cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of the Notes of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to the holders of all of the Notes them outstanding. 7.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver shall apply equally to all of 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 waiver or impair any right consequent thereon. SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS. 8.1 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) (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, (ii) which beneficially owns or holds 5% or more of any class of the Voting Stock of the Company or (iii) 5% or more of the Voting Stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by the 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 contrast or otherwise. "BUSINESS DAY" shall mean any day of the week (excluding Saturday or Sunday) on which bank in New York, New York are not obligated by law to close. "CAPITALIZED LEASE" shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with generally accepted accounting principles. "CAPITALIZED RENTALS" shall mean as of the date of any determination the amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which the Company or any Subsidiary is a lessee would be reflected as a liability on a consolidated balance sheet of the Company and its Subsidiaries. "CONSOLIDATED ASSETS" shall mean as of the date of determination thereof, all assets of the Company and its Subsidiaries determined to a consolidated basis in accordance with generally accepted accounting principles excluding Intangible Assets and assets consisting of the investment of the Company or any Subsidiary in any Joint Venture. "CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES" shall mean assets and liabilities of the Company and its Restricted Subsidiaries on a consolidated basis as shall be determined in accordance with generally accepted accounting principles to constitute current assets and current liabilities, respectively. -18- Super Food Services, Inc. Note Agreement "CONSOLIDATED NET INCOME" for any period shall mean the gross revenues of the Company and its Subsidiaries for such period LESS all expenses and other proper charges (including taxes on income), determined on a consolidated basis in accordance with generally accepted accounting principles consistently applied and after eliminating earnings or losses attributable to outstanding Minority Interests, but excluding in any event: (a) any extraordinary gains or losses; (b) net earnings and losses of any Subsidiary accrued prior to the date it became a Subsidiary; (c) net earnings and losses of any corporation (other than a Subsidiary), substantially all the assets of which have been acquired in any manner, realized by such other corporation prior to the date of such acquisition; (d) net earnings and losses of any corporation (other than a Subsidiary) with which the Company or a Subsidiary shall have consolidated or which shall have merged into or with the Company or a Subsidiary prior to the date of such consolidation or merger; (e) net earnings of any business entity (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; (f) any portion of the net earnings of any Subsidiary which for any reason is unavailable for payment of dividends to the Company or any other Subsidiary; (g) earnings resulting from any reappraisal, revaluation or write-up of assets; (h) any deferred or other credit representing any excess of the equity in any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary; and (i) any gain arising from the acquisition of any Securities of the Company or any Subsidiary; and "CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of the date of any determination thereof, the sum of (i) shareholders' equity PLUS (ii) preferred stock PLUS (iii) Minority Interests (all as indicated on the most recent quarterly or annual balance sheet of the Company and its Subsidiaries) MINUS (a) Intangible Assets and (b) the value of the investment of the Company and its Subsidiaries in Joint Ventures, all determined in accordance with generally accepted accounting principles consolidating the Company and its Subsidiaries. "CONSOLIDATED TOTAL CAPITALIZATION" shall mean, as of the date of any determination thereof, the sum of (i) Consolidated Funded Debt and (ii) Consolidated Tangible Net Worth. -19- Super Food Services, Inc. Note Agreement "CONSOLIDATED WORKING CAPITAL" shall mean, as of the date of any determination thereof, the total amount of all Current Assets of the Company and its Subsidiaries minus the Current Liabilities of the Company and its Subsidiaries, all determined in accordance of generally accepted accounting principles. "DEBT" shall mean, as of the date of any determination thereof; (i) Indebtedness for borrowed money; (ii) Indebtedness representing the deferred purchase price of property, but excluding accounts payable and accrued liabilities arising in, and on terms customary in, the ordinary course of the business of the Company and its Subsidiaries; (iii) Indebtedness which is evidenced by acceptances, notes or other instruments; (iv) Capitalized Rentals; (v) Reimbursement obligations under all letters of credit; and (vi) Guaranties; of the Company or any of its Subsidiaries. Debt shall not include any unfunded obligations which the Company or any Subsidiary may have from time to time in respect of pension plans of the Company or any Subsidiary. "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 as defined in Section 6.1. "FUNDED DEBT" of any person shall mean (i) all Debt having a final maturity of one or more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin), (ii) Revolving Credit Debt, (iii) all Capitalized Rentals, and (iv) all Guaranties of Funded Debt of others. Funded Debt shall not include (i) Retail Guaranties in an aggregate amount not in excess of 5% of Concolidated working Capital and (ii) the so-called "current portion" of long term debt. "Concolidated" when used as a prefix to any Funded Debt shall mean the aggregate amount of all such Funded Debt of the Company and its Subsidiaries on a consolidated basis eliminating intercompany items. "GUARANTIES" by any person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) 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, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any property or assets constituting security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or -20- Super Food Services, Inc. Note Agreement obligation, (y) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, or (iii) 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 (iv) 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 Indebtedness equal to 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. "INDEBTEDNESS" of any Person shall mean and include all obligations of such Person which in accordance with generally accepted accounting principles shall be classified upon a balance sheet of such Person as liabilities of such Person, and in any event shall include all (i) obligations of such Person for borrowed money or which has been incurred in connection with the acquisition of property or assets, (ii) obligations secured by any lien or other charge upon property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such obligations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, and (iv) Capitalized Rentals under any Capitalized Lease. For the purpose of computing the "Indebtedness" of any Person, there shall be excluded any particular Indebtedness to the extent that, upon or prior to the maturity thereof, there shall have been deposited with the proper depositary in trust the necessary funds (or evidence of such Indebtedness, if permitted by the instrument creating such Indebtedness) for the payment, redemption, or satisfaction of such Indebtedness; and thereafter such funds and evidences of Indebtedness so deposited shall not be included in any computation of the assets of such Person. "INTANGIBLE ASSETS" shall mean as of the date of any determination thereof, the total amount of all assets of the Company and it Subsidiaries consisting of goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expense, deferred assets other than prepaid insurance, workers compensation insurance and prepaid taxes, the excess of cost of shares acquired over book value of related assets and such other assets as are properly classified as "intangible assets" in accordance with generally acceptable accounting principles. "JOINT VENTURES" shall mean any Subsidiary or other investments of the Company or any Subsidiary which has been designated as a Joint Venture by the Company's chief financial officer in accordance with the provisions of Section 5.12(a) hereof, it being agreed that any Subsidiary shall no longer be deemed to be a Subsidiary for the purposes of this Agreement after it has been properly designated as a Joint Venture. "MATERIAL INDEBTEDNESS" shall mean at any time one or more obligations of the Company or any Subsidiaries for borrowed money or in respect of interest rate -21- Super Food Services, Inc. Note Agreement swaps, interest rate exchange agreements, currency swaps or currency exchange agreements (however denominated) which individually or in the aggregate have, or relate to, an unpaid principal amount of more than $5,000,000. "MINORITY INTERESTS" shall mean any shares of stock of any class of a Subsidiary (other than directors' qualifying shares as required by law) that are not owned by the Company and/or one or more of its Subsidiaries. Minority Interests shall be valued by valuing Minority Interests constituting preferred stock at the voluntary or involuntary liquidating value of such preferred stock, whichever is greater, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in preferred stock. "PERSON" shall mean an individual, partnership, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof. "RENTALS" shall mean and include all fixed rents (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, in any, required to be paid by the lessee regardless of sales volume or gross revenues. "RETAIL GUARANTIES" shall mean, as of the date of determination thereof, all Guaranties of the Company entered into in the ordinary course of business guaranteeing the obligations of any retail grocer that is a regular customer of the Company, which obligations of such retail grocer were incurred for valid business purposes. "REVOLVING CREDIT DEBT" shall mean any Indebtedness for borrowed money outstanding under a revolving credit or similar agreement the terms of which provide for borrowing money (including extensions and renewals thereof) for a period equal to or exceeding one year, notwithstanding that such Indebtedness for borrowed money may be payable on demand or within one year from the date of creation thereof. "SECURITY" shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. The term "SUBSIDIARY" shall mean, as to any particular parent corporation, any corporation of which more than 50% (by number of votes) of the Voting Stock shall be owned by such parent corporation and/or one or more corporations which are themselves subsidiaries of such parent corporation. The term "SUBSIDIARY" shall mean a subsidiary of the Company. -22- Super Food Services, Inc. Note Agreement "VOTING STOCK" shall mean Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the board of directors (or Persons performing similar functions). "WHOLLY-OWNED" when used in connection with any Subsidiary shall mean a Subsidiary of which all of the issued and outstanding shares of stock (except shares required as directors' qualifying shares) and all Indebtedness for borrowed money shall be owned by the Company and/or one or more of its Wholly-owned Subsidiaries. 8.2. 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, except where such principles are inconsistent with the requirements of the Agreement. 8.3. 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 9. MISCELLANEOUS. 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 the registered holder of such Note or its attorney duly authorized in writing. The Person in whose name any registered Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes of this Agreement. Payment of or on account of the principal, premium, if any, and interest on any registered Note shall be made to or upon the written order of such registered holder. 9.2. EXCHANGE OF NOTES. At any time and from time to time, upon not less than ten days' notice to that effect given by the holder of any Note initially delivered or of any Note substituted therefor pursuant to SECTION9.1, this SECTION9.2 or SECTION9.3, and, upon surrender of such Note at its office, the Company will 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, 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 -23- Super Food Services, Inc. Note Agreement surrendered or, if such surrender is prior to the payment of any interest thereon, then dated as of the date of issue, payable to such Person or Persons, or order, 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. 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 or such mutilation upon surrender and cancellation of the Note, the Company will make and deliver without expense to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or mutilated Note. If the Purchaser or any subsequent institutional holder is the owner of any such lost, stolen or destroyed Note, then the affidavit of an authorized 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 further indemnity shall be required as a condition to the execution and delivery of a new Note other than the written agreement of such owner to indemnify the Company. 9.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the transactions herein contemplated shall be consummated, the Company agrees to pay directly all of your out-of-pocket expenses in connection with the preparation, execution and delivery of this Agreement and the transactions contemplated hereby, including but not limited to the reasonable charges and disbursements of Chapman and Cutler, your special counsel, duplicating and printing costs and charges for shipping the Notes, adequately insured to you at your home office or at such other place as you may designate, and all such expenses relating to any amendment, waivers or consents pursuant to the provisions hereof, including, without limitation, and 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 also agrees that it will pay and save you harmless against any and all liability with respect to 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, whether or not any Notes are then outstanding. The Company 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. 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 SECTION7 hereof, shall extend to or affect any obligation or right not expressly waived or consented to. -24- Super Food Services, Inc. Note Agreement 9.6. NOTICES. All communications provided for hereunder shall be in writing and, if to you, delivered or mailed by registered mail, certified mail, or overnight air courier, in each case prepaid and 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, and if to the Company, delivered or mailed by registered mail, certified mail or by overnight air courier, in each case prepaid and addressed to the Company at Kettering Box 2323, Dayton, Ohio 45429, Attention: Secretary, or to such other address as the Company may in writing designate to you or to a subsequent holder of the Note initially issued to you. 9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to your benefit and to the benefit of your successors and assigns, including each successive holder or holders of any Notes. 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 Date, shall survive the closing and the delivery of this Agreement and the Notes. 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. 9.10. GOVERNING LAW. This Agreement and the Notes issued and sold hereunder shall be governed by and construed in accordance with Ohio Law. 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. -25- Super Food Services, Inc. Note Agreement 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. SUPER FOOD SERVICES, INC. By ----------------------------- Its Accepted as of November 1, 1989. [VARIATION] By ----------------------------- Its -26- SCHEDULE I PRINCIPAL AMOUNT NAMES AND ADDRESSEES OF NOTES TO BE OF PURCHASERS PURCHASED - ------------------- ----------------- NATIONWIDE LIFE INSURANCE COMPANY $20,500,000 One Nationwide Plaza Columbus, Ohio 43216 Attention: Corporate Fixed-Income Securities 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 Super Food Services, Inc. 9.20% Senior Notes Due 2000, principal or interest) to: AMERITRUST/TRUST No. 30352900 FAO Nationwide Life Insurance Company ABA No. 41000687 NOTICES ALL NOTICES OF PAYMENT, on or in respect of the Notes and written confirmation of each such payment to: Nationwide Life Insurance Company One Nationwide Plaza Columbus, Ohio 43216 Attention: Cash Division, Money and Banking ALL NOTICES AND COMMUNICATIONS other than those in respect to payments to be addressed as first provided above. NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: None SCHEDULE I PRINCIPAL AMOUNT NAME AND ADDRESS OF NOTES TO BE OF PURCHASERS PURCHASED - ------------------- ------------------- EMPLOYERS LIFE INSURANCE $ 3,000,000 COMPANY OF WAUSAU 2000 Westwood Drive Wausau, Wisconsin 54401 Attention: Investment Department PAYMENTS ALL PAYMENTS on or in respect of the Notes to be BY BANK WIRE TRANSFER of Federal of other immediately available funds (identifying each payment as 9.20% Senior Notes Due 2000 of Super Food Services, Inc., principal, premium or interest) to: First Wisconsin National Bank Milwaukee, Wisconsin for credit to First Wisconsin Trust Company (Account No. 112-950-027) for further credit to Employers Life Insurance Company of Wausau Account No. 6600557511. NOTICES ALL NOTICES AND COMMUNICATIONS, including notices with respect to payments and written confirmation of each such payment, to be addressed: Employers Life Insurance Company of Wausau One Nationwide Plaza-33T Columbus, Ohio 43216 Attention: Corporate-Fixed Income Securities NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: EMPL & Co. SCHEDULE I PRINCIPAL AMOUNT NAME AND ADDRESS OF NOTES TO BE OF PURCHASERS PURCHASED - ------------------- ------------------- WEST COAST LIFE INSURANCE COMPANY $1,500,000 1275 Market Street San Francisco, California 94103 Attention: Ms. Lina Cruz-Investments 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 Super Food Services, Inc. 9.20% Senior Notes Due 2000, principal, premium or interest) to: Security Pacific National Bank Los Angeles, California 90071 ABA # 122-0000-43 For the Account of West Coast Life Insurance Company's Account No. 811-161020 NOTICES ALL NOTICES AND COMMUNICATIONS with respect to payments shall be sent to West Coast Life Insurance Company at the address first described above and all other notices and written confirmation of each such payment, to be addressed: West Coast Life Insurance Company One Nationwide Plaza-33T Columbus, Ohio 43216 Attention: Corporate-Fixed Income Securities NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: None SUPER FOOD SERVICES, INC. 9.20% Senior Note Due January 10, 2000 NO. R- _____________,19___ $ SUPER FOOD SERVICES, INC., a Delaware corporation (the "Company"), for value received, hereby promises to pay to or registered assigns, on the tenth day of January, 2000 the principal amount of DOLLARS($ ) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the rate of 9.20% per annum from the date hereof until maturity, payable quarterly on the tenth of each January, April, July and October in each year commencing April 10, 1990, and at maturity. The Company agrees to pay interest on overdue principal (including any overdue required or optional prepayment of principal) and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest, at the rate of 10.20% per annum after maturity, whether by acceleration or otherwise, until paid. Both the principal hereof and interest hereon are payable at the principal office of the Company in Miamisburg, Ohio 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 9.20% Senior Notes of the Company in the aggregate principal amount of $25,000,000 issued or to be issued under and pursuant to the terms and provisions of separate and several Note Agreements each dated as of November 1, 1989, entered into by the Company with the original purchasers therein referred to and 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 and security provided for thereby or referred to therein, to which Note Agreements reference is hereby made for the statement thereof. This Note and the other Notes outstanding under the Note Agreements may be declared due prior to their expressed maturity dates and certain prepayments are required to be made thereon, all in the events, on the terms and in the manner and amounts as provided in the Note Agreements. The Notes ate 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 with the premium, if any, set forth in Section 2 of 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 instrument of transfer duly executed by the registered holder of this Note or its 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. SUPER FOOD SERVICES, INC. By----------------------- Its A-2 SUPER FOOD SERVICES, INC. CLOSING CERTIFICATE Nationwide Life Insurance Company One Nationwide Plaza Columbus, Ohio Employers Life Insurance Company of Wausau 2000 West Wood Drive Wausau, Wisconsin West Coast Life Insurance Company 1275 Market Street San Francisco, California Gentlemen: This certificate is delivered to you in compliance with the requirements of the separate and several Note Agreements dated as of November 1, 1989 (the "AGREEMENTS"), entered into by the undersigned, Super Food Services, Inc., a Delaware corporation (the "COMPANY"), with each of you, and as an inducement to and as part of the consideration for your separate purchases on this date aggregating $25,000,000 principal amount of the 9.20% Senior Notes due January 10, 2000 (the "NOTES") of the Company pursuant to the Agreements. The terms which are capitalized herein shall have the same meanings as in the Agreements. The Company represents and warrants to each of you as follows: 1. SUBSIDIARIES AND JOINT VENTURES. Annex A attached hereto states the name of each of the Company's Subsidiaries and Joint Ventures, its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and/or its Subsidiaries. The Company and each Subsidiary has good and marketable title to all of the shares it purports to own of the stock of each Subsidiary and each Joint Venture, 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; (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 is in good standing as a foreign corporation in each jurisdiction wherein the nature of the business transacted by it EXHIBIT B (to Note Agreement) or the nature of the property owned or leased by it makes such licensing or qualification necessary. 3. BUSINESS AND PROPERTY. You have heretofore been furnished with an Annual Report dated August 26, 1989 (the "1989 REPORT") of the Company and its Subsidiaries prepared thereby which generally sets forth the business conducted and proposed to be conducted by the Company and its Subsidiaries and the principal properties of the Company and its Subsidiaries. 4. FINANCIAL STATEMENTS. (a) The consolidated balance sheets of the Company and its Subsidiaries as of the fiscal years ended August 31, 1985, August 30, 1986, August 29, 1987, August 27, 1988 and August 26, 1989, and the statements of income and retained earnings and changes in financial position or cash flows for each of the fiscal years ended on said dates accompanied by a report thereon containing an opinion unqualified as to scope limitations imposed by the Company and otherwise without qualification except as therein noted, by Arthur Andersen & Co., have been prepared in accordance with generally accepted accounting principles consistently applied except as therein noted, are correct and complete and present fairly the financial position of the Company and its Subsidiaries as of such dates and the results of their operations and changes in their financial position for such periods. The unaudited consolidated balance sheets of the Company and its Subsidiaries as of November 18, 1989, and the unaudited statements of income and retained earnings and cash flows for the three-month period ended on said date prepared by the Company have been prepared in accordance with generally accepted accounting principles consistently applied, are correct and complete and present fairly the financial position of the Company and its Subsidiaries as of said date and the results of their operations and cash flows for such period. (b) Since August 26, 1989, there has been no change in the condition, financial or otherwise, of the Company and its Subsidiaries as shown on the consolidated 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. INDEBTEDNESS. Annex B attached hereto correctly describes all Current Debt, Funded Debt, Capitalized Leases and Long-Term Leases of the Company and its Subsidiaries outstanding on November 18, 1989. 6. FULL DISCLOSURE. The financial statements referred to in paragraph 4 do not, nor does the 1989 Report or any other written statement furnished by the Company to you in connection with the negotiation of the sale of the Note (including the 1989 Report), 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 or its Subsidiaries 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. 7. 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 involve the possibility of materially and adversely affecting the properties, business, prospects, profits or condition (financial or otherwise) of the Company and its Subsidiaries. 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. B-2 8. 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 otherwise permitted by the Agreements. 9. PATENTS AND TRADEMARKS. The Company and each Subsidiary owns or possesses all the 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 conflict with the rights of others. 10. SALE IS LEGAL AND AUTHORIZED. The sale of the Notes and compliance by the Company with all of the provisions of the 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) 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 charter 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. 11. NO DEFAULTS. No Default or Event of Default as defined in the Agreements 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 instruments or agreements 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. 12. 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 Agreements or the Notes or compliance by the company with any of the provisions of the Agreements or the Notes. 13. 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 August 27,1983, 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 adequate provision has not been made in its accounts, and no material controversy in B-3 respect of additional Federal or state income taxes is pending or to the knowledge to 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. 14. USE OF PROCEEDS. The net proceeds from the sale of the Notes will be used to repay outstanding indebtedness, to provide additional working capital and other corporate purposes. None of the transactions contemplated in the Agreements (including, without limitation thereof, the use of proceeds from the issuance of the notes) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation 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. Neither the Company nor any Subsidiary owns or intends to carry or purchase any "margin stock" 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. 15. PRIVATE OFFERING. Neither the Company, directly or indirectly, nor any agent on its behalf has offered or will offer the Notes or any similar Security or has solicited or will solicit an offer to acquire the Notes or any similar Security from or has otherwise approached or negotiated or will approach or negotiate in respect of the Notes or any similar Security with any Person other than you and not more than two other institutional investors, each of whom was offered a portion of the Notes at private sale for investment. Neither the company, directly or indirectly, nor any agent on its behalf has offered or will offer the Notes or any similar Security or has solicited or will solicit an offer to acquire the Notes or any similar Security 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. 16. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The consummation of the transactions provided for in the agreement and compliance by the Company with the provisions thereof and the Notes issued thereunder will not involve any prohibited transaction within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended. No "employee pension benefit plans", as defined in ERISA ("Plans"), maintained by the Company or any Person which is under common control with the Company within the meaning of Section 4001(b) of ERISA nor does the present value of all benefits vested under all Plans exceed, as of the last annual valuation date, the value of the assets of the Plans allocable to such vested benefits. 17. COMPLIANCE WITH LAW. neither the Company nor any Subsidiary (a) is in violation of any law, ordinance, franchise, governmental rule or regulation to which it is subject; or (b) has failed to obtain any license, permit, franchise or other governmental authorization necessary to the ownership of its property or to the conduct of its business, which violation or failure to obtain would materially adversely affect the business, prospects, profits, properties or condition (financial or otherwise) of the company and its Subsidiaries, taken as a whole, or the ability of the Company to perform its obligations contained in the Agreements or the Notes. 18. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company is not in violation of any applicable Federal, state, or local laws, statutes, rules, regulations or B-4 ordinances relating to public health, safety or the environment, including, without limitation, relating to releases, discharges, emissions or disposals to air, water, land or ground water, to the withdrawal or use of ground water, to the use, handling or disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the treatment, storage, disposal or management of hazardous substances (including, without limitation, petroleum, crude oil or any fraction thereof, or other hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or other controlled, prohibited or regulated substances which violation could have a material adverse effect on the business, prospects, profits, properties or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. The Company does not know of any liability or class of liability of the Company or any Subsidiary under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 ET SEQ.), or the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 ET SEQ.). Dated: February 6, 1990 SUPER FOOD SERVICES, INC. By_____________________________________ Its Vice Chairman of the Board, Secretary and General Counsel B-5 SUBSIDIARIES AND JOINT VENTURES OF THE COMPANY
1. Subsidiaries: Name of Jurisdiction of Percentage of Voting Stock Subsidiary Incorporation Owned by Company ---------- --------------- -------------------------- Gray Bear, Inc. Michigan 100% 2. Joint Ventures: Percentage of Voting Stock Name of Jurisdiction of Owned by the Company Joint Venture Incorporation and any Subsidiary ------------- --------------- -------------------------- Enon Supermarket, Inc. Ohio 52% Whitten Enterprises, Inc. Ohio 67% Monroeville Foods, Inc. Ohio 59% Bad Axe Food Store, Inc. Michigan 49.6%
ANNEX A (to Closing Certificate) DESCRIPTION OF DEBT AND LEASES
1. Current Debt of the Company and its Subsidiaries outstanding on November 18, 1989 was as follows: Current Portion of Long Term Debt $1,140,000 Current Maturities of Obligations Under 835,235 Capitalized Leases Notes Payable to Banks 18,000,000 ---------- $19,976,235 ---------- ----------
2. Funded Debt of the Company and its Subsidiaries outstanding on November 18, 1989 was as follows: (a) Notes, Bonds and other Securities: Senior Notes 9.65% Teachers Insurance and Annuity $13,000,000 Association of America Note Payable to Bank First National Bank 3,000,000 (1) of Louisville Revolving Credit Society Bank N.A. 5,000,000 Agreement Revolving Credit Central Trust Bank N.A. 5,000,000 Agreement Term Loan Agreement National Bank of Detroit 12,000,000 (2) Term Loan Agreement National Bank of Detroit 680,000 Industrial Revenue Continental Illinois 5,600,000 Bonds National Bank ---------- 44,280,000 ---------- ----------
ANNEX B (to Closing Certificate) (b) Guaranteed Obligations Hyland Foods, Inc. $ 16,500 Stanley Olszewski 125,000 Bush, Inc. 100,000 -------- $ 241,500 -------- --------
(c) Capitalized Leases: Of the Company and its Subsidiaries outstanding at November 18, 1989. Includes the current portion of $835,235. Real Property ------------------------------------- 5425 Dixie Highway, Bridgeport, Michigan $10,420,279 8291 Chancellor Drive, Orlando, Florida 10,441,480 County Route 130, Bellefontaine, Ohio 1,080,000 Personal Property ------------------------------------ Cessna Citation I Jet Airplane 38,008 Retail Stores ----------------------------------- All Stores (9) 2,620,674 --------- $24,600,441 ----------- -----------
- ------------------------ (1) Short term note classified as long-term debt (2) Paid since 11/18/89 ANNEX B (to Closing Certificate)
3. Long-Term Leases of the Company and is Subsidiaries outstanding on November 18, 1989 were as follows: I. Liens --------- Amount Designation Property Subject to Lien Lienholder of Lien ---------------------------------------------------------------------------------------------------------------- Real Property County Route 130, Bellefontaine, OH Logan County, OH $5,600,000 Personal Property Hawker Siddeley HS-125 Jet Airplane Fifth-Third Bank, N.A. 44,960 II. Leases(1) ---------- Annual Designation Property Subject to Lease Lessor Rent ----------------------------------------------------------------------------------------------------------------- Capital Leases -------------- Real Property 5425 Dixie Highway, Bridgeport, MI American Real Estate Holdings $1,261,850 Limited Partnership Real Property 8201 Chancellor Drive, Orlando, FL Pacific Mutual Life Insurance 1,159,296 Co. Real Property County Route 130, Bellefontaine, OH Logan County, OH 247,375 Operating Leases ---------------- Real Property 555 E. Huron Ave., Vassar, MI Sidney Starkman and Irving 101,424 Rothbart Real Property 212 E. Columbus St., Bellefontaine, OH Bellefontaine Investors 50,000 Real Property 100 West Pineloch Avenue, Orlando, FL Southwestern Warehousing Ltd. 58,740 Real Property 2002 Directors Row, Orlando, FL Northwestern Mutual Life 337,217 Insurance Co. Real Property 6205 Centre Park Drive, Cincinnati, OH Schumacher-Dugan Construction, 34,392 Inc. Real Property 520 Nichols Avenue, Muncie, IN Timothy J. Foley 4,800 Real Property 1322 Sander Circle, Indianapolis, IN F.C. Tucker Company 5,100 (1) The Company also leases 84 retail supermarket locations, most of which are subleased to its affiliated retail customers, which have been omitted from the above schedule. None of these individual retail subleases is material to the operations of the Company.
ANNEX B (to Closing Certificate)
Annual Designation Property Subject to Lease Lessor Rent - ------------------------------------------------------------------------------------------------------------ Real Property 901 Henry Street Bellefontaine, OH Discon Services, Inc. 246,252 Real Property 6000 Creek Road, Blue Ash, OH Tricon Properties, Inc. 132,380 Real Property Corunna Road, Flint, MI Lansing Wholesale Grocery Co. 122,699 Capital Leases - -------------- Personal Property Cessna Citation I Jet Airplane Bank One, Indianapolis, NA 97,730 Operating Leases - ---------------- Personal Property Highway Tractors, Bridgeport, MI First Federal Savings and Loan 417,184 Assoc. Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 269,100 Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 372,600 Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 248,400 Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 248,400 Personal Property Rapistan System(A), Bridgeport, MI Security-Pacific Leasing Corp. 233,052 Personal Property Rapistan System(B), Bridgeport, MI Security-Pacific Leasing Corp. 74,520 Personal Property Rapistan System(E), Bridgeport, MI Security-Pacific Leasing Corp. 82,032 Personal Property Automobiles Various 357,954
ANNEX B (to Closing Certificate) DESCRIPTION OF CLOSING OPINION OF SPECIAL COUNSEL The closing opinion of Chapman and Cutler, special counsel to the Purchasers, called for by -section-4.2 of the Note Agreement, shall be dated 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, duly incorporated, legally existing and in good standing under the laws of the State of Delaware, has corporate power and authority and is duly authorized to enter into and perform the Note Agreements and to issue the Notes and incur the Indebtedness to be evidenced thereby; (2) The Note Agreements have been duly authorized, executed and delivered by the Company and constitute the legal, valid and binding contracts and agreements of the Company enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principals of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (3) The Notes have been duly authorized by proper corporate action on the part of the Company, have been duly executed by authorized officers of the Company and delivered and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (4) No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any Federal governmental body is necessary in connection with the execution and delivery of the Note Agreements or the Notes; and (5) The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Agreements is an exempt transaction under the Securities Act of 1933, as amended, and does 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 Identure Act of 1939, as amended. The opinion of Chapman and Cutler shall also state that the opinion of John Demos, Vice Chairman of the Board, Secretary and General Counsel, is satisfactory in scope and form to Chapman and Cutler and that, in their opinion, the Purchasers are justified in relying thereon and shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. 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. EXHIBIT C (to Note Agreement) DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY The closing opinion of John Demos, Vice Chairman of the Board, SEcretary and General Counsel of the Company, which is called for by - -section-4.2 of the Note Agreement, shall be dated the Closing Date and addressed to the Purchasers, shall be satisfactory in scope and form to the Purchasers and shall cover the matters referred to in paragraphs 1 through 5 of Exhibit C (except that in the case of paragraph 4, said opinion shall also cover Ohio law) and shall also be to the effect that: (1) The Company has full power and authority and is duly authorized 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; (2) Each Subsidiary is a corporation duly organized, legally 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 are owned by the Company, by one or more Subsidiaries, or by the Company and one or more Subsidiaries; and (3) The issuance and sale of the Notes and the execution, delivery and performance by the Company of the Note Agreements do not conflict with or result in any breach of any 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 any charter document 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. The opinion of John Demos, Vice Chairman of the Board, Secretary and General Counsel of the Company shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. With the 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. EX-10.15 10 EXHIBIT 10.15 NASH-FINCH COMPANY FIRST AMENDMENT TO CREDIT AGREEMENT Harris Trust and Savings Bank PNC Bank, N.A. Chicago, Illinois Chicago, Illinois Bank of Montreal Chicago, Illinois Ladies and Gentlemen: We refer to the Credit Agreement dated as of October 8, 1996 (such Credit Agreement being hereinafter referred to as the "CREDIT AGREEMENT") and currently in effect between you and us. Capitalized terms used without definition below shall have the same meanings herein as they have in the Credit Agreement. The Borrower hereby applies to you (the "BANKS") to amend the requirements contained in the Credit Agreement for Subsidiary Guarantee Agreements. Accordingly, upon satisfaction of the conditions precedent to effectiveness set forth below, this letter shall serve as an agreement between the Banks and the Borrower amending the Credit Agreement as hereinafter set forth. 1. ADDITION OF DEFINED TERMS TO SECTION 6.1. The following definitions shall be, and hereby are, added to Section 6.1 of the Credit Agreement, as alphabetically appropriate: "MATERIAL SUBSIDIARY" shall mean (a) each Subsidiary (other than a Super Food Joint Venture) (i) which has (itself or in any of its subsidiaries) any ongoing business operations or (ii) which has (together with its subsidiaries) consolidated total assets with an aggregate book value as determined in accordance with GAAP of more than $50,000 as of the close of any quarterly accounting period ending on or after October 5, 1996, or (iii) which is obligated, or which has a subsidiary which is obligated, as of any time after the date hereof on any Debt and (b) each Subsidiary which is a Super Food Joint Venture if at any time (i) such Super Food Joint Venture (together with its subsidiaries) has consolidated gross revenues as determined in accordance with GAAP in excess of $10,000,000 during any four (4) consecutive quarterly accounting periods ending on or after October 5, 1996, or (ii) such Super Food Joint Venture (together with its subsidiaries) has a consolidated tangible net worth (calculated for such Super Food Joint Venture and its subsidiaries in a manner consistent with determinations of Tangible Net Worth) in excess of $1,000,000 as of the end of any quarterly accounting period ending on or after October 5, 1996, or (iii) such Super Food Joint Venture (together with its subsidiaries) has outstanding Debt owed to the Borrower or any Subsidiary in excess of $500,000 in the aggregate as of any time on or after October 5, 1996, or (iv) the Borrower makes any new Investment in such Super Food Joint Venture or any of its subsidiaries for the benefit of such Super Food Joint Venture or subsidiary thereof except in the ordinary course of business to provide such Super Food Joint Venture or subsidiary thereof with ordinary and necessary working capital. "SUPER FOOD JOINT VENTURES" shall mean (i) Whitten Enterprises, Inc., an Ohio corporation, if and so long as such corporation is a Subsidiary but not a Wholly-Owned Subsidiary and (ii) New Castle Foods, Inc., an Indiana corporation, if and so long as such corporation is a Subsidiary but not a Wholly-Owned Subsidiary. 2. AMENDMENT TO SECTION 7.2. The following sentence shall be added to the end of Section 7.2 of the Credit Agreement: Each Material Subsidiary is a Guarantor and has executed a Subsidiary Guaranty Agreement pursuant to Section 9.1 hereof. 3. ADDITION OF NEW SECTION 8.7. A new Section 8.7 shall be added to the Credit Agreement to be and to read as follows: SECTION 8.7. SUBSIDIARIES OTHER THAN MATERIAL SUBSIDIARIES. Notwithstanding anything in Section 8 to the contrary, any Subsidiary which is not a Material Subsidiary shall not be required to execute a Subsidiary Guaranty Agreement. 4. AMENDMENT TO SECTION 9.1. The second sentence of Section 9.1 shall be deleted in its entirety and replaced with the following: As a condition to establishing or acquiring any Subsidiary, unless the Required Banks otherwise agree, the Borrower shall deliver an updated Schedule 7.2 reflect the new Subsidiary. In addition to the foregoing, as a -2- condition to establishing or acquiring a Subsidiary which is a Material Subsidiary, unless the Required Banks otherwise agree, the Borrower shall, within thirty (30) days after such establishment or acquisition, (i) cause such Material Subsidiary to execute a Subsidiary Guarantee Agreement and (ii) cause such Material Subsidiary to deliver documentation (including a legal opinion) similar to that described in Section 8.1(a) through (c) relating to the authorization for, execution and delivery of, and validity of such Material Subsidiary's obligations as a Guarantor hereunder and under the Subsidiary Guarantee Agreement in form and substance satisfactory to the Required Banks. 5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent: (a) The Borrower and the Banks shall have executed this Amendment. (b) Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to the Banks and their counsel. Upon satisfaction of such conditions precedent, this Amendment shall take effect as of October 8, 1996. 6. REPRESENTATIONS REAFFIRMED. In order to induce the Banks to execute and deliver this Agreement, the Borrower hereby represents to the Banks that as of the date hereof and as of the time that this Amendment becomes effective, each of the representations and warranties set forth in Section 7 of the Credit Agreement, after giving effect to the amendments made hereby, are and shall be true and correct (except that the representations contained in Section 7.4 shall be deemed to refer to the most recent financial statements of the Borrower delivered to the Banks). 7. MISCELLANEOUS. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed shall be an original but all of which shall constitute one and the same instrument. Except as specifically amended and modified hereby, all of the terms and conditions of the Credit Agreement shall stand and remain unchanged and in full force and effect. No reference to this Amendment need be made in any note, instrument or other document making reference to the Credit Agreement, any reference to the Credit Agreement in any such note, instrument or other document to be deemed to be a reference to the Credit Agreement as amended hereby. The Borrower confirms its agreement to pay the reasonable fees and disbursements of Messrs. Chapman and Cutler, counsel to the Administrative Agent, in connection with the preparation, -3- execution and delivery of this Amendment and the transactions and documents contemplated hereby. This instrument shall be construed and governed by and in accordance with the laws of the State of Illinois (without regard to principles of conflicts of laws). -4- Dated as of this ___ day of December, 1996 but effective (as set forth above) as of October 8, 1996. NASH-FINCH COMPANY By Name: ------------------------------ Title: ------------------------------ Accepted and agreed to as of the date last above written. HARRIS TRUST AND SAVINGS BANK, in its individual capacity as a Bank and as Administrative Agent By Its Vice President BANK OF MONTREAL, in its individual capacity as a Bank and as Syndication Agent By Its -------------------------------- PNC BANK, NATIONAL ASSOCIATION, in its individual capacity as a Bank and as Syndication Agent -5- By Its -------------------------------- -6- EX-10.22 11 EXHIBIT 10.22 EXCERPTS FROM MINUTES OF BOARD OF DIRECTORS MEETING OF NASH FINCH COMPANY ON APRIL 9, 1996 RESOLVED, that effective May 1, 1996, the director elected to serve as Board Chair, if such director is not a present full time employee of Nash Finch Company or its subsidiaries, shall, in addition to and not in lieu of any other compensation paid to such director as an outside member of this Board of Directors, be compensated with a monthly retainer equal to two times the amount of the monthly retainer paid to outside members of this Board of Directors generally; and that, upon becoming effective, this resolution shall supercede any resolution heretofore adopted by this Board of Directors pertaining to compensation of the Board Chair. EX-10.23 12 EXHIBIT 10.23 EXCERPTS FROM MINUTES OF BOARD OF DIRECTORS MEETING OF NASH FINCH COMPANY ON NOVEMBER 19, 1996 RESOLVED, that effective as of January 1, 1997, outside members of the Board of Directors of the Company be compensated at a rate of $1,500 plus reasonable expenses incurred for each meeting of the Board of Directors attended, $750 plus reasonable expenses incurred for attendance at meetings of committees of the Board, $1,250 per month ($15,000 per year) retainer for serving as a director, $125 per month ($1,500 per year) retainer for serving as a member of a committee of the Board, and $125 per month ($1,500 per year) retainer for serving as Chair of a committee of the Board. For the purposes of this resolution, an outside director is defined as any director who is not a present full time employee of Nash Finch Company or its subsidiaries. RESOLVED FURTHER, that the directer elected to serve as Board Chair, if such director is not a present full time employee of Nash Finch Company or its subsidiaries, shall, in addition to and not in lieu of any other compensation paid to such director as an outside member of the Board of Directors, be compensated with a monthly retainer equal to two times the amount of the monthly retainer paid to outside members of this Board of Directors generally. RESOLVED FURTHER, that upon becoming effective, the foregoing resolutions shall supercede any resolution heretofore adopted by this Board of Directors pertaining to compensation of outside directors including, without limitation, the Board Chair. EX-13.1 13 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 1996 1995 1994 - ------------------------------------------------------------------------------ Total Revenues. . . . . . . . . . . . . 100.0% 100.0% 100.0% ------ ------ ------ Gross Margin. . . . . . . . . . . . . . 13.1 14.5 14.9 Operating Expense . . . . . . . . . . . 10.7 12.1 12.5 Depreciation and Amortization . . . . . 1.0 1.0 1.1 Interest Expense. . . . . . . . . . . . .4 .4 .4 Earnings before Income Taxes. . . . . . 1.0 1.0 .9 Income Taxes. . . . . . . . . . . . . . .4 .4 .4 ------ ------ ------ Net Earnings. . . . . . . . . . . . . . .6 .6 .5 ------ ------ ------ REVENUES Total revenues increased 16.8% during fiscal 1996 to $3.375 billion compared to $2.889 billion in 1995 and $2.832 billion in 1994. The increase in 1996 is largely attributed to the acquisitions which have taken place during the year; (see Note (2) of Notes to Consolidated Financial Statements), and the addition of new independent retail accounts. Wholesale segment revenues increased 25.4% to $2.469 billion from $1.969 billion in 1995, primarily due to the acquisitions of Military Distributors of Virginia, Inc., ("MDV"), T. J. Morris Company ("T. J. Morris") and Super Food Services, Inc. ("Super Food") which reported combined 1996 revenues of $718.4 million, from their respective dates of acquisition. Prior year revenues include volume of Thomas & Howard Company of Hickory, Inc. ("T&H"), the Company's convenience store distribution operation which was sold in December 1995. Also, the volume of several new independent retailer accounts were added in 1996; in particular, Sunshine Food Markets, a seven-store chain based in Sioux Falls, South Dakota which was acquired by the Company under a joint ownership arrangement with an existing customer. Fiscal 1995 wholesale revenues increased 6.2% over 1994 due to growth of the military wholesale business and the addition of several new customers. Retail segment revenues declined 1.1% from $860.0 million in fiscal 1995 to $850.0 million in 1996. The decline reflects the sale of three stores to an existing customer, and the closing of eight unprofitable stores, partially offset by the acquisition of four other stores in three separate transactions. Same store sales during 1996 increased 1.1% compared to a year ago. Retail revenue during 1995 decreased from 1994 levels by 7.1% due to the sale of several stores to existing wholesale accounts and the closing of unprofitable stores. GROSS MARGINS Gross margins were 13.1% in 1996 compared to 14.5% in 1995 and 14.9% in 1994. The decline over the three-year period resulted from a growing proportion of wholesale revenues which achieve lower margins than retail. Wholesale operations accounted for 73.3% of consolidated revenues in 1996, compared to 68.4% and 65.7% in 1995 and 1994, respectively. Overall margins were also negatively impacted by the sale of T&H, a higher margin general merchandise and convenience store distribution business, and the acquisition of the lower margin military and conventional wholesale volume of MDV and T. J. Morris. On a wholesale level, the Company has continued to regionalize procurement functions among warehouse groups to improve operating efficiency and lower product costs, which may favorably impact margins. Retail segment margins improved as a result of an increased distribution of sales from higher margin perishable and specialty department products and the availability and recognition of greater vendor promotional allowances at the store level. Margins were also affected by a LIFO charge for the year of $1.6 million compared to $.1 million and $1.4 million for 1995 and 1994, respectively. The prior year charge is net of a $1.5 million credit related to a reduction of inventory levels by T&H preceding the sale of the subsidiary. OPERATING EXPENSES Selling, general and administrative expenses as a percent of total revenues were 10.7% in 1996 compared to 12.1% in 1995 and 12.5% in 1994. Expense levels declined as a percent of total revenues due to the growing proportion of wholesale business which operates at lower expense levels than retail. In addition, operating expenses of the newly acquired MDV and T. J. Morris wholesale businesses are lower, as a percent of total revenues, than those of the divested T&H operations. 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 increased expenses of approximately $1.0 million related to the closing of a distribution center in Macon, Georgia; and the systematic transfer of a substantial portion of its business to the newly acquired T. J. Morris operation. In addition, information system costs increased on a pretax basis by $1.8 million over 1995 as a result of the Company's project to redesign its information systems to client/server-based technology. The upward trend in management information systems costs is expected to continue through fiscal 1997 as the design process progresses to encompass more facets of the Company's operations. Also, the Company recorded a fourth quarter pretax charge of $1.6 million representing a valuation allowance related to its minority interest in an unconsolidated company. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense increased 18.2% from 1995 expense levels. The increase was primarily due to amortization of goodwill and depreciation of property, plant and equipment acquired since the beginning of 1996. Partially offsetting these costs were lower depreciation expenses resulting from the sale or closing of several retail stores and divestiture of T&H. The decrease in 1995 compared to 1994 reflected a reduction in the number of corporate owned stores and lower capital expenditures. INTEREST EXPENSE Interest expense in 1996 increased by 38% compared to 1995. The increase is attributed to higher debt levels required to fund the acquisitions of both MDV and Super Food. Interest expense as a percent of revenues was .44%, .37% and .40% for 1996, 1995 and 1994, respectively. Interest expense in 1995 was favorably impacted by cash proceeds from the sales of T&H and customer notes receivable which favorably reduced borrowing requirements in the second half of the year. EARNINGS BEFORE TAXES Earnings before income taxes increased 17.7% from $28.6 million in 1995 to $33.7 million in 1996. The earnings improvement is attributed to each segment of the Company's operations; in particular, wholesale operations benefited from the acquisitions in 1996 as well as new independent retail volume which has been added since last year. Retail operations also showed improvement for the year as a result of expense control and better gross margin management. Nash DeCamp, the Company's produce marketing subsidiary, was plagued by weak market conditions for South American product at mid-year, but was favorably affected by strong market conditions for its domestically-grown products in the second half of 1996. 14 NASH FINCH COMPANY AND SUBSIDIARIES INCOME TAXES The effective income tax rate increased to 40.5% in 1996 from 39.1% in 1995 and 40.0% in 1994. The 1995 reduction was due to utilization of available capital loss carry forwards to partially offset the taxable gain from the sale of T&H capital stock to an unrelated third party. The 1996 and future year effective tax rate increased as the result of non-tax deductible goodwill amortization resulting from the acquisitions of T. J. Morris and Super Food. The effective tax rate is not expected to decline in future years. 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. During 1996, the Company utilized long-term debt to finance the acquisitions of MDV and Super Food as well as for capital projects. Cash provided from operating activities was $32.9 million in 1996, compared to $85.8 million last year. The decline results from the sale of T&H for cash in the fourth quarter last year compounded by the additional working capital requirements needed to service the increased revenue base in 1996. Working capital at December 28, 1996 was $228.5 million compared to $104.0 million in 1995. At December 28, 1996, the Company had $16.2 million in short-term debt, compared to no outstanding borrowing at the same time last year. The Company has committed lines of credit totaling $7.0 million and uncommitted lines of credit of $35.0 million with a number of banks. On October 8, 1996, the Company entered into a 5-year, $500.0 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 $51.3 million in 1996 compared to $33.3 and $34.9 in 1995 and 1994, respectively. These projects have typically been funded through operating cash flows. For 1997, capital spending is projected to be $46.9 million, consisting of warehouse and delivery equipment replacements, several retail store replacements, expansions and remodeling, and expenditures related to the redesign of information systems. During 1996, the Company provided financial assistance in the form of secured loans totaling $3.9 million to new or existing independent retailers (exclusive of any such loans made by Super Food and T. J. Morris prior to their being acquired by the Company). These loans are generally used to maintain and grow their businesses. Dividend payments in 1996 were $.75 per share, up from $.74 in 1995. These amounts represented 41% and 46% of net earnings in each year, respectively. Return on average stockholders' equity was 8.9% in 1996, up from 8.3% in 1995. PRICE RANGE OF COMMON STOCK AND DIVIDENDS Nash Finch Company Common Stock is traded on the Nasdaq National Market tier of The Nasdaq Stock 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, 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 28, 1996 there were 2,225 stockholders of record. Dividends 1996 1995 Per Share ---------------- ---------------- ---------------- High Low High Low 1996 1995 - --------------------------------------------------------------------------- First Quarter 18 1/2 16 3/8 16 3/4 15 1/4 .18 .18 Second Quarter 18 1/4 15 3/4 16 3/4 15 5/8 .18 .18 Third Quarter 16 3/4 15 1/2 20 1/2 16 3/8 .18 .18 Fourth Quarter 21 5/8 16 1/4 19 15/16 17 1/4 .21 .20 - --------------------------------------------------------------------------- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
A summary of quarterly financial First Quarter Second Quarter Third Quarter Fourth Quarter information is presented. 12 Weeks 12 Weeks 16 Weeks 12 Weeks -------------------- -------------------- -------------------- -------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------- Net sales and other revenue. . . . . . $684,494 623,598 735,242 676,514 1,003,867 918,825 951,882 669,899 Cost of sales. . . . . . . . . . . . . 593,145 534,312 635,315 575,582 869,669 785,623 834,580 574,324 Earnings before income taxes . . . . . 4,699 4,519 10,253 9,835 11,421 8,491 7,294 5,750 Income taxes . . . . . . . . . . . . . 1,903 1,830 4,153 3,983 4,625 3,439 2,954 1,929 Net earnings . . . . . . . . . . . . . 2,796 2,689 6,100 5,852 6,796 5,052 4,340 3,821 Percent to sales and revenues. . . . . .41 .43 .82 .86 .68 .55 .46 .57 Net earnings per share . . . . . . . . $ .26 .25 .56 .54 .61 .46 .38 .35 Average number of shares outstanding. . . . . . . . . . . 10,890 10,874 10,921 10,875 11,121 10,875 11,265 10,877 - ------------------------------------------------------------------------------------------------------------------------------- 15
NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS Fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994 1996 1995 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - ----------------------------------------------------------------------------------------- INCOME: Net sales . . . . . . . . . . . . . . . . . . . . . $3,322,666 2,831,114 2,779,330 Other revenues. . . . . . . . . . . . . . . . . . . 52,819 57,722 52,670 ---------- ----------- ----------- Total revenues. . . . . . . . . . . . . . . . . . 3,375,485 2,888,836 2,832,000 COST AND EXPENSES: Cost of sales . . . . . . . . . . . . . . . . . . . 2,932,709 2,469,841 2,410,292 Selling, general and administrative, and other operating expenses. . . . . . . . . . . 359,456 350,201 352,683 Depreciation and amortization . . . . . . . . . . . 34,759 29,406 31,831 Interest expense. . . . . . . . . . . . . . . . . . 14,894 10,793 11,384 ---------- ----------- ----------- Total costs and expenses. . . . . . . . . . . . . 3,341,818 2,860,241 2,806,190 Earnings before income taxes. . . . . . . . . . . 33,667 28,595 25,810 Income taxes . . . . . . . . . . . . . . . . . . . . 13,635 11,181 10,330 ---------- ----------- ----------- Net earnings. . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480 ---------- ----------- ----------- Weighted average number of common shares outstanding 11,055 10,875 10,873 ---------- ----------- ----------- Earnings per share . . . . . . . . . . . . . . . . . $ 1.81 1.60 1.42 ---------- ----------- ----------- - ----------------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Nash Finch Company: We have audited the accompanying consolidated balance sheets of Nash Finch Company and subsidiaries as of December 28, 1996 and December 30, 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years 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 audits. The financial statements of Nash Finch Company for the year ended December 31, 1994 were audited by other auditors whose report dated March 3, 1995, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 1996 and 1995 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nash Finch Company and subsidiaries at December 28, 1996 and December 30, 1995, and the consolidated results of their operations and their cash flows, for each of the years then ended in conformity with generally accepted accounting principles. /s/Ernst & Young LLP Minneapolis, Minnesota February 19, 1997 16 NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal years ended December 28, 1996, December 30, 1995, and December 30, 1994 1996 1995 1994 (IN THOUSANDS) - ----------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . 34,759 29,406 31,831 Provision for bad debts . . . . . . . . . . . . . . . . . . . . 1,893 3,997 2,187 Provision for (recovery from) losses on closed lease locations. (458) 1,361 366 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (2,278) (4,187) 2,874 Deferred compensation . . . . . . . . . . . . . . . . . . . . . (149) (901) (539) Loss (earnings) of equity investments . . . . . . . . . . . . . 616 (501) (902) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326 (157) (545) Changes in operating assets and liabilities: Accounts and notes receivable . . . . . . . . . . . . . . . . . (12,544) 8,115 (9,418) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 14,021 14,680 (6,880) Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . (349) (3,441) (1,087) Accounts payable and outstanding checks . . . . . . . . . . . . (24,245) 15,339 6,979 Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 2,219 2,160 2,553 Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . (967) 2,508 (2,172) -------- -------- -------- Net cash provided by operating activities . . . . . . . . . . 32,876 85,793 40,727 -------- -------- -------- INVESTING ACTIVITIES: Dividends received. . . . . . . . . . . . . . . . . . . . . . . . -- 890 618 Disposals of property, plant and equipment, net . . . . . . . . . 9,169 14,858 12,501 Additions to property, plant and equipment excluding capital leases. . . . . . . . . . . . . . . . . . . . (51,333) (33,264) (34,965) Businesses acquired, net of cash acquired . . . . . . . . . . . . (257,868) -- (8,614) Investment in an affiliate. . . . . . . . . . . . . . . . . . . . (2,500) (1,379) -- Loans to customers. . . . . . . . . . . . . . . . . . . . . . . . (4,997) (9,199) (7,958) Payments from customers on loans. . . . . . . . . . . . . . . . . 4,713 8,788 8,093 Loans sold including current portion. . . . . . . . . . . . . . . 3,402 13,744 -- Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,896) (137) (902) -------- -------- -------- Net cash used for investing activities. . . . . . . . . . . . (302,310) (5,699) (31,227) -------- -------- -------- FINANCING ACTIVITIES: Proceeds from long-term debt. . . . . . . . . . . . . . . . . . . 30,000 352 -- Proceeds from revolving debt. . . . . . . . . . . . . . . . . . . 244,000 -- -- Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . (8,288) (8,048) (7,938) Payments of short-term debt . . . . . . . . . . . . . . . . . . . 1,171 (41,400) 3,100 Payments of long-term debt. . . . . . . . . . . . . . . . . . . . (21,946) (5,568) (2,933) Payments of capitalized lease obligations . . . . . . . . . . . . (717) (540) (1,576) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 56 35 -------- -------- -------- Net cash provided by (used in) financing activities . . . . . 244,331 (55,148) (9,312) -------- -------- -------- Net (decrease) increase in cash . . . . . . . . . . . . . . . $(25,103) 24,946 188 -------- -------- -------- - ----------------------------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 17
NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 28, 1996 and December 30, 1995 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Assets 1996 1995 - ------------------------------------------------------------------------------- CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . . . . . . $ 921 26,024 Accounts and notes receivable, net. . . . . . . . . . 206,062 85,968 Inventories . . . . . . . . . . . . . . . . . . . . . 293,458 183,957 Prepaid expenses. . . . . . . . . . . . . . . . . . . 20,492 12,067 Deferred tax assets . . . . . . . . . . . . . . . . . 4,663 3,674 -------- -------- Total current assets. . . . . . . . . . . . . . . 525,596 311,690 Investments in affiliates. . . . . . . . . . . . . . . 10,300 8,421 Notes receivable, noncurrent . . . . . . . . . . . . . 21,652 4,595 PROPERTY, PLANT AND EQUIPMENT: Land. . . . . . . . . . . . . . . . . . . . . . . . . 33,753 28,638 Buildings and improvements. . . . . . . . . . . . . . 148,227 110,887 Furniture, fixtures, and equipment. . . . . . . . . . 295,147 204,054 Leasehold improvements. . . . . . . . . . . . . . . . 54,925 25,786 Construction in progress. . . . . . . . . . . . . . . 7,543 6,538 Assets under capitalized leases . . . . . . . . . . . 26,105 12,923 -------- -------- 565,700 388,826 Less accumulated depreciation and amortization. . . . (293,845) (210,787) -------- -------- Net property, plant and equipment . . . . . . . . 271,855 178,039 Intangible assets, net . . . . . . . . . . . . . . . . 80,312 6,282 Investment in direct financing leases. . . . . . . . . 22,011 456 Deferred tax asset -- net. . . . . . . . . . . . . . . 4,076 2,835 Other assets . . . . . . . . . . . . . . . . . . . . . 9,675 1,942 -------- -------- Total assets. . . . . . . . . . . . . . . . . . $945,477 514,260 -------- -------- -------- -------- - ------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 18 NASH FINCH COMPANY AND SUBSIDIARIES
Liabilities and Stockholders' Equity 1996 1995 - ----------------------------------------------------------------------------------------------------- CURRENT LIABILITIES: Outstanding checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,492 28,998 Short-term debt payable to banks. . . . . . . . . . . . . . . . . . . . . . . 16,171 -- Current maturities of long-term debt and capitalized lease obligations. . . . 7,795 14,701 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,501 127,592 Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,130 31,745 Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,999 4,652 -------- -------- Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 297,088 207,688 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,819 71,030 Capitalized lease obligations. . . . . . . . . . . . . . . . . . . . . . . . . 41,832 10,158 Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,476 7,625 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,401 2,446 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; 11,574 shares issued in 1996 and 11,224 in 1995 . . . . . . . . . . . . . . . . . . . . . 19,290 18,706 Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . 16,816 12,013 Foreign currency translation adjustment - net of a $633 deferred tax benefit. . . . . . . . . . . . . . . . . . . . . (950) (950) Restricted stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (500) -- Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,322 188,578 -------- -------- 234,978 218,347 Less cost of 307 shares and 346 shares of common stock in treasury, respectively. . . . . . . . . . . . . . . . . . . (2,117) (3,034) -------- -------- Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 232,861 215,313 -------- -------- Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . $945,477 514,260 -------- -------- -------- -------- - ----------------------------------------------------------------------------------------------------- 19
NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Foreign Common stock Additional currency ------------ paid-in Retained translation Shares Amount capital earnings adjustment - ------------------------------------------------------------------------------------------------------------ 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. -- -- -- -- (572) ------- ------- ------- ------- ------- BALANCE AT DECEMBER 31, 1994 . . . . . 11,224 18,706 11,977 179,212 (572) 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. -- -- -- -- (378) ------- ------- ------- ------- ------- BALANCE AT DECEMBER 30, 1995 . . . . . 11,224 18,706 12,013 188,578 (950) Net earnings . . . . . . . . . . . . . -- -- -- 20,032 -- Dividend declared of $.75 per share. . -- -- -- (8,288) -- Shares issued in connection with acquisition of a business . . . . . . 350 584 5,064 -- -- Treasury stock issued upon exercise of options. . . . . . . . . . . . . . -- -- 47 -- -- Issuance of restricted stock . . . . . -- -- (308) -- -- Amortized compensation under restricted stock plan . . . . . . . . -- -- -- -- -- Treasury stock purchased . . . . . . . -- -- -- -- -- ------- ------- ------- ------- ------- BALANCE AT DECEMBER 28, 1996 . . . . . 11,574 $19,290 16,816 200,322 (950) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Treasury Stock Total Restricted -------------- stockholders Stock Shares Amount equity - ----------------------------------------------------------------------------------------- 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) ------- ------- ------- ------- BALANCE AT DECEMBER 31, 1994 . . . . . -- (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) ------- ------- ------- ------- BALANCE AT DECEMBER 30, 1995 . . . . . -- (346) (3,034) 215,313 Net earnings . . . . . . . . . . . . . -- -- -- 20,032 Dividend declared of $.75 per share. . -- -- -- (8,288) Shares issued in connection with acquisition of a business . . . . . . -- -- 5,648 Treasury stock issued upon exercise of options. . . . . . . . . . . . . . -- 6 42 89 Issuance of restricted stock . . . . . (524) 40 995 163 Amortized compensation under restricted stock plan . . . . . . . . 24 -- -- 24 Treasury stock purchased . . . . . . . -- (7) (120) (120) ------- ------- ------- ------- BALANCE AT DECEMBER 28, 1996 . . . . . (500) (307) $(2,117) 232,861 ------- ------- ------- ------- ------- ------- ------- ------- - ----------------------------------------------------------------------------------------- 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 1996, 1995 and 1994 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% or less owned companies. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain reclassifications were made to prior year amounts to conform with 1996 presentation. 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 and 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 28, 1996 and December 30, 1995, approximately 86% of the Company's inventories are valued on the last-in, first-out (LIFO) method. During fiscal 1996 the Company recorded a LIFO charge of $1.6 million compared to $.1 million in 1995. 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 $41.6 million and $40.0 million higher at December 28, 1996 and December 30, 1995, 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 2-25 years. Amortization expense charged to operations for fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994 was $5.2 million, $1.8 million and $2.2 million, respectively. The accumulated amortization of intangible assets was $10.1 million and $5.1 million at December 28, 1996 and December 30, 1995. DEPRECIATION AND AMORTIZATION Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets which generally range from 10 to 40 years for building and improvements and 3 to 10 years for furniture, fixtures and equipment. 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. STOCK OPTION PLANS In accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the Company has chosen to continue to apply Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related interpretations in accounting for its stock option plans, and, accordingly, does not recognize compensation costs, if option price equals or exceeds market price at date of grant. Note (6) to the Consolidated Financial Statements contains a summary of the pro forma effects to reported net income and earnings per share had the Company elected to recognize compensation costs as encouraged by SFAS No. 123. 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. (2) ACQUISITIONS During fiscal 1996, the Company completed three acquisitions. These acquisitions have been accounted for by the purchase method of accounting and accordingly, the operating results of the newly acquired businesses have been included in the consolidated operating results of the Company since their respective dates of acquisition. On November 7, 1996, the Company completed a tender offer to purchase the outstanding shares of common stock of Super Food Services, Inc. ("Super Food") for $15.50 per share in cash, with 10.6 million shares tendered, representing approximately 96 percent of the outstanding common stock of Super Food. Super Food is a wholesale grocery distributor based in Dayton, Ohio with annual revenues of approximately $1.2 billion. The fair value of the assets acquired, including goodwill, was $321.9 million, and liabilities assumed totaled $150.0 million. Goodwill of $29.8 million and other intangibles of $7.1 million are being amortized over 25 years on a straight-line basis. On August 5, 1996, the Company acquired all of the outstanding stock of T. J. Morris Company ("T. J. Morris"), a full line food wholesaler located in Statesboro, Georgia, with annual revenues of $110.0 million. In exchange for the T. J. Morris stock, the Company issued 350,261 shares of its common stock, valued at approximately $5.7 million, of which 75,000 shares are held in escrow. The excess of purchase price over fair value of the assets acquired resulted in goodwill of approximately $3.1 million which is being amortized on a straight line basis over a 15-year period. 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, with revenues of approximately $350.0 million, 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. The following summary, prepared on a pro forma basis, combines the consolidated results of operations as if Super Food, T. J. Morris and MDV had been acquired as of the beginning of the periods presented, after including the impact of certain adjustments such as amortization of intangibles, increased interest expense on acquisition debt and related income tax effects: PRO FORMA INFORMATION (UNAUDITED) - --------------------------------------------------------------------------- 1996 1995 - --------------------------------------------------------------------------- Net revenues . . . . . . . . . . . . . . . . . .$4,507,600 4,589,362 Earnings before income taxes . . . . . . . . . . 23,192 32,291 Net income . . . . . . . . . . . . . . . . . . . 13,761 19,060 Earnings per share . . . . . . . . . . . . . . . $1.24 1.70 ---------- ---------- The pro forma information is provided for informational purposes only. It is based on historical information and does not necessarily reflect results that would have occurred had the acquisitions been made as of those dates or results which may occur in the future. (3) ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable at the end of fiscal years 1996 and 1995 are comprised of the following components (in thousands): - --------------------------------------------------------------------------- 1996 1995 - --------------------------------------------------------------------------- Customer notes receivable - current portion. . . $ 8,090 2,232 Customer accounts receivable . . . . . . . . . . 197,336 73,153 Other receivables. . . . . . . . . . . . . . . . 21,158 11,992 Allowance for doubtful accounts. . . . . . . . . (20,522) (1,409) ---------- ---------- Net current accounts and notes receivable. . . . 206,062 85,968 ---------- ---------- Noncurrent customer notes receivable . . . . . . 29,223 8,066 Allowance for doubtful accounts. . . . . . . . . (7,571) (3,471) ---------- ---------- Net noncurrent notes receivable. . . . . . . . . $ 21,652 4,595 ---------- ---------- ---------- ---------- Operating results include bad debt expense totaling $1.9 million, $4.0 million and $2.2 million during fiscal years 1996, 1995 and 1994, respectively. 21 NASH FINCH COMPANY AND SUBSIDIARIES On September 8, 1995, the Company entered into an agreement with a financial institution which allowed the Company to sell on a revolving basis customer notes receivable. Although the agreement lapsed on December 28, 1996, the notes, which have maturities through the year 2002, were sold at face value with recourse. As a result, the Company continues to be 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 fund working capital requirements. The remaining balances of such sold notes receivable totaled $14.0 million and $15.0 million at December 28, 1996 and December 30, 1995, 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 1996 and 1995 is summarized as follows (in thousands): - --------------------------------------------------------------------------- 1996 1995 - --------------------------------------------------------------------------- Variable Rate -- revolving credit agreement . . . $244,000 -- Industrial development bonds, 5.4% to 7.8% due in various installments through 2009 . . . . . . . . . . . 4,885 5,385 Term loans, 7.5% to 9.9% due in various installments through 2008 . . . . . . . . . . . 112,250 71,167 Notes payable and mortgage notes, 9.3% to 12.0% due in various installments through 2003 . . . . . . . . . . . 6,747 8,666 -------- ------ 367,882 85,218 Less current maturities . . . . . . . . . . . . . 6,063 14,188 -------- ------ $361,819 71,030 -------- ------ -------- ------ On October 8, 1996, the Company entered into a $500 million senior unsecured revolving credit facility ("the credit facility") with two lead banks. The agreement calls for a scheduled reduction of the facility within two years, to $400 million, with the remaining balance maturing five years from closing. Borrowings under this agreement will bear interest at variable rates equal to London Interbank Office Rate (LIBOR) plus .30%. In addition, the Company pays commitment fees of .175% on the entire facility both used and unused. The average borrowing rate during the period was 5.9%. The credit facility contains covenants which, among other matters, limits the Company's ability to incur indebtedness, buy and sell assets, and requires compliance to predetermined ratios related to net worth, debt to equity and interest coverage. At December 28, 1996, 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 $5.3 million and $4.5 million, respectively. Aggregate annual maturities of long-term debt for the five fiscal years after December 28, 1996 are as follows (in thousands): - --------------------------------------------------------------------------- 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,063 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,641 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,277 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,834 2001 and thereafter . . . . . . . . . . . . . . . . . . . . . . 304,067 - --------------------------------------------------------------------------- Interest paid was $14.9 million, $10.8 million and $11.4 million, for the fiscal years 1996, 1995 and 1994, respectively. 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 28, 1996 unused formal lines of credit amounted to $7.0 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 including current maturities, utilizing discounted cash flows, is $365.4 million. (5) INCOME TAXES Income tax expense for fiscal years 1996, 1995 and 1994 is made up of the following components (in thousands): - --------------------------------------------------------------------------- 1996 1995 1994 - --------------------------------------------------------------------------- Current: Federal. . . . . . . . . . . . . $12,125 12,244 5,779 State. . . . . . . . . . . . . . 2,354 2,872 1,296 Deferred: Federal. . . . . . . . . . . . . (576) (3,145) 2,691 State. . . . . . . . . . . . . . (268) (790) 564 ------- ------ ------ Total. . . . . . . . . . . . . $13,635 11,181 10,330 ------- ------ ------ ------- ------ ------ Total income tax expense represents effective tax rates of 40.5%, 39.1% and 40.0%, for the fiscal years 1996, 1995, and 1994, respectively. The reasons for differences compared with the U.S. federal statutory tax rate (expressed as a percentage of pretax income) are as follows: - --------------------------------------------------------------------------- 1996 1995 1994 - --------------------------------------------------------------------------- Federal statutory tax rate. . . . 35.0% 35.0% 35.0% Items affecting federal income tax rate: State taxes, net of federal income tax benefit. . . . . . . . . 4.3 4.9 4.7 Other, net . . . . . . . . . . 1.2 (.8) .3 ----- ----- ----- Effective tax rate . . . . . 40.5% 39.1% 40.0% ----- ----- ----- ----- ----- ----- Income taxes paid were $12.4 million, $10.8 million and $9.2 million during fiscal years 1996, 1995 and 1994, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 28, 1996, December 30, 1995, and December 31, 1994, are presented below (in thousands): - --------------------------------------------------------------------------- 1996 1995 1994 - --------------------------------------------------------------------------- Deferred tax assets: Accounts and notes receivable, principally due to allowance for doubtful accounts . . . . . . . $ 7,625 1,964 1,412 Inventories, principally due to additional cost inventoried for tax purposes pursuant to the Tax Reform Act of 1986. . . . . . . . 2,956 1,654 1,745 Health care claims, principally due to accrual for financial reporting purposes. . . . . . . . . 2,991 1,073 684 Deferred compensation, principally due to accrual for financial reporting purposes. . . . . . . . . 2,376 3,173 3,329 Compensated absences, principally due to accrual for financial reporting purposes. . . . . . . . . 2,286 1,379 1,263 Compensation and casualty loss, principally due to accrual for financial reporting purposes. . . . 1,959 2,135 1,842 Purchased intangibles . . . . . . . . -- 1,958 846 Closed locations. . . . . . . . . . . 3,126 1,110 500 Other . . . . . . . . . . . . . . . . 2,236 1,193 757 ------ ------ ------ Total gross deferred tax assets. . . 25,555 15,639 12,378 Less valuation allowance . . . . . -- -- -- ------ ------ ------ Net deferred tax assets. . . . . . 25,555 15,639 12,378 ------ ------ ------ ------ ------ ------ 22 NASH FINCH COMPANY AND SUBSIDIARIES Deferred tax liabilities: Purchased intangibles . . . . . . . . . 1,055 -- -- Plant and equipment, principally due to differences in depreciation. . 6,511 5,978 6,402 Inventories, principally due to differences in LIFO basis. . . . . 7,230 2,070 2,661 Other . . . . . . . . . . . . . . . . . 2,020 1,082 993 ------- ------ ------ Total gross deferred tax liabilities. . 16,816 9,130 10,056 ------- ------ ------ Net deferred tax asset. . . . . . . . $ 8,739 6,509 2,322 ------- ------ ------ ------- ------ ------ Since it is more likely than not that the deferred tax asset of $25,555, $15,639 and $12,378 at December 28, 1996, December 30, 1995 and December 31, 1994, respectively, will be realized through carry back to taxable income in prior years, future reversals of existing taxable temporary differences, future taxable income and tax planning strategies, the Company has determined that there is no need to establish a valuation allowance for the deferred tax asset at December 28, 1996, December 30, 1995 and December 31, 1994, as required by SFAS No. 109, ACCOUNTING FOR INCOME TAXES. (6) STOCK RIGHTS AND OPTIONS Under the Company's 1996 Stockholder Rights Plan, 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 $30.00 ($60.00 per full share). The rights are not yet exercisable and no separate rights certificates have been distributed. All rights expire on March 31, 2006. The rights become exercisable 20 days after a "flip-in event" has occurred or 10 business days (subject to extension) after a person or group makes a tender offer for 15% or more of the Company's outstanding common stock. A flip-in event would occur if a person or group acquires (1) 15% of the Company's outstanding common stock, or (2) an ownership level set by the Board of Directors at less than 15% if the person or group is deemed by the Board of Directors to have interests adverse to those of the Company and its stockholders. The rights may be redeemed by the Company at any time prior to the occurrence of a flip-in event at $.01 per right. The power to redeem may be reinstated within 20 days after a flip-in event occurs if the cause of the occurrence is removed. Upon the rights becoming exercisable, subject to certain adjustments or alternatives, each right would entitle the holder (other than the acquiring person or group, whose rights become void) to purchase a number of shares of the Company's common stock having a market value of twice the exercise price of the right. If the Company is involved in a merger or other business combination, or certain other events occur, each right would entitle the holder to purchase common shares of the acquiring company having a market value of twice the exercise price of the right. Within 30 days after the rights become exercisable following a flip-in event, the Board of Directors may exchange shares of Company common stock or cash or other property for exercisable rights. The Company follows 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 ("the 1994 Plan"). As a result of this action, a previous plan was terminated. For purposes of the 1994 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 not less than 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. On May 9, 1995 the stockholders approved a stock option plan for non-employee directors ("the Director Plan"). 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 28, 1996 under the 1994 Plan, options to purchase 341,110 shares of common stock of the Company at an average price of $17.19 per share and exercisable over terms of five to seven years from the dates of grant, have been granted and are outstanding. In February 1996, certain members of management exercised rights to purchase restricted stock from the Company at a 25% discount to fair market value pursuant to grants awarded in January 1996 under the terms of the 1994 Plan. The purchase required a minimum of 10% payment in cash with the remaining balance evidenced by a 5-year promissory note to the Company. Unearned compensation equivalent to the excess of market value of the shares purchased over the price paid by the recipient at the date of grant, and the unpaid balance of the promissory note have been charged to stockholders' equity; amortization of compensation expense was not significant. At December 28, 1996, 32,832 shares of restricted stock have been issued and are outstanding. Performance unit awards having a maximum potential payout of 190,046 shares have also been granted and are outstanding. Reserved for the granting of future stock options, restricted stock awards and performance unit awards are 67,136 shares. At December 28, 1996 under the Director Plan, options to purchase 8,000 shares of common stock of the Company, at an average price of $16.80 per share and exercisable over a term of five years from the dates of grant, have been granted and are outstanding. Reserved for the granting of future stock options are 32,000 shares. Changes in outstanding options during the three fiscal years ended December 28, 1996 are summarized as follows (in thousands): Weighted Average Shares Option Price Per Share - ------------------------------------------------------------------------------- Options outstanding January 1, 1994 . . . . . . . . . 1 23.00 Exercised. . . . . . . . . . . . . . . . . . . . . (1) 16.88 Forfeited. . . . . . . . . . . . . . . . . . . . . (7) 18.19 Granted. . . . . . . . . . . . . . . . . . . . . . 298 16.86 - ------------------------------------------------------------------------------- Options outstanding December 31, 1994 . . . . . . . . 291 16.86 Exercised. . . . . . . . . . . . . . . . . . . . . (3) 16.72 Forfeited. . . . . . . . . . . . . . . . . . . . . (36) 16.88 Granted. . . . . . . . . . . . . . . . . . . . . . 4 16.06 - ------------------------------------------------------------------------------- Options outstanding December 30, 1995 . . . . . . . . 256 16.85 Exercised. . . . . . . . . . . . . . . . . . . . . (4) 16.77 Forfeited. . . . . . . . . . . . . . . . . . . . . (45) 17.05 Granted. . . . . . . . . . . . . . . . . . . . . . 142 17.72 - ------------------------------------------------------------------------------- Options outstanding December 28, 1996. . . . . . . . 349(a) 17.18 - ------------------------------------------------------------------------------- (a) Remaining average contractual life of options outstanding at December 28, 1996 was 2.5 years. Options exercisable at: December 28, 1996 . . . . . . . . . . . . . . . . . 147 16.95 December 30, 1995 . . . . . . . . . . . . . . . . . 105 16.83 The weighted average fair value of options granted during 1996 is $2.40. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes single option-pricing model assuming a 23 NASH FINCH COMPANY AND SUBSIDIARIES weighted average risk-free interest rate of 6.0%, an expected dividend yield of 3.83%, expected lives of two and one-half years and volatility of 18.7%. Had compensation expense for stock options been determined based on the fair value method (instead of intrinsic value method) at the grant dates for awards, the Company's 1996 and 1995 net income and earnings per share would have decreased by less than 1%. The effects of applying the fair value method of measuring compensation expense for 1996 is likely not representative of the effects for future years in part because the fair value method was applied only to stock options granted after December 31, 1994. (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): - ------------------------------------------------------------------------------- 1996 1995 - ------------------------------------------------------------------------------- Buildings and improvements. . . . . . . . . . . . . . $26,105 12,923 Less accumulated amortization . . . . . . . . . . . . (10,147) (4,011) ------- ------- Net assets under capitalized leases. . . . . . . . $15,958 8,912 ------- ------- ------- ------- At December 28, 1996, future minimum rental payments under noncancelable leases and subleases are as follows (in thousands): - ------------------------------------------------------------------------------- Operating Capital leases leases - ------------------------------------------------------------------------------- 1997 . . . . . . . . . . . . . . . . . . . . . . . . $ 27,366 6,217 1998 . . . . . . . . . . . . . . . . . . . . . . . . 24,289 6,129 1999 . . . . . . . . . . . . . . . . . . . . . . . . 21,095 6,052 2000 . . . . . . . . . . . . . . . . . . . . . . . . 18,767 5,927 2001 and thereafter . . . . . . . . . . . . . . . . 100,374 65,357 -------- -------- Total minimum lease payments(a). . . . . . . . . . . $191,891 89,682 Less imputed interest (rates ranging from 7.9% to 11.5%). . . . . . . . . . . . (46,118) -------- Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . 43,564 Less current maturities . . . . . . . . . . . . . . (1,732) -------- Capitalized lease obligations. . . . . . . . . . . . 41,832 -------- -------- (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 28, 1996 are $84.0 million and $49.3 million, respectively. Total rental expense under operating leases for fiscal years 1996, 1995 and 1994 is as follows (in thousands): - ------------------------------------------------------------------------------- 1996 1995 1994 - ------------------------------------------------------------------------------- Total rentals . . . . . . . . . . . . . $33,316 27,533 28,978 Less real estate taxes, insurance and other occupancy costs . . . . . . . . . . . (2,070) (2,095) (2,429) ------ ------ ------ Minimum rentals . . . . . . . . . . . . 31,246 25,438 26,549 Contingent rentals. . . . . . . . . . . 183 312 148 Sublease rentals. . . . . . . . . . . . (9,449) (7,964) (7,716) ------ ------ ------ $21,980 17,786 18,981 ------ ------ ------ ------ ------ ------ 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 $23.7 million. (8) CONCENTRATION OF CREDIT RISK The Company provides financial assistance in the form of secured loans to some of its 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 may guarantee lease and promissory note obligations of customers. As of December 28, 1996, the Company has guaranteed outstanding promissory note obligations of one customer in the amount of $8.3 million and of another customer in the amount of $3.8 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 and, in certain instances, on crops yet to be harvested. At December 28, 1996, $8.1 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) PROFIT SHARING PLAN 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 1996, 1995 and 1994 was $4.1 million, $3.8 million and $3.5 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) PENSION Super Food has a qualified non-contributory retirement plan to provide retirement income for eligible full-time employees who are not covered by union retirement plans. Pension benefits under the plans are based on length of service and compensation. The Company contributes amounts necessary to meet minimum funding requirements. The plans' funded status at December 28, 1996 was: - ------------------------------------------------------------------------------- 1996 - ------------------------------------------------------------------------------- Actuarial present value of benefit obligation: Vested benefits . . . . . . . . . . . . . . . . . . . . . . . . . . $28,979 Nonvested benefits. . . . . . . . . . . . . . . . . . . . . . . . . 388 ------ Accumulated benefit obligation . . . . . . . . . . . . . . . . . $29,367 Additional benefits based on future salary levels . . . . . . . . . . 3,193 ------ Projected benefit obligation. . . . . . . . . . . . . . . . . . . . $32,560 Plan assets at fair value, principally listed securities. . . . . . . (34,274) ------ Plan assets (over) under projected benefit obligation . . . . . . . (1,714) Unrecognized net gain . . . . . . . . . . . . . . . . . . . . . . . . 911 ------ Net Prepaid Pension Cost . . . . . . . . . . . . . . . . . . . . . $ (803) ------ ------ Assumptions used in the determination of the above amounts, in conjunction with the recording of the Super Food acquisition, include the following: - ------------------------------------------------------------------------------- 1996 - ------------------------------------------------------------------------------- Discount rate for determining estimated obligations and interest cost. . . . . . . . . . . . . . . . . . . 8.5% Expected aggregate average long-term change in compensation. . . . . 4.5% Expected long-term return on assets. . . . . . . . . . . . . . . . . 8.5% 24 NASH FINCH COMPANY AND SUBSIDIARIES Approximately 49% of Super Food employees are covered by collectively-bargained, multi-employer pension plans. Contributions are determined in accordance with the provisions of negotiated union contracts and generally are based on the number of hours worked. The Company does not have the information available to determine its share of the accumulated plan benefits or net assets available for benefits under the multi-employer plans. Aggregate cost for the Company's retirement plans includes the following components: ------ 1996 ------ Defined Benefit Plan: Service cost benefits earned during the year. . . . . . . . . . . . . $ 237 Interest cost on projected benefit obligation . . . . . . . . . . . . 882 Return on assets. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,855) Net amortization and deferral . . . . . . . . . . . . . . . . . . . . 931 ------ Net pension expense . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Mult-employer plans . . . . . . . . . . . . . . . . . . . . . . . . . . 370 ------ Total Pension and Retirement Plan Expense. . . . . . . . . . . . $ 565 ------ ------ (11) POSTRETIREMENT HEALTH CARE BENEFITS The Company provides certain health care benefits for retired employees. Substantially all of the Company's employees not subject to collective bargaining agreements, become eligible for those benefits when they reach normal retirement age and have a minimum of 15 years of service with the Company. The Company adopted SFAS No. 106, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS which requires accrual of the estimated future cost of providing postretirement health costs over the active service life of the employee. The periodic postretirement benefit costs under Statement 106 were as follows (in thousands): - ------------------------------------------------------------------------------- 1996 1995 1994 - ------------------------------------------------------------------------------- Service costs . . . . . . . . . . . . . . . . . . $260 273 235 Interest costs. . . . . . . . . . . . . . . . . . 403 382 361 Amortization of unrecognized transition obligation . . . . . . . . . . . . . 248 249 248 ---- --- --- Net postretirement costs. . . . . . . . . . . . . $911 904 844 ---- --- --- ---- --- --- The actuarial present value of benefit obligations at December 30, 1995 and December 31, 1994 are as follows (in thousands): - ------------------------------------------------------------------------------- 1996 1995 1994 - ------------------------------------------------------------------------------- Retirees eligible for benefits . . . . . . . . . $1,969 1,903 1,612 Active employees fully eligible. . . . . . . . . 428 493 466 Active employees not fully eligible. . . . . . . 3,204 3,147 3,191 ------ ----- ----- $5,601 5,543 5,269 ------ ----- ----- ------ ----- ----- The assumed annual rate of future increases in per capita cost of health care benefits was 11.0% in fiscal 1996 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 $282,000 at December 28, 1996 and the service and interest costs by $47,000 for fiscal 1996. The discount rate used in determining the accumulated benefit obligation was 7.5%. (12) SEGMENT INFORMATION The Company and its subsidiaries sell and distribute food and nonfood products that are typically found in supermarkets. The Company's wholesale distribution segment sells to independently owned retail food stores and institutional customers while the retail distribution segment sells directly to the consumer. Produce marketing includes farming, packing and marketing operations. 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 earnings from equity investments. 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) - ------------------------------------------------------------------------------- 1996 1995 1994 - ------------------------------------------------------------------------------- Net sales and other operating revenues: Wholesale distribution . . . . . . . . . $2,468,695 1,968,982 1,854,629 Retail distribution. . . . . . . . . . . 850,404 859,956 925,772 Produce marketing and other. . . . . . . . . . . . . . . 50,410 48,154 41,861 ---------- --------- --------- Total net sales and other operating revenues . . . . . . . . . . . . . $3,369,509 2,877,092 2,822,262 ---------- --------- --------- ---------- --------- --------- Operating profit: Wholesale distribution . . . . . . . . . $ 37,115 30,047 24,593 Retail distribution. . . . . . . . . . . 7,709 4,143 8,804 Produce marketing and other. . . . . . . . . . . . . . . 2,124 2,439 1,122 ---------- --------- --------- Total operating profit . . . . . . . 46,948 36,629 34,519 ---------- --------- --------- Interest income. . . . . . . . . . . . . 1,613 2,759 2,675 Interest expense . . . . . . . . . . . . (14,894) (10,793) (11,384) ---------- --------- --------- Earnings before income taxes . . . . . . . . . . . $ 33,667 28,595 25,810 ---------- --------- --------- ---------- --------- --------- Identifiable assets: Wholesale distribution . . . . . . . . . $ 649,470 205,288 240,415 Retail distribution. . . . . . . . . . . 203,217 201,493 203,317 Produce marketing and other. . . . . . . . . . . . . . . 41,948 45,662 42,597 Corporate. . . . . . . . . . . . . . . . 50,842 61,817 45,275 ---------- --------- --------- $ 945,477 514,260 531,604 ---------- --------- --------- ---------- --------- --------- Capital expenditures: Wholesale distribution . . . . . . . . . $ 15,511 8,704 8,372 Retail distribution. . . . . . . . . . . 19,795 15,517 25,821 Produce marketing and other. . . . . . . . . . . . . . . 2,234 5,259 2,072 Corporate. . . . . . . . . . . . . . . . . 13,793 3,784 1,913 ---------- --------- --------- $ 51,333 33,264 38,178 ---------- --------- --------- ---------- --------- --------- Depreciation and amortization: Wholesale distribution . . . . . . . . . $ 14,996 11,121 11,660 Retail distribution. . . . . . . . . . . 15,791 14,454 16,600 Produce marketing and other. . . . . . . . . . . . . . . 1,511 1,597 1,513 Corporate . . . . . . . . . . . . . . . 2,461 2,234 2,058 ---------- --------- --------- $ 34,759 29,406 31,831 ---------- --------- --------- ---------- --------- --------- (13) 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. 25
NASH FINCH COMPANY AND SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS Eleven years ended December 28, 1996 (not covered by Independent Auditors' Report) 1996 1995 1994 1993 1992 1991 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks) - ---------------------------------------------------------------------------------------------------------------------------------- Sales and revenues. . . . . . . . . . . . . . . . $3,369,509 2,877,092 2,822,262 2,715,787 2,509,464 2,337,560 Other income. . . . . . . . . . . . . . . . . . . 5,976 11,744 9,738 7,748 5,974 5,718 ---------- ---------- ---------- ---------- ---------- ---------- Total sales, revenues and other income. . . . . . 3,375,485 2,888,836 2,832,000 2,723,535 2,515,438 2,343,278 Cost of sales . . . . . . . . . . . . . . . . . . 2,932,709 2,469,841 2,410,292 2,325,249 2,147,845 1,997,462 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . 355,364 346,442 349,190 328,703 294,700 276,144 Interest expense. . . . . . . . . . . . . . . . . 14,894 10,793 11,384 10,114 9,294 8,966 Depreciation and amortization . . . . . . . . . . 34,759 29,406 31,831 29,145 27,038 26,124 Profit sharing contribution . . . . . . . . . . . 4,092 3,759 3,493 3,646 3,963 3,789 Provision for income taxes. . . . . . . . . . . . 13,635 11,181 10,330 10,804 12,530 11,738 ---------- ---------- ---------- ---------- ---------- ---------- Net earnings. . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480 15,874 20,068 19,055 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share. . . . . . . . . . . . . . . . $ 1.81 1.60 1.42 1.46 1.85 1.75 ---------- ---------- ---------- ---------- ---------- ---------- Cash dividends declared per common share(2). . . . . . . . . . . . . . . $ .75 .74 .73 .72 .71 .70 ---------- ---------- ---------- ---------- ---------- ---------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . 11,055 10,875 10,873 10,872 10,872 10,871 ---------- ---------- ---------- ---------- ---------- ---------- Pre-tax earnings as a percent of sales and revenues . . . . . . . . . . . . . . . 1.00 .99 .91 .98 1.30 1.31 Net earnings as a percent of sales and revenues . . . . . . . . . . . . . . . .59 .60 .55 .58 .80 .81 Effective income tax rate . . . . . . . . . . . . 40.5 39.1 40.0 40.5 38.4 38.1 Current assets. . . . . . . . . . . . . . . . . . $ 525,596 311,690 309,522 294,925 310,170 239,850 Current liabilities . . . . . . . . . . . . . . . $ 297,088 207,688 220,065 215,021 213,691 154,993 Net working capital . . . . . . . . . . . . . . . $ 228,508 104,002 89,457 79,904 96,479 84,857 Ratio of current assets to current liabilities . . . . . . . . . . . . . 1.77 1.50 1.41 1.37 1.45 1.55 Total assets. . . . . . . . . . . . . . . . . . . $ 945,477 514,260 531,604 521,654 513,615 429,648 Capital expenditures. . . . . . . . . . . . . . . $ 51,333 33,264 34,965 36,382 42,991 36,836 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . $ 403,651 81,188 95,960 97,887 94,145 82,532 Stockholders' equity. . . . . . . . . . . . . . . $ 232,861 215,313 206,269 199,264 191,204 178,846 Stockholders' equity per share(1), (2). . . . . . $ 21.06 19.80 18.97 18.33 17.59 16.45 Return on average stockholders' equity. . . . . . % 8.94 8.26 7.63 8.13 10.85 11.01 Number of common stockholders of record at year-end. . . . . . . . . . . . . . 2,230 1,940 2,074 2,074 2,087 2,122 Common stock high price(2), (3) . . . . . . . . . 21 5/8 20 1/2 18 1/4 23 1/4 19 3/4 20 1/4 Common stock low price(2), (3). . . . . . . . . . 15 3/4 15 3/4 15 3/8 17 16 1/4 16 1/2
1990 1989 1988 1987 1986 (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) - --------------------------------------------------------------------------------------------------------------------- Sales and revenues. . . . . . . . . . . . . . . . 2,369,054 2,219,451 2,091,822 1,938,758 1,573,717 Other income. . . . . . . . . . . . . . . . . . . 5,799 4,312 6,012 4,590 3,640 ---------- ---------- ---------- ---------- ---------- Total sales, revenues and other income. . . . . . 2,374,853 2,223,763 2,097,834 1,943,348 1,577,357 Cost of sales . . . . . . . . . . . . . . . . . . 2,036,335 1,904,041 1,807,448 1,682,667 1,360,537 Selling, general, administrative, and other operating expenses, including warehousing and transportation expenses. . . . . . . . . . . . . 271,735 264,024 230,221 198,553 165,713 Interest expense. . . . . . . . . . . . . . . . . 8,670 8,277 8,106 8,087 6,497 Depreciation and amortization . . . . . . . . . . 25,551 23,170 20,193 18,389 16,249 Profit sharing contribution . . . . . . . . . . . 3,603 3,089 2,832 2,734 2,349 Provision for income taxes. . . . . . . . . . . . 11,129 8,010 10,859 14,416 12,178 ---------- ---------- ---------- ---------- ---------- Net earnings. . . . . . . . . . . . . . . . . . . 17,830 13,152 18,175 18,502 13,834 ---------- ---------- ---------- ---------- ---------- Earnings per share. . . . . . . . . . . . . . . . 1.64 1.21 1.67 1.75 1.35 ---------- ---------- ---------- ---------- ---------- Cash dividends declared per common share(2). . . . . . . . . . . . . . . .69 .67 .65 .57 .52 ---------- ---------- ---------- ---------- ---------- Average number of common shares outstanding during period (in thousands)(2). . . . . . . . . . . . . . . . 10,870 10,868 10,881 10,576 10,244 ---------- ---------- ---------- ---------- ---------- Pre-tax earnings as a percent of sales and revenues . . . . . . . . . . . . . . . 1.22 .95 1.38 1.69 1.65 Net earnings as a percent of sales and revenues . . . . . . . . . . . . . . . .75 .59 .87 .95 .88 Effective income tax rate . . . . . . . . . . . . 38.4 37.9 37.4 43.8 46.8 Current assets. . . . . . . . . . . . . . . . . . 234,121 212,264 219,956 209,305 182,676 Current liabilities . . . . . . . . . . . . . . . 159,439 128,159 153,068 127,608 120,687 Net working capital . . . . . . . . . . . . . . . 74,682 84,105 66,888 81,697 61,989 Ratio of current assets to current liabilitie. . . . . . . . . . . . . . 1.47 1.66 1.44 1.64 1.51 s Total assets. . . . . . . . . . . . . . . . . . . 416,233 380,771 388,269 352,187 313,908 Capital expenditures. . . . . . . . . . . . . . . 36,129 34,635 52,019 29,680 26,969 Long-term obligations (long-term debt and capitalized lease obligations) . . . . . . . 74,333 77,950 66,216 66,988 61,588 Stockholders' equity. . . . . . . . . . . . . . . 167,388 157,024 151,043 140,850 116,416 Stockholders' equity per share(1), (2). . . . . . 15.40 14.45 13.90 12.97 11.34 Return on average stockholders' equity. . . . . . 10.99 8.54 12.45 14.38 12.36 Number of common stockholders of record at year-end. . . . . . . . . . . . . . 2,138 2,146 2,227 2,234 1,829 Common stock high price(2), (3) . . . . . . . . . 25 1/4 25 3/4 27 1/2 26 1/2 19 1/8 Common stock low price(2), (3). . . . . . . . . . 16 1/4 21 1/4 18 14 3/4 14 3/4
(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. [CHART] [CHART] [CHART] 27 EX-21.1 14 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 ------------ ------------- GTL Truck Lines, Inc. Nebraska Norfolk, Nebraska Nash De-Camp Company Visalia, California California Piggly Wiggly Northland Corporation Edina, Minnesota Minnesota Super Food Services, Inc. Dayton, Ohio Delaware T.J. Morris Company Statesboro, Georgia Georgia B. Direct subsidiaries of Nash Finch Company (the voting stock of which is owned, with respect to each subisidiary, 66.6 percent by Nash Finch Company): Subsidiary State of Corporation Incorporation ----------- ------------- Gillette Dairy of the Black Hills, Inc. Rapid City, South Dakota South Dakota Nebraska Dairies, Inc. Norfolk, Nebraska 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 of Corporation Incorporation ----------- -------------- Forrest Transportation Service, Inc. Visalia, California California Agricola Nadco Limitada (*) Chile * Ninety-nine percent (99%) is owned by Nash-DeCamp Company. D. Subsidiaries of Super Food Services, Inc. (the voting stock of which is owned, with respect to each subsidiary 100 percent by Super Food Services, Inc.): Subsidiary State of Corporation Incorporation ----------- ------------- Gray Bear, Inc. Bridgeport, Michigan Michigan Kentucky Food Stores, Inc. Lexington, Kentucky Kentucky Management Incentives, Corp. Dayton, Ohio Delaware Super Foods, Inc. Dayton, Ohio Ohio EX-23.1 15 EXHIBIT 23.1 [LETTERHEAD] Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of Nash Finch Company and subsidiaries of our report dated February 19, 1997, included in the 1996 Annual Report to Shareholders of Nash Finch Company and subsidiaries. Our audits also included the financial statement schedule of Nash Finch Company and subsidiaries 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 audits. 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. We also consent to the incorporation by reference in Registration Statement Number 33-64313 and Registration Statement Number 33-54478 on Form S-8 of Nash Finch Company and subsidiaries and in the related Prospectuses of our report dated February 19, 1997, 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 and subsidiaries. /s/ Ernst & Young LLP Minneapolis, Minnesota March 28, 1997 EX-23.2 16 EXHIBIT 23.2 [LETTERHEAD] Independent Auditors' Consent The Board of Directors Nash Finch Company We consent to incorporation by reference in the Registration Statements (Nos. 33-54487 and 33-64313) on Form S-8 of Nash Finch Company of our reports dated March 3, 1995, relating to the consolidated statements of earnings, stockholders' equity and cash flows of Nash Finch Company and subsidiaries and related consolidated financial statement schedule for the fiscal year ended December 31, 1994, which reports are included or incorporated by reference in the Decmeber 28, 1996 annual report on Form 10-K of Nash Finch Company. /s/ KPMG Peat Marwick LLP Minneapolis, Minnesota March 28, 1997 EX-27 17 EX 27
5 1,000 12-MOS DEC-28-1996 DEC-31-1995 DEC-28-1996 921 0 226,584 20,522 293,458 525,596 565,700 293,845 945,477 297,088 361,819 0 0 19,290 215,688 945,477 3,322,666 3,375,485 2,932,709 392,322 0 1,893 14,894 33,667 13,635 20,032 0 0 0 20,032 1.81 1.81
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