<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the twenty-four weeks ended June 17, 1995
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File no. 0-785
NASH-FINCH COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 410431960
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7600 France Ave. South, Minneapolis, Minnesota 55435
(Address of principal executive offices) (Zip Code)
(612) 832-0534
(Registrant's telephone number including area code)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
Number of shares of common stock outstanding at July 19, 1995:
10,874,915 shares
-----------------
<PAGE>
PART I - FINANCIAL INFORMATION
This report is for the twenty-four week interim period beginning January 1,
1995, through June 17, 1995.
The accompanying financial information has been prepared in conformity with
generally accepted accounting principles and practices, and methods of applying
accounting principles and practices, (including consolidation practices) as
reflected in the financial information included in the Company's Annual Report
on Form 10-K, filed with the Securities and Exchange Commission for the
preceding fiscal year. The financial statements included in this quarterly
report include all adjustments which are, in the opinion of management,
necessary to a fair presentation of the Company's financial position and results
of operations for the interim period.
The information contained herein has not been audited by independent
certified public accountants and is subject to any adjustments which may develop
in connection with the annual audit of its accounts by Ernst & Young LLP, the
Company's independent auditors.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 17, 1995
NOTE 1
The accompanying financial statements include all adjustments which are, in
the opinion of management, necessary to present fairly the financial position of
the Company and its subsidiaries at June 17, 1995 and December 31, 1994, and the
results of operations for the 24-weeks ending June 17, 1995 and June 18, 1994,
and the changes in cash flows for the 24-week periods ending June 17, 1995 and
June 18, 1994, respectively. All material intercompany accounts and
transactions have been eliminated in the consolidated financial statements.
Results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
NOTE 2
The Company uses the LIFO method for valuation of a substantial portion of
inventories. If the FIFO method had been used, inventories would have been
approximately $43.9 million higher at June 17, 1995 and at December 31, 1994.
NOTE 3
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each period presented.
Options granted under the Company's qualified stock plan are considered common
stock equivalents for the purpose of earnings per share data, but have been
excluded from the computation since the dilutive effect is not material.
NOTE 4
On April 2, 1992, the Company sold customer notes totaling $22.8 million.
The notes having maturities through the year 2000, were sold at face value with
limited recourse as to certain notes. The Company is responsible for collection
of the notes and remits the principal plus a floating rate of interest to the
purchaser on a monthly basis. Proceeds from the sale of the notes receivable
were used to pay off short-term bank debt.
Remaining balances on the notes receivable sold totaled $2.3 million at
June 17, 1995.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-four Weeks Ended
------------------------- -------------------------
June 17, June 18, June 17, June 18,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Net sales $ 663,708 656,346 1,277,606 1,266,481
Other revenues 12,806 14,016 22,506 22,046
---------- ---------- ---------- ----------
Total revenues 676,514 670,362 1,300,112 1,288,527
Cost and Expenses:
Cost of sales 575,582 566,167 1,109,894 1,093,863
Selling, general and administrative
and other operating expenses 81,671 85,307 156,709 161,942
Depreciation and amortization 6,780 7,409 13,570 14,472
Interest expense 2,646 2,718 5,585 5,169
---------- ---------- ---------- ----------
Total costs and expenses 666,679 661,601 1,285,758 1,275,446
Earnings before income taxes 9,835 8,761 14,354 13,081
Income taxes 3,983 3,549 5,813 5,298
---------- ---------- ---------- ----------
Net earnings $ 5,852 5,212 8,541 7,783
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding 10,875 10,872 10,875 10,872
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share $ 0.54 0.48 0.79 0.72
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
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See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 17, December 31,
Assets 1995 1994
------ ---------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash on hand $ 941 1,078
Accounts and notes receivable, net 100,762 98,859
Inventories 189,036 198,637
Prepaid expenses 15,626 8,626
Deferred tax assets 2,824 2,322
---------- -----------
Total current assets 309,189 309,522
Investments at net equity 8,184 7,432
Notes receivable, noncurrent 16,050 16,441
Property, plant and equipment:
Land 27,481 27,556
Buildings and improvements 107,677 107,149
Furniture, fixtures, and equipment 211,487 214,564
Leasehold improvements 27,220 28,205
Construction in progress 2,511 2,039
Assets under capitalized leases 11,755 12,423
---------- -----------
388,131 391,936
Less accumulated depreciation and amortization (207,220) (204,965)
---------- -----------
Net property, plant and equipment 180,911 186,951
---------- -----------
Intangible assets, net 7,082 7,810
Other assets 3,232 3,448
---------- -----------
Total assets $ 524,648 531,604
---------- -----------
---------- -----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Outstanding checks, net of cash in banks $ 3,857 18,649
Short-term debt payable to banks 35,700 41,400
Current maturities of long-term debt and
capitalized lease obligations 3,984 5,685
Accounts payable 125,726 122,602
Accrued expenses 35,472 29,585
Income taxes 5,847 2,144
---------- -----------
Total current liabilities 210,586 220,065
Long-term debt 83,583 85,289
Capitalized lease obligations 10,419 10,671
Deferred compensation 7,974 8,526
Other 1,184 784
Stockholders' equity:
Preferred stock - no par value
Authorized 500 shares; none issued -- --
Common stock of $1.66 2/3 par value
Authorized 25,000 shares, issued 11,224 shares 18,706 18,706
Additional paid-in capital 11,982 11,977
Foreign curency translation adjustment - net of a
$361 deferred tax benefit (572) (572)
Retained earnings 183,838 179,212
---------- -----------
213,954 209,323
Less cost of 349 shares of common stock in treasury (3,052) (3,054)
---------- -----------
Total stockholders' equity 210,902 206,269
---------- -----------
Total liabilities and stockholders' equity $ 524,648 531,604
---------- -----------
---------- -----------
</TABLE>
-----------------------------------------------------
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands) Twenty-four Weeks Ended
-----------------------------
June 17, 1995 June 18, 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 8,541 7,783
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,570 14,472
Provision for bad debts 1,429 283
Provision for losses on closed lease locations 31 250
Deferred income taxes (266) 2,649
Deferred compensation (552) (279)
Earnings of equity investments (463) (754)
Other 151 23
Changes in current assets and liabilities:
Accounts and notes receivable (2,071) (15,742)
Inventories 9,501 4,864
Prepaid expenses (7,000) (5,383)
Accounts payable 3,125 4,774
Accrued expenses 5,667 5,126
Income taxes 3,704 644
----------- -----------
Net cash provided by operating activities 35,667 18,710
----------- -----------
Cash flows from investing activities:
Dividends received 890 618
Disposal of property, plant and equipment 1,980 6,207
Additions to property, plant and equipment
excluding capital leases (8,560) (17,607
Business acquired -- (8,307)
Investment in unconsolidated company (1,179) --
Loans to customers (4,765) (4,908)
Payments from customers on loans 3,981 3,560
Other (72) (34)
----------- -----------
Net cash used for investing activities (7,745) (20,471)
----------- -----------
Cash flows from financing activities:
Dividends paid (3,915) (3,914)
Proceeds (Payments) of short-term debt (5,700) 7,600
Payments of long-term debt (3,389) (1,260)
Payments of capitalized lease obligations (270) (60)
Other 7 6
----------- -----------
Net cash (used for) provided by
financing activities (13,267) 2,372
----------- -----------
Net increase in cash $ 14,655 611
----------- -----------
----------- -----------
</TABLE>
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See accompanying notes to consolidated financial statements.
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Fiscal period ended June 17, 1995,
December 31, 1994 and January 1, 1994
(In thousands, except per share amounts) Foreign
Common stock Additional currency Treasury stock Total
--------------------- paid-in Retained translation ------------------- stockholders'
Shares Amount capital earnings adjustment Shares Amount equity
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 2, 1993 $ 11,224 18,706 11,944 163,624 -- (352) $ (3,070) 191,204
Net earnings -- -- -- 15,874 -- -- -- 15,874
Dividend declared of $.72 per share -- -- -- (7,828) -- -- -- (7,828)
Treasury stock issued upon exercise
of options and other insignificant
items -- -- 10 -- -- 1 4 14
---------- --------- --------- ---------- ---------- ---------- ---------- ----------
Balance at January 1, 1994 11,224 18,706 11,954 171,670 -- (351) (3,066) 199,264
Net earnings -- -- -- 15,480 -- -- -- 15,480
Dividend declared of $.73 per share -- -- -- (7,938) -- -- -- (7,938)
Treasury stock issued upon exercise
of options and other insignificant
items -- -- 23 -- -- 2 12 35
Foreign currency translation
adjustment - net of a $381 -- -- -- -- (572) -- -- (572)
---------- --------- --------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1994 11,224 18,706 11,977 179,212 (572) (349) (3,054) 206,269
Net earnings -- -- -- 8,541 -- -- 8,541
Dividend declared of $.36 per share -- -- -- (3,915) -- -- (3,915)
Treasury stock issued upon exercise
of options and other insignificant
items -- -- 5 -- -- -- 2 7
---------- --------- --------- ---------- ---------- ---------- ---------- ----------
Balance at June 17, 1995 $ 11,224 16,706 11,982 183,838 (572) (349) $ (3,052) 210,902
---------- --------- --------- ---------- ---------- ---------- ---------- ----------
---------- --------- --------- ---------- ---------- ---------- ---------- ----------
</TABLE>
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See accompanying notes to consolidated financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the second quarter of 1995, total revenues were $676.5 million
compared to $670.3 million in 1994, an increase of .9%. On a year to date
basis, total revenues also increased .9% from $1.289 billion last year to $1.300
billion this year. Wholesale revenues increased over last year by 7.7% and 6.4%
for the quarter and year to date, respectively, reflecting the volume of a
number of new independent accounts during the first half of the year. In
addition, the sale of six corporate owned retail stores to existing independent
customers also favorably impacted wholesale revenues compared with last year.
Partially offsetting the revenue gains at wholesale, retail revenues were
negatively affected by the net reduction of nine stores since the end of the
second quarter of 1994. In addition to selling stores, the Company closed
thirteen under-performing stores and acquired ten from existing or former
customers including six in Kentucky in December 1994. Same store sales declined
2.7% for second quarter and 3.0% for the year to date compared to last year,
largely due to growing competition in certain market areas.
Gross margins were 14.9% for the second quarter this year compared to 15.5%
for the same period last year. On a year to date basis, margins were 14.6%
compared to 15.1% last year. The decrease for both periods reflected a greater
proportion of wholesale sales which typically achieve lower gross margins.
Although consolidated gross margins reflect a decline, margins for the quarter
and year to date improved for both the wholesale and retail segments of the
business. The implementation of a regional buying office to procure the product
needs of several distribution centers resulted in consolidating volume, thereby
lowering product costs and improving margins. On the retail side, margin
improvements were attributed to a more effective marketing plan and better
product merchandising, especially in the higher margin specialty departments of
the stores.
Selling, general and administrative expenses as a percent of total revenues
were 12.1% for both the quarter and year to date, compared to 12.7% and 12.6%
for the prior year quarter and year to date, respectively. Productivity gains
and tighter cost controls at the wholesale level contributed to the decrease in
overall expenses compared to last year. The Company has developed an evaluation
process and is currently implementing performance measurements which it believes
will further improve productivity and eliminate costs. Expense levels were also
favorably impacted by a greater proportion of wholesale business which typically
has lower operating expenses.
<PAGE>
Partially offsetting gains, operating expenses for the quarter include
higher costs associated with a review of the Company's management information
systems. Management recognizes the need to monitor and evaluate its systems in
accordance with current technological advances.
Depreciation and amortization expenses decreased 8.4% and 6.2% for quarter
and year to date, respectively, compared to the same periods last year. The
decrease reflects the reduction in property, plant and equipment resulting from
the sale and closing of a number of retail stores since last year.
Interest expense for the second quarter decreased 2.6% compared to last
year due to lower average short-term borrowings. On a year to date basis,
interest costs increased 8.0% over last year because of higher average short-
term borrowings and higher interest rates.
The effective tax rate for all periods reported was 40.5%. Income tax
expense increased this year because of higher pretax earnings.
Net earnings for the quarter were $5.9 million, an increase of 12.2% over
last year. The earnings improvement is attributed to strong operating results
for both the wholesale and retail segments of the business.
LIQUIDITY AND CAPITAL RESOURCES
At the end of the second quarter, the Company had lines of credit with
banks totaling $112.5 million of which $45 million were informally committed.
Borrowing under these lines was $35.7 million at the end of the second quarter
compared with $41.4 at year end and $47.8 million at the end of the first
quarter of 1995.
In the ordinary course of business the Company makes loans to retail
customers to finance the purchase, enlargement or remodeling of store facilities
and for inventory in such facilities. During the third quarter the Company
intends to sell approximately $16 million of these customer loans to a bank for
cash. The proceeds of this sale will be used to reduce short term bank debt.
Capital expenditures for plant, property and equipment were $8.6 million
for the first two quarters of 1995 compared with $17.6 million for a similar
period in 1994. Capital expenditures for 1995 are budgeted at $31.3 million
compared to actual 1994 expenditures of $35.0 million, excluding acquisitions.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Items 1, 2, 3 and 5 are not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The annual meeting of stockholders was held May 9, 1995.
(b) Not required. (Proxies were solicited pursuant to Regulation 14, there was
no solicitation in opposition to management's nominees, and all such
nominees were elected.)
(c) (i) ELECTION OF DIRECTORS. Four incumbent directors were elected to serve
for three-year terms. (The terms of the other seven directors do not
expire until 1996 and 1997.)
The director nominees and voting results are as follows:
Votes Broker
Nominees Vote For Withheld Non-votes
-------- -------- -------- ---------
Alfred N. Flaten 9,288,551.644 109,919.295 -0-
Allister P. Graham 9,329,583.927 68,987.012 -0-
Richard G. Lareau 9,253,844.821 144,726.118 -0-
Jerome O. Rodysill 9,186,387.927 212,183,012 -0-
(ii) APPROVAL OF 1995 DIRECTOR STOCK OPTION PLAN. Stockholders approved
the adoption of the Nash Finch Company 1995 Director Stock Option Plan.
Voting results are as follows: votes for - 8,379,830.022; votes against -
531,872.071; abstentions - 473,068.846; broker non-votes - 13,800.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
3(ii).1 Bylaws of the Company, as amended effective May 9, 1995.
10.1 Excerpt from Board minutes relating to compensation of
Board Chair.
10.2 Nash Finch Company 1995 Director Stock Option Plan.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
Not applicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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.
NASH-FINCH COMPANY
------------------
Registrant
Date August 1, 1995 By /s/ Alfred N. Flaten
--------------------- ----------------------
Alfred N. Flaten
President and Chief
Executive Officer
Date August 1, 1995 By /s/ Robert F. Nash
----------------------- ------------------------------
Robert F. Nash
Vice President and Treasurer
<PAGE>
Index to Exhibits
-----------------
Exhibit
-------
3(ii).1 Bylaws of the Company, as amended effective May 9, 1995.
10.1 Excerpt from Board minutes relating to compensation of
Board Chair.
10.2 Nash Finch Company 1995 Director Stock Option Plan.
27 Financial Data Schedule.
<PAGE>
NASH-FINCH COMPANY BY-LAWS EXHIBIT 3(ii).1
RESTATED JULY 26, 1983
ARTICLE I
STOCK
1. A certificate of stock shall be issued to each holder of fully paid
stock, in numerical order, signed by the President or Executive Vice President,
or by a Vice President, and by the Secretary or Assistant Secretary. [Amended
5-9-95]
2. A transfer of stock shall be made only upon the books of the Company and
before a new certificate is issued, the old certificate must be surrendered for
cancellation.
3. Stock of the Company which shall have been purchased by it and held in
the treasury shall be subject to disposal by the Board of Directors, but, while
held by the Company, shall not be voted, nor shall it participate in the
dividends or profits of the Company; provided that such stock may participate in
any stock split in the form of a stock dividend. [Amended 9-1-83]
ARTICLE II
STOCKHOLDERS AND STOCKHOLDERS MEETINGS
1. The annual meeting of the stockholders of this Company for the election
of directors and the transaction of such other business as may properly be
brought before such meeting shall be held on the second Tuesday in May of each
year, if not a legal holiday, but if a legal holiday, then on the next secular
day following at the same place and time. The place, date and time of such
annual meeting may be changed by the directors not less than 60 days before the
date of such meeting and notice of such change shall be mailed to stockholders
not less than 20 days before the date of said meeting. All meetings of the
stockholders shall be held in the County of Hennepin, State of Minnesota, at
such place as may be fixed from time to time by the Board of Directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting.
2. The holders of a majority of the stock issued and outstanding, and
entitled to vote thereat, present in person, or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders for
the transaction of business
<PAGE>
except as otherwise provided by law, by the certificate of incorporation or by
these by-laws. If, however, such majority shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or by proxy, shall have power to adjourn the meeting from time
to time without notice other than announcement at the meeting, until the
requisite amount of voting stock shall be present. At such adjourned meeting at
which the requisite amount of voting stock shall be represented any business may
be transacted which might have been transacted at the meeting as originally
notified. Any question coming before a meeting at which a quorum is present
shall be decided by a majority vote of the stock issued and outstanding and
entitled to vote thereat, then present in person or represented by proxy, unless
the question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
3. At any meeting of the stockholders each stockholder shall be entitled to
one vote in person or by written proxy for each share of the capital stock
having voting power held by such stockholder.
4. Written or printed notice of annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote thereat
at such address as appears on the stock ledger of the Company not less than 20
days nor more than 60 days before the date of meeting.
5. The officer who has charge of the stock ledger of the Company shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the county where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified in the notice of the meeting, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
-2-
<PAGE>
6. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called at any time only by the President or by an affirmative vote of
two-thirds (2/3) of the full Board of Directors at any regular or special
meeting of the Board of Directors called for that purpose. [Amended 5-9-95]
7. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
8. Written notice of a special meeting stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be given not less than 10 nor more than 60 days before the date of such meeting,
to each stockholder entitled to vote at such meeting.
9. No action shall be taken by the stockholders except in an annual or
special meeting as provided for in this Article II.
ARTICLE III
DIRECTORS
1. The property and business of this Company shall be managed by its Board
of Directors, not less than nine (9) nor more than seventeen (17) in number,
which number shall be determined by the Board of Directors from time to time and
no fewer than two (2) of whom are neither former officers nor present full-time
employees of Nash-Finch Company and its subsidiaries. The directors shall be
classified with respect to their terms of office by dividing them into three
classes (Classes A, B and C) with each class being as nearly equal in number as
possible. The terms of office of the directors initially classified as Class A
shall expire at the annual meeting of stockholders to be held in 1986; the terms
of those classified as Class B shall expire at the annual meeting of
stockholders to be held in 1985; and the terms of those classified as Class C
shall expire at the annual meeting of stockholders to be held in 1984. At each
annual meeting of stockholders after such initial classification, directors of
the class whose term is expiring will be elected to hold office until the third
succeeding annual meeting (or, for terms of approximately three years).
Directors shall hold office until the expiration of the terms for which they
were elected and qualified; provided, however, that a director may be removed
from office at any time but only (i) for cause, and (ii) then upon the
affirmative vote of the holders of three-fourths (3/4) of all outstanding shares
entitled to vote.
-3-
<PAGE>
2. If the office of any director or directors becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office, increase
in the number of directors, or otherwise, a majority of the remaining directors,
though less than a quorum, at a meeting called for that purpose, may choose a
successor or successors, or new director or directors in the event of an
increase in the number of directors, who shall hold office until the expiration
of the term of the class for which appointed and until a successor shall be
elected and shall qualify.
3. In addition to the powers and authorities by these by-laws expressly
conferred upon it, the Board of Directors may exercise all such powers of the
Company and do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
4. The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of two or more directors of the Company, which, to the extent provided
in said resolution or resolutions, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the Company,
and may have power to authorize the seal of the Company to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors.
5. The Board of Directors, at its first meeting after each annual meeting
of stockholders, shall elect a director to serve as Board Chair. The director
so elected shall not, by virtue of such election, be deemed to be an officer of
the Company pursuant to Article VI hereof. An officer of the Company, elected
by the Board of Directors under the provisions of said Article VI, however, may
be elected to serve as the Board Chair. The Board Chair shall preside at all
meetings of the stockholders and Board of Directors and otherwise shall have
such duties and responsibilities as may be assigned from time to time by the
Board of Directors. During the absence or disability of the Board Chair, the
Board of Directors shall designate another director to discharge the duties of
the Board Chair. [Added 5-9-95]
-4-
<PAGE>
ARTICLE IV
MEETINGS OF THE BOARD
1. Each newly elected Board of Directors shall hold its first and annual
meeting immediately following the annual meeting of the stockholders at a place
designated by the Board, or they may meet at such place and time as shall be
fixed by the consent in writing of all the directors. No notice of such meeting
shall be necessary to the newly elected directors in order legally to constitute
the meeting; provided, however, that a majority of the whole Board shall be
present.
2. Meetings of the Board of Directors other than the annual meeting, may be
called at any time by the Board Chair, President or Secretary, or in their
absence by the Executive Vice President, or by any Vice President or on the
written request of any three directors; on one day's notice to each director,
either personally or by mail or by telegram. Unless otherwise fixed by the
Board, such meetings shall be held at the office of the Company in Edina,
Minnesota. [Amended 5-9-95]
3. At all meetings of the Board a majority of directors shall be necessary
and sufficient to constitute a quorum for the transaction of business, and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation or by
these by-laws.
4. Unless otherwise restricted by the certificate of incorporation or these
by-laws, any actions required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting,
if all members of the Board or the committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or the committee.
5. Unless otherwise restricted by the certificate of incorporation, the
Board of Directors shall have the authority to fix the compensation of
directors.
-5-
<PAGE>
ARTICLE V
INDEMNIFICATION
[Amended and restated 3-16-87]
SECTION 1. RIGHT TO INDEMNIFICATION.
Every person who was or is a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation or, while a director
or officer of the Corporation, is or was serving at the request of the
Corporation or for its benefit as a director, officer, employee or agent of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise, including any employee benefit plan, shall be
indemnified and held harmless by the Corporation to the fullest extent legally
permissible under the General Corporation Law of the State of Delaware in the
manner prescribed therein, from time to time, against all expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection therewith. Similar indemnification may
be provided by the Corporation to an employee or agent of the Corporation who
was or is a party or is threatened to be made a party to or is involved in any
such threatened, pending or completed action, suit or proceeding by reason of
the fact that he is or was an employee or agent of the Corporation or is or was
serving at the request of the Corporation or for its benefit as a director,
officer, employee, or agent of another corporation or as its representative in a
partnership, joint venture, trust or other enterprise, including any employee
benefit plan.
SECTION 2. OTHER INDEMNIFICATION.
The rights of indemnification conferred by the Article shall not be exclusive
of, but shall be in addition to, any other rights which such directors,
officers, employees or agents may have or hereafter acquire and, without
limiting the generality of such statement, they shall be entitled to their
respective rights of indemnification under any by-law, agreement, vote of
stockholders, provisions or law or otherwise, as well as their rights under this
Article.
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<PAGE>
SECTION 3. INDEMNIFICATION AGREEMENT.
The Company shall have the express authority to enter such agreements as the
Board of Directors deems appropriate for the indemnification of present or
future directors or officers of the Company in connection with their service to,
or status with, the Company or any other corporation, entity or enterprise with
whom such person is serving at the express written request of the Company.
ARTICLE VI
OFFICERS
1. The Board of Directors, at its first meeting after each annual meeting
of stockholders, shall elect the corporate officers of the Company. [Amended 5-
13-86]
2. The corporate officers of the Company shall be a President, as many Vice
Presidents (some of whom may be designated Senior Vice Presidents) as may be
deemed necessary; such Assistant Vice Presidents as may be deemed necessary; a
Secretary and such Assistant Secretaries as may be deemed necessary; a Treasurer
and such Assistant Treasurers as may be deemed necessary; and a Controller and
such Assistant Controllers as may be deemed necessary. [Amended 5-13-86]
3. The Board of Directors may elect such other corporate officers and
agents as it shall deem necessary, including an Executive Vice President, and
one or more operating officers (who may be designated Vice Presidents, but who
shall not be corporate officers). Such other corporate and operating officers
and agents shall hold their offices for such terms, shall exercise such powers
and perform such duties as shall be determined from time to time by the Board;
provided, however, that operating officers shall exercise only such powers and
perform only such duties as may be determined by the Board and shall not have
authority to exercise the powers or discharge the duties of any corporate
officer. Unless expressly stated to the contrary, any reference in these By-Laws
to officers, by title or otherwise, other than in this Paragraph 3 of Article
VI, shall be deemed to mean corporate officers. [Amended 5-9-95]
4. The President must be a director but no other officer need be a
director. Any two offices may be held by the same person. [Amended 5-9-95]
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<PAGE>
5. The President shall be the Chief Executive Officer of the corporation;
he shall have general and active management of the business of the corporation,
shall see that all orders and resolutions of the Board are carried into effect
and shall perform such other duties as the Board shall prescribe. He shall
possess power to sign all certificates, contracts and other instruments of the
corporation. [Amended 5-9-95]
6. [Rescinded 5-9-95]
7. During the absence of the President, the Executive Vice President, and
during the absence or disability of both of them, the Vice Presidents in the
order in which they have been nominated, shall exercise all the functions of the
President. Each Vice President shall have such powers and discharge such duties
as may be assigned from time to time by the Board of Directors. [Amended 5-9-
95]
8. The Assistant Vice Presidents shall perform such duties as are
prescribed and allotted to them by the Board of Directors or the President.
9. The Secretary shall issue notices of all meetings, shall attend all
meetings of the Board of Directors and all meetings of the stockholders, shall
keep their minutes, shall have charge of the seal and the corporate books, shall
sign with the President, Executive Vice President or Vice Presidents, stock
certificates and such other instruments as require such signature, and shall
make such reports and perform such other duties as are incident to the office or
are properly required of him by the Board of Directors.
[Amended 5-9-95]
10. The Assistant Secretary shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such other duties as the Board of Directors or the President shall
prescribe.
11. The Treasurer shall have the custody of all monies and securities of
the Company. He shall sign or countersign such instruments as require his
signature, and shall perform all duties incident to his office, or that are
properly required of him by the Board. He shall render to the President and
Board of Directors, whenever required, a report of his transactions as Treasurer
and of the financial condition of the Company. [Amended 5-9-95]
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<PAGE>
12. The Assistant Treasurers shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer, and
shall perform such other duties as the Board of Directors or the President shall
prescribe.
13. The Controller shall keep regular books of accounts and balance same
periodically. He shall keep full and accurate accounts of receipts and
disbursements of the Company. He shall deposit all monies, and other valuable
effects of the Company, in such depositories as may be designated. He shall
disburse the funds of the Company as properly authorized on adequate supporting
documents and shall render to the President and Board of Directors, whenever
required, an accounting of all of his transactions as Controller and the
financial condition of the Company. [Amended 5-9-95]
14. The Assistant Controller shall, in the absence or disability of the
Controller, perform the duties and exercise the powers of the Controller, and
shall perform such other duties as the Board of Directors or the President shall
prescribe.
ARTICLE VII
DIVIDENDS
1. Dividends upon the capital stock of the Company, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the certificate of incorporation.
2. Before payment of any dividend, there may be set aside out of any funds
of the Company available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Company, or for such other purposes as the
directors shall think conducive to the interest of the Company, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
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<PAGE>
ARTICLE VIII
FIXING RECORD DATE
1. In order that the Company may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
ARTICLE IX
REGISTERED STOCKHOLDERS
1. The Company shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE X
NOTICE
1. Whenever under the provision of the statutes or of the certificate of
incorporation or of these by-laws, notice is required to be given to any
director or stockholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, by depositing the same in the post
office or letter box, in a postpaid sealed wrapper, addressed to such
stockholder or director at such address as appears on the books of the Company,
or, in default of other address, to such director or stockholder at the general
post office in the City of Wilmington, Delaware, and such notice shall be deemed
to be given at the time when the same shall be thus mailed. Notice to directors
may also be given by telephone or telegram.
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<PAGE>
2. Whenever any notice is required to be given under the provisions of the
statutes or of the certificate of incorporation or of these by-laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE XI
SEAL
1. The corporate seal of the Company shall be of such design as may be
decided upon by the officers of the Company.
1. These by-laws may be amended, repealed or altered in whole or in part by
the Board of Directors at any regular meeting or at any special meeting of the
Board of Directors where such action has been announced in the call and notice
of meeting.
ARTICLE XII
AMENDMENTS
Board of Directors at any regular meeting or at any special meeting of the
Board of Directors where such action has been announced in the call and notice
of meeting.
ARTICLE XIII
CONSTRUCTION
1. Masculine pronouns shall be construed as feminine or neuter pronouns and
singular pronouns and verbs shall be construed as plural in any place or places
herein in which the context may require such construction.
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<PAGE>
EXHIBIT 10.1
EXCERPT FROM MINUTES OF
THE BOARD OF DIRECTORS OF
NASH-FINCH COMPANY ON
MAY 9, 1995
The chairman stated that the next item of business concerned additional
compensation for the Board Chair. He noted that he and Messrs. Graham and
Lareau had been appointed by the Nominating Committee, at its April 25 meeting,
as an ad hoc committee to develop a recommendation in this regard. He then
called upon Mr. Graham who offered the following resolution and moved its
adoption:
RESOLVED, that the director elected to serve as Board Chair, if such person
is not a present full time employee of Nash Finch Company or its
subsidiaries, shall be compensated at the rate of $1,100 per month
retainer; which compensation shall be in addition to and not in lieu of
any other compensation paid to such director as an outside member of this
Board of Directors.
The above resolution was seconded by Mr. Fisher and, upon vote being taken, with
Mr. Miller abstaining, all present and voting voted unanimously in favor
thereof and same was declared duly adopted.
<PAGE>
NASH FINCH COMPANY
1995 DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF PLAN.
The purpose of the Nash Finch Company 1995 Director Stock Option Plan (the
"Plan") is to advance the interests of Nash Finch Company (the "Company") and
its stockholders by enabling the Company to attract and retain the services of
experienced and knowledgeable directors and to increase the proprietary
interests of such directors in the Company's long-term success and progress and
their identification with the interests of the Company's stockholders.
2. DEFINITIONS.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CODE" means the Internal Revenue Code of 1986, as amended.
2.3 "COMMITTEE" means the group of individuals administering the Plan, as
provided in Section 3 of the Plan.
2.4 "COMMON STOCK" means the common stock of the Company, par value $1.66
2/3 per share, or the number and kind of shares of stock or other securities
into which such Common Stock may be changed in accordance with Section 4.3 of
the Plan.
2.5 "DISABILITY" means the disability of an Eligible Director such as
would entitle the Eligible Director to receive disability income benefits
pursuant to the long-term disability plan of the Company then covering the
Eligible Director or, if no such plan exists or is applicable to the Eligible
Director, the permanent and total disability of the Eligible Director within the
meaning of Section 22(e)(3) of the Code.
2.6 "ELIGIBLE DIRECTORS" means all directors of the Company who are not,
as of the date of grant of an Option, full-time employees of the Company or any
subsidiary of the Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2.8 "FAIR MARKET VALUE" means, with respect to the Common Stock, as of any
date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote), the mean between the
reported high and low sale prices of the Common Stock as reported on the NASDAQ
National Market System or any stock exchange on which the Common Stock is
listed.
2.9 "OPTION" means a right to purchase 500 shares of Common Stock (subject
to adjustment as provided in Section 4.3 of the Plan) granted to an Eligible
Director pursuant to Section 5 of the Plan that does not qualify as an
"incentive stock option" within the meaning of Section 422 of the Code.
<PAGE>
2.10 "RETIREMENT" means the retirement of an Eligible Director pursuant to
and in accordance with the normal retirement/pension plan or practice of the
Company then covering the Eligible Director.
2.11 "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. PLAN ADMINISTRATION.
The Plan will be administered by a committee (the "Committee") consisting
solely of two or more members of the Board. All questions of interpretation of
the Plan will be determined by the Committee, each determination, interpretation
or other action made or taken by the Committee pursuant to the provisions of the
Plan will be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under the Plan. The
Committee, however, will have no power to determine the eligibility for
participation in the Plan, the number of shares of Common Stock to be subject to
Options, or the timing, pricing or other terms and conditions of the Options.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to adjustment as provided
in Section 4.3 of the Plan, the maximum number of shares of Common Stock that
will be available for issuance under the Plan will be 40,000 shares. The shares
available for issuance under the Plan may, at the election of the Committee, be
either treasury shares or shares authorized but unissued, and, if treasury
shares are used, all references in the Plan to the issuance of shares will, for
corporate law purposes, be deemed to mean the transfer of shares from treasury.
4.2 ACCOUNTING FOR OPTIONS. Shares of Common Stock that are issued under
the Plan or that are subject to outstanding Options will be applied to reduce
the maximum number of shares of Common Stock remaining available for issuance
under the Plan. Any shares of Common Stock that are subject to an Option that
lapses, expires, or for any reason is terminated unexercised will automatically
again become available for issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND OPTIONS. In the event of any reorganization,
merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off) or any other change in the
corporate structure or shares of the Company, the Committee (or, if the Company
is not the surviving corporation in any such transaction, the board of directors
of the surviving corporation) will make appropriate adjustment (which
determination will be conclusive) as to the number and kind of securities
available for issuance under the Plan and, in order to prevent dilution or
enlargement of the rights of Eligible Directors, the number, kind and, where
applicable, exercise price of securities subject to outstanding Options.
5. OPTIONS.
5.1 GRANT. On an annual basis, each director of the Company who qualifies
as an Eligible Director immediately following each annual meeting of
stockholders of the Company will be granted an Option.
5.2 EXERCISE PRICE. The per share price to be paid by an Eligible Director
upon exercise of an Option will be 100% of the Fair Market Value of one share of
Common Stock on the date of grant. The
2
<PAGE>
total purchase price of the shares to be purchased upon exercise of an Option
will be paid entirely in cash (including check, bank draft or money order).
5.3 EXERCISABILITY AND DURATION. Each Option will become exercisable in
full six months following its date of grant and, subject to earlier termination
in accordance with Section 5.6 of the Plan, will expire and will no longer be
exercisable five years from its date of grant.
5.4 MANNER OF EXERCISE. An Option may be exercised by an Eligible Director
in whole or in part from time to time, subject to the conditions contained in
the Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Corporate Secretary) at its principal
executive office in Edina, Minnesota and by paying in full the total exercise
price for the shares of Common Stock to be purchased in accordance with Section
5.2 of the Plan.
5.5 RIGHTS AS A STOCKHOLDER. As a holder of Options, an Eligible Director
will have no rights as a stockholder unless and until such Options are exercised
for shares of Common Stock and the Eligible Director becomes the holder of
record of such shares. Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to Options as to which
there is a record date preceding the date the Eligible Director becomes the
holder of record of such shares.
5.6 EFFECT OF TERMINATION OF SERVICE AS DIRECTOR.
(a) TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. In the event
an Eligible Director's service as a director of the Company is terminated by
reason of death, Disability or Retirement, all outstanding Options then held by
the Eligible Director will become immediately exercisable in full and will
remain exercisable for one year following such termination (but in no event
after the expiration date of any such Option).
(b) TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR
RETIREMENT.
(i) In the event an Eligible Director's service as a
director of the Company is terminated for any reason other than death,
Disability or Retirement, all rights of the Eligible Director under
the Plan and any agreements evidencing an Option will immediately
terminate without notice of any kind and no Options then held by the
Eligible Director will thereafter be exercisable; provided, however,
that if such termination is due to any reason other than termination
for "cause," all outstanding Options then held by the Eligible
Director will remain exercisable to the extent exercisable as of such
termination for a period of three months after such termination (but
in no event after the expiration date of any such Option).
(ii) For purposes of this Section 5.6, "cause" will be as
defined in any agreement or policy applicable to the Eligible Director
or, if no such agreement or policy exists, will mean (i) dishonesty,
fraud, misrepresentation, embezzlement or material and deliberate
injury or attempted injury, in each case related to the Company or any
subsidiary, (ii) any unlawful or criminal activity of a serious
nature, (iii) any willful breach of duty, habitual neglect of duty or
unreasonable job performance, or (iv) any material breach of any
service, confidentiality or noncompete agreement entered into with the
Company.
6. DATE OF TERMINATION OF SERVICE AS A DIRECTOR.
3
<PAGE>
An Eligible Director's service as a director of the Company will, for
purposes of the Plan, be deemed to have terminated on the date recorded on the
personnel or other records of the Company, as determined by the Committee based
upon such records.
7. RIGHTS OF ELIGIBLE DIRECTORS, TRANSFERABILITY OF INTERESTS.
7.1 SERVICE AS A DIRECTOR. Nothing in the Plan will interfere with or
limit in any way the right of the shareholders to remove an Eligible Director at
any time, and neither the Plan, nor the granting of an Option nor any other
action taken pursuant to the Plan, will constitute or be evidence of any
agreement or understanding, express or implied, that an Eligible Director will
be retained for any period of time or at any particular rate of compensation.
7.2 RESTRICTIONS ON TRANSFER OF INTERESTS. Except pursuant to testamentary
will or the laws of descent and distribution or as otherwise expressly permitted
by the Plan, no right or interest of any Eligible Director in an Option prior to
the exercise of Options will be assignable or transferable, or subjected to any
lien, during the lifetime of the Eligible Director, either voluntarily or
involuntarily, directly or indirectly, by operation of law or otherwise. In the
event of an Eligible Director's death, exercise of any Options (to the extent
permitted pursuant to Section 5 of the Plan) may be made by the Eligible
Director's legal representatives, heirs and legatees.
7.3 NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is intended
to modify or rescind any previously approved compensation plans or programs of
the Company or create any limitations on the power or authority of the Board to
adopt such additional or other compensation arrangements as the Board may deem
necessary or desirable.
8. Securities LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and an Eligible Director may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Options granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
9. Plan AMENDMENT, MODIFICATION AND TERMINATION
The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Options under the Plan will conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that (a) no
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of the amendment is then required pursuant
to Rule 16b-3 under the Exchange Act or the rules of the NASD,
4
<PAGE>
and (b) to the extent prohibited by Rule 16b-3 of the Exchange Act, the Plan may
not be amended more than once every six months. No termination, suspension or
amendment of the Plan may adversely affect any outstanding Option without the
consent of the affected Eligible Director; provided, however, that this sentence
will not impair the right of the Committee to take whatever action it deems
appropriate under Section 4.3 of the Plan.
10. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan is effective as of March 24, 1995, the date it was adopted by the
Board. The Plan will terminate at midnight on March 1, 2000, and may be
terminated prior thereto by Board action, and no Option will be granted after
such termination. Options outstanding upon termination of the Plan may continue
to be exercised, or become free of restrictions, in accordance with their terms.
11. MISCELLANEOUS
11.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota, notwithstanding the conflicts of laws
principles of any jurisdictions.
11.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the Eligible
Directors.
5
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