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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 30, 1995 0-785
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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
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.66-2/3 per share
Common Stock Purchase Rights
---------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 25, 1996, 10,920,793 shares of Common Stock of the
Registrant were outstanding, and the aggregate market value of the Common Stock
of the Registrant as of that date (based upon the last reported sale price of
the Common Stock at that date by the NASDAQ National Market System), excluding
outstanding shares deemed beneficially owned by directors and officers, was
approximately $173,677,400.
Parts I, II and IV of this Annual Report on Form 10-K incorporate by
reference information (to the extent specific pages are referred to herein) from
the Registrant's Annual Report to Stockholders for the Year Ended December 30,
1995 (the "1995 Annual Report"). Parts II and III of this Annual Report on Form
10-K incorporate by reference information (to the extent specific sections are
referred to herein) from the Registrant's Proxy Statement for its Annual Meeting
to be held May 14, 1996 (the "1996 Proxy Statement").
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PART I
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS.
Nash Finch Company, a Delaware corporation organized in 1921 as the
successor to a business founded in 1885, has its principal executive offices
at 7600 France Avenue South, Edina, Minnesota 55435. Its telephone number is
(612) 832-0534. Unless the context otherwise indicates, the term "Company,"
as used in this Report, means Nash Finch Company and its consolidated
subsidiaries.
The Company is one of the largest food wholesalers in the United States,
serving approximately 1,400 affiliated and other independent retail
supermarkets, other retail stores and outlets, and institutional accounts,
such as military base commissaries, restaurants, schools and hospitals, as of
December 30, 1995. No one customer accounts for a significant portion of the
Company's sales. The Company also operates and supplies, as of December 30,
1995, 113 Company-owned supermarkets and warehouse stores. The Company's
affiliated and Company-owned stores operate under a number of tradenames,
including ECONOFOODS-Registered Trademark-, FOOD BONANZA-Registered
Trademark-, SUN MART-TM-, FAMILY THRIFT CENTER-TM-, EASTER FOODS-TM-, FOOD
FOLKS-Registered Trademark-, JACK & JILL-Registered Trademark-,
ECONOMART-TM-, OUR FAMILY FOODS-Registered Trademark-, FOOD PRIDE-Registered
Trademark- and SAX FOOD & DRUG-Registered Trademark-. The Company's market
areas are in approximately 30 states in the Midwest, West, Mid-Atlantic and
Southeast and are serviced through 16 wholesale distribution centers and one
general merchandise warehouse. The Company packages, ships and markets fresh
produce from California and the countries of Chile and Mexico to a variety of
buyers across the United States, Canada and overseas.
During 1995, the Company converted a closed full-line distribution
center into a specialized warehouse which handles general merchandise and
slow-moving items in support of other Midwest distribution centers.
Operations from the closed facility were consolidated into those of four
other distribution centers.
In December, 1995, the Company sold its two convenience store
subsidiaries which distributed food and non-food products to over 3,000
convenience stores primarily in the southeastern United States. The sale
involved Thomas & Howard Company of Hickory, Inc. ("Thomas & Howard"), a
wholly-owned subsidiary of the Company, and T&H Service Merchandisers, Inc.
("T&H"), a wholly-owned subsidiary of Thomas & Howard. Thomas & Howard
operates a grocery distribution center in Newton, North Carolina; T&H
operates a general merchandise warehouse in Hickory, North Carolina.
In January, 1996, the Company acquired substantially all of the business
and assets of Military Distributors of Virginia, Inc. ("MDV"), a Virginia
corporation based in Norfolk, Virginia. MDV engages in the business of
distributing groceries and related products to military commissaries in the
eastern United States and Europe. The MDV operation is being consolidated
with the Company's existing military distribution operations in Baltimore,
Maryland, and Chesapeake, Virginia, into a single military division which will
have two operating centers - one in Norfolk and the other in Baltimore.
<PAGE>
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about the Company's business segments for the most
recent three fiscal years is contained on pages 24 and 25 of the 1995 Annual
Report (Note 11 to Consolidated Financial Statements). For segment financial
reporting purposes, a portion of the operational profits of wholesale
distribution centers are allocated to retail operations to the extent that
merchandise is purchased by these distribution centers and transferred to
retail stores directly operated by the Company. For fiscal 1995, 44% of such
warehouse operational profits were allocated to retail operations.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
1. PRODUCTS SUPPLIED.
The Company distributes and sells a full line of food products,
including dry groceries, fresh fruits and vegetables, frozen foods, fresh and
processed meat products and dairy products, and a variety of non-food
products, including health and beauty aids, tobacco products, paper products,
cleaning supplies and small household items. The Company primarily
distributes and sells nationally advertised brand products and a number of
unbranded products (principally meats and produce) purchased directly from
various manufacturers, processors and suppliers or through manufacturers'
representatives and brokers. Many of the major suppliers of the Company are
large companies. The Company has no significant long-term purchase
obligations and believes that adequate and alternative sources of supply are
generally available to meet the Company's needs.
The Company also distributes and sells private label products using the
Company's own trademarks. A wide variety of grocery, dairy, package meat,
frozen foods, health and beauty care products, paper and household products,
beverages, and other packaged products are manufactured or processed by
others for the Company and sold under Company brand names.
2. DISTRIBUTION.
The Company distributes products to Company-owned supermarkets and
warehouse stores and to independent customers and military base commissaries
from 16 distribution centers, as of December 30, 1995, located in Minnesota
(1), Iowa (1), Kansas (1), Nebraska (2), Colorado (1), North Dakota (2),
South Dakota (1), Wisconsin (1), North Carolina (2), Virginia (2), Maryland
(1) and Georgia (1). The Company's distribution centers are located at
strategic points to efficiently serve Company-owned stores, independent
customers, and military base commissaries. The distribution centers are
equipped with modern materials handling equipment for receiving, storing and
shipping goods and merchandise and are designed for high-volume operations at
low unit costs. The Company also distributes health and beauty aids, general
merchandise and specialty grocery products from a warehouse facility located
in South Dakota, and produce from a separate warehouse facility in North
Carolina.
The distribution centers serve as central sources of supply for
Company-owned and independent stores, military base commissaries and other
institutional customers within their operating areas. The distribution
centers maintain complete inventories containing virtually
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every national brand grocery product sold in supermarkets, together with a
wide variety of high-volume private label items. In addition, the
distribution centers provide full lines of perishables, including fresh meats
and poultry, fresh fruits and vegetables, dairy and delicatessen products and
frozen foods. Retailers order their inventory requirements at regular
intervals through direct linkage with Company computers. Deliveries are made
primarily by the Company's transportation fleet. The frequency of deliveries
varies, depending upon customer needs. The Company currently has a modern
fleet of approximately 350 tractors, 610 semi-trailers, and 160 small trucks
and vans, most of which are owned by the Company. In addition, many types of
meats, dairy products, bakery and other products are sold by the Company but
are delivered by the suppliers directly to retail food stores.
Virtually all of the Company's wholesale sales to independent customers
are made on a cost-plus-fee basis, with the fee based on the type of
commodity and quantity purchased. Selling prices are changed promptly, based
on the latest cost information.
The Company distributes products to military base commissaries primarily
under contractual arrangements with the manufacturers of those products. The
Company provides storage, handling and transportation services for the
manufacturers; and, as products ordered from the Company by the commissaries
are delivered to them, the Company invoices the manufacturer for the cost of
the merchandise delivered plus negotiated fees.
3. WHOLESALE OPERATIONS.
As of December 30, 1995, the Company distributed food products and
non-food items, on a wholesale basis, to approximately 1,400 affiliated and
other independent retail supermarkets, other retail stores and outlets, and
institutional accounts, such as military base commissaries, restaurants,
schools and hospitals. The Company's retail supermarket customers are
primarily self-service supermarkets that carry a wide variety of grocery
products, health and beauty aids and general merchandise. Many stores also
have one or more specialty departments such as delicatessens, in-store
bakeries, restaurants, pharmacies and flower shops. The stores served by the
Company's wholesale operations range in size from small stores to large
supermarkets containing approximately 100,000 square feet.
The Company offers to its affiliated independent retailers a broad range
of services, including promotion, advertising and merchandising programs, the
installation of computerized ordering, receiving and scanning systems, the
establishment and supervision of computerized retail accounting, budgeting
and payroll systems, personnel management assistance and employee training,
consumer and market research, store development services and insurance
programs. The Company's retail counselors and other Company personnel advise
and counsel the affiliated independents, and directly provide many of the
above services. Separate charges are made for some of these services. Other
independent stores are charged for services on a negotiated basis. The
Company also provides retailers with marketing and store upgrade services,
many of which have been developed in connection with Company-owned stores.
For example, the Company assists retailers in installing and operating
delicatessens and other specialty food sections. Rather than develop a
single pattern for the services it provides, the
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Company has developed flexible programs to serve the needs of most of its
affiliated independents, whether rural or urban, large or small.
The Company's assistance to its affiliated independent stores in store
development provides a means of continued growth for the Company through the
development of new retail store locations and the enlargement or remodeling
of existing retail stores. The services provided include site selection,
marketing studies, building design, store layout and equipment planning and
procurement. The Company assists its retail customers in securing existing
supermarkets that are for sale from time to time in market areas serviced by
the Company and, occasionally, acquires existing stores for resale to
customers.
The Company also may provide financial assistance to independent
retailers it services, generally in connection with new store development and
the upgrading or expansion of existing stores. The Company makes secured
loans to some of its affiliated independent operators, generally repayable
over a period of five or seven years, for inventories, store fixtures and
equipment, working capital and store improvements. Loans are secured by
liens on inventory or equipment or both, by personal guarantees and by other
types of security. As of December 30, 1995, the Company had outstanding
$7,373,000 in such secured loans to 27 independent operators. In addition,
the Company may provide such assistance to independent retailers by
guarantying loans from financial institutions and leases entered into
directly with lessors. The Company also uses its credit strength to lease
supermarket locations and sublease them to independent operators, at rates
that are at least as high as the rent paid by the Company.
4. RETAIL OPERATIONS.
As of December 30, 1995, the Company owned and operated 113 retail
outlets, including 75 supermarkets, 34 warehouse stores and 4 combination
general merchandise/food stores. The Company has devoted considerable
resources in recent years to acquire, construct, enlarge and modernize
Company-owned stores; and, by constructing new stores or expanding existing
stores, seeks to add either larger conventional supermarkets (at least 30,000
square feet) or warehouse stores (at least 45,000 square feet), as
appropriate. The Company has implemented a number of automated systems,
including scanning and direct store delivery for its stores. These systems
provide inventory control at delivery and checkout points, reducing shrinkage
and increasing labor efficiency.
The Company operates its 75 supermarkets principally under the names SUN
MART-TM-, EASTER FOODS-TM- and FOOD FOLKS-Registered Trademark-. These
stores, 14 of which the Company owns (the remainder are leased), range in
size up to approximately 46,000 square feet. These stores are primarily
self-service supermarkets that carry a wide variety of grocery products,
health and beauty aids, and general merchandise. Many stores also have one
or more specialty departments such as delicatessens, in-store bakeries,
restaurants, pharmacies and flower shops.
The Company operates 34 warehouse stores principally under the names
ECONOFOODS-Registered Trademark- and FOOD BONANZA-Registered Trademark-.
These stores, 10 of which the Company owns (the remainder are leased), range
in size up to approximately 106,000 square feet. The Company's warehouse
stores offer a
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wide variety of high quality groceries, fresh fruits and vegetables, dairy
products, frozen foods, fresh fish, fresh and processed meat and health and
beauty aids, all at lower prices. Many have specialty departments such as
delicatessens, in-store bakeries, pharmacies, banks and floral and video
departments. These stores appeal to quality and price-conscious customers
who want national brands, broad selection, and availability of convenience
foods, but are willing, in some cases, to forgo standard supermarket
services. The stores are able to offer lower prices due to increased
business volume as well as the limited services available.
The Company also operates four combination general merchandise/food
stores under the name FAMILY THRIFT CENTER-TM-. These stores, all of which
are owned, range in size up to approximately 60,000 square feet. In addition
to traditional supermarket food departments, these stores have expanded
general merchandise and health and beauty aid departments and pharmacies, and
some also have sit-down restaurants, full-service floral departments and book
departments.
5. PRODUCE MARKETING OPERATIONS.
Through a wholly-owned subsidiary, Nash-DeCamp Company, the Company
grows, packs, ships and markets fresh fruits and vegetables from locations in
California and the countries of Chile and Mexico to customers across the
United States and Canada, and also overseas. For regulatory reasons, the
amount of business between Nash-DeCamp Company and the Company is limited.
The Company owns and operates three modern packing, shipping and/or cold
storage facilities that ship fresh grapes, citrus, plums, peaches,
nectarines, apricots, pears, persimmons, kiwi fruit and other products. The
Company also acts as marketing agent for other packers of fresh produce in
California and in the countries of Chile and Mexico. For the above services,
the Company receives, in addition to a selling commission, a fee for packing,
handling and shipping produce. The Company also owns vineyards and orchards
for the production of table grapes, tree fruit, kiwi and citrus.
6. COMPETITION.
All segments of the Company's business are highly competitive. The
Company competes directly at the wholesale level with a number of wholesalers
that supply independent retailers, including "cooperative" wholesalers that
are owned by their retail customers and "voluntary" wholesalers who, like the
Company, are not owned by their retail customers but sponsor a program under
which single-unit or multi-unit independent retailers may affiliate under a
common name. Certain of these competing wholesalers may also engage in
distribution to military bases. The Company also competes indirectly with
the warehouse and distribution operations of the large integrated chains,
which consist of single entities owning both wholesale and retail operations.
At the wholesale level, the principal methods of competition are location of
distribution centers, the services offered to independent retailers, such as
store financing and use of store names, and the services offered to
manufacturers of products sold to military base commissaries. The success of
the Company's wholesale business also depends upon the ability of its retail
store customers to compete successfully with other retail food stores.
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The Company competes on the retail level in a fragmented market with
many organizations of various sizes, ranging from national chains and
voluntary or cooperative groups to local chains and privately owned
unaffiliated stores. Depending on the product and location involved, the
principal methods of competition at the retail level include price, service,
quality, display, selection and store location.
The Company competes directly in its produce marketing operations with a
large number of other firms that pack, ship and market produce, and competes
indirectly with larger, integrated firms that grow, pack, ship and market
produce. The principal methods of competition in this segment are service
provided to growers and the ability to sell produce at the most favorable
prices.
7. EMPLOYEES.
As of December 30, 1995, the Company employed approximately 11,500
persons (approximately 5,400 full-time and 6,100 part-time).
ITEM 2. PROPERTIES.
The principal executive offices of the Company are located in Edina,
Minnesota, and consist of approximately 68,000 square feet of office space.
The locations and sizes of the Company's distribution centers, as of
December 30, 1995, are listed below (all of which are owned, except as
indicated). The distribution center facilities which are leased have varying
terms, all with remaining terms of less than 20 years. Total rent in fiscal
year 1996 for the leased facilities was $4,385,000.
<TABLE>
<CAPTION>
APPROX. SIZE
LOCATION (SQUARE FEET)
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<S> <C>
Midwest/West:
Denver, Colorado (*) 335,800
Cedar Rapids, Iowa 351,900
Liberal, Kansas 176,500
St. Cloud, Minnesota 325,100
Grand Island, Nebraska 177,700
Lincoln, Nebraska 226,000
Fargo, North Dakota 288,800
Minot, North Dakota 185,200
Rapid City, South Dakota 186,600
Sioux Falls, South Dakota
(includes 79,300 square feet of warehouse
space which is leased) 252,400
Appleton, Wisconsin 430,900
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APPROX. SIZE
LOCATION (SQUARE FEET)
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<S> <C>
Southeast:
Macon, Georgia 242,400
Baltimore, Maryland (*)
(includes 60,000 square feet of
refrigerated warehouse space
located in Jessup, Maryland) 234,500
Lumberton, North Carolina (*)
(includes 16,100 square feet of
produce warehouse space located
in Wilmington, North Carolina) 256,600
Rocky Mount, North Carolina (*) 191,800
Bluefield, Virginia 186,400
Chesapeake, Virginia (*) 236,800
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Total Square Footage 4,285,400
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* Leased facility (excluding produce warehouse in Wilmington, North
Carolina which is owned by the Company).
</TABLE>
The following table shows the number and aggregate size of Company-owned
and operated supermarkets and warehouse stores operated at December 30, 1995:
<TABLE>
<S> <C>
Supermarkets (*):
Number of Stores 79
Total Square Feet 1,804,000
Warehouse stores:
Number of Stores 34
Total Square Feet 1,441,000
Totals:
Number of Stores 113
Total Square Feet 3,245,000
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* Includes four combination general merchandise/food stores.
</TABLE>
The Company leases 61 of its supermarket and combination general
merchandise/food store buildings (the remainder are owned), which range in
size up to approximately 60,000 square feet. The Company also leases 24 of
its warehouse store buildings, which range in size up to approximately
106,000 square feet. These leases are for varying terms, primarily under
20 years. The total rent in fiscal year 1995 for store buildings was
$8,578,000.
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Further information about the lease obligations of the Company is given
in Note 7 to the Consolidated Financial Statements on pages 23 and 24 of the
1995 Annual Report, incorporated herein by reference.
Nash-DeCamp Company, a wholly-owned subsidiary of the Company, owns and
operates three packing, shipping and/or cold storage facilities in California
in connection with its produce marketing operations, with total space of
approximately 174,000 square feet. Its executive offices, comprising
approximately 9,000 square feet, are in leased premises located in Visalia,
California. In addition, Nash-DeCamp Company owns approximately 831 acres
for the production of table grapes, 40 acres for the production of kiwi
fruit, 925 acres for the production of peaches, plums, apricots and
nectarines, 628 acres for the production of citrus, and 237 acres of open
ground for future development. Nash-DeCamp Company also leases 112 acres of
tree fruit. All of these vineyards and orchards are located in the San
Joaquin Valley of California. Nash-DeCamp Company, through a wholly-owned
Chilean subsidiary, also leases approximately 789 acres in Chile for the
production of table grapes.
Nash-DeCamp Company makes a continuing effort to keep all of its
properties and facilities modern, efficient and adequate for its operational
needs, through the acquisition, disposition, expansion and improvement of
such properties and facilities. As a result, Nash-DeCamp Company believes
that its properties and facilities are, on an aggregate basis, fully utilized
and adequate for the conduct of its business.
ITEM 3 LEGAL PROCEEDINGS.
In November 1992, Jin Ku Kim, currently an employee of the Company,
commenced an action against the Company in U.S. District Court for the
Northern District of Iowa claiming damages as a result of the alleged failure
of the Company to promote Mr. Kim to the position of shipping foreman in
November 1990 and April 1992 because of his national origin and race, and the
alleged retaliation against him by the Company in terms and conditions of
employment after he filed charges of employment discrimination with the Cedar
Rapids, Iowa, Civil Rights Commission. On September 16, 1994 a jury verdict
was entered against the Company in the amount of $8,786,000, including
$36,000 in back pay, $1,750,000 in mental anguish and loss of enjoyment of
life and $7,000,000 in punitive damages. On April 13, 1995, the U.S.
District Court entered an Amended Judgment reducing the jury award to a total
of $421,000 plus attorneys' fees and costs of $114,556. Both Mr. Kim and the
Company have filed appeals from the Amended Judgment with the United States
Court of Appeals for the Eighth Circuit. Mr. Kim's appeal seeks reinstatement
of the jury verdict and the Company's appeal seeks judgment as a matter of
law or further reduction of the damage award; both parties seek a new trial
in the alternative. Briefs have been submitted and the case was argued on
December 14, 1995. No decision has been issued. The Company continues to
deny that Mr. Kim has suffered any discrimination or retaliation, or any
damages as a result thereof. The Company believes that there is substantial
basis, both in the facts of this case and in law, supporting the Company's
position before the Eighth Circuit. Although no assurance can be given that
the Eighth Circuit will award the relief the Company seeks, the Company
believes that
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the jury verdict will not be reinstated and that the reserves it has
established are reasonably adequate to cover its liability.
On March 16, 1995 a group of nine separate entities engaged in growing
citrus crops in Fresno County and Tulare County, California, commenced an
action against Nash-DeCamp Company, a wholly-owned subsidiary of the Company,
and others, including three of its officers and directors, in the United
States District Court for the Eastern District of California. Nash-DeCamp
Company provided services to the plaintiffs relating to the packing,
marketing and distribution of produce grown by the plaintiffs, and advanced
financing to assist the plaintiffs in growing and harvesting their crops.
The plaintiffs' complaint alleges that the defendants engaged in various acts
of misconduct relating to the handling, packaging and pricing of such
produce, and relating to financing extended to the plaintiffs, in violation
of various federal and state laws, resulting in unspecified damages to the
plaintiffs. The plaintiffs' complaint sought unspecified compensatory
damages, punitive damages, treble damages, rescission of the loan documents
relating to the financing extended by Nash-DeCamp Company to the plaintiffs,
injunctive relief preventing Nash-DeCamp from enforcing the loan documents,
attorneys' fees and costs. The defendants denied any liability under the
plaintiffs' claims, and Nash-DeCamp Company counter-sued for judicial
foreclosure of certain deeds of trust securing debts of the plaintiffs to
Nash-DeCamp Company. At December 30, 1995, while still in the pre-trial
phase of this action, the parties entered into a Settlement Agreement and
Mutual Release of All Claims, pursuant to which the referenced action was
dismissed with prejudice as to all claims. The reserves established by Nash-
DeCamp Company at the end of the fiscal year 1995 were sufficient to cover
the terms of the settlement, and no financial liability is expected to be
incurred in 1996.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company, their ages, the year first
elected or appointed as an executive officer and the offices held as of
March 1, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR FIRST ELECTED
OR APPOINTED AS AN
NAME (AGE) EXECUTIVE OFFICER TITLE
---------- ------------------ -----
<S> <C> <C>
Alfred N. Flaten (61) 1991 President and Chief Executive Officer
David W. Bell (51) 1990 Senior Vice President, Retail Sales and
Operations
William T. Bishop (55) 1994 Senior Vice President, Sales and Logistics
Norman R. Soland (55) 1986 Vice President, Secretary and General
Counsel
Clarence T. Walters (59) 1988 Vice President, Management Information
Systems
Charles F. Ramsbacher (53) 1991 Vice President, Marketing
Steven L. Lumsden (50) 1992 Vice President, Warehouse and
Transportation
Gerald D. Maurice (62) 1993 Vice President, Store Development
John R. Scherer (45) 1994 Vice President and Chief Financial Officer
Charles M. Seiler (48) 1995 Vice President, Corporate Retail Operations
Edgar F. Timberlake (48) 1995 Vice President, Human Resources
Lawrence A. Wojtasiak (50) 1990 Controller
Suzanne S. Allen (31) 1996 Treasurer
</TABLE>
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.
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Mr. Flaten was elected Chief Executive Officer in November 1994. His
election as President and Chief Operating Officer was effective in November
1991. He had been elected Executive Vice President, Sales and Operations of
Nash Finch in February 1991.
Mr. Bell was elected as Senior Vice President, Retail Sales and
Operations effective in October 1994. He previously served as Vice
President, Corporate Retail Operations from May 1991 to October 1994 and Vice
President, Marketing from May 1990 to May 1991.
Mr. Bishop was elected as Senior Vice President, Sales and Logistics
effective in December 1994 after joining the Company in the same month. He
was previously employed by Scrivner, Inc., a wholesale and retail food
distribution company, serving as its President and Chief Operating Officer
from 1987 to 1994.
Mr. Ramsbacher was elected Vice President, Marketing in May 1991. He
previously served as operating Vice President, Iowa Division from May 1990 to
May 1991.
Mr. Lumsden was elected Vice President, Warehouse and Transportation in
May 1992. He previously served as Director, Warehouse and Transportation from
May 1990 to May 1992.
Mr. Maurice was elected Vice President, Store Development in May 1993.
He previously served as operating Vice President, Central Division for more
than five years.
Mr. Scherer was appointed as Chief Financial Officer in November 1995.
His election as Vice President was effective in December 1994, and he served
as Vice President, Planning and Financial Services from December 1994 to
November 1995. He previously served as Director of Strategic Planning and
Financial Services from April 1994 to December 1994, and Director of Planning
and Budgets from January 1988 through April 1994.
Mr. Seiler was elected as Vice President, Corporate Retail Operations
effective as of October 1994. He previously served as operating Vice
President, Iowa Division from May 1993 to October 1994, Iowa Division Manager
from June 1991 to May 1993, and Corporate Retail Sales and Operations
Supervisor (Fargo, ND) from July 1984 to June 1991.
Mr. Timberlake was elected as Vice President, Human Resources in
November 1995. He previously served as Director of Human Resources from
January 1993, and Director of Training and Management Development from
February 1988 to January 1993.
Ms. Allen was elected as Treasurer effective as of January 1996. She
previously served as Assistant Treasurer from May 1995, Treasury Manager from
January 1993 to May 1995, and Treasury Assistant from September 1987 to
January 1993.
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PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information under the caption "Price Range of Common Stock and
Dividends" on page 15 of the Company's 1995 Annual Report is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The financial information under the caption "Consolidated Summary of
Operations" on pages 26 and 27 of the Company's 1995 Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 14 and 15 of the
Company's 1995 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements and the report of its
independent auditors on pages 16-25 of the Company's 1995 Annual Report are
incorporated herein by reference, as is the unaudited information set forth
under the caption "Quarterly Financial Information" on page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The information under the caption "Independent Auditors" in the
Company's 1996 Proxy Statement is incorporated herein by reference.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
A. DIRECTORS OF THE REGISTRANT.
The information under the captions "Election of Directors--Information
About Directors and Nominees" and "Election of Directors--Other Information
About Directors and Nominees" in the Company's 1996 Proxy Statement is
incorporated herein by reference.
B. EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning executive officers of the Company is included in
this Report under Item 4A, "Executive Officers of the Registrant."
C. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT OF 1934.
Information under the caption "Executive Compensation and Other
Benefits--Compliance with Section 16(a) of the Exchange Act" in the Company's
1996 Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Election of Directors--Compensation
of Directors" and "Executive Compensation and Other Benefits" in the
Company's 1996 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Principal Stockholders and Beneficial
Ownership of Management" in the Company's 1996 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors--Other
Information About Directors and Nominees" in the Company's 1996 Proxy
Statement is incorporated herein by reference.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
The following Financial Statements are incorporated herein by
reference from the pages indicated in the Company's 1995 Annual Report:
Independent Auditors' Report -- page 16
Consolidated Statements of Earnings for the years ended December 30,
1995, December 31, 1994 and January 1, 1994 -- page 16
Consolidated Statements of Cash Flows for the years ended December 30,
1995, December 31, 1994 and January 1, 1994 -- page 17
Consolidated Balance Sheets as of December 30, 1995 and December 31,
1994 -- pages 18 and 19
Consolidated Statements of Stockholders' Equity for the years ended
December 30, 1995, December 31, 1994 and January 1, 1994 -- page 20
Notes to Consolidated Financial Statements -- pages 20-25
2. FINANCIAL STATEMENT SCHEDULES:
The following financial statement schedules are included herein and
should be read in conjunction with the consolidated financial statements
referred to above (page numbers refer to pages in this Report):
PAGE
----
(a) Valuation and Qualifying Accounts .................... 18
(b) Other Schedules. All other schedules are omitted as the
required information is inapplicable or the information is presented in the
consolidated financial statements or related notes.
14
<PAGE>
3. Exhibits:
The exhibits to this Report are listed in the Exhibit Index on
pages E-1 to E-5 herein.
A copy of any of these exhibits will be furnished at a
reasonable cost to any person who was a stockholder of the Company as of
March 25, 1996, upon receipt from any such person of a written request for
any such exhibit. Such request should be sent to Nash Finch Company,
7600 France Avenue South, P.O. Box 355, Minneapolis, Minnesota, 55440-0355,
Attention: Secretary.
The following is a list of each management contract or
compensatory plan or arrangement required to be filed as an exhibit to this
Annual Report on Form 10-K pursuant to Item 14(c):
A. Nash Finch Profit Sharing Plan -- 1994 Revision and
Nash Finch Profit Sharing Trust Agreement (as restated
effective January 1, 1994) (incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 1994 (File No. 0-785)).
B. Nash Finch Profit Sharing Plan -- 1994 Revision -- First
Declaration of Amendment (incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 (File No. 0-785)).
C. Nash Finch Profit Sharing Plan -- 1994 Revision --
Second Declaration of Amendment (filed herewith as
Exhibit 10.10).
D. Nash Finch Executive Incentive Bonus and Deferred
Compensation Plan (as amended and restated effective
December 31, 1993) (incorporated by reference to Exhibit 10.7
to the Company's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 (File No. 0-785)).
E. Excerpt from minutes of the Board of Directors regarding Nash
Finch Pension Plan, as amended (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1987 (File No. 0-785)).
F. Excerpt from minutes of the Board of Directors regarding Nash
Finch Pension Plan, as amended (filed herewith as
Exhibit 10.13).
15
<PAGE>
G. Excerpts from minutes of the Board of Directors regarding
director compensation (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended October 7, 1995 (File No. 0-785)).
H. Excerpts from minutes of the Board of Directors relating to
compensation of the Board Chair (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 17, 1995 (File No. 0-785)).
I. Form of Director Fee Deferral Agreement (incorporated by
reference to Exhibit 10.19 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 1990 (File
No. 0-785)).
J. Form of letter agreement specifying benefits in the event
of termination of employment following a change in control
of Nash Finch (incorporated by reference to Exhibit 10.20 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 (File No. 0-785)).
K. Nash Finch Income Deferral Plan (incorporated by
reference to Exhibit 10.17 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 1, 1994 (File
No. 0-785)).
L. Nash Finch 1994 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Registration Statement on
Form S-8 filed July 8, 1994 (File No. 33-54487)).
M. Nash Finch 1995 Director Stock Option Plan (incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the period ended June 17, 1995 (File
No. 0-785)).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the
fiscal year covered by this Report.
On January 17, 1996, the Company filed a Form 8-K with the Securities
and Exchange Commission to report that on January 2, 1996, the Company
acquired substantially all of the business and assets of Military
Distributors of Virginia, Inc. ("MDV"), a Virginia corporation. Amendment
No. 1 on Form 8-K/A, amending the January 17, 1996 filing to include
financial statements for the most recent fiscal year of MDV and required
pro forma financial information, was filed on March 18, 1996.
On February 28, 1996, Nash Finch filed a Form 8-K with the Securities
and Exchange Commission to report that on February 13, 1996, the Board of
Directors of the Company
16
<PAGE>
approved a Stockholder Rights Agreement dated February 13, 1996 between
the Company and Norwest Bank Minnesota, a national association, as Rights
Agent. Also, on March 7, 1996, Nash Finch filed a Registration Statement
on Form 8-A regarding the registration of Common Stock Purchase Rights
under the Securities Exchange Act of 1934.
17
<PAGE>
SCHEDULE II
NASH FINCH COMPANY and SUBSIDIARIES
Valuation and Qualifying Accounts
Fiscal years ended December 30, 1995, December 31, 1994, and Janaury 1, 1994
(In thousands)
<TABLE>
<CAPTION>
Additions
------------------------- Charged
Balance at Charged to (credited) Balance
beginning costs and Due to to other at end
Description of year expenses acquisitions accounts Deductions of year
- -------------------------------------- --------- --------- ------------ --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
52 weeks ended January 1, 1994:
Allowance for doubtful receivables (d) $3,554 10,146 - (3,123)(e) 2,146 (b) 8,522
91 (a)
Provision for losses relating to
leases on closed locations 667 583 - 677 (c) 1,759 168
-------- ------- -------- ------- -------- -------
$4,221 10,729 - (2,355) 3,905 8,690
-------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- -------
52 weeks ended December 31, 1994:
Allowance for doubtful receivables (d) $8,522 2,187 961 7,123 (e) 14,207 (b) 4,620
34 (a)
Provision for losses relating to
leases on closed locations 168 1,451 - (618)(c) 467 534
-------- ------- -------- ------- -------- -------
$8,690 3,638 961 6,539 14,674 5,154
-------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- -------
52 weeks ended December 30, 1995:
Allowance for doubtful receivables (d) $4,620 3,997 - 78 (a) 3,815 (b) 4,880
Provision for losses relating to
leases on closed locations 534 1,864 - (106)(c) 397 1,895
-------- ------- -------- ------- -------- -------
$5,154 5,861 - (28) 4,212 6,775
-------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- -------
</TABLE>
(a) Recoveries on accounts previously charged off.
(b) Accounts charged off.
(c) Change in current portion shown as current liability.
(d) Includes current and non-current receivables.
(e) Reserve for estimated losses on notes previously sold
reclassified from other current liability.
18
<PAGE>
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 29, 1996 NASH-FINCH COMPANY
By /S/ ALFRED N. FLATEN
----------------------------------------
Alfred N. Flaten
President, Chief Executive Officer,
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 29, 1996 by the following persons on
behalf of the Registrant and in the capacities indicated.
/S/ ALFRED N. FLATEN /S/ LAWRENCE A. WOJTASIAK
- --------------------------------- -------------------------------------------
Alfred N. Flaten, President, Lawrence A. Wojtasiak, Controller (Principal
Chief Executive Officer Accounting Officer)
(Principal Executive Officer)
and Director
/S/ JOHN R. SCHERER /S/ CAROLE F. BITTER
- --------------------------------- --------------------------------------------
John R. Scherer, Vice President Carole F. Bitter, Director
and Chief Financial Officer
(Principal Financial Officer)
/S/ RICHARD A. FISHER /S/ ALLISTER P. GRAHAM
- --------------------------------- ------------------------------------------
Richard A. Fisher, Director Allister P. Graham, Director
/S/ JOHN H. GRUNEWALD /S/ RICHARD G. LAREAU
- --------------------------------- -------------------------------------------
John H. Grunewald, Director Richard G. Lareau, Director
/S/ RUSSELL N. MAMMEL /S/ DON E. MARSH
- --------------------------------- --------------------------------------------
Russell N. Mammel, Director Don E. Marsh, Director
/S/ DONALD R. MILLER /S/ ROBERT F. NASH
- -------------------------------- -------------------------------------------
Donald R. Miller, Director Robert F. Nash, Director
/S/ JEROME O. RODYSILL
- --------------------------------
Jerome O. Rodysill, Director
<PAGE>
NASH FINCH COMPANY
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
ITEM
NO. ITEM METHOD OF FILING
- ---- ---- ----------------
<S> <C> <C>
3.1 Restated Certificate of
Incorporation of the Company....... Incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 28,
1985 (File No. 0-785).
3.2 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 29, 1986....................... Incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
3.3 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 15, 1987....................... Incorporated by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-3 (File
No. 33-14871).
3.4 Bylaws of the Company as
amended, effective
November 21, 1995.................. Filed herewith.
4.1 Amended and Restated
Stockholder Rights Agreement,
dated January 18, 1990, between
the Company and Norwest Bank
Minnesota, National Association.... Incorporated by reference to Exhibit 1 to the Company's
Amendment to Application or Report on Form 8 dated
January 18, 1990 (File No. 0-785).
E-1
<PAGE>
ITEM
NO. ITEM METHOD OF FILING
- ---- ---- ----------------
<S> <C> <C>
4.2 Stockholder Rights Agreement,
dated February 13, 1996, between
the Company and Norwest Bank
Minnesota, National Association.... Incorporated by reference to Exhibit 4 to the Company's
Current Report on Form 8-K dated February 13, 1996
(File No. 0-785).
10.1 Note Agreement, dated August 1,
1986, between the Company and
Nationwide Life Insurance Company.. Incorporated by reference to Exhibit 19.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
10.2 Note Agreements, dated
September 15, 1987, between the
Company and IDS Life Insurance
Company, and between the Company
and IDS Life Insurance Company
of New York........................ Incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
October 10, 1987 (File No. 0-785).
10.3 Note Agreements, dated
September 29, 1989, between the
Company and Nationwide Life
Insurance Company, and between
the Company and West Coast Life
Insurance Company.................. Incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
October 7, 1989 (File No. 0-785).
E-2
<PAGE>
ITEM
NO. ITEM METHOD OF FILING
- ---- ---- ----------------
<S> <C> <C>
10.4 Note Agreements dated March 22,
1991, between the Company and The
Minnesota Mutual Life Insurance
Company, and between the Company
and The Minnesota Mutual Life
Insurance Company - Separate
Account F.......................... Incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 23,
1991 (File No. 0-785).
10.5 Note Agreements, dated as of
February 15, 1993, between the
Company and Principal Mutual Life
Insurance Company, and between the
Company and Aid Association for
Lutherans.......................... Incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 27,
1993 (File No. 0-785).
10.6 Note Agreement, dated March 22,
1996, between the Company and The
Variable Annuity Life Insurance
Company, Independent Life and
Accident Insurance Company,
Northern Life Insurance Company,
and Northwestern National Life
Insurance Company.................. Filed herewith.
10.7 Credit Agreement, dated
December 27, 1995, between the
Company and First Bank National
Association, Norwest Bank Minnesota,
National Association, PNC Bank,
National Association, Mitsubishi
Bank, Limited Chicago Branch, and
Wachovia Bank of Georgia, N.A..... Filed herewith.
E-3
<PAGE>
ITEM
NO. ITEM METHOD OF FILING
- ---- ---- ----------------
<S> <C> <C>
10.8 Nash Finch Profit Sharing Plan--1994
Revision and Nash Finch Profit
Sharing Trust Agreement (as restated
effective January 1, 1994)......... Incorporated by reference to Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785).
10.9 Nash Finch Profit Sharing Plan--1994
Revision-- First Declaration of
Amendment.......................... Incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 1,
1995 (File No. 0-785).
10.10 Nash Finch Profit Sharing Plan -- 1994
Revision -- Second Declaration of
Amendment.......................... Filed herewith.
10.11 Nash Finch Executive Incentive Bonus
and Deferred Compensation Plan (as
amended and restated effective
December 31, 1993)................. Incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 1,
1994 (File No. 0-785).
10.12 Excerpts from minutes of
Board of Directors regarding
Nash Finch Pension Plan, as amended
effective January 2, 1966.......... Incorporated by reference to Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 3, 1987
(File No. 0-785).
10.13 Excerpts from minutes of the Board
of Directors regarding Nash Finch
Pension Plan, as amended........... Filed herewith.
E-4
<PAGE>
ITEM
NO. ITEM METHOD OF FILING
- ---- ---- ----------------
<S> <C> <C>
10.14 Excerpts from minutes of the Board
of Directors regarding director
compensation....................... Incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended October 7,
1995 (File No. 0-785).
10.15 Excerpts from minutes of the Board
of Directors relating to compensation
of the Board Chair................. Incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 17,
1995 (File No. 0-785).
10.16 Form of Director Fee Deferral
Agreement.......................... Incorporated by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 (File No. 0-785).
10.17 Form of Letter Agreement
Specifying Benefits in the
Event of Termination of
Employment Following a Change
in Control of Nash Finch........... Incorporated by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 (File No. 0-785).
10.18 Nash Finch Income Deferral Plan.... Incorporated by reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785).
10.19 Nash Finch 1994 Stock Incentive Plan Incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-8 filed July 8, 1994
(File No. 33-54487).
10.20 Nash Finch 1995 Director Stock Option
Plan............................... Incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 17, 1995 (File No. 0-785).
13.1 1995 Annual Report to Stockholders
(selected portions of pages 14-27) Filed herewith.
21.1 Subsidiaries of the Company........ Filed herewith.
23.1 Consent of Ernst & Young LLP....... Filed herewith.
23.2 Consent of KPMG Peat Marwick, LLP.. Filed herewith.
27.1 Financial Data Schedule............ Filed herewith.
</TABLE>
E-5
<PAGE>
EXHIBIT 3.4
NASH-FINCH COMPANY BY-LAWS
RESTATED JULY 26, 1983
ARTICLE I
STOCK
1. A certificate of stock shall be issued to each holder of fully paid
stock, in numerical order, signed by the President or Executive Vice President,
or by a Vice President, and by the Secretary or Assistant Secretary. [Amended
5-9-95]
2. A transfer of stock shall be made only upon the books of the Company and
before a new certificate is issued, the old certificate must be surrendered for
cancellation.
3. Stock of the Company which shall have been purchased by it and held in
the treasury shall be subject to disposal by the Board of Directors, but, while
held by the Company, shall not be voted, nor shall it participate in the
dividends or profits of the Company; provided that such stock may participate in
any stock split in the form of a stock dividend. [Amended 9-1-83]
ARTICLE II
STOCKHOLDERS AND STOCKHOLDERS MEETINGS
1. The annual meeting of the stockholders of this Company for the election
of directors and the transaction of such other business as may properly be
brought before such meeting shall be held in April or May of each year, the date
and time of such annual meeting to be determined by the Board of Directors not
less than 60 days before the date of such meeting. All meetings of the
stockholders shall be held in the County of Hennepin, State of Minnesota, at
such place as may be fixed from time to time by the Board of Directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. [Amended 11-21-95.]
2. The holders of a majority of the stock issued and outstanding, and
entitled to vote thereat, present in person, or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders for
the transaction of business
<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>
- -------------------------------------------------------------------------------
NASH-FINCH COMPANY
NOTE AGREEMENT
Dated as of March 22, 1996
Re:
$30,000,000 7.13% Senior Notes
Due October 1, 2011
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . . . .1
Section 1.1. Description of Notes. . . . . . . . . . . . . . . . .1
Section 1.2. Commitment: Closing Date. . . . . . . . . . . . . . .2
Section 1.3. Other Agreements. . . . . . . . . . . . . . . . . . .2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . .2
Section 2.1. Required Principal Prepayments. . . . . . . . . . . .2
Section 2.2. Optional Prepayments. . . . . . . . . . . . . . . . .2
Section 2.3. Notice of Optional Prepayments. . . . . . . . . . . .3
Section 2.4. Allocation of Prepayments . . . . . . . . . . . . . .3
Section 2.5. Method and Place of Payment of Principal
and Interest. . . . . . . . . . . . . . . . . . . . .3
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . .4
Section 3.1. Representations of the Company. . . . . . . . . . . .4
Section 3.2. Representations of the Purchaser. . . . . . . . . . .4
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . .5
Section 4.1. Closing Certificate . . . . . . . . . . . . . . . . .5
Section 4.2. Legal Opinions. . . . . . . . . . . . . . . . . . . .5
Section 4.3. Company's Existence and Authority . . . . . . . . . .6
Section 4.4. Related Transactions. . . . . . . . . . . . . . . . .6
Section 4.5. Consent of Holders of Other Securities. . . . . . . .6
Section 4.6. Private Placement Number. . . . . . . . . . . . . . .6
Section 4.7. Funding Instructions. . . . . . . . . . . . . . . . .6
Section 4.8. Legality of Investment. . . . . . . . . . . . . . . .6
Section 4.9. Proceedings and Documents . . . . . . . . . . . . . .6
Section 4.10. Waiver of Conditions. . . . . . . . . . . . . . . . .7
SECTION 5. INTERPRETATION OF AGREEMENT . . . . . . . . . . . . . . .7
Section 5.1. Definitions . . . . . . . . . . . . . . . . . . . . .7
Section 5.2. Accounting Principles . . . . . . . . . . . . . . . 13
Section 5.3. Directly or Indirectly. . . . . . . . . . . . . . . 13
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<PAGE>
SECTION 6. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . 13
Section 6.1. Corporate Existence, Etc. . . . . . . . . . . . . . 14
Section 6.2. Insurance . . . . . . . . . . . . . . . . . . . . . 14
Section 6.3. Taxes, Claims for Labor and Materials, Compliance
with Laws . . . . . . . . . . . . . . . . . . . . . 14
Section 6.4. Maintenance, Etc. . . . . . . . . . . . . . . . . . 14
Section 6.5. Nature of Business. . . . . . . . . . . . . . . . . 14
Section 6.6. Current Ratio; Fixed Charge Coverage. . . . . . . . 15
Section 6.7. Stockholders' Equity. . . . . . . . . . . . . . . . 15
Section 6.8. Incurrence of Funded Debt . . . . . . . . . . . . . 15
Section 6.9. Liens and Encumbrances. . . . . . . . . . . . . . . 16
Section 6.10. Dividends, Stock Purchases. . . . . . . . . . . . . 18
Section 6.11. Mergers, Consolidations and Sales of Assets . . . . 18
Section 6.12. Reports and Rights of Inspection. . . . . . . . . . 20
Section 6.13. Repurchase of Notes . . . . . . . . . . . . . . . . 22
Section 6.14. Termination of Pension Plans. . . . . . . . . . . . 22
Section 6.15. Transactions with Affiliates. . . . . . . . . . . . 22
SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . 23
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . 23
Section 7.2. Notice to Holders . . . . . . . . . . . . . . . . . 24
Section 7.3. Default Remedies. . . . . . . . . . . . . . . . . . 24
Section 7.4. Rescission of Acceleration. . . . . . . . . . . . . 25
SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . . . . . . 25
Section 8.1. Amendments and Waivers. . . . . . . . . . . . . . . 25
Section 8.2. Solicitation of Holders . . . . . . . . . . . . . . 26
Section 8.3. Binding Effect. . . . . . . . . . . . . . . . . . . 26
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 26
Section 9.1. Registered Notes. . . . . . . . . . . . . . . . . . 26
Section 9.2. Exchange for Different Denominations. . . . . . . . 26
Section 9.3. Loss, Theft, etc. of Notes. . . . . . . . . . . . . 27
Section 9.4. Expenses, Stamp Tax Indemnity . . . . . . . . . . . 27
Section 9.5. Powers and Rights Not Waived. . . . . . . . . . . . 27
Section 9.6. Notices . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.7. Successors and Assigns. . . . . . . . . . . . . . . 28
Section 9.8. Survival of Covenants and Representations . . . . . 28
Section 9.9. Severability. . . . . . . . . . . . . . . . . . . . 28
Section 9.10. Governing Law . . . . . . . . . . . . . . . . . . . 28
Section 9.11. Captions. . . . . . . . . . . . . . . . . . . . . . 29
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Names and Addresses of Purchasers and Amounts of
Commitments
Exhibit A -- Form of 7.13% Senior Note due October 1, 2011
Exhibit B -- Form of Closing Certificate
Exhibit C -- Description of Special Counsel's Closing Opinion
Exhibit D -- Description of Closing Opinion of Counsel to the Company
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<PAGE>
NASH-FINCH COMPANY
7600 France Avenue South
Minneapolis, Minnesota 55440-0355
NOTE AGREEMENT
Re:
$30,000,000 7.13% Senior Notes
Due October 1, 2011
Dated as of
March 22, 1996
To the Purchaser named in Schedule I
hereto which is a
signatory to this Agreement
Ladies and Gentlemen:
The undersigned, NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT
SECTION 1.1. DESCRIPTION OF NOTES. The Company will authorize the
issue and sale of its 7.13% Senior Notes due October 1, 2011 (the "NOTES") in an
aggregate principal amount not exceeding $30,000,000 to be dated the date of
issue, to bear interest from the date thereof until maturity at the rate of
7.13% per annum on the principal amount from time to time outstanding, such
interest to be payable semi-annually on the first day of April and October in
each year (commencing on October 1, 1996), until the principal amount thereof
shall be due and payable, to mature on October 1, 2011 and to be otherwise
substantially in the form attached hereto as Exhibit A. Overdue principal
(including any overdue required or optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) overdue installments of
interest shall bear interest at the rate of 8.13% per annum from and after the
maturity thereof, whether by acceleration or otherwise, until paid. Interest on
the Notes will be computed on the basis of a 360-day year of twelve 30-day
months. The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in Section
2 of this Agreement. The term "NOTES" as used herein shall include each Note
delivered pursuant to this Agreement and the separate agreements with the other
purchasers named in Schedule I hereto.
<PAGE>
You and the other purchasers named in Schedule I hereto are hereinafter
sometimes referred to as the "PURCHASERS". The terms which are capitalized
herein shall have the meanings specified in Section 5 unless the context shall
otherwise require.
SECTION 1.2. COMMITMENT: CLOSING DATE. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes of the Company at a price equal to
100% of the principal amount thereof set forth opposite your name in Schedule 1.
The sale and purchase of the Notes shall take place on such date not later than
March 22, 1996 as shall be mutually agreed upon by the Company and the
Purchasers (the "CLOSING DATE"). On the Closing Date, delivery of the Notes
will be made against payment therefor in funds current and immediately available
at First Bank National Association, First Bank Place, Minneapolis, Minnesota
55480, ABA #091000022, account number: 150250050179, account name: Nash-Finch
Company, at 10:00 A.M. Minneapolis, Minnesota time for credit to the account of
the Company upon advice to do so from special counsel to the Purchasers. Unless
you notify the Company at least three days prior to the Closing Date, the Notes
delivered to you will be delivered to you in the form of a single registered
Note, registered in your name or in the name of such nominee as you may specify.
SECTION 1.3. OTHER AGREEMENTS. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into similar agreements with
the other Purchasers under which such other Purchasers agree to purchase from
the Company the principal amount of Notes set opposite such Purchasers' names in
Schedule I, and your obligations and the obligations of the Company hereunder
are subject to the execution and delivery of the similar agreements by the other
Purchasers. The obligations of each Purchaser shall be several and not joint
and no Purchaser shall be liable or responsible for the acts of any other
Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company agrees that
it will prepay and apply, and there shall become due and payable $2,500,000
principal amount on October 1 in each year beginning October 1, 2000 up to and
including October 1, 2010 (each such payment and the payment on October 1, 2011
being hereinafter referred to collectively as the "PRINCIPAL PAYMENT DATES") in
respect of the aggregate principal indebtedness evidenced by the Notes. The
remaining unpaid principal amount of the Notes and accrued and unpaid interest
thereon shall be due and payable on October 1, 2011.
No premium shall be payable in connection with any required prepayment
made pursuant to this Section 2.1. In the event of any repurchase of less than
all of the outstanding Notes pursuant to Section 6.13, each scheduled prepayment
pursuant to the provisions of this Section 2.1 coming due
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<PAGE>
concurrently therewith or thereafter shall be reduced to the amount determined
by dividing the aggregate principal amount of Notes outstanding immediately
after any such repurchase pursuant to said Section 6.13 by the sum of the number
of the remaining Principal Payment Dates, including, if on a Principal Payment
Date, the date of such purchase.
SECTION 2.2. OPTIONAL PREPAYMENTS. In addition to the prepayments
required by Section 2.1, and upon compliance with Section 2.3, the Company shall
have the privilege, on the first day of April and October in each year
commencing on April 1, 1997, of prepaying the outstanding Notes, either in whole
or in part (but if in part then in units of $500,000 or an integral multiple of
$100,000 in excess thereof) by payment of the principal amount of the Notes or
portion thereof to be prepaid and accrued interest thereon to the date of such
prepayment, together with a premium equal to the then applicable Make Whole
Premium.
SECTION 2.3. NOTICE OF OPTIONAL PREPAYMENTS. The Company will give
notice of any optional prepayment of the Notes to be made pursuant to Section
2.2 hereof to each holder thereof not less than 30 days nor more than 60 days
before the date fixed for such optional prepayment specifying (a) such date, (b)
the principal amount of the holder's Notes to be prepaid on such date, (c) that
a premium may be payable, (d) the date when such premium will be calculated, (e)
a description of the calculation of the premium, if any, and (f) accrued
interest applicable to the prepayment. Such notice of prepayment shall also
certify compliance with all requirements, if any, which are conditions precedent
to any such prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
the premium, if any, and accrued interest shall become due and payable on the
prepayment date. Two business days prior to the prepayment date, the Company
shall provide each holder of a Note (by facsimile transmission) written notice
of the premium, if any, payable in connection with such prepayment and, whether
or not any premium is payable, a reasonably detailed computation of the Make
Whole Premium.
SECTION 2.4. ALLOCATION OF PREPAYMENTS. All partial prepayments shall
be applied on all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof but only in units of $1,000, and to the extent that
such ratable application shall not result in an even multiple of $1,000,
adjustment may be made by the Company to the end that successive optional
prepayments shall result in substantially ratable payments. Partial prepayments
made pursuant to Section 2.2 shall be credited in each case first, against the
final maturities of the Notes being prepaid and then, against the required
prepayments provided for by Section 2.1 hereof in the inverse order of the due
dates of such prepayments.
SECTION 2.5. METHOD AND PLACE OF PAYMENT OF PRINCIPAL AND INTEREST.
Anything in the Notes or this Agreement to the contrary notwithstanding, at the
time of any payment, the Company will promptly and punctually pay the principal
thereof, if any, and premium, if any,
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<PAGE>
and interest due thereon, without any presentment thereof, directly to the
Purchaser or any subsequent holder at the address of the Purchaser set forth in
Schedule I or at such other address as the Purchaser or such subsequent holder
may from time to time designate in writing to the Company or, if a bank account
is designated for a Purchaser on Schedule I hereto or in any written notice to
the Company from the Purchaser or any such subsequent holder, the Company will
make such payments in immediately available funds or in such manner indicated on
Schedule I hereto to such bank account before 12:00 noon, Minneapolis, Minnesota
time, marked for attention as indicated, or in such other manner or to such
other account of the Purchaser or such holder in any bank in the United States
as the Purchaser or any such subsequent holder may from time to time direct in
writing. If you shall sell or transfer any Note, you will notify the Company of
such action and of the name and address of the transferee of such Note and you
will, prior to the delivery of such Note, make a notation on such Note of the
date to which interest has been paid on such Note and, if not previously made, a
notation on such Note of the extent to which any payment has been made on
account of the principal of such Note.
SECTION 3. REPRESENTATIONS.
SECTION 3.1. REPRESENTATIONS OF THE COMPANY. The Company represents
and warrants that all representations set forth in the form of the certificate
annexed hereto as Exhibit B are true and correct as of the date hereof and are
hereby incorporated herein by reference with the same force and effect as though
herein set forth in full.
SECTION 3.2. REPRESENTATIONS OF THE PURCHASER. (a) You represent, and
in entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the distribution
thereof, and that you have no present intention of selling, negotiating or
otherwise disposing of the Notes; PROVIDED that the disposition of your property
shall at all times be and remain within your control.
(b) You further represent that at least one of the following
statements concerning each source of funds to be used by you to purchase the
Notes is accurate as of the Closing Date:
(1) the source of funds to be used by you to pay the purchase
price of the Notes is an "INSURANCE COMPANY GENERAL ACCOUNT" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf
of such plan, exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile;
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<PAGE>
(2) all or a part of such funds constitute assets of one or
more separate accounts, trusts or a commingled pension trust maintained
by you, and you have disclosed to the Company the names of such employee
benefit plans whose assets in such separate account or accounts or
pension trusts exceed 10% of the total assets or are expected to exceed
10% of the total assets of such account or accounts or trusts as of the
date of such purchase (for the purpose of this clause (2), all employee
benefit plans maintained by the same employer or employee organization
are deemed to be a single plan);
(3) all or part of such funds constitute assets of a bank
collective investment fund maintained by you, and you have disclosed to
the Company the names of such employee benefit plans whose assets in
such collective investment fund exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such fund as of the date
of such purchase (for the purpose of this clause (3), all employee
benefit plans maintained by the same employer or employee organization
are deemed to be a single plan);
(4) all or part of such funds constitute assets of one or more
employee benefit plans, each of which has been identified to the Company
in writing;
(5) you are acquiring the Notes for the account of one or more
pension funds, trust funds or agency accounts, each of which is a
"GOVERNMENTAL PLAN" as defined in Section 3(32) of ERISA;
(6) the source of funds is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84-14, issued March 13, 1984), provided that no other party to
the transactions described in this Agreement and no "affiliate" of such
other party (as defined in Section V(c) of PTE 84-14) has at this time,
and during the immediately preceding one year has exercised the
authority to appoint or terminate said QPAM as manager of the assets of
any plan identified in writing pursuant to this clause (6) or to
negotiate the terms of said QPAM's management agreement on behalf of any
such identified plans; or
(7) if you are other than an insurance company, all or a
portion of such funds consists of funds which do not constitute "plan
assets".
The Company shall deliver a certificate on the Closing Date which
certificate shall either state that (i) it is neither a "party in interest" (as
defined in Title I, Section 3(14) of ERISA) nor a "disqualified person" (as
defined in Section 4975(e)(2) of the Internal Revenue Code of 1986, as amended),
with respect to any plan identified pursuant to paragraphs (2), (3) or (4)
above, or (ii)
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with respect to any plan identified pursuant to paragraph (6) above, neither it
nor any "affiliate" (as defined in Section V(c) of PTE 84-14) is described in
the proviso to said paragraph (6). As used in this Section 3.2(b), the terms
"SEPARATE ACCOUNT", "EMPLOYER SECURITIES", and "EMPLOYEE BENEFIT PLAN" shall
have the respective meanings assigned to them in ERISA and the term "PLAN
ASSETS" shall have the meaning assigned to it in Department of Labor Regulation
29 C.F.R. Section 2510.3-101.
SECTION 4. CLOSING CONDITIONS.
Your obligation to purchase and pay for the Notes to be issued on the
Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following conditions precedent:
SECTION 4.1. CLOSING CERTIFICATE. On the Closing Date you shall
receive from the Company a certificate dated such Closing Date, executed by the
President or a Vice President of the Company substantially in the form attached
hereto as Exhibit B, the truth and accuracy of which shall be a condition to
your obligation to accept and pay for the Notes.
SECTION 4.2. LEGAL OPINIONS. On the Closing Date you shall receive
from Chapman and Cutler, who are acting as your special counsel in this
transaction, and from Norman R. Soland, Esq., General Counsel for the Company,
their respective opinions, dated the Closing Date, in form and substance
satisfactory to you and covering substantially the matters set forth or provided
in Exhibits C and D, respectively, hereto.
SECTION 4.3. COMPANY'S EXISTENCE AND AUTHORITY. On or prior to the
Closing Date, you shall have received in form and substance satisfactory to you
and your special counsel, such documents and evidence with respect to the
Company as you may reasonably request to establish the existence and good
standing of the Company and the authorization of the transactions contemplated
by this Agreement.
SECTION 4.4. RELATED TRANSACTIONS. Prior to or concurrently with the
issuance and sale of the Notes to you, the Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to this Agreement and the other agreements referred to in
Section 1.3.
SECTION 4.5. CONSENT OF HOLDERS OF OTHER SECURITIES. On or prior to
the Closing Date, any consents or approvals required to be obtained from any
holder or holders of any outstanding Security of the Company and any amendments
of agreements pursuant to which any Securities may have been issued which shall
be necessary to permit the consummation of the transactions
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contemplated hereby shall have been obtained and all such consents or amendments
shall be satisfactory in form and substance to you and your special counsel.
SECTION 4.6. PRIVATE PLACEMENT NUMBER. On or prior to the Closing
Date, special counsel to the Purchasers of the Notes shall have duly made the
appropriate filings with Standard & Poor's CUSIP Service Bureau, as agent for
the National Association of Insurance Commissioners, in order to obtain a
private placement number for the Notes.
SECTION 4.7. FUNDING INSTRUCTIONS. At least three business days prior
to the Closing Date, you shall have received written instructions executed by
the President or any Vice President of the Company directing the manner of the
payment of funds and setting forth (1) the name and address of the transferee
bank, (2) such transferee bank's ABA number, (3) the account name and number
into which the purchase price for the Notes is to be deposited, and (4) the name
and telephone number of the account representative responsible for verifying
receipt of such funds.
Section 4.8. LEGALITY OF INVESTMENT. The Notes to be purchased by you
shall be a legal investment for you under the laws of each jurisdiction to which
you may be subject (without resort to any so-called "BASKET PROVISIONS" to such
laws).
SECTION 4.9. PROCEEDINGS AND DOCUMENTS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to you and your special counsel and you and your special counsel
shall have received copies (executed or certified as may be appropriate) of all
legal documents or proceedings which you and they may reasonably request in
connection with consummation of said transactions.
SECTION 4.10. WAIVER OF CONDITIONS. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in this Section 4 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in this Section 4
have not been fulfilled, you may waive compliance by the Company with any such
condition to such extent as you may in your sole discretion determine. Nothing
in this Section 4.10 shall operate to relieve the Company of any of its
obligations hereunder or to waive any of your rights against the Company.
SECTION 5. INTERPRETATION OF AGREEMENT.
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SECTION 5.1. DEFINITIONS. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"AFFILIATE" shall mean any Person (other than a Subsidiary) (a) which,
directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (b) which
beneficially owns or holds 10% or more of any class of the Voting Stock of the
Company, or (c) 10% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 10% or more of the Securities of such Person which
shall have any rights or interests similar to the Voting Stock of a corporation)
of which is beneficially owned or held by the Company or a Subsidiary. The term
"CONTROL" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.
"CAPITALIZED LEASE" shall mean any lease which is required to be
capitalized on the consolidated balance sheet of the Company and its
Subsidiaries in accordance with generally accepted accounting principles.
"CAPITALIZED RENTALS" shall mean at any date as of which the amount
thereof is to be determined, the amount at which the aggregate rentals due under
or to become due under all Capitalized Leases under which the Company or any
Subsidiary is a lessee will be reflected as a liability on a consolidated
balance sheet of the Company and its Subsidiaries in accordance with generally
accepted accounting principles.
"CLOSING DATE" is defined in Section 1.2 hereof.
"CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
shall mean such assets and liabilities of the Company and its Subsidiaries on a
consolidated basis as shall be determined in accordance with generally accepted
accounting principles to constitute current assets and current liabilities,
respectively.
"CONSOLIDATED NET INCOME" for any period shall mean net earnings after
income taxes of the Company and its Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles, but
excluding:
(a) earnings of any Subsidiary accrued prior to the date it
became a Subsidiary;
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(b) earnings of any Person, substantially all the assets of
which have been acquired in any manner by the Company or its
Subsidiaries, realized by such Person prior to the date of acquisition
by the Company or its Subsidiaries;
(c) net earnings of any Person (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless
such net earnings shall have actually been received by the Company or
such Subsidiary in the form of cash distributions; and
(d) the earnings of any Person to which assets of the Company
shall have been sold, transferred or disposed of, or into which the
Company shall have merged, prior to the date of such transaction.
"DEBT" with respect to any Person shall mean, without duplication, the
sum of:
(a) the obligations of such Person for borrowed money or which
have been incurred in connection with the acquisition of assets;
(b) liabilities secured by any Lien existing on Property owned
by such Person (whether or not such liabilities have been assumed);
(c) Capitalized Rentals under any Capitalized Lease; and
(d) all Guarantees of Debt of others, whether or not reflected
in the balance sheet of such Person.
"DEFAULT" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"ENVIRONMENTAL LEGAL REQUIREMENT" shall mean any current or future
statute, law, regulation, ordinance, order, consent decree, judgment, permit,
license or other requirement of any international, foreign, federal, state,
regional, county, local or other governmental body which pertains to protection
of the environment, health or safety of persons, natural resource use,
conservation, wildlife, waste management, hazardous materials or pollution
(including regulation of releases to air, land, water and groundwater), and
includes, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 ET SEQ., Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 ET
SEQ., Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 U.S.C. Sections 1251 ET SEQ.,
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Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 ET SEQ., Toxic
Substances Control Act of 1976, 15 U.S.C. Sections 2601 ET SEQ., Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 ET SEQ., Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Sections 651 ET SEQ., Oil
Pollution Act of 1990, 33 U.S.C. Sections 2701 ET SEQ., Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 ET SEQ., National
Environmental Policy Act of 1975, 42 U.S.C. Sections 4321 ET SEQ., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. Sections 300(f) ET SEQ., any similar or
implementing state law, and all amendments, rules, regulations and guidance
documents promulgated thereunder.
"EVENT OF DEFAULT" is defined in Section 7.1 hereof.
"FIXED CHARGES" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Rentals on Capitalized Leases) payable during
such period by the Company and its Subsidiaries, and (ii) all Interest Charges
on all Debt (including the interest component of Rentals on Capitalized Leases)
of the Company and its Subsidiaries.
"FUNDED DEBT" with respect to any Person shall mean, without
duplication, the sum of (i) all Debt of such Person (including obligations of
such Person which are classified as Long-Term Liabilities in accordance with
generally accepted accounting principles) in each case having a final maturity
of one or more than one year from the date of origin thereof (or which, by the
terms of the agreement creating the obligation, is renewable or extendable at
the option of the Obligor for a period or periods more than one year from the
date of origin), including all payments in respect thereof that are required to
be made within one year from the date of any determination of Funded Debt
whether or not included in Consolidated Current Liabilities, and (ii) all
guarantees of Funded Debt of others, whether or not reflected in the balance
sheet of such Person.
"GUARANTY" shall mean for any Person all obligations of such Person
guaranteeing or in effect guaranteeing any indebtedness, dividend or other
obligation of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including obligations incurred through an agreement,
contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
Property or assets constituting security therefor;
(b) to advance or supply funds:
(1) for the purchase or payment of such
indebtedness or obligation; or
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(2) to maintain working capital or other
balance sheet condition or any income statement condition or
otherwise to advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease Property or to purchase Securities or other
Property or services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of the primary obligor to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or
obligation of the primary obligor against loss in respect thereof.
For the purposes of all computations made under this Agreement, a
Guaranty in respect of any indebtedness for borrowed money shall be deemed to be
an amount of indebtedness equal to the portion of the principal amount of such
indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed to
be indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic chemical, waste,
byproduct, pollutant, contaminant, compound, product or substance, including,
without limitation, asbestos, polychlorinated biphenyls, petroleum (including
crude oil or any fraction thereof) and any material designated as hazardous or
toxic pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Sections 9601 ET SEQ., Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 ET
SEQ., Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 U.S.C. Sections 1251 ET SEQ., Clean Air Act of 1966, as amended, 42
U.S.C. Sections 7401 ET SEQ., Toxic Substances Control Act of 1976, 15 U.S.C.
Sections 2601 ET SEQ., or Hazardous Materials Transportation Act, 49 U.S.C.
Sections 1801 ET SEQ.
"INTEREST CHARGES" for any period shall mean all interest and all
amortization of debt, discount and expense for all Debt of a Person for which
such calculations are being made.
"LIEN" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the pledge or deposit of Property, the security interest lien arising
from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes. The term "LIEN" shall
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the
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purposes of this Agreement, the Company or a Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes and such retention or vesting shall be deemed to be a
Lien.
"MAKE WHOLE PREMIUM" shall mean in connection with any prepayment or
acceleration of the Notes the excess, if any, of (a) the aggregate present
values as of the date of such prepayment of each dollar of principal being
prepaid (taking into account the application of such prepayment required by
Section 2.1, if any,) and the amount of interest (exclusive of interest accrued
to the date of prepayment) that would have been payable in respect of such
dollar if such prepayment had not been made, determined by discounting such
amounts at the Reinvestment Rate from the respective dates on which they would
have been payable, over (b) 100% of the principal amount of the Notes being
prepaid at the date such Notes are to be prepaid. If the Reinvestment Rate at
the time of determination of the Make Whole Premium is equal to or higher than
7.13%, the Make Whole Premium shall be zero. For purposes of any determination
of the Make Whole Premium:
"REINVESTMENT RATE" means (1) .50% plus the yield to maturity of
the United States Treasury obligations having a maturity (as compiled by
and published on Telerate Page 500 or its successor ("TELERATE") more
than three (3) Business Days immediately preceding the payment date at
11:00 A.M. New York City time) (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the Notes
being prepaid or paid (taking into account the application of any
prepayment required by Section 2.1) or (2) if such rate shall not have
been so published by Telerate and Telerate does not publish the Collar
Yields referred to in clause (b) of the next following sentence, the
Reinvestment Rate in respect of such payment date shall mean .50% plus
the yield to maturity of the United States Treasury obligations having a
maturity (as compiled by and published on page "USD" of the Bloomberg
Financial Market Services ("BLOOMBERG") three (3) Business Days
immediately preceding the payment date at 11:00 A.M. New York City time)
(rounded to the nearest month) corresponding to the Weighted Average
Life to Maturity of the Notes being prepaid or paid (taking into account
the application of any prepayment required by Section 2.1), or (3) if
such rate shall not have been so published by either Telerate or
Bloomberg and Telerate and Bloomberg do not publish the Collar Yields
referred to in clause (b) of the next following sentence, the
Reinvestment Rate in respect of such payment date shall mean .50% plus
the arithmetic mean of the yields for the two columns under the heading
"WEEK ENDING" published in the Statistical Release under the caption
"TREASURY CONSTANT MATURITIES" for the maturity (rounded to the nearest
month) corresponding to the Weighted Average Life to Maturity of the
Notes being prepaid or paid (taking into account the application of any
prepayment required by
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Section 2.1). If no maturity exactly corresponding to Weighted Average
Life to Maturity of the Notes shall appear in either Telerate, Bloomberg
or the Statistical Release, as the case may be, (a) if necessary, U.S.
Treasury bill quotations shall be converted to bond-equivalent yields in
accordance with accepted financial practice and (b) yields for the
published maturity next longer than the Weighted Average Life to
Maturity and the published maturity next shorter than the Weighted
Average Life to Maturity (such yields described in this clause (b) being
referred to as "COLLAR YIELDS") shall be calculated pursuant to the
foregoing sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each
of the relevant periods to the nearest month. For purposes of
calculating the Reinvestment Rate pursuant to clause (3) above, the most
recent Statistical Release published prior to the date of determination
of the Make Whole Premium shall be used.
"STATISTICAL RELEASE" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the holders of
66-2/3% in aggregate principal amount of the outstanding Notes.
"WEIGHTED AVERAGE LIFE TO MATURITY" of the principal amount of
the Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such
principal. The term "REMAINING DOLLAR-YEARS" of such principal shall
mean the amount obtained by (1) multiplying (i) the remainder of (A) the
amount of principal that would have become due on each scheduled payment
date if such prepayment had not been made, LESS (B) the amount of
principal on the Notes scheduled to become due on such date after giving
effect to such prepayment and the application thereof in accordance with
the provisions of Section 2.1, if any, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between the
date of determination and such scheduled payment date, and (2) totaling
the products obtained in (1).
"MULTIEMPLOYER PLAN" shall have the same meaning as in the Employee
Retirement Income Security Act of 1974, as amended.
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the
sum of (i) Consolidated Net Income during such period PLUS (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
federal, state or other income taxes paid by
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the Company and its Subsidiaries during such period and (iii) Fixed Charges of
the Company and its Subsidiaries during such period.
"NOTES" is defined in Section 1.1 hereof.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PURCHASERS" is defined in Section 1.1 hereof.
"RENTALS" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Subsidiary, as lessee or sublessee under a
lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes
and similar charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"RESTRICTED PAYMENTS" is defined in Section 6.10 hereof.
"SECURITY" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
"STOCKHOLDERS' EQUITY" shall mean the amount of the capital stock
accounts (LESS treasury stock) PLUS the surplus and retained earnings of the
Company determined in accordance with generally accepted accounting principles.
"SUBSIDIARY" shall mean any corporation of which more than 50% (by
number of votes) of the Voting Stock is owned and controlled by the Company
and/or one or more corporations which are Subsidiaries.
"TOTAL CAPITALIZATION" shall mean the sum of (a) Funded Debt of the
Company and its Subsidiaries, (b) deferred income taxes of the Company and its
Subsidiaries classified as long-term liabilities in accordance with generally
accepted accounting principles, and (c) Stockholders' Equity.
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"VOTING STOCK" shall mean Securities of any class or classes of a
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or Persons performing
similar functions).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary, all of the equity
Securities (except directors' qualifying shares) of which are owned by the
Company and/or the Company's other Wholly-Owned Subsidiaries.
SECTION 5.2. ACCOUNTING PRINCIPLES. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with
generally accepted accounting principles, to the extent applicable.
SECTION 5.3. DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 6. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
SECTION 6.1. CORPORATE EXISTENCE, ETC. The Company will preserve and
keep in force and effect, and will cause each Subsidiary to preserve and keep in
force and effect, its corporate existence and all licenses and permits necessary
to the proper conduct of its business, PROVIDED, HOWEVER, that the foregoing
shall not prevent any transaction permitted by Section 6.11.
SECTION 6.2. INSURANCE. The Company will maintain or cause to be
maintained, and will cause each Subsidiary to maintain or cause to be
maintained, insurance coverage by financially sound and reputable insurers in
such forms and amounts, including such deductibles and such provisions for self-
insurance, and against such risks as are customary for corporations of
established reputation engaged in the same or a similar business and owning and
operating similar Properties.
SECTION 6.3. TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH
LAWS. The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the Property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with
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usual and customary business terms, and all claims for work, labor or materials,
which if unpaid might become a Lien or charge upon any Property of the Company
or such Subsidiary; PROVIDED the Company or such Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (a) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any Property of the Company or such Subsidiary or any material
interference with the use thereof by the Company or such Subsidiary or (b) such
nonpayment would not materially and adversely affect the Properties, business,
prospects, profits or condition of the Company and its Subsidiaries, and (c) the
Company or such Subsidiary shall set aside on its books, reserves, if any,
required by generally accepted accounting principles with respect thereto. The
Company will promptly comply and will cause each Subsidiary to promptly comply
with all laws, ordinances or governmental rules and regulations to which it is
subject, including without limitation, the Occupational Safety and Health Act of
1970, as amended, the Employee Retirement Income Security Act of 1974, as
amended, and all Environmental Legal Requirements, the violation of any of which
would materially and adversely affect the Properties, business, prospects,
profits or condition of the Company and its Subsidiaries or would result in any
Lien or charge upon any Property of the Company or such Subsidiary.
SECTION 6.4. MAINTENANCE, ETC. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
Properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
SECTION 6.5. NATURE OF BUSINESS. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business which would then be engaged in by the Company and its Subsidiaries
would be substantially changed from the general nature of the business engaged
in by the Company and its Subsidiaries on the date of this Agreement.
SECTION 6.6. CURRENT RATIO; FIXED CHARGE Coverage. (a) The Company
will at all times keep and maintain the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at not less than 1.10 to 1.0.
(b) The Company will keep and maintain the ratio of Net Income
Available for Fixed Charges to Fixed Charges (determined as of the end of each
fiscal quarter) for the immediately preceding 12-month period (taken as a single
accounting period ending at the end of such fiscal quarter) at an amount not
less than 1.25 to 1.00.
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SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will at all times keep
and maintain Stockholders' Equity at an amount not less than $100,000,000.
SECTION 6.8. INCURRENCE OF FUNDED DEBT. (a) Neither the Company nor
any Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Funded Debt, except:
(1) the Notes;
(2) Funded Debt of the Company and its Subsidiaries
outstanding as of the date of this Agreement and reflected on the
consolidated balance sheet of the Company and its Subsidiaries as of
December 30, 1995;
(3) additional unsecured Funded Debt of the Company; PROVIDED
that at the time of issuance thereof and after giving effect thereto and
to the application of the proceeds thereof Funded Debt of the Company
and its Subsidiaries shall not exceed 60% of Total Capitalization; and
(4) additional Funded Debt of the Company and its Subsidiaries
secured by Liens permitted by and incurred within the limitations of
Section 6.9(a)(8), Section 6.9(a)(9) or Section 6.9(a)(10); PROVIDED
that at the time of issuance thereof and after giving effect thereto and
to the application of the proceeds thereof Funded Debt of the Company
and its Subsidiaries shall not exceed 60% of Total Capitalization; and
(5) Funded Debt of a Subsidiary to the Company or to a Wholly-
Owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after the date hereof
shall for all purposes of this Section 6.8 be deemed to have created, assumed or
incurred at the time it becomes a Subsidiary all Funded Debt of such corporation
existing immediately after it becomes a Subsidiary.
(c) The renewal, extension or refunding of any Funded Debt issued or
incurred in accordance with the limitations of Section 6.8(a) shall constitute
the issuance of additional Funded Debt, which is, in turn, subject to the
limitations of the applicable provisions of this Section 6.8.
SECTION 6.9. LIENS AND ENCUMBRANCES.
(a) NEGATIVE PLEDGE. Neither the Company nor any Subsidiary will
create or incur, or suffer to be incurred or to exist, any Lien on its or their
Property or assets, whether now owned
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or hereafter acquired, or upon any income or profits therefrom, or transfer any
Property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Subsidiary to acquire, any Property or assets upon
conditional sales agreements or other title retention devices, except:
(1) Liens securing taxes, assessments or governmental charges
or levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, PROVIDED the payment
thereof is not at the time required by Section 6.3;
(2) Liens incurred or deposits made in the ordinary course of
business (i) in connection with workmen's compensation, unemployment
insurance, social security and other like laws, or (ii) to secure the
performance of letters of credit, bids, tenders, sales contracts,
leases, statutory obligations, surety, appeal and performance bonds and
other similar obligations not incurred in connection with the borrowing
of money, the obtaining of advances or the payment of the deferred
purchase price of Property, PROVIDED in each case, the obligation
secured is not overdue or, if overdue, is being contested in good faith
by appropriate actions or proceedings;
(3) attachment, judgment and other similar Liens arising in
connection with court proceedings, PROVIDED the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings PROVIDED FURTHER, the aggregate amount of all pledges or
deposits made to stay the execution or enforcement of such Liens of the
Company and its Subsidiaries does not exceed $1,000,000;
(4) Liens on Property of a Subsidiary, PROVIDED such Liens
secure only obligations owing to the Company or a Wholly-Owned
Subsidiary;
(5) reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other similar
title exceptions or encumbrances affecting real Property, which are
necessary for the conduct of the activities of the Company and its
Subsidiaries or which customarily exist on Properties of corporations
engaged in similar activities and similarly situated, PROVIDED they do
not in the aggregate materially detract from the value of said
Properties or materially interfere with their use in the ordinary
conduct of the owning company's business;
(6) leases of Property other than Capitalized Leases;
(7) the Lien of mortgages, conditional sale contracts,
security interests or other arrangements for the retention of title
(including Capitalized Leases) existing as of
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the date of this Agreement, securing Funded Debt of the Company or any
Subsidiary outstanding on such date;
(8) the Lien of mortgages, conditional sale contracts,
security interests or other arrangements for the retention of title
(including Capitalized Leases) given to secure the payment of the
purchase price or the costs of construction or improvement of fixed
assets useful and intended to be used in carrying on the business of the
Company or such Subsidiary, as the case may be, including Liens existing
on such fixed assets at the time of acquisition thereof or at the time
of acquisition by the Company or a Subsidiary of any business entity
then owning such fixed assets, whether or not such existing Liens were
given to secure the payment of the purchase price of the fixed assets to
which they attach; PROVIDED that (i) the Lien or charge shall attach
solely to the fixed assets acquired, constructed or improved, (ii) at
the time of acquisition, construction or improvement of such fixed
assets, the aggregate amount remaining unpaid on all indebtedness
secured by Liens on such fixed assets (whether or not assumed by the
Company or such Subsidiary), shall not be in excess of the lesser of the
total purchase price or fair market value thereof at the time of
acquisition, construction or improvement of such fixed assets (as
determined in good faith by the chief financial officer of the Company),
(iii) the indebtedness secured by such Liens is payable in equal
monthly, quarterly, semi-annual or annual installments and is not
callable or subject to acceleration prior to its stated maturity at the
option of the lender for reasons unrelated to the creditworthiness of
the obligor or destruction of the collateral thereof, and (iv) the
indebtedness secured by such Liens shall have been incurred within the
applicable limitations of Section 6.8(A)(4);
(9) Liens of mortgages, conditional sale contracts, security
interests or other arrangements for the retention of title (including
Capitalized Leases) in addition to the Liens permitted by preceding
clauses (1) through (8) hereof; PROVIDED that the indebtedness secured
by such Liens permitted by this Section 6.9(a)(9) at any one time
outstanding shall not exceed 25% of Total Capitalization; and
(10) any extension, renewal or replacement of any Lien
permitted by the foregoing clauses (7), (8) and (9) in respect of the
same Property theretofore subject to such Lien in connection with the
extension, renewal or refunding (without increases in principal amount)
of the indebtedness secured thereby which is permitted by the provisions
of Section 6.8(a)(4).
(b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property is
subjected to a Lien in violation of this Section 6.9, the Company will make or
cause to be made provision whereby the Notes will be secured equally and ratably
with all other obligations secured thereby and in any case the Notes shall have
the benefit, to the full extent that, and with such priority as, the holders
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may be entitled thereto under applicable law, of an equitable Lien on such
Property so equally and ratably securing the Notes. Such violation of Section
6.9 shall constitute an Event of Default hereunder, whether or not any such
provision is made pursuant to this Section 6.9(b).
SECTION 6.10. DIVIDENDS, STOCK PURCHASES. The Company will not except
as hereinafter provided:
(a) declare or pay any dividends, either in cash or Property,
on any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of the
Company); or
(b) directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class
or any warrants, rights or options to purchase or acquire any shares of
its capital stock (other than in exchange for or out of the net proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all such other
distributions being herein collectively called "RESTRICTED PAYMENTS"), if after
giving effect thereto the aggregate amount of Restricted Payments made during
the period from and after December 30, 1995 to and including the date of the
making of the Restricted Payment in question, would exceed the sum of (1)
$35,000,000, (2) 75% of Consolidated Net Income for such period, computed on a
cumulative basis for said entire period (or if such Consolidated Net Income is a
deficit figure, then minus 100% of such deficit), and (3) the aggregate net cash
proceeds received by the Company from the issuance and sale of capital stock for
such period (but without duplication of any net proceeds to the Company referred
to in clause (b) above).
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 90 days after the date of declaration thereof.
For the purposes of this Section 6.10, the amount of any Restricted
Payment declared, paid or distributed in Property of the Company shall be deemed
to be the greater of the book value or fair market value (as determined in good
faith by the chief financial officer of the Company) of such Property at the
time of the making of the Restricted Payment in question.
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SECTION 6.11. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS. (a) The
Company will not (1) consolidate with or be a party to a merger with any other
corporation or (2) sell, lease or otherwise dispose of all or any substantial
part (as hereinafter defined) of the assets of the Company, unless:
(i) the successor formed by or resulting from such
consolidation or merger or the transferee to which such sale, lease or
other disposition shall have been made shall be a solvent corporation
organized under the laws of the United States of America or a State
thereof or the District of Columbia, and after giving effect to such
transaction, no Default or Event of Default shall exist;
(ii) such successor or transferee corporation shall expressly
assume in writing the due and punctual payment of the principal of and
interest and premium, if any, on the Notes, according to their tenor,
and the due and punctual performance and observance of all the terms,
covenants, agreements and conditions of the Notes and this Agreement and
shall furnish the holders of the Notes an opinion of counsel
satisfactory to such holders to the effect that the instrument has been
duly authorized, executed and delivered and constitutes the legal, valid
and binding contract and agreement of the surviving corporation
enforceable in accordance with its terms; and
(iii) after giving effect to such consolidation or merger the
Company would be permitted to incur at least $1.00 of additional Funded
Debt under the provisions of Section 6.8(a)(3).
(b) No Subsidiary will (1) consolidate with or be a party to any
merger with any other corporation or (2) sell, lease or otherwise dispose of all
or any substantial part of its assets, except in each case, that a Subsidiary
may consolidate with, merge into or sell, lease or otherwise dispose of all or
any substantial part of its assets to the Company or any Wholly-owned Subsidiary
or, in the case of a merger, any other corporation, PROVIDED that, the surviving
corporation in such merger is a Wholly-owned Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Subsidiary (except to qualify directors) or any
indebtedness of any Subsidiary, and will not permit any Subsidiary to sell,
transfer or otherwise dispose of (except to the Company or a Wholly-owned
Subsidiary) any shares of stock or any indebtedness of any other Subsidiary,
unless:
(1) simultaneously with such sale, transfer, or disposition,
all shares of stock and all indebtedness of such Subsidiary at the time
owned by the Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
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(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the proposed
sale, transfer or disposition of said shares of stock and indebtedness
is in the best interests of the Company;
(3) said shares of stock and indebtedness are sold,
transferred or otherwise disposed of to a Person, for a cash
consideration and on terms reasonably deemed by the Board of Directors
to be adequate and satisfactory;
(4) the Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Subsidiary not being
simultaneously disposed of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the Company
and its Subsidiaries.
(d) As used in this Section 6.11, a sale, lease or other disposition
of assets shall be deemed to be a "SUBSTANTIAL PART" of the assets of the
Company and its Subsidiaries only if the book value of such assets, when added
to the book value of all other assets sold, leased or otherwise disposed of by
the Company and its Subsidiaries (other than in the ordinary course of business)
during the twelve month period ending on the date of such sale, lease or other
disposition, exceeds 10% of Total Capitalization, determined as of the end of
the immediately preceding fiscal year.
SECTION 6.12. REPORTS AND RIGHTS OF INSPECTION. The Company will keep
or cause to be kept, and will cause each Subsidiary to keep or cause to be kept,
proper books of record and account in which full and correct entries will be
made of all dealings or transactions of or in relation to the business and
affairs of the Company or such Subsidiary in accordance with generally accepted
accounting principles consistently applied (except for changes disclosed in the
financial statements furnished to you pursuant to this Section 6.12 and
concurred in by the independent public accountants referred to in Section
6.12(b) hereof), and will furnish to you so long as you are the holder of any
Note and to each holder of then outstanding Notes (in duplicate if so
requested):
(a) QUARTERLY STATEMENTS. As soon as available and in any
event within 60 days after the end of each quarterly fiscal period
(except the last) of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the close of such period, setting
forth in comparative form the consolidated figures for the fiscal
year then most recently ended,
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(2) consolidated statements of income and retained
earnings of the Company and its consolidated Subsidiaries for the
portion of the fiscal year ending with such quarterly fiscal
period; in each case setting forth in comparative form the
consolidated figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and certified by
the chief financial officer of the Company as complete and
correct, subject to changes resulting from year-end and audit
adjustments, and
(3) consolidated statements of cash flows of the
Company and its consolidated Subsidiaries for the portion of the
fiscal year ending with such quarterly fiscal period, setting
forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year;
(b) ANNUAL STATEMENTS. As soon as available and in any event
within 120 days after the close of each fiscal year of the Company,
copies of:
(1) a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the close of such fiscal year,
and
(2) consolidated statements of income and retained
earnings and cash flows of the Company and its consolidated
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures
for the preceding fiscal year, all in reasonable detail and accompanied
by a report thereon by Ernst & Young LLP or of other independent
accountants of recognized national standing selected by the Company to
the effect that such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the
Company and its Subsidiaries as of the end of the fiscal year being
reported on and on the consolidated results of the operations and cash
flows for said year in conformity with generally accepted accounting
principles and that the examination of such accountants in connection
with such financial statements has been conducted in accordance with
generally accepted auditing standards and included such tests of the
accounting records and such other auditing procedures as said
accountants deemed necessary in the circumstances;
(c) SEC AND OTHER REPORTS. Promptly upon their becoming
available, one copy of each regular financial statement or report, as
the Company shall send to its stockholders and of each regular and
periodic report, registration statement or prospectus filed by the
Company with any Securities exchange or the Securities and Exchange
Commission (the "SEC") or any successor agency, it being understood that
if and to the
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extent that the Company's SEC Form 10Q and Form 10K or successor forms
are provided within the time periods prescribed by clauses (a) and (b)
above, the requirements of supplying the quarterly and annual statements
provided for in said clauses (a) and (b) shall be deemed to have been
met;
(d) NOTICE OF DEFAULT. Immediately upon becoming aware of the
existence of any condition or event which constitutes an Event of
Default, or event which with the lapse of time or giving of notice, or
both, would constitute an Event of Default, under this Agreement, a
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto;
(e) OFFICER'S CERTIFICATE. Within the period provided in
paragraph (b) above, a certificate of an authorized financial officer of
the Company stating: (1) that the signer thereof has reexamined the
terms and provisions of this Agreement (which statement shall be
accompanied by the information and computations (in reasonable detail)
required in order to establish whether the Company was in compliance
with the requirements of Sections 6.6 through 6.11, inclusive, at the
end of the period being covered by the financial statements then being
furnished) and (2) whether, to the best knowledge of such officer (after
due inquiry), there exists on the date of the certificate any Default or
Event of Default under this Agreement and, if any such condition or
event exists, specifying the nature and period of existence thereof and
the action the Company is taking and proposes to take with respect
thereto; and
(f) REQUESTED INFORMATION. Such additional information as you
or any such holder may reasonably request concerning the Company.
Without limiting the foregoing, the Company will permit you, so long as
you are the holder of any Note, and each institutional holder of the then
outstanding Notes (or such Persons as either you or such holder may designate),
under the Company's guidance, to visit the Company at its corporate headquarters
and to examine all the books of account, records, reports and other papers of
the Company, to make copies and extracts therefrom as is reasonably necessary
for the purposes hereof, and to discuss its affairs, finances and accounts with
its officers and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with you the finances and affairs
of the Company) all at such reasonable times and as often as may be reasonably
requested. Any information obtained by you or such other holder from such
examination or discussion will be treated as confidential unless and until such
information has been publicly disclosed by the Company; PROVIDED, HOWEVER, that
nothing herein contained shall limit or impair the right or obligation of
yourself or such other holder to disclose such information when required by law
or to appropriate regulatory authorities having jurisdiction over your or its
affairs (including, in all events, to proposed transferees of the Notes
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and to proposed purchasers of the assets of a holder of Notes) or to use the
same in connection with the enforcement of the terms and conditions of this
Agreement. Any visitation shall be at your sole expense or the sole expense of
such institutional holder unless an Event of Default or an event which with the
lapse of time or giving of notice and lapse of time would become an Event of
Default shall have occurred and be continuing, in which case, any such
visitation or inspection shall be at the sole expense of the Company.
SECTION 6.13. REPURCHASE OF NOTES. Neither the Company nor any
Subsidiary, directly or indirectly through an Affiliate or otherwise, may
repurchase or make any offer to repurchase any Notes unless the offer has been
made to repurchase Notes, pro rata, from all holders of the Notes at the same
time and upon the same terms. In case the Company repurchases any Notes such
Notes shall thereafter be cancelled and no Notes shall be issued in substitution
therefor. Without limiting the foregoing, upon the purchase or other
acquisition of any Notes by the Company, any Subsidiary or any Affiliate, such
Notes shall no longer be outstanding for purposes of any section of this
Agreement relating to the taking by the holders of the Notes of any actions with
respect hereto, including, without limitation, Section 7.3, Section 7.4 and
Section 8.1.
SECTION 6.14. TERMINATION OF PENSION PLANS. The Company will not and
will not permit any Subsidiary to withdraw from any Multiemployer Plan or permit
any employee benefit plan maintained by it to be terminated if such withdrawal
or termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of the Employee Retirement Income Security Act of 1974,
as amended) or the imposition of a Lien on any Property of the Company or any
Subsidiary pursuant to Section 4068 of the Employee Retirement Income Security
Act of 1974, as amended.
SECTION 6.15. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, enter into or be a party to, any transaction
or arrangement with any Affiliate (including without limitation, the purchase
from, sale to or exchange of Property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person other
than an Affiliate.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
SECTION 7.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "EVENT OF DEFAULT" as the term is used herein:
(a) default in the payment of interest on any Note when the
same shall have become due and such default shall continue for more than
five days; or
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(b) default in the payment of principal or premium, if any, on
any Note when the same shall have become due; or
(c) default shall occur in the observance or performance of
the covenants or agreements contained in Sections 6.6 through 6.11; or
(d) default shall occur in the observance or performance of
any other provision of this Agreement which is not remedied within 30
days after the earlier of (1) such default shall first become known to
any executive officer of the Company or the chief financial officer of
the Company, or (2) notice of such default shall have been given by any
holder of the Notes to any executive officer or the chief financial
officer of the Company; or
(e) any representation or warranty made by the Company herein,
or made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and sale of
the Notes or furnished by the Company pursuant hereto proves untrue or
misleading in any material respect as of the date of the issuance or
making thereof; or
(f) the Company or any Subsidiary fails to make any payment of
principal and/or interest in respect of any indebtedness for borrowed
money aggregating more than $15,000,000 in original principal amount or
any event shall occur (other than the mere passage of time) or any
condition shall exist in respect of any indebtedness for borrowed money
aggregating more than $15,000,000 in original principal amount of the
Company or any Subsidiary, or under any agreement securing or relating
to such indebtedness, the effect of which is to cause such indebtedness
to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment; or
(g) the Company becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an assignment for the
benefit of creditors, or the Company causes or suffers an order for
relief to be entered with respect to it under applicable Federal
bankruptcy law or applies for or consents to the appointment of a
custodian, trustee or receiver for the Company or for the major part of
the Property of either; or
(h) a custodian, trustee or receiver is appointed for the
Company or for the major part of the Property of the Company and is not
discharged within 90 days after such appointment; or
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(i) final judgment or judgments for the payment of money
aggregating in excess of $500,000 is or are outstanding against the
Company or against any of the Property or assets of the Company and any
one of such judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days or such longer
period, not to exceed 60 days, as is permitted by applicable law or
judicial rule from the date of its entry; or
(j) bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company and, if instituted against the Company, are
consented to or are not dismissed within 60 days after such institution.
SECTION 7.2. NOTICE TO HOLDERS. When any Event of Default described in
the foregoing Section 7.L has occurred, or if the holder of any Note or any
other evidence of indebtedness for borrowed money of the Company gives any
notice or takes any other action with respect to a claimed default, the Company
agrees to give notice within seven business days of such event to all holders of
the Notes then outstanding, such notice to be in writing and sent by registered
or certified mail or by telegram.
SECTION 7.3. DEFAULT REMEDIES. When any Event of Default described in
subparagraphs (a) or (b) of Section 7.1 has occurred and is continuing, any
holder of any Note may, and when any Event of Default described in subparagraphs
(c) through (f) and (i) of Section 7.1 has happened and is continuing, the
holder or holders of 35% or more of the principal amount of Notes at the time
outstanding may exercise any right, power or remedy permitted to such holder or
holders at law or in equity and shall have, in particular, without limiting the
generality of the foregoing, the right, by notice in writing sent by registered
or certified mail to the Company, to declare the entire principal and all
interest accrued on all Notes to be, and all Notes shall thereupon become,
forthwith due and payable without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of
Default described in subparagraphs (g), (h) or (j) of Section 7.1 has occurred,
then all outstanding Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire principal and interest
accrued on the Notes and to the extent permitted by law, an amount as liquidated
damages for the loss of the bargain evidenced hereby (and not as a penalty)
equal to the then applicable Make Whole Premium, determined as of the date on
which the Notes shall so become due and payable. No course of dealing on the
part of any holder of the Notes nor any delay or failure on the part of any such
holder to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to the holder or holders
of the Notes all costs and expenses incurred by them in the
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collection of any Notes upon any default hereunder or thereon, including
reasonable compensation to such holder's or holders' attorneys for all services
rendered in connection therewith.
SECTION 7.4. RESCISSION OF ACCELERATION. The provisions of Section 7.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (i), inclusive, of Section 7.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, PROVIDED that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other
sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and
payable solely by reason of such declaration under Section 7.3) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to Section 8.1;
and PROVIDED FURTHER, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS.
SECTION 8.1. AMENDMENTS AND WAIVERS. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 66-2/3% in aggregate principal
amount of outstanding Notes; PROVIDED, HOWEVER, that without the written consent
of the holders of all the Notes then outstanding no such waiver, modification,
alteration or amendment shall be effective (a) which will change the time of
payment (including any prepayment required by Section 2.1) of the principal of,
the interest on or premium on, if any, any Note or change the principal amount
thereof or change the rate of interest thereon, or (b) which will change any of
the provisions of Section 2 in respect of optional prepayments or (c) which will
change the percentage of holders of the Notes required to consent
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to any such amendment, waiver, alteration or modification or any of the
provisions of this Section 8 or Section 7.
SECTION 8.2. SOLICITATION OF HOLDERS. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. The Company will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as consideration for or as an
inducement to entering into by any holder of Notes of any waiver or amendment of
any of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently offered and paid, on the same terms, ratably to the
holders of all Notes then outstanding.
SECTION 8.3. BINDING EFFECT. Any such amendment or waiver shall apply
equally to all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company, whether or not such Note
shall have been marked to indicate such amendment or waiver. No such amendment
or waiver shall extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon.
SECTION 9. MISCELLANEOUS.
SECTION 9.1. REGISTERED NOTES. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the Notes
(hereinafter called the "NOTE REGISTER"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note,
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by such registered
holder or its attorney authorized in writing.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement
and the Company shall not be affected by any notice or knowledge to the
contrary. Payment of or on account of the principal, premium, if any, and
interest on any such Note shall be made to or upon the written order of such
registered holder.
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SECTION 9.2. EXCHANGE FOR DIFFERENT DENOMINATIONS. The Company will,
at any time and from time to time, upon not less than 30 days notice to that
effect given by the holder of any Note initially delivered or of any Note
substituted therefor pursuant to Section 9.1, this Section 9.2 or to Section
9.3, and, upon surrender of such Note at its office, deliver in exchange
therefor, without expense to the holder, except as set forth below, Notes for
the same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered and, as nearly as possible, in the denomination of $100,000
or any amount in excess thereof as such holder shall specify, dated as of the
date to which interest has been paid on the Note so surrendered or, if such
surrender is prior to the payment of any interest thereon, then dated the date
of original issuance of Notes hereunder, registered in the name of such Person
or Persons as may be designated by such holder, and otherwise of the same form
and tenor as the Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
SECTION 9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. The Company may require
the payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such reissuance. If a Purchaser or any subsequent institutional
holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of the President, a Vice President or other responsible officer of
such owner, setting forth the fact of loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof and no indemnity shall be required as
a condition to execution and delivery of a new Note other than the written
agreement of such owner to indemnify and hold the Company harmless.
SECTION 9.4. EXPENSES, STAMP TAX INDEMNITY. The Company agrees to pay
all expenses in connection with the issuance, sale and delivery to you of the
Notes, including the cost of shipping the same to you at your home office or
such other place as you may specify. Whether or not the purchase herein
contemplated shall be consummated, the Company agrees to reimburse you for all
of your out-of-pocket expenses, including, but not limited to, the reasonable
charges and disbursements of Chapman and Cutler, your special counsel in
connection with the transaction contemplated by this Agreement and all of your
out-of-pocket expenses relating to any proposed or actual amendments of this
Agreement or waivers or consents pursuant to the provisions hereof or thereof,
including, without limitation, any proposed or actual amendments, waivers or
consents resulting from any work-out, restructuring or similar proceedings
relating to the performance by the Company of its obligations under this
Agreement and the Notes. The Company agrees to indemnify and hold you harmless
from any liability on
-35-
<PAGE>
account of stamp and other taxes, if any, which may be payable or which may be
determined to be payable in connection with the execution and delivery of this
Agreement or the Notes. The Company further agrees to protect and indemnify you
against any liability for any and all brokerage fees and commissions payable or
claimed to be payable to any Person in connection with the transactions
contemplated by this Agreement. Without limiting the foregoing, the Company
agrees to pay the cost of obtaining a private placement number for the Notes and
authorizes the submission of such information as may be required by Standard &
Poor's Corporation for the purpose of obtaining such number.
SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 8 hereof shall extend to or affect any
obligation or right not expressly waived or consented to.
SECTION 9.6. NOTICES. All communications provided for hereunder shall
be in writing and sent by confirmed facsimile transmission (with hard copy sent
concurrently by nationally recognized overnight carrier) or by nationally
recognized overnight carrier in each case prepaid and if to you, addressed to
you at your address appearing on Schedule I to this Agreement or such other
address as you or the subsequent holder of any Note initially issued to you, may
designate to the Company in writing, or if to the Company, addressed to the
Company, at 7600 France Avenue South, Minneapolis, Minnesota 55435, Attention:
Treasurer, or to such other address as you or the Company shall designate by
written notice to the other. Notice properly sent under this Section 9.6 will
be deemed given only when actually received by the Company or you, as the case
may be, and without regard to receipt by the actual individual to whose
attention such notice is sent.
SECTION 9.7. SUCCESSORS AND ASSIGNS. This Agreement and all covenants
herein contained shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereunder.
SECTION 9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
closing, shall survive the closing and the delivery of this Agreement and the
Notes.
-36-
<PAGE>
SECTION 9.9. SEVERABILITY. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be hereafter
declared invalid.
SECTION 9.10. GOVERNING LAW. THIS AGREEMENT AND THE NOTES ISSUED AND
SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH MINNESOTA
LAW.
SECTION 9.11. CAPTIONS. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
-37-
<PAGE>
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one Agreement.
NASH-FINCH COMPANY
BY
-------------------------------
Its
-38-
<PAGE>
Accepted as of March 22, 1996:
THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY
By
Its
-31-
<PAGE>
Accepted as of March 22, 1996:
INDEPENDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By
Its
-31-
<PAGE>
Accepted as of March 22, 1996:
NORTHERN LIFE INSURANCE COMPANY
By
Its
-31-
<PAGE>
Accepted as of March 22, 1996:
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By
Its
-31-
<PAGE>
NAMES AND ADDRESSES OF PURCHASERS
AND AMOUNTS OF COMMITMENTS
NAME AND ADDRESS PRINCIPAL
OF PURCHASER AMOUNT
THE VARIABLE ANNUITY LIFE $17,000,000
INSURANCE COMPANY
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
Attention: Investment Research Department, A37-01
Facsimile Number: (713) 831-1366
REGULAR MAIL:
P.O. Box 3247
Houston, Texas 77253-3247
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal,
premium or interest) to:
State Street Bank and Trust Company (ABA #011000028)
Boston, Massachusetts 02101
Re: The Variable Annuity Life Insurance Company
AC-0125-821-9
OBI=PPN Number and description of payment
Fund Number PA 54
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
SCHEDULE I
(to Note Agreement)
<PAGE>
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, Massachusetts 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other correspondences to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 74-1625348
Deliver securities by overnight courier to:
State Street Bank and Trust Company
Securities Services
225 Franklin Street
Boston, Massachusetts 02105
Attention: Mr. David A. Kay--Receive and Deliver
with a transmittal letter requesting that State Street confirm receipt of the
securities to Caroline Lee and transmit by regular mail a photocopy of such
securities to her attention at American General Corporation, P. O. Box 3247,
Houston, Texas 77253-3247.
I-44
<PAGE>
NAME AND ADDRESS PRINCIPAL
OF PURCHASER AMOUNT
INDEPENDENT LIFE AND ACCIDENT $3,000,000
INSURANCE COMPANY
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
Attention: Investment Research Department, A37-01
Facsimile Number: (713) 831-1366
REGULAR MAIL:
P.O. Box 3247
Houston, Texas 77253-3247
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal,
premium or interest) to:
State Street Bank and Trust Company (ABA #011000028)
Boston, Massachusetts 02101
Re: Independent Life and Accident Insurance Company
AC-34817924
OBI=PPN Number and description of payment
Fund Number PA 88
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Independent Life and Accident Insurance Company
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, Massachusetts 02171
I-45
<PAGE>
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other correspondences to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 59-0302660
Deliver securities by overnight courier to:
State Street Bank and Trust Company
Securities Services
225 Franklin Street
Boston, Massachusetts 02105
Attention: Mr. David A. Kay--Receive and Deliver
with a transmittal letter requesting that State Street confirm receipt of the
securities to Caroline Lee and transmit by regular mail a photocopy of such
securities to her attention at American General Corporation, P. O. Box 3247,
Houston, Texas 77253-3247.
I-46
<PAGE>
NAME AND ADDRESS PRINCIPAL
OF PURCHASER AMOUNT
NORTHERN LIFE INSURANCE COMPANY $6,000,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2121
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal,
premium or interest) to:
First National Bank N.A./Mpls. (ABA #091000022)
601 2nd Avenue South
Attention: Securities Accounting
for credit to: Northern Life Insurance Company
Account Number 1602-3237-6105
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 41-1295933
Deliver securities by overnight courier to:
ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota 55401-2121
Attention: Richell Waddick
I-47
<PAGE>
NAME AND ADDRESS PRINCIPAL
OF PURCHASER AMOUNT
NORTHWESTERN NATIONAL LIFE INSURANCE $4,000,000
COMPANY
c/o ReliaStar Investment Research
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
Attention: Securities Department
Telecopier Number: (612) 372-5368
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
Nash-Finch Company, 7.13% Senior Notes due 2011, PPN 631158 D@ 8, principal,
premium or interest) to:
First National Bank N.A./Mpls. (ABA #091000022)
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention: Securities Accounting
for credit to: Northwestern National Life Insurance Company
Account Number 1102-4001-4461
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 41-0451140
Deliver securities by overnight courier to:
ReliaStar Investment Research
100 Washington Square, Suite 800
Minneapolis, Minnesota 55401-2147
I-48
<PAGE>
Attention: Richell Waddick
I-49
<PAGE>
NASH-FINCH COMPANY
7.13% Senior Note Due October 1, 2011
PPN: 631158 D@ 8
No. R- [Date of Issue]
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS
($ ) on October 1, 2011 together with interest on the principal amount
from time to time remaining unpaid hereon at the rate of 7.13% per annum from
the date hereof until maturity (computed on the basis of a 360-day year of 12
consecutive 30-day months) in installments payable on October 1, 1996 and on the
first day of each April and October thereafter to and including the date of
maturity hereof. The Company further promises to pay interest on each overdue
installment of principal, premium, if any, and (to the extent legally
enforceable) upon each overdue installment of interest at the rate of 8.13% per
annum in each case from and after the maturity of each such installment, whether
by acceleration or otherwise, until paid. Subject only to SECTION 2.5 of the
Note Agreements hereinafter referred to, both the principal hereof, premium, if
any, and interest hereon are payable at the principal office of the Company in
Minneapolis, Minnesota, in coin or currency of the United States of America
which at the time of payment shall be legal tender for the payment of public and
private debts.
This Note is one of the 7.13% Senior Notes due October 1, 2011 of the
Company in the aggregate principal amount of $30,000,000 issued or to be issued
under and pursuant to the terms and provisions of separate and several Note
Agreements each dated as of March 22, 1996 (collectively, the "NOTE AGREEMENTS")
entered into by the Company with the institutional investors named in Schedule I
thereto. This Note and the holder hereof are entitled equally and ratably with
the holders of all other Notes outstanding under the Note Agreements to all the
benefits provided for thereby or referred to therein, to which Note Agreements
reference is hereby made for the statement thereof.
EXHIBIT A
(to Note Agreement)
<PAGE>
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity date and certain prepayments
are required to be made thereon by the Company, all in the events, on the terms
and in the manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written statement of transfer duly executed by the
registered holder of this Note or his attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
NASH-FINCH COMPANY
By
Its
A-51
<PAGE>
NASH-FINCH COMPANY
CLOSING CERTIFICATE
To the Purchasers of the 7.13%
Senior Notes due October 1, 2011
of Nash-Finch Company
Re:
$30,000,000 7.13% SENIOR NOTES
DUE OCTOBER 1, 2011 OF NASH-FINCH COMPANY
Ladies and Gentlemen:
This certificate is delivered to you in compliance with the requirements
of the separate and several Note Agreements each dated as of March 22, 1996
(collectively, the "NOTE AGREEMENTS") entered into by the undersigned, NASH-
FINCH COMPANY, a Delaware corporation (the "COMPANY") with each of you, and as
an inducement to and as part of the consideration for your purchase on this date
of $30,000,000 aggregate principal amount of the 7.13% Senior Notes due October
1, 2011 (the "NOTES") of the Company pursuant to the Note Agreements. The terms
which are capitalized herein shall have the same meanings as in the Note
Agreements.
The Company represents and warrants to each of you as follows:
1. SUBSIDIARIES. Annex A attached hereto states the name of
each of the Company's Subsidiaries, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by the Company and/or its
Subsidiaries. The Company has good and marketable title to all of the
shares it purports to own of the capital stock of each Subsidiary, free
and clear in each case of any Lien. All such shares have been duly
issued and are fully paid and non-assessable.
2. CORPORATE ORGANIZATION AND AUTHORITY. The Company and each
Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
EXHIBIT B
(to Note Agreement)
<PAGE>
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its Properties and to carry
on its business as now conducted and as presently proposed to be
conducted; and
(c) is duly licensed or qualified and in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the Property owned or
leased by it makes such licensing or qualification necessary and in
which the failure to so qualify could have a material adverse effect
on the Properties, business prospects, profits or condition
(financial or otherwise) of the Company and its Subsidiaries taken as
a whole.
3. BUSINESS AND PROPERTY. You have heretofore been furnished
with a copy of the Private Placement Memorandum dated January 28, 1996
(the "MEMORANDUM") prepared by Norwest Bank Minnesota, National
Association, which generally sets forth the business conducted and
proposed to be conducted by the Company and its Subsidiaries.
4. FINANCIAL STATEMENTS. (a) The consolidated balance sheets
of the Company and its Subsidiaries as of December 28, 1991, January 2,
1993, January 1, 1994, December 31, 1994 and December 30, 1995 each
inclusive, and the consolidated statements of stockholders' equity and
changes in financial position or cash flows, as the case may be, for the
fiscal years ended on said dates, each accompanied by a report thereon
containing an opinion unqualified as to scope limitations imposed by the
Company and otherwise without qualification, except as noted therein, by
KPMG Peat Marwick LLP and, in the case of December 30, 1995, Ernst &
Young LLP, have been prepared in accordance with generally accepted
accounting principles consistently applied, except as therein noted, are
correct and complete and present fairly, in all material respects, the
financial position of the Company and its Subsidiaries as of such dates
and the results of its operations and changes in financial position or
and cash flows, as the case may be, for such periods.
(b) Since December 30, 1995, there has been no change in the
condition, financial or otherwise, of the Company and its Subsidiaries
including, without limitation, any change in Liens securing Funded Debt
of the Company or any Subsidiary, as shown on the balance sheet as of
such date except changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse.
5. FULL DISCLOSURE. Neither the financial statements referred
to in paragraph 4 hereof, nor the Note Agreements, the Memorandum as
modified by subsequent information provided by the Company, or any other
written statement furnished by the
B-53
<PAGE>
Company to you, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or
herein not misleading. There is no fact peculiar to the Company which
the Company has not disclosed to you in writing which materially affects
adversely nor, so far as the Company can now foresee, will materially
affect adversely the Properties, business prospects, profits or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole or the ability of the Company to perform the terms and conditions
of the Note Agreements and the Notes.
6. PENDING LITIGATION. There are no proceedings pending or, to
the knowledge of the Company threatened, against or affecting the Company
or any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which if adversely determined would
materially and adversely affect the Properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is
in default with respect to any order of any court or governmental
authority or arbitration board or tribunal.
7. TITLE TO PROPERTIES. The Company and each Subsidiary has
good and marketable title in fee simple (or its equivalent under
applicable law) to all the real Property and has good title to all the
other Property it purports to own, including that reflected in the most
recent balance sheet referred to in paragraph 4 except as sold or
otherwise disposed of in the ordinary course of business and except for
Liens disclosed in notes to the financial statements referred to in
paragraph 4 hereof or such Liens which are not material in the aggregate
and do not materially and adversely affect the value of such Property or
interfere with the conduct of the business of the Company and its
Subsidiaries.
8. PATENTS AND TRADEMARKS. The Company and each Subsidiary owns
or possesses adequate rights to use all material patents, trademarks,
trade names, service marks, copyright, licenses and rights with respect
to the foregoing necessary for the present and planned future conduct of
its business, without any known material conflict with the rights of
others.
9. SALE IS LEGAL AND AUTHORIZED. The sale of the Notes and
compliance by the Company with all of the provisions of the Note
Agreements and the Notes:
(a) are within the corporate powers of the Company and have
been duly authorized by proper corporate action on the part of the
Company; and
B-54
<PAGE>
(b) will not violate any provisions of any law or any order
of any court or governmental authority or agency and will not
conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the
Restated Certificate of Incorporation or By-laws of the Company or
any indenture or other agreement or instrument to which the
Company is a party or by which it may be bound or result in the
imposition of any Liens or encumbrances on any Property of the
Company.
10. NO DEFAULTS. No Default or Event of Default has occurred and
is continuing. The Company is not in default in the payment of principal
or interest on any indebtedness for borrowed money and is not in default
under any instrument or agreement under and subject to which any
indebtedness for borrowed money has been issued and no event has occurred
and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.
11. GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of
the Note Agreements or the Notes or compliance by the Company with any of
the provisions of the Note Agreements or the Notes.
12. TAXES. All tax returns required to be filed by the Company
or any Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company
or any Subsidiary or upon any of their respective Properties, income or
franchises which are shown to be due and payable in such returns have
been paid. For all taxable years ending on or before December 31, 1991,
the Federal income tax liability of the Company and its Subsidiaries has
been satisfied and either the period of limitations on assessment of
additional Federal Income Tax has expired or the Company and its
Subsidiaries have entered into an agreement with the Internal Revenue
Service closing conclusively the total tax liability for the taxable
year. The Company does not know of any proposed additional tax
assessment against it for which added provision has not been made in its
accounts, and no material controversy in respect of additional Federal or
state income taxes is pending or is to the knowledge of the Company
threatened. The provisions for taxes on the books of the Company and
each Subsidiary are adequate for all open years and for its current
fiscal period.
13. USE OF PROCEEDS. The proceeds from the sale of the Notes
will be used to repay bank borrowings incurred to fund the acquisition
and other expenses related thereto of the Military Distributors of
Virginia. None of the transactions contemplated in the
B-55
<PAGE>
Note Agreements (including, without limitation thereof, the use of the
proceeds from the sale of the Notes) will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Company does not own
or intend to carry or purchase any "MARGIN SECURITY" within the meaning
of said Regulation G. None of the proceeds from the sale of the Notes
will be used to purchase, or refinance any borrowing, the proceeds of
which were used to purchase any "SECURITY" within the meaning of the
Securities Exchange Act of 1934, as amended.
14. COMPLIANCE WITH LAW. The Company and each Subsidiary is in
compliance with all laws, ordinances, governmental rules or regulations
to which it is subject, including without limitation, the Occupational
Safety and Health Act of 1970, as amended, the Employee Retirement Income
Security Act of 1974, as amended, and all Environmental Legal
Requirements, the violation of which would materially and adversely
affect the Properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole. Neither the Company nor any Subsidiary is the owner or operator
of property, nor has the Company or any Subsidiary arranged for the
disposal of Hazardous Substances at a property, where there has been a
release or threat of release of Hazardous Substances, the response or
corrective action for which could have a material adverse effect on the
Properties, business prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
15. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The
consummation of the transactions provided for in the Note Agreements and
compliance by the Company with the provisions of the Note Agreements and
the Notes will not involve any prohibited transaction within the meaning
of the Employee Retirement Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of 1986, as amended.
16. PRIVATE OFFERING. Neither the Company, directly or
indirectly, nor Norwest Bank Minnesota, National Association (the only
Person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes or any
similar Security of the Company related to this transaction) has offered
or will offer the Notes or any similar Security related to this
transaction or has solicited or will solicit an offer to acquire the
Notes or any similar Security related to this transaction from or has
otherwise approached or negotiated or will approach or negotiate in
respect of the Notes or any similar Security related to this transaction
with any Person other than you and not more than ten (10) other
institutional investors, each of whom was offered a portion of the Notes
at private sale for investment. Neither the Company,
B-56
<PAGE>
directly or indirectly, nor any agent on its behalf has offered or will
offer the Notes or any similar Security related to this transaction or
has solicited or will solicit an offer to acquire the Notes or any
similar Security related to this transaction from any Person so as to
bring the issuance and sale of the Notes within the provisions of Section
5 of the Securities Act of 1933, as amended.
Dated March ____, 1996
NASH-FINCH COMPANY
By
Its
B-57
<PAGE>
SUBSIDIARIES OF THE COMPANY AS OF MARCH 22, 1996
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED BY COMPANY AND EACH
INCORPORATION OTHER SUBSIDIARY
NAME OF SUBSIDIARY
Nash-DeCamp Company California 100%
Subsidiaries:
Agricola Nadco Chile 99%
Limitada
Forrest Transportation California 100%
Service, Inc.
Piggly Wiggly Northland Minnesota 100%
Corporation
GTL Truck Lines, Inc. Nebraska 100%
Nebraska Dairies, Inc. Nebraska 66-2/3%
Gillette Dairy of the Black South Dakota 66-2/3%
Hills, Inc.
ANNEX A
(to Closing Certificate)
<PAGE>
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by SECTION 4.2 of the Note Agreements, shall be dated as
of the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:
(1) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware, has the corporate power
and the corporate authority to execute and deliver the Note Agreements
and to issue the Notes;
(2) The Note Agreements have been duly authorized by all
necessary corporate action on the part of the Company, have been duly
executed and delivered by the Company and constitute the legal, valid and
binding contracts of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law);
(3) The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law); and
(4) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not under existing
law require the registration of such Notes under the Securities Act of
1933, as amended, or the qualification of an indenture in respect thereof
under the Trust Indenture Act of 1939.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Restated Certificate of
Incorporation certified by, and a Certificate of good standing of the Company
from, the Secretary of State of the State of Delaware, and the By-laws of the
Company. Chapman and Cutler's opinion shall be limited to the laws of the State
of Illinois, the Delaware General Corporate Law, the general corporate law of
the State of Minnesota and the Federal law of the United States.
EXHIBIT C
(to Note Agreement)
<PAGE>
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company.
C-60
<PAGE>
DESCRIPTION OF CLOSING OPINION OF
COUNSEL TO THE COMPANY
The closing opinion of Norman R. Soland, Esq., General Counsel for the
Company, which is called for by SECTION 4.2 of the Agreements, shall be dated
the Closing Date and addressed to the Purchasers, shall be satisfactory in form
and substance to the Purchasers and shall also be to the effect that:
(1) The Company is a corporation, duly incorporated, validity
existing and in good standing under the laws of the State of Delaware,
has the corporate power and the corporate authority to execute and
perform the Note Agreements and to issue the Notes and incur the
indebtedness to be evidenced thereby;
(2) The Company has full corporate power and corporate authority
to conduct the activities in which it is now engaged and is duly licensed
or qualified and is in good standing as a foreign corporation in each
jurisdiction in which the character of the Properties owned or leased by
it or the nature of the business transacted by it makes such licensing or
qualification necessary;
(3) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly licensed or qualified and is in good standing
in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary and all of the issued and
outstanding shares of capital stock of each such Subsidiary have been
duly issued, are fully paid and non-assessable and those shares
represented to be owned by the Company pursuant to the Company's Closing
Certificate delivered concurrently herewith are owned by the Company, by
one or more Subsidiaries, or by the Company and one or more Subsidiaries;
(4) The Note Agreements have been duly authorized by all
necessary corporate action on the part of the Company, have been duly
executed and delivered by the Company and constitute the legal, valid and
binding contracts of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law);
(5) The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in
EXHIBIT D
(to Note Agreement)
<PAGE>
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or
at law);
(6) No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with, any governmental body,
Federal, state or local, is necessary in connection with the lawful
execution, delivery and performance of the Agreements or the Notes;
(7) The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Note Agreements do not
conflict with applicable laws, rules or regulations or result in any
breach of the provisions of or constitute a default under or result in
the creation or imposition of any Lien or encumbrance upon any of the
Property of the Company pursuant to the provisions of the Restated
Certificate of Incorporation or By-laws of the Company or any agreement
or other instrument known to such counsel to which the Company is a party
or by which the Company may be bound; and
(8) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements do not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture in respect thereof
under the Trust Indenture Act of 1939 as amended.
(9) Neither the issuance and sale of the Notes or the application
of the proceeds thereof will violate or result in a violation of Section
7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including, without limitation, Regulations G, T
and X of the Board of Governors of the Federal Reserve System.
(10) There are no proceedings pending or, to the knowledge of such
counsel, threatened, against or affecting the Company or any Subsidiary
in any court or before any governmental authority or arbitration board or
tribunal which could reasonably be expected to materially and adversely
affect the Properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole.
The opinion of Norman R. Soland, Esq., General Counsel to the Company
shall cover such other matters relating to the sale of the Notes as the
Purchasers may reasonably request. With respect to matters of fact on which
such opinion is based, such counsel shall be entitled to rely on appropriate
certificates of public officials and officers of the Company. The opinion of
D-62
<PAGE>
Norman R. Soland, Esq., General Counsel to the Company, shall state that it may
be relied upon by permitted successors and assigns of the Purchasers.
D-63
<PAGE>
CREDIT AGREEMENT
by and between
NASH-FINCH COMPANY,
FIRST BANK NATIONAL ASSOCIATION,
as Agent and as a Bank,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
PNC BANK, NATIONAL ASSOCIATION,
MITSUBISHI BANK, LIMITED CHICAGO BRANCH
and
WACHOVIA BANK OF GEORGIA, N.A.,
as Banks
Dated as of December 27, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . 1
Section 1.2 Accounting Terms and Calculations. . . . . . . . . 10
Section 1.3 Computation of Time Periods. . . . . . . . . . . . 10
Section 1.4 Other Definitional Terms . . . . . . . . . . . . . 10
ARTICLE II
TERMS OF THE CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . 11
Section 2.1 The Revolving Commitments. . . . . . . . . . . . . 11
Section 2.3 Revolving Notes. . . . . . . . . . . . . . . . . . 13
Section 2.4 Conversions and Continuations. . . . . . . . . . . 13
Section 2.5 Interest Rates, Interest Payments and Default
Interest . . . . . . . . . . . . . . . . . . . . 14
Section 2.6 Repayment. . . . . . . . . . . . . . . . . . . . . 14
Section 2.7 Optional Prepayments . . . . . . . . . . . . . . . 14
Section 2.8 Optional Reduction of Revolving
Commitment Amounts or Termination of Revolving
Commitments. . . . . . . . . . . . . . . . . . . 15
Section 2.9 Revolving Commitment and Agent's Fees. . . . . . . 15
Section 2.10 Computation . . . . . . . . . . . . . . . . . . . 16
Section 2.11 Payments. . . . . . . . . . . . . . . . . . . . . 16
Section 2.12 Revolving Commitment Ending Date and Extension. . 16
Section 2.13 Use of Loan Proceeds. . . . . . . . . . . . . . . 17
Section 2.14 Interest Rate Not Ascertainable, Etc. . . . . . . 17
Section 2.15 Increased Cost. . . . . . . . . . . . . . . . . . 17
Section 2.16 Illegality. . . . . . . . . . . . . . . . . . . . 18
Section 2.17 Capital Adequacy. . . . . . . . . . . . . . . . . 19
Section 2.18 Funding Losses; LIBOR Advances. . . . . . . . . . 19
Section 2.19 Discretion of Banks as to Manner of Funding . . . 19
Section 2.20 Withholding Taxes . . . . . . . . . . . . . . . . 20
Section 2.21 The Swing-Line Loan Facility . . . . . . . . . . 21
Section 2.22 The Bid Loan Facility . . . . . . . . . . . . . . 22
ARTICLE III
CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.1 Conditions of Initial Transaction. . . . . . . . . 30
Section 3.2 Conditions Precedent to all Loans. . . . . . . . . 32
-i-
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . 32
Section 4.1. Organization, Standing, Etc.. . . . . . . . . . . 32
Section 4.2. Authorization and Validity; No Conflict . . . . . 33
Section 4.3. Enforceability of Agreements and Loan Documents . 33
Section 4.4. No Default. . . . . . . . . . . . . . . . . . . . 33
Section 4.5. Financial Statements and Condition. . . . . . . . 33
Section 4.7. Regulation U. . . . . . . . . . . . . . . . . . . 34
Section 4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.9. Legal Requirements. . . . . . . . . . . . . . . . 34
Section 4.10. Litigation . . . . . . . . . . . . . . . . . . . 34
Section 4.11. Environmental, Health and Safety Laws. . . . . . 35
Section 4.12. Investment Company Act . . . . . . . . . . . . . 35
Section 4.13. Public Utility Holding Company Act . . . . . . . 35
Section 4.14. Retirement Benefits. . . . . . . . . . . . . . . 35
Section 4.15. Full Disclosure. . . . . . . . . . . . . . . . . 35
Section 4.16 Title to Property; Leases; Liens; Subordination . 36
Section 4.17 Trademarks, Patents. Except as set forth in
Exhibit 4.17, each . . . . . . . . . . . . . . . 36
Section 4.18 Burdensome Restrictions . . . . . . . . . . . . . 36
Section 4.19 Force Majeure . . . . . . . . . . . . . . . . . . 36
Section 4.20 Subsidiaries. . . . . . . . . . . . . . . . . . . 36
ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.1. Financial Statements. . . . . . . . . . . . . . . 37
Section 5.2. Corporate Existence . . . . . . . . . . . . . . . 38
Section 5.3. Insurance . . . . . . . . . . . . . . . . . . . . 38
Section 5.4. Payment of Taxes and Claims . . . . . . . . . . . 38
Section 5.5. Books and Records . . . . . . . . . . . . . . . . 39
Section 5.6. Compliance. . . . . . . . . . . . . . . . . . . . 39
Section 5.7. Notice of Litigation. . . . . . . . . . . . . . . 39
Section 5.8. ERISA . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.9. Environmental Matters; Reporting. . . . . . . . . 40
Section 5.10. Inspection . . . . . . . . . . . . . . . . . . . 40
Section 5.11 Maintenance of Properties . . . . . . . . . . . . 41
ARTICLE VI
NEGATIVE COVENANTS 41
Section 6.1. Restrictions on Fundamental Changes . . . . . . . 41
Section 6.2. Accounting Changes. . . . . . . . . . . . . . . . 42
Section 6.3. Liens . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.4. Net Worth . . . . . . . . . . . . . . . . . . . . 44
Section 6.5. Leverage Ratio. . . . . . . . . . . . . . . . . . 44
Section 6.6. Interest Coverage Ratio . . . . . . . . . . . . . 44
-ii-
<PAGE>
Section 6.7. Transactions with Affiliates. . . . . . . . . . . 44
Section 6.8. Restricted Payments . . . . . . . . . . . . . . . 44
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . 44
Section 7.1 Events of Default. . . . . . . . . . . . . . . . . 44
Section 7.2 Remedies . . . . . . . . . . . . . . . . . . . . . 46
Section 7.3 Offset . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.1 Appointment and Authorization. . . . . . . . . . . 48
Section 8.2 Note Holders . . . . . . . . . . . . . . . . . . . 48
Section 8.3 Consultation With Counsel. . . . . . . . . . . . . 48
Section 8.4 Loan Documents . . . . . . . . . . . . . . . . . . 48
Section 8.5 First Bank and Affiliates. . . . . . . . . . . . . 48
Section 8.6 Action by Agent. . . . . . . . . . . . . . . . . . 48
Section 8.7 Credit Analysis. . . . . . . . . . . . . . . . . . 49
Section 8.8 Notices of Event of Default, Etc . . . . . . . . . 49
Section 8.9 Indemnification. . . . . . . . . . . . . . . . . . 49
Section 8.10 Payments and Collections . . . . . . . . . . . . . 49
Section 8.11 Sharing of Payments. . . . . . . . . . . . . . . . 50
Section 8.12 Advice to Banks. . . . . . . . . . . . . . . . . . 51
Section 8.13 Resignation. . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.1 Modifications. . . . . . . . . . . . . . . . . . . 51
Section 9.2 Expenses . . . . . . . . . . . . . . . . . . . . . 52
Section 9.3 Waivers, etc.. . . . . . . . . . . . . . . . . . . 52
Section 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . 52
Section 9.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.6 Successors and Assigns; Participations;
Foreign and Purchasing Banks . . . . . . . . . . 53
Section 9.7 Confidentiality of Information . . . . . . . . . . 55
Section 9.8 Governing Law and Construction . . . . . . . . . . 56
Section 9.9 Consent to Jurisdiction. . . . . . . . . . . . . . 56
Section 9.10 Waiver of Jury Trial . . . . . . . . . . . . . . . 56
Section 9.11 Survival of Agreement. . . . . . . . . . . . . . . 56
Section 9.12 Indemnification. . . . . . . . . . . . . . . . . . 57
Section 9.13 Captions . . . . . . . . . . . . . . . . . . . . . 58
Section 9.14 Entire Agreement . . . . . . . . . . . . . . . . . 58
Section 9.15 Counterparts . . . . . . . . . . . . . . . . . . . 58
Section 9.16 Borrower Acknowledgements. . . . . . . . . . . . . 58
-iii-
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT 1.1 - REVOLVING NOTE
EXHIBIT 2.2 - FORM OF LOAN REQUEST
EXHIBIT 2.21 - SWING-LINE NOTE
EXHIBIT 2.22(b) - BID LOAN TENDER REQUEST NOTICE
EXHIBIT 2.22(c) - INVITATION TO TENDER FOR BID LOANS
EXHIBIT 2.22(g) - BID LOAN NOTE
EXHIBIT 2.22(h) - WIRE TRANSFER INSTRUCTIONS
EXHIBIT 3.1 - MATTERS TO BE COVERED BY OPINION OF COUNSEL TO THE
BORROWER
EXHIBIT 4.20 - LIST OF SUBSIDIARIES
EXHIBIT 5.1 (d) - COMPLIANCE CERTIFICATE
EXHIBIT 6.3 - EXISTING LIENS
EXHIBIT 9.6 - ASSIGNMENT AGREEMENT
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 27, 1995, is by and
between NASH-FINCH COMPANY, a Delaware corporation (the "Borrower"), the banks
which are signatories hereto (individually, a "Bank" and, collectively, the
"Banks") and FIRST BANK NATIONAL ASSOCIATION, a national banking association,
one of the Banks, as agent for the Banks (in such capacity, the "Agent").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINED TERMS. As used in this Agreement the
following terms shall have the following respective meanings (and such meanings
shall be equally applicable to both the singular and plural form of the terms
defined, as the context may require):
"ADJUSTED LIBOR": With respect to each Interest Period
applicable to a LIBOR Advance, the rate (rounded upward, if necessary, to the
next one hundredth of one percent) determined by dividing LIBOR for such
Interest Period by 1.00 minus the LIBOR Reserve Percentage.
"ADVANCE": Any portion of the outstanding Revolving Loans by a
Bank as to which the Borrower elected one of the available interest rate options
and, if applicable, an Interest Period. An Advance may be a LIBOR Advance or a
Reference Rate Advance.
"AFFILIATE": When used with reference to any Person, (a) each
Person that, directly or indirectly, controls, is controlled by or is under
common control with, the Person referred to, (b) each Person which beneficially
owns or holds, directly or indirectly, twenty-five percent or more of any class
of voting stock of the Person referred to (or if the Person referred to is not a
corporation, twenty-five percent or more of the equity interest), (c) each
Person, twenty-five percent or more of the voting stock (or if such Person is
not a corporation, twenty-five percent or more of the equity interest) of which
is beneficially owned or held, directly or indirectly, by the Person referred
to, and (d) each of such Person's officers, directors, joint venturers and
partners. The term control (including the terms "controlled by" and "under
common control with") means the possession, directly, of the power to direct or
cause the direction of the management and policies of the Person in question.
"AGENT": As defined in the opening paragraph hereof.
"AGGREGATE REVOLVING COMMITMENT AMOUNTS": As of any date, the
sum of the Revolving Commitment Amounts of all the Banks.
<PAGE>
"APPLICABLE LENDING OFFICE": For each Bank and for each type of
Advance, the office of such Bank identified pursuant to Section 9.4 or such
other domestic or foreign office of such Bank (or of an Affiliate of such Bank)
as such Bank may specify from time to time to the Agent and the Borrower as the
office by which its Advances of such type are to be made and maintained.
"APPLICABLE MARGIN": With respect to each Interest Period, the
Applicable Margin set forth in the table below as in effect on the third day
prior to the first day of such Interest Period:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
----------- -----------------
<S> <C>
A- or better 0.25%
BBB+ 0.32%
BBB 0.35%
BBB- 0.50%
Below BBB- 1.00%
</TABLE>
For purposes of this definition, the "Debt Rating" means the rating assigned by
Standard & Poor's Rating Group to senior, unsecured public debt issued by the
Borrower that is not credit enhanced. If at any time of determination no such
rating is available, the Applicable Margin shall be 1.00%.
"BANK": As defined in the opening paragraph hereof.
"BID LOAN": A loan made by a Bank pursuant to subsection 2.22
hereof.
"BID LOAN BORROWING DATE": As defined in subsection 2.22(b).
"BID LOAN FACILITY": The credit facility granted by the Banks to
the Borrower pursuant to subsections 2.1 and 2.22 hereof.
"BID LOAN FINANCING": A financing consisting of the simultaneous
making of Bid Loans by each of the Banks whose offer to make a Bid Loan as part
of such financing has been accepted by the Borrower under the auction bidding
procedures described in subsection 2.22 hereof.
"BID LOAN NOTE": As defined in subsection 2.22(g) hereof.
"BID LOAN OBLIGATION": The obligation of the Borrower with
respect to matured Bid Loans as set forth in subsection 2.22(h) hereof.
"BID LOAN SCHEDULE": A schedule substantially in the form of the
Bid Loan Schedule attached to Exhibit 2.22(g) hereto.
-2-
<PAGE>
"BID LOAN TENDER": As defined in subsection 2.22(d) hereof.
"BID LOAN TENDER DATE": As defined in subsection 2.22(d) hereof.
"BID LOAN TENDER REQUEST NOTICE" shall mean a notice in the form
of Exhibit 2.22(b) hereto given by the Borrower pursuant to subsection 2.22(b)
hereof.
"BOARD": The Board of Governors of the Federal Reserve System or
any successor thereto.
"BORROWER": As defined in the opening paragraph hereof.
"BUSINESS DAY": Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.
"CHANGE OF CONTROL": The occurrence of any of the following
circumstances: (a) any Person or two or more Persons acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing twenty-five percent or more of
the combined voting power of all securities of the Borrower entitled to vote in
the election of directors; or (b) during any period of up to twelve consecutive
months, whether commencing before or after the Closing Date, the membership of
the Board of Directors of the Borrower changes for any reason (other than by
reason of death, disability or scheduled retirement) so that the majority of the
Board of Directors is made up of Persons who were not directors at the beginning
of such twelve month period.
"CLOSING DATE": December 27, 1995.
"CODE": The Internal Revenue Code of 1986, as amended.
"CONTINGENT OBLIGATION": With respect to any Person at the time
of any determination, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor") in any
manner, whether directly or otherwise; provided, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit, in each
case in the ordinary course of business.
"DEFAULT": Any event which, with the giving of notice (whether
such notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
-3-
<PAGE>
"EARNINGS BEFORE INTEREST AND INCOME TAXES": For any period of
determination, the consolidated net income of the Borrower and its Subsidiaries
before deductions for income taxes and Interest Expense.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE": Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"ERISA EVENT": To the extent any of the following events result
in a liability of Borrower under Title IV of ERISA: (a) a Reportable Event
described in Section 4043 of ERISA which is subject to the provision for 30-day
notice to the PBGC under ERISA; (b) the withdrawal of the Borrower or any ERISA
Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041(c) of ERISA; (d) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA; (e) any other event
or condition that would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; or (f)
the withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan.
"EVENT OF DEFAULT": Any event described in Section 7.1.
"FINANCIAL OFFICER": With respect to the Borrower, the Chief
Executive Officer, the Chief Financial Officer, the Vice President-Treasurer,
the Treasurer or the Controller.
"FIRST BANK": First Bank National Association in its capacity as
one of the Banks hereunder.
"GAAP": Generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination.
"GUARANTOR SUBSIDIARY": Any Subsidiary that guarantees the
obligations of the Borrower to the Banks hereunder pursuant to a guaranty in
form and substance satisfactory to the Agent and the Majority Banks.
-4-
<PAGE>
"IMMEDIATELY AVAILABLE FUNDS": Funds with good value on the day
and in the city in which payment is received.
"INDEBTEDNESS": With respect to any Person at the time of any
determination, without duplication, all obligations, contingent or otherwise, of
such Person which in accordance with GAAP should be classified upon the balance
sheet of such Person as liabilities, but in any event including: (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid
or accrued, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all obligations of others secured by any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all capitalized lease obligations of such
Person, (h) all obligations of such Person in respect of interest rate or
currency protection agreements, (i) all obligations of such Person, actual or
contingent, as an account party in respect of letters of credit or bankers'
acceptances, (j) all obligations of any partnership or joint venture as to which
such Person is or may become personally liable, (k) all obligations of such
person to purchase property owned by another Person, and (l) all Contingent
Obligations of such Person. Accounts payable and accrued expenses incurred in
the ordinary course of business by any Person shall not constitute
"Indebtedness" for so long as such accounts payable are not past due.
"INTEREST COVERAGE RATIO": For any period of determination, the
ratio of (a) Earnings before Interest and Income Taxes to (b) Interest Expense,
in each determined in accordance with GAAP.
"INTEREST EXPENSE": For any period of determination, the
aggregate amount of consolidated interest expense of the Borrower, determined in
accordance with GAAP.
"INTEREST PERIOD": With respect to each LIBOR Advance, the
period commencing on the date of such Advance or on the last day of the
immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two, three or six months thereafter, as the Borrower may
elect in the applicable notice of borrowing, continuation or conversion;
PROVIDED THAT:
(a) Any Interest Period that would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end
on the next preceding LIBOR Business Day;
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(b) Any Interest Period that begins on the last LIBOR
Business Day of a calendar month (or a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of a
calendar month;
(c) Any Interest Period that would otherwise end after the
Revolving Commitment Ending Date shall end on the Revolving Commitment
Ending Date; and
(d) No more than 10 Interest Periods may exist at any time.
"INVITATION TO TENDER FOR BID LOANS": As defined in subsection
2.22(c) hereof.
"LEVERAGE RATIO": On any date of determination, the ratio of (a)
Indebtedness of the Borrower to (b) Total Capitalization, in each case
determined in accordance with GAAP.
"LIBOR BUSINESS DAY": A Business Day which is also a day for
trading by and between banks in United States dollar deposits in the London
interbank eurodollar market and a day on which banks are open for business in
New York City.
"LIBOR": With respect to each Interest Period applicable to a
LIBOR Advance, the interest rate per annum (rounded upward, if necessary, to the
next one-sixteenth of one percent) at which United States dollar deposits are
offered to the Agent in the interbank eurodollar market three LIBOR Business
Days prior to the first day of such Interest Period for delivery in Immediately
Available Funds on the first day of such Interest Period and in an amount
approximately equal to the Advance by the Agent to which such Interest Period is
to apply as determined by the Agent and for a maturity comparable to the
Interest Period; provided, that in lieu of determining the rate in the foregoing
manner, the Agent may substitute the per annum Eurodollar rate (LIBOR) for
United States dollars displayed on the Telerate Systems, Inc. screen, page 3750
(or other applicable page), on the first day of such Interest Period.
"LIBOR ADVANCE": An Advance with respect to which the interest
rate is determined by reference to the Adjusted LIBOR.
"LIBOR RESERVE PERCENTAGE": As of any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board for determining the maximum reserve requirement (including any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System, with deposits comparable in amount to those held by the Agent, in
respect of "Eurocurrency Liabilities" as such term is defined in Regulation D of
the Board. The
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rate of interest applicable to any outstanding LIBOR Advances shall be adjusted
automatically on and as of the effective date of any change in the LIBOR Reserve
Percentage.
"LIEN": With respect to any Person, any security interest,
mortgage, pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device (including the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"LOAN DOCUMENTS": This Agreement and the Notes.
"LOANS": The Bid Loans, the Revolving Loans and the Swing-Line
Loans.
"MAJORITY BANKS": At any time, Banks holding at least 51% of the
Aggregate Revolving Commitment Amounts.
"MULTIEMPLOYER PLAN": A multiemployer plan, as such term is
defined in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing
Date, within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of the Borrower or any ERISA Affiliate.
"NET WORTH": On any date of determination, the consolidated
assets of the Borrower at such date, determined in accordance with GAAP, after
deducting all proper reserves (including reserves for depreciation, obsolescence
and amortization), MINUS all liabilities of the Borrower and its Subsidiaries,
determined in accordance with GAAP.
"NOTES": Collectively, the Revolving Notes, the Swing-Line Note
and the Bid Loan Notes; "NOTE" shall mean a Revolving Note, the Swing-Line Note
or a Bid Loan Note, as the context may require.
"OBLIGATIONS": The Borrower's obligations in respect of the due
and punctual payment of principal and interest on the Notes when and as due,
whether by acceleration or otherwise and all fees (including Revolving
Commitment Fees), expenses, indemnities, reimbursements and other obligations of
the Borrower under this Agreement or any other Loan Document, in all cases
whether now existing or hereafter arising or incurred.
"PARTIALLY ACCEPTED BID": As defined in subsection 2.22(f)(1).
"PBGC": The Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
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"PERSON": Any natural person, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"PLAN": Each employee benefit plan (whether in existence on the
Closing Date or thereafter instituted), as such term is defined in Section 3 of
ERISA, maintained for the benefit of employees, officers or directors of the
Borrower or of any ERISA Affiliate, other than a Multiemployer Plan.
"PROHIBITED TRANSACTION": The respective meanings assigned to
such term in Section 4975 of the Code and Section 406 of ERISA.
"REFERENCE RATE": The rate of interest from time to time
publicly announced by the Agent as its "reference rate." The Agent may lend to
its customers at rates that are at, above or below the Reference Rate. For
purposes of determining any interest rate hereunder or under any other Loan
Document which is based on the Reference Rate, such interest rate shall change
as and when the Reference Rate shall change.
"REFERENCE RATE ADVANCE": An Advance with respect to which the
interest rate is determined by reference to the Reference Rate.
"REGULATORY CHANGE": Any change after the Closing Date in
federal, state or foreign laws or regulations or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including any Bank under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"REPORTABLE EVENT": A reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation has
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, PROVIDED that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any waiver in
accordance with Section 412(d) of the Code.
"RESTRICTED PAYMENTS": With respect to any Person, collectively,
all dividends or other distributions of any nature (cash, securities, assets or
otherwise), and all payments on any class of equity securities (including
warrants, options or rights therefor) issued by that Person, whether such
securities are authorized or
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outstanding on the Closing Date or at any time thereafter and any redemption or
purchase of, or distribution in respect of, any of the foregoing, whether
directly or indirectly.
"REVOLVING COMMITMENT": With respect to a Bank, the agreement of
such Bank to make Revolving Loans to the Borrower in an aggregate principal
amount outstanding at any time not to exceed such Bank's Revolving Commitment
Amount upon the terms and subject to the conditions and limitations of this
Agreement.
"REVOLVING COMMITMENT AMOUNT": With respect to a Bank, initially
the amount set opposite such Bank's name on the signature page hereof as its
Revolving Commitment Amount, but as the same may be reduced from time to time
pursuant to Sections 2.8 and 9.6.
"REVOLVING COMMITMENT ENDING DATE": As defined in Section 2.12.
"REVOLVING COMMITMENT FEES": As defined in Section 2.9.
"REVOLVING LOAN": As defined in Section 2.1.
"REVOLVING LOAN DATE": The date of the making of any Revolving
Loans hereunder.
"REVOLVING NOTE": A promissory note of the Borrower in the form
of Exhibit 1.1 hereto.
"REVOLVING PERCENTAGE": With respect to any Bank, the percentage
equivalent of a fraction, the numerator of which is the Revolving Commitment
Amount of such Bank and the denominator of which is the Aggregate Revolving
Commitment Amounts.
"SUBSIDIARY": Any corporation or other entity of which
securities or other ownership interests having ordinary voting power for the
election of a majority of the board of directors or other Persons performing
similar functions are owned by the Borrower either directly or through one or
more Subsidiaries.
"SWING-LINE LOAN": As defined in subsection 2.21(a) hereof.
"SWING-LINE LOAN FACILITY": The credit facility granted by the
Banks to the Borrower pursuant to subsections 2.1 and 2.21 hereof.
"SWING-LINE NOTE": As defined in Section 2.21(a) hereof.
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"TERMINATION DATE": The earliest of (a) the Revolving Commitment
Ending Date, (b) the date on which the Revolving Commitments are terminated
pursuant to Section 7.2 hereof or (c) the date on which the Revolving Commitment
Amounts are reduced to zero pursuant to Section 2.8 hereof.
"TOTAL CAPITALIZATION": On any date of determination, the sum of
Net Worth and Indebtedness of the Borrower.
"TOTAL OUTSTANDINGS": At the time of any determination, the
aggregate unpaid principal balance of all Revolving Loans, Swing-Line Loans and
Bid Loans.
"UNUSED REVOLVING COMMITMENT": With respect to any Bank as of
any date of determination, the amount by which such Bank's Revolving Commitment
Amount exceeds the principal amount of unpaid Revolving Loans owing to such Bank
on such date. Bid Loans and Swing-Line Loans shall be disregarded for purposes
of computing the Unused Revolving Commitment.
Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Borrower and Majority Banks agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
Section 1.3 COMPUTATION OF TIME PERIODS. In this Agreement, in
the computation of a period of time from a specified date to a later specified
date, unless otherwise stated the word "from" means "from and including" and the
word "to" or "until" each means "to but excluding".
Section 1.4 OTHER DEFINITIONAL TERMS. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. References to Sections, Exhibits, schedules and like references
are to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or".
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ARTICLE II
TERMS OF THE CREDIT FACILITIES
Section 2.1 THE REVOLVING COMMITMENTS. Subject to the terms and
conditions hereof, the Banks hereby establish credit facilities for the
Borrower, consisting of a Revolving Loan Facility under which each Bank
severally agrees to make loans (each, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower on a revolving basis at any time and from
time to time from the Closing Date to the Termination Date, during which period
the Borrower may borrow, repay and reborrow in accordance with subsections 2.2
through 2.20 hereof, a Swing-Line Loan Facility under which the Agent may make
Swing-Line Loans in accordance with subsection 2.21 hereof, and a Bid Loan
Facility under which the Banks may make Bid Loans in accordance with subsection
2.22 hereof; PROVIDED, HOWEVER, that the Banks shall not make any Revolving
Loans if, after giving effect thereto, the Total Outstandings would exceed the
Aggregate Revolving Commitment Amounts. The unpaid principal amount of
outstanding Revolving Loans of a Bank shall not at any time exceed the Revolving
Commitment Amount of such Bank. Revolving Loans hereunder shall be made by the
several Banks ratably in the proportion of their respective Revolving Commitment
Amounts. Revolving Loans may be obtained and maintained, at the election of the
Borrower but subject to the limitations hereof, as Reference Rate Advances or
LIBOR Advances or any combination thereof.
Section 2.2 PROCEDURE FOR REVOLVING LOANS. Any request by the
Borrower for Revolving Loans hereunder shall be in writing or by telephone and
must be given so as to be received by the Agent not later than 11:00 a.m.
(Minneapolis time) three LIBOR Business Days prior to the requested Revolving
Loan Date if the Revolving Loans are requested as LIBOR Advances and not later
than 11:00 a.m. (Minneapolis time) on the requested Revolving Loan Date if the
Revolving Loans are requested as Reference Rate Advances. Any written request
for Revolving Loans shall be in the form of Exhibit 2.2 and shall be signed by a
Financial Officer or a person designated as authorized to make such requests in
a writing signed by a Financial Officer. Any oral request for Revolving Loans
shall be made by a Financial Officer or a person designated as authorized to
make such requests in a writing signed by a Financial Officer and shall be
confirmed by a writing in the form of Exhibit 2.2 signed by a Financial Officer
or a person designated as authorized to make such requests in a writing signed
by a Financial Officer, which written confirmation shall be delivered to the
Agent not later than five Business Days after the date the Revolving Loans in
question are made. The Revolving Commitments of the Banks shall be suspended
from the fifth Business Day after the date the Agent notifies the Borrower that
such written confirmation is past due until any such past due written
confirmation has been delivered. Each request for Revolving Loans hereunder
shall be irrevocable and shall be deemed a
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representation by the Borrower that on the requested Revolving Loan Date and
after giving effect to the requested Revolving Loans the applicable conditions
specified in Article III have been and will be satisfied. Each request for
Revolving Loans hereunder shall specify (i) the requested Revolving Loan Date,
(ii) the aggregate amount of Revolving Loans to be made on such date which shall
be in a minimum amount of $2,000,000 or, if more, an integral multiple of
$1,000,000, (iii) whether such Revolving Loans are to be funded as Reference
Rate Advances or LIBOR Advances and (iv) in the case of LIBOR Advances, the
duration of the initial Interest Period applicable thereto. The Agent may rely
on any telephone request for Revolving Loans hereunder which it believes in good
faith to be genuine; and the Borrower hereby waives the right to dispute the
Agent's record of the terms of such telephone request. The Agent shall promptly
notify each other Bank of the receipt of such request, the matters specified
therein, and of such Bank's ratable share of the requested Revolving Loans. On
the date of the requested Revolving Loans, each Bank shall provide its share of
the requested Revolving Loans to the Agent in Immediately Available Funds not
later than 2:00 p.m., Minneapolis time. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make available to the Borrower at the Agent's principal office in
Minneapolis, Minnesota in Immediately Available Funds not later than 3:00 p.m.
(Minneapolis time) on the requested Revolving Loan Date the amount of the
requested Revolving Loans. If the Agent has made a Revolving Loan to the
Borrower on behalf of a Bank but has not received the amount of such Revolving
Loan from such Bank by the time herein required, such Bank shall pay interest to
the Agent on the amount so advanced at the overnight Federal Funds rate from the
date of such Revolving Loan to the date funds are received by the Agent from
such Bank, such interest to be payable with such remittance from such Bank of
the principal amount of such Revolving Loan (provided, however, that the Agent
shall not make any Revolving Loan on behalf of a Bank if the Agent has received
prior notice from such Bank that it will not make such Revolving Loan). If the
Agent does not receive payment from such Bank by the next Business Day after the
date of any Revolving Loan, the Agent shall be entitled to recover such
Revolving Loan, with interest thereon at the rate then applicable to such
Revolving Loan, on demand, from the Borrower, without prejudice to the Agent's
and the Borrower's rights against such Bank. If such Bank pays the Agent the
amount herein required with interest at the overnight Federal Funds rate before
the Agent has recovered from the Borrower, such Bank shall be entitled to the
interest payable by the Borrower with respect to the Revolving Loan in question
accruing from the date the Agent made such Revolving Loan.
Section 2.3 REVOLVING NOTES. The Advances of each Bank shall be
evidenced by a single Revolving Note payable to the order of such Bank in a
principal amount equal to such Bank's Revolving Commitment Amount originally in
effect. Upon receipt of each Bank's Revolving Note from the Borrower, the Agent
shall mail such Revolving Note to such Bank. Each Bank shall enter in its
ledgers and records the amount of each Revolving Loan, the various Advances
made,
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converted or continued and the payments made thereon, and each Bank is
authorized by the Borrower to enter on a schedule attached to its Revolving Note
a record of such Revolving Loans, Advances and payments; provided, however that
the failure by any Bank to make any such entry or any error in making such entry
shall not limit or otherwise affect the obligation of the Borrower hereunder and
on the Revolving Notes, and, in all events, the principal amounts owing by the
Borrower in respect of the Revolving Notes shall be the aggregate amount of all
Revolving Loans made by the Banks less all payments of principal thereof made by
the Borrower.
Section 2.4 CONVERSIONS AND CONTINUATIONS. On the terms and
subject to the limitations hereof, the Borrower shall have the option at any
time and from time to time to convert all or any portion of the Advances into
Reference Rate Advances or LIBOR Advances, or to continue a LIBOR Advance as
such; provided, however that a LIBOR Advance may be converted or continued only
on the last day of the Interest Period applicable thereto and no Advance may be
converted to or continued as a LIBOR Advance if a Default or Event of Default
has occurred and is continuing on the proposed date of continuation or
conversion. Advances may be converted to, or continued as, LIBOR Advances only
in amounts, as to the aggregate amount of the Advances of all Banks so converted
or continued, of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. The Borrower shall give the Agent written notice, in the form of
Exhibit 2.2 attached hereto, of any continuation or conversion of any Advances
and such notice must be given so as to be received by the Agent not later than
11:00 a.m. (Minneapolis time) three LIBOR Business Days prior to requested date
of conversion or continuation in the case of the continuation of, or conversion
to, LIBOR Advances and on the date of the requested conversion to Reference Rate
Advances. Each such notice shall specify (a) the amount to be continued or
converted, (b) the date for the continuation or conversion (which must be (i)
the last day of the preceding Interest Period for any continuation or conversion
of LIBOR Advances, and (ii) a LIBOR Business Day in the case of continuations as
or conversions to LIBOR Advances and a Business Day in the case of conversions
to Reference Rate Advances), and (c) in the case of conversions to or
continuations as LIBOR Advances, the Interest Period applicable thereto. Any
notice given by the Borrower under this Section shall be irrevocable. If the
Borrower shall fail to notify the Agent of the continuation of any LIBOR
Advances within the time required by this Section, such Advances shall, on the
last day of the Interest Period applicable thereto, automatically be converted
into Reference Rate Advances of the same principal amount. All conversions and
continuation of Advances must be made uniformly and ratably among the Banks.
(E.g., when continuing a two-month LIBOR Advance of one Bank to a three-month
LIBOR Advance, the Borrower must simultaneously continue all two-month LIBOR
Advances of all Banks having Interest Periods ending on the date of continuation
as three-month LIBOR Advances.)
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Section 2.5 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT
INTEREST. Interest shall accrue and be payable on the Revolving Loans as
follows:
(a) Subject to paragraph (c) below, each LIBOR Advance
shall bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to the
sum of (i) the Adjusted LIBOR for such Interest Period, plus (ii) the
Applicable Margin.
(b) Subject to paragraph (c) below, each Reference Rate
Advance shall bear interest on the unpaid principal amount thereof at
a varying rate per annum equal to the Reference Rate.
(c) Any Advance not paid when due, whether at the date
scheduled therefor or earlier upon acceleration, shall bear interest
until paid in full (i) during the balance of any Interest Period
applicable to such Advance, at a rate per annum equal to the sum of
the rate applicable to such Advance during such Interest Period plus
2.0%, and (ii) otherwise, at a varying rate per annum equal to the sum
of (1) the Reference Rate, plus (2) two percent (2.0%) per annum.
(d) Interest shall be payable (i) with respect to each
LIBOR Advance having an Interest Period of three months or less, on
the last day of the Interest Period applicable thereto; (ii) with
respect to each LIBOR Advance having an Interest Period greater than
three months, on the last day of the Interest Period applicable
thereto and on each day that would have been the last day of the
Interest Period for such Advance had successive Interest Periods of
three months duration been applicable to each Advance; (iii) with
respect to any Reference Rate Advance, on the last day of each month;
(iv) with respect to all Advances, upon any permitted prepayment (on
the amount prepaid); and (v) with respect to all Advances, on the
Termination Date; provided that interest under Section 2.5 (c) shall
be payable on demand.
Section 2.6 REPAYMENT. The unpaid principal amount of all
Advances, together with all accrued and unpaid interest thereon, shall be due
and payable on the Termination Date.
Section 2.7 OPTIONAL PREPAYMENTS. The Borrower may prepay
Reference Rate Advances, in whole or in part, at any time, without premium or
penalty, upon not less than one Business Day's prior written notice to the
Agent. Any such prepayment must be accompanied by accrued and unpaid interest
on the amount prepaid. Each partial prepayment shall be in an aggregate amount
for all the Banks of $2,000,000 or an integral multiple of $1,000,000 in excess
thereof. Except upon an acceleration following an Event of Default or upon
termination of the Revolving Commitments in whole, the Borrower may pay LIBOR
Advances only on the last day of the Interest Period applicable thereto.
Amounts paid (unless
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following an acceleration or upon termination of the Revolving Commitments in
whole) or prepaid on Advances under this Section 2.7 may be reborrowed upon the
terms and subject to the conditions and limitations of this Agreement. Amounts
paid or prepaid on the Advances under this Section 2.7 shall be for the account
of each Bank in proportion to its share of outstanding Revolving Loans.
Section 2.8 OPTIONAL REDUCTION OF REVOLVING COMMITMENT AMOUNTS
OR TERMINATION OF REVOLVING COMMITMENTS. The Borrower may, at any time, upon
not less than five Business Days prior written notice to the Agent, reduce the
Revolving Commitment Amounts, ratably, with any such reduction in a minimum
aggregate amount for all the Banks of $5,000,000, or, if more, in an integral
multiple of $1,000,000; PROVIDED, HOWEVER, that the Borrower may not at any time
reduce the Aggregate Revolving Commitment Amounts below the aggregate unpaid
principal balance of all the Bid Loan Notes, Revolving Notes and the Swing-Line
Note. The Borrower may, at any time, upon not less than five Business Days
prior written notice to the Agent, terminate the Revolving Commitments in their
entirety. Upon termination of the Revolving Commitments pursuant to this
Section, the Borrower shall pay to the Agent for the account of the Banks the
aggregate unpaid principal amount of all outstanding Advances, the Swing-Line
Loan and the Bid Loans, all accrued and unpaid interest thereon, all unpaid
Revolving Commitment Fees accrued to the date of such termination, any
indemnities payable with respect to Advances pursuant to Section 2.18, and all
other unpaid obligations of the Borrower to the Agent and the Banks hereunder.
Section 2.9 REVOLVING COMMITMENT AND AGENT'S FEES.
(a) The Borrower shall pay to the Agent for the account of each
Bank fees (the "Revolving Commitment Fees") in an amount determined by
applying the applicable per annum rate from the table below to the
average daily Unused Revolving Commitment of such Bank for the period
from the Closing Date to the Termination Date. Such Revolving
Commitment Fees are payable in arrears quarterly on the last day of
each March, June, September and December and on the Termination Date.
The per annum rate used in computing the Revolving Commitment Fees for
any period shall be the rate set forth in the table below as in effect
on the day payment of the Revolving Commitment Fees is due:
<TABLE>
<CAPTION>
Debt Rating Per Annum Rate
----------- --------------
<S> <C>
A- or better 0.10%
BBB+ or BBB 0.12%
BBB- 0.18%
Below BBB- 0.27%
</TABLE>
For purposes of this subsection, the "Debt Rating" means the rating
assigned by Standard & Poor's Rating Group to senior, unsecured public
debt issued by
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the Borrower that is not credit enhanced. If at any time of
determination no such rating is available, the per annum rate shall be
0.27%.
(b) On the Closing Date, the Borrower shall pay to the Agent an
arrangement fee in the amount specified in that certain side letter
dated November 16, 1995 from the Agent to the Borrower. On the last
day of each March, June, September and December, beginning December
31, 1996, the Borrower shall pay to the Agent an agency fee in the
amount specified in such November 16, 1995 side letter. On the last
day of each March, June, September and December, beginning March 31,
1996, the Borrower shall pay to the Agent a competitive bid agent fee
in the amount specified in such November 16, 1995 side letter. No
Bank (other than the Agent) shall be entitled to any portion of the
arrangement, agency or competitive bid agent fees.
Section 2.10 COMPUTATION. Revolving Commitment Fees and
interest on Advances, the Swing-Line Loan and the Bid Loans shall be computed on
the basis of actual days elapsed and a year of 360 days.
Section 2.11 PAYMENTS. Payments and prepayments of principal
of, and interest on, the Notes and all fees, expenses and other obligations
under this Agreement payable to the Agent or the Banks shall be made without
setoff or counterclaim in Immediately Available Funds not later than 11:00 a.m.
(Minneapolis time) on the dates called for under this Agreement and the
Revolving Notes to the Agent at its main office in Minneapolis, Minnesota.
Funds received after such time shall be deemed to have been received on the next
Business Day. The Agent will promptly distribute in like funds to each Bank its
ratable share of each such payment of principal, interest and Revolving
Commitment Fees by the Agent for the account of the Banks. Whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time, in the case of a payment of principal,
shall be included in the computation of any interest on such principal payment.
Section 2.12 REVOLVING COMMITMENT ENDING DATE. The "Revolving
Commitment Ending Date" is December 27, 2000.
Section 2.13 USE OF LOAN PROCEEDS. The proceeds of the Loans
shall be used for the Borrower's general business purposes (including but not
limited to financing acquisitions, refinancing debt and working capital) in a
manner not in conflict with any of the Borrower's covenants in this Agreement.
Section 2.14 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or
prior to the date for determining the Adjusted LIBOR in respect of the Interest
Period for any LIBOR Advance, any Bank determines (which determination shall be
conclusive and binding, absent error) that:
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(a) deposits in dollars (in the applicable amount) are not being
made available to such Bank in the relevant market for such Interest
Period, or
(b) the Adjusted LIBOR will not adequately and fairly reflect
the cost to such Bank of funding or maintaining LIBOR Advances for
such Interest Period,
such Bank shall forthwith give notice to the Borrower and the other Banks of
such determination, whereupon the obligation of such Bank to make or continue,
or to convert any Advances to, LIBOR Advances shall be suspended until such Bank
notifies the Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist. While any such suspension continues, all further
Advances by such Bank shall be made as Reference Rate Advances. No such
suspension shall affect the interest rate then in effect during the applicable
Interest Period for any LIBOR Advance outstanding at the time such suspension is
imposed.
Section 2.15 INCREASED COST. If any Regulatory Change:
(a) shall subject any Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its LIBOR
Advances, its Revolving Note or its obligation to make LIBOR Advances
or shall change the basis of taxation of payment to any Bank (or its
Applicable Lending Office) of the principal of or interest on its
LIBOR Advances or any other amounts due under this Agreement in
respect of its LIBOR Advances or its obligation to make LIBOR Advances
(except for changes in the rate of tax on the overall net income of
such Bank or its Applicable Lending Office imposed by the jurisdiction
in which such Bank's principal office or Applicable Lending Office is
located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit, capital requirement or similar requirement
(including, without limitation, any such requirement imposed by the
Board, but excluding with respect to any LIBOR Advance any such
requirement to the extent included in calculating the applicable
Adjusted LIBOR) against assets of, deposits with or for the account
of, or credit extended by, any Bank's Applicable Lending Office or
shall impose on any Bank (or its Applicable Lending Office) or the
interbank eurodollar market any other condition affecting its LIBOR
Advances, its Revolving Note or its obligation to make LIBOR Advances;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any LIBOR Advance, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Revolving Note,
then, within fifteen days after demand by such Bank (with a copy to the Agent),
the Borrower
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shall pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction. Each Bank will promptly notify the
Borrower and the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank; provided, however, that the Borrower's liability for additional amounts
computed in accordance with this Section shall be neither changed nor waived by
the failure to give such notice. If any Bank fails to give such notice within
45 days after it obtains knowledge of such an event, such Bank shall, with
respect to compensation payable pursuant to this Section, only be entitled to
payment under this Section for costs incurred from and after the date 45 days
prior to the date that such Bank does give such notice. A certificate of any
Bank claiming compensation under this Section, setting forth the additional
amount or amounts to be paid to it hereunder and stating in reasonable detail
the basis for the charge and the method of computation, shall be rebuttable
presumptive evidence of the matters stated therein. In determining such amount,
any Bank may use any reasonable averaging and attribution methods. Failure on
the part of any Bank to demand compensation for any increased costs or
reduction in amounts received or receivable with respect to any Interest Period
shall not constitute a waiver of such Bank's rights to demand compensation for
any increased costs or reduction in amounts received or receivable in any
subsequent Interest Period.
Section 2.16 ILLEGALITY. If any Regulatory Change shall make it
unlawful or impossible for any Bank to make, maintain or fund any LIBOR
Advances, such Bank shall notify the Borrower and the Agent, whereupon the
obligation of such Bank to make or continue, or to convert any Advances to,
LIBOR Advances shall be suspended until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist.
Before giving any such notice, such Bank shall designate a different Applicable
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank determines that it may not lawfully continue to
maintain any LIBOR Advances to the end of the applicable Interest Periods, all
of the affected Advances shall be automatically converted to Reference Rate
Advances as of the date of such Bank's notice, and upon such conversion the
Borrower shall indemnify such Bank in accordance with Section 2.18.
Section 2.17 CAPITAL ADEQUACY. In the event that any Regulatory
Change reduces or shall have the effect of reducing the rate of return on any
Bank's capital or the capital of its parent corporation (by an amount such Bank
deems material) as a consequence of its Revolving Commitment and/or Advances to
a level below that which such Bank or its parent corporation could have achieved
but for such Regulatory Change (taking into account such Bank's policies and the
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policies of its parent corporation with respect to capital adequacy), then the
Borrower shall, within thirty days after written notice and demand from such
Bank (with a copy to the Agent), pay to such Bank additional amounts sufficient
to compensate such Bank or its parent corporation for such reduction. Any
determination by such Bank under this Section and any certificate as to the
amount of such reduction given to the Borrower by such Bank shall be rebuttable
presumptive evidence of the matters stated therein. Each Bank shall promptly
give the Borrower written notice of any Regulatory Change or other circumstances
which may result in increased costs under this Section with respect to that
Bank; PROVIDED, HOWEVER, that the Borrower's liability for additional amounts
computed in accordance with this Section shall be neither changed nor waived by
any failure to give such notice.
Section 2.18 FUNDING LOSSES; LIBOR ADVANCES. The Borrower shall
compensate each Bank, upon its written request, for all losses, expenses and
liabilities (including any interest paid by such Bank to lenders of funds
borrowed by it to make or carry LIBOR Advances to the extent not recovered by
such Bank in connection with the re-employment of such funds and including loss
of anticipated profits) which such Bank may sustain: (i) if a funding of a
LIBOR Advance does not occur on the date specified therefor in the Borrower's
request or notice as to such Advance under Section 2.2 or 2.4 for any reason
(such as the Borrower's refusal to accept the LIBOR Advance) other than a
default by such Bank, or (ii) if, for whatever reason (including, but not
limited to, acceleration of the maturity of Advances following an Event of
Default), any repayment of a LIBOR Advance, or a conversion pursuant to Section
2.16, occurs on any day other than the last day of the Interest Period
applicable thereto. A Bank's request for compensation shall set forth the basis
for the amount requested and shall be rebuttable presumptive evidence of the
matters stated therein.
Section 2.19 DISCRETION OF BANKS AS TO MANNER OF FUNDING. Each
Bank shall be entitled to fund and maintain its funding of LIBOR Advances in any
manner it may elect, it being understood, however, that for the purposes of this
Agreement all determinations hereunder (including, but not limited to,
determinations under Section 2.18, but excluding determinations that the Agent
may elect to make from the Telerate screen) shall be made as if such Bank had
actually funded and maintained each LIBOR Advances during the Interest Period
for such Advance through the purchase of deposits having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to LIBOR for such Interest Period.
Section 2.20 WITHHOLDING TAXES.
(a) BANKS TO SUBMIT FORMS. Each Bank represents to the Borrower
and the Agent that it is either (i) a corporation organized under the laws of
the United States or any State thereof or (ii) is entitled to complete exemption
from United States withholding tax imposed on or with respect to any payments,
including fees,
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to be made pursuant to this Agreement (x) under an applicable provision of a tax
convention to which the United States is a party or (y) because it is acting
through a branch, agency or office in the United States and any payment to be
received by it hereunder is effectively connected with a trade or business in
the United States. Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and
the Agent, on or before the Effective Date or the day on which such Bank becomes
a Bank by assignment under Section 9.6, duly completed and signed copies of
either Form 1001 (relating to such Bank and entitling it to a complete exemption
from withholding on all payments to be received by such Bank hereunder) or Form
4224 (relating to all payments to be received by such Bank hereunder) of the
United States Internal Revenue Service. Thereafter and from time to time, each
such Bank shall submit to the Borrower and the Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
Forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) reasonably requested by the Borrower or the Agent and
(ii) required and permitted under then-current United States law or regulations
to avoid United States withholding taxes on payments in respect of all payments
to be received by such Bank hereunder. Upon the request of the Borrower or the
Agent, each Bank that is a United States person (as such term is defined in
Section 7701(a)(30) of the Code) shall submit to the Borrower and the Agent a
certificate in such form as is reasonably satisfactory to the Borrower and the
Agent to the effect that it is such a United States person.
(b) INABILITY OF A BANK. If the Borrower shall be required by
law or regulation to make any deduction, withholding or backup withholding of
any taxes, levies, imposts, duties, fees, liabilities or similar charges of the
United States of America, any possession or territory of the United States of
America (including the Commonwealth of Puerto Rico) or any area subject to the
jurisdiction of the United States of America ("U.S. TAXES") from any payments to
a Bank pursuant to any Loan Document in respect of the Obligations payable to
such Bank then or thereafter outstanding, the Borrower shall make such
withholdings or deductions and pay the full amount withheld or deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
Section 2.21. THE SWING-LINE LOAN FACILITY.
(a) SWING-LINE COMMITMENTS. Upon the terms and subject to the
conditions hereof, the Agent, in its capacity as a Bank, agrees, at any time and
from time to time from the Closing Date to the Termination Date, to make loans
("Swing-Line Loans") on a revolving credit basis in an aggregate principal
amount at any time outstanding not to exceed $10,000,000; PROVIDED, HOWEVER,
that the Agent shall not be obligated to make a Swing-Line Loan if, after giving
effect to the making of such Swing-Line Loan and any payment of Total
Outstandings made directly by the Agent, for the account of the Borrower, from
the proceeds of such Swing-Line Loan, the Total Outstandings would exceed the
Aggregate Revolving Commitment
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Amounts. The Swing-Line Loans shall be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit 2.21 hereto (the "Swing-Line
Note"), shall bear interest on the aggregate unpaid principal balance thereof
outstanding from time to time at a fluctuating rate per annum equal to the
Reference Rate (as such rate may change from time to time), and shall mature on
the Termination Date, when all amounts then outstanding under the Swing-Line
Note shall be due and payable in full. Interest on any Swing-Line Loan shall be
payable on the last day of each month and at maturity. Principal of any Swing-
Line Loan may be prepaid at any time in whole or in part and without premium or
penalty of any kind. The Agent, in its capacity as a Bank, is hereby authorized
to record the date and amount of each Swing-Line Loan and the date and amount of
each payment or prepayment of principal thereof on the schedules annexed to and
constituting part of the Swing-Line Note; provided, however that the failure by
the Agent to make any such entry or any error in making such entry shall not
limit or otherwise affect the obligation of the Borrower hereunder and on the
Swing-Line Note, and, in all events, the principal amounts owing by the Borrower
in respect of the Swing-Line Note shall be the aggregate amount of all Swing-
Line Loans made by the Agent less all payments of principal thereof made by the
Borrower.
(b) PROCEDURE FOR BORROWING. The Borrower may borrow Swing-Line
Loans from the Closing Date to the Termination Date on any Business Day;
PROVIDED, that the Borrower shall give the Agent irrevocable notice in writing
or orally, which notice must be received by the Agent prior to 2:00 p.m.,
Minneapolis, Minnesota time, on the requested Borrowing Date, specifying in each
case the amount thereof and the requested Borrowing Date. Any written request
for a Swing-Line Loan shall be in the form of Exhibit 2.2 and shall be signed by
a Financial Officer or a person designated as authorized to make such requests
in a writing signed by a Financial Officer. Any oral request for a Swing-Line
Loan shall be made by a Financial Officer or a person designated as authorized
to make such requests in a writing signed by a Financial Officer and shall be
confirmed by a writing in the form of Exhibit 2.2 signed by a Financial Officer
or a person designated as authorized to make such requests in a writing signed
by a Financial Officer, which written confirmation shall be delivered to the
Agent weekly, each Friday (or the next succeeding Business Day, if a Friday is
not a Business Day) not later than five Business Days after the date the Swing-
Line Loan in question is made. The Revolving Commitments of the Banks shall be
suspended from the fifth Business Day after the date the Agent notifies the
Borrower that such written confirmation is past due until any such past due
written confirmation has been delivered. Each borrowing of Swing-Line Loans
shall be in an aggregate principal amount of $100,000 or an integral multiple of
$100,000 in excess thereof. Upon receipt of such notice from the Borrower, the
Agent will make the requested Swing-Line Loan available to the Borrower on such
date by crediting the account of the Borrower on the books of the Agent with the
aggregate of such amounts or in such manner as the Borrower may request in
writing.
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(c) REFINANCING OF SWING-LINE LOANS BY BANKS. Except as
provided in the last sentence of this Section 2.21(c), the Agent, at any time
and in its sole discretion, may, upon notice given to each Bank, request that
each Bank make a Revolving Loan in an amount equal to its Revolving Percentage
of the aggregate unpaid principal amount of any outstanding Swing-Line Loans for
the purpose of refinancing such Swing-Line Loans. In such case, each Bank
shall, upon receipt of such notice from the Agent, make a Revolving Loan
(regardless of noncompliance with subsections 2.2, 3.2 or any other provision of
this Agreement) in an amount equal to that Bank's respective Revolving
Percentage of the aggregate unpaid principal amount of the outstanding Swing-
Line Loans as specified in such notice and make the proceeds of such Revolving
Loan available to the Agent, in same day funds, at the office of the Agent
specified in such notice, not later than 1:00 P.M. (Minneapolis time) on the
Business Day after the date that Bank was notified by the Agent, which payments
by the Banks shall be applied by the Agent to the payment of principal of the
Swing-Line Loans. In the event that any Bank fails to make the proceeds of its
Revolving Loan available to the Agent as provided in this subsection 2.21(c),
the Agent shall be entitled to recover such amount on demand from such Bank
together with interest at the overnight Federal Funds rate for three Business
Days and thereafter at the Reference Rate. Notwithstanding the provisions of
this Section 2.21(c) or any other section of this Agreement, no Bank shall be
obligated to make a Revolving Loan with respect to any portion of the
outstanding Swing-Line Loans that was made available to the Borrower after the
Agent's receipt of written notice of the existence, and during the continuation,
of an Event of Default (but this sentence shall not limit any Bank's obligations
with respect to that portion of any outstanding Swing-Line Loans made available
to the Borrower prior to the Agent's receipt of such notice or after any such
Event of Default has been cured).
Section 2.22 THE BID LOAN FACILITY.
(a) ESTABLISHMENT OF BID LOAN FACILITY. The Banks agree to make
available to the Borrower a Bid Loan Facility, pursuant to which the Borrower
may, as provided in this subsection 2.22, request the Banks, through the Agent,
to make offers to make Bid Loans to the Borrower; PROVIDED, HOWEVER, that a Bank
shall not make a Bid Loan if, after giving effect thereto and any payment of
Total Outstandings made directly by the Agent, for the account of the Borrower,
from the proceeds of such Bid Loan, either: (i) the total unpaid principal
amount of all Bid Loans outstanding would exceed $50,000,000; or (ii) the Total
Outstandings would exceed the Aggregate Revolving Commitment Amounts.
(b) BID LOAN TENDER REQUEST NOTICE. When the Borrower wishes to
request offers to make Bid Loans, it shall transmit to the Agent written notice
in the form attached hereto as Exhibit 2.22(b) (a "Bid Loan Tender Request
Notice") so as to be received no later than 10:00 a.m. (Minneapolis time) on or
before:
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(x) the second Business Day prior to the date proposed in such Notice
for a Bid Loan (the "Bid Loan Borrowing Date"), if the applicable
interest rate for the Bid Loan Financing is to be specified as an
absolute percentage, or
(y) the fourth Business Day prior to the proposed Bid Loan Borrowing
Date, if the applicable interest rate for the Bid Loan Financing is to
be specified as LIBOR plus a specified margin,
in either case specifying:
(1) the proposed Bid Loan Borrowing Date, which shall be
any Business Day thirty days or more prior to the Termination Date;
(2) the aggregate principal amount of the proposed Bid Loan
Financing which shall be a minimum amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof;
(3) the maturity dates (which shall not exceed four) of
such Bid Loans to be made as part of such Bid Loan Financing (each of
which maturity dates shall be a Business Day and may not be earlier
than the date occurring thirty days after the proposed Bid Loan
Borrowing Date or later than the date occurring the earlier of the
Termination Date or 180 days after the proposed Bid Loan Borrowing
Date);
(4) whether the interest rate applicable to each Bid Loan
should be specified as an absolute percentage or as LIBOR plus a
specified margin; and
(5) any other terms to be applicable to such Bid Loan
Financing.
Each Bid Loan Tender Request Notice shall be given or signed on
behalf of the Borrower by an officer or employee of the Borrower previously
identified to the Agent in a writing satisfactory to the Agent as authorized to
give Bid Loan Tender Request Notices.
(c) INVITATION TO TENDER FOR BID LOANS. Promptly upon receipt
of each Bid Loan Tender Request Notice and in any event not later than 3:00 p.m.
(Minneapolis time) on:
(x) the second Business Day prior to the proposed Bid Loan Borrowing
Date, if the applicable interest rate for the Bid Loan Financing is to
be specified as an absolute percentage, or
(y) the fourth Business Day prior to the proposed Bid Loan Borrowing
Date, if the applicable interest rate for the Bid Loan Financing is to
be specified as LIBOR plus a specified margin,
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provided that the aggregate principal amount of the proposed Bid Loan Financing
does not exceed the limitations set forth in subsection 2.22(a), the Agent shall
send to the Banks by telex or telecopier a notice in the form attached hereto as
Exhibit 2.22(c) (an "Invitation to Tender for Bid Loans") which shall constitute
an invitation by the Borrower to each Bank to submit Bid Loan Tenders offering
to make Bid Loans to which such Bid Loan Tender Request Notice relates in
accordance with subsection 2.22(d) hereof. Each Bid Loan Tender Request Notice
shall be irrevocable.
(d) SUBMISSION AND CONTENTS OF BID LOAN TENDERS.
(1) Each Bank may submit one or more bids (each, a "BID
LOAN TENDER") containing an offer or offers to make Bid Loans in
response to any Invitation to Tender for Bid Loans. Each Bid Loan
Tender must comply with the requirements of this subsection 2.22(d)
and must be submitted to the Agent by telephone so as to be received
not later than 8:45 a.m. (Minneapolis time) on:
(x) the proposed Bid Loan Borrowing Date, if the applicable
interest rate for the Bid Loan Financing is to be specified as an
absolute percentage, or
(y) the third Business Day prior to the proposed Bid Loan
Borrowing Date, if the applicable interest rate for the Bid Loan
Financing is to be specified as LIBOR plus a specified margin;
(whichever of such dates is applicable, the "BID LOAN TENDER DATE")
PROVIDED, that if the Agent in its capacity as a Bank shall, in its
sole discretion, elect to submit a Bid Loan Tender, it shall submit
the same to the Borrower by telephone not later than 8:30 a.m.
(Minneapolis time) on the applicable Bid Loan Tender Date. No Bank
shall discuss the proposed or actual terms of any Bid Loan Tender with
any other Bank before 9:00 a.m. (Minneapolis time) on the applicable
Bid Loan Tender Date. Subject to satisfaction of the applicable
conditions set forth in subsection 3.2 hereof, any Bid Loan Tender
shall be irrevocable prior to 9:30 a.m. (Minneapolis time) on the
applicable Bid Loan Tender Date, except (A) with the written consent
of the Agent given on the written instructions of the Borrower, and
(B) except to the extent specifically set forth below in the event of
a Partially Accepted Bid.
(2) Each Bid Loan Tender shall specify:
(A) the applicable Bid Loan Borrowing Date;
(B) the principal amount of Bid Loans for which each
offer is being made for each maturity date, which face amount
shall be
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$5,000,000 or an integral multiple of $1,000,000 in excess
thereof and may not exceed, in the aggregate as to all such Bid
Loans, the principal amount of Bid Loans for which offers were
requested (although such Bid Loan Tender may include any number
of separate offers to make Bid Loans for the same or different
maturity dates at different interest rates, each of which offers
shall be capable of acceptance hereunder by the Borrower);
(C) either (i) the per annum (based on actual days
elapsed and a year of 360 days) fixed interest rate (which shall
include any facility or other fee) offered on each such principal
amount of Bid Loans (expressed to three decimal places) or (ii)
the margin over LIBOR offered on each such principal amount of
Bid Loans (expressed to three decimal places), as appropriate;
and
(D) the identity of the tendering Bank.
(3) any Bid Loan Tender shall be disregarded that:
(A) does not specify all the information required by
subsection 2.22(d)(2) hereof;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation to Tender for Bid Loans;
or
(D) is received by the Agent after the time set forth
in subsection 2.22(d)(1) hereof on the applicable Bid Loan Tender
Date.
(e) NOTICE TO THE BORROWER. As soon as reasonably practicable,
and in no event later than 9:00 a.m. (Minneapolis time) on the applicable Bid
Loan Tender Date, the Agent shall notify the Borrower by telephone of the terms
of each Bid Loan Tender submitted by a Bank that complies with subsection
2.22(d) hereof.
(f) ACCEPTANCE AND REJECTION OF BID LOAN TENDERS.
(1) ACCEPTANCE AND NOTICE BY THE BORROWER. As soon as
reasonably practicable and in no event later than 9:15 a.m.
(Minneapolis time) on the applicable Bid Loan Tender Date, the
Borrower shall notify the Agent by telephone of its acceptance or
rejection of the offers contained in the Bid Loan Tenders of which it
was notified pursuant to subsection 2.22(e) hereof. Such notification
from the Borrower shall specify the aggregate principal amount of
offers at each interest rate for each maturity date that are accepted.
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The Borrower may accept any of the Bid Loan Tenders in whole or in
part; PROVIDED, that:
(A) the aggregate principal amount of the Bid Loans in
respect of which offers are accepted may not exceed the aggregate
principal amount requested in the related Bid Loan Tender Request
Notice; and
(B) acceptances of Bid Loan Tenders made in response
to the same Invitation to Tender for Bid Loans may only be made
on the basis of ascending interest rates, PROVIDED THAT each
resulting Bid Loan must be in a principal amount of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof.
If the Borrower rejects all Bid Loan Tenders, the proposed
Bid Loan Financing shall be canceled and the Agent shall give the
Banks prompt notice to that effect.
If (x) the aggregate principal amount of the Bid Loans
offered by the Banks in their Bid Loan Tenders aggregate less than, or
(y) the Borrower does not accept offers contained in Bid Loan Tenders
in an aggregate face amount equal to, the aggregate face amount
requested in the related Bid Loan Tender Request Notice (either such
event, a "PARTIALLY ACCEPTED BID"), the Banks whose offers are
accepted shall have the right (but not the obligation) to revoke those
offers as hereinafter set forth. In the event that a Partially
Accepted Bid has occurred, the Borrower shall notify the Agent by
telephone prior to 9:15 a.m. on the applicable Bid Loan Tender Date of
the occurrence and of which Bid Loan Tenders the Borrower accepts. By
9:30 a.m. on the applicable Bid Loan Tender Date, the Agent shall
notify by telephone those Banks whose offers have been accepted that a
Partially Accepted Bid has occurred, and shall inform those Banks of
the sum of the accepted Bid Loan Tenders and whether that Bank's offer
or offers have been accepted, and whether in whole or in part,
specifying the date, principal amount and maturity date of each Bid
Loan to be made by such Bank as part of the applicable Bid Loan
Financing and the interest rate applicable to each such Bid Loan to be
created by such Bank. Each Bank whose offer has been accepted but
which wishes to revoke that offer must do so by informing the Agent by
telephone no later than 9:45 a.m. on the applicable Bid Loan Tender
Date. The Agent shall then notify the Borrower by telephone of any
bids which have been revoked prior to 10:00 a.m. on the applicable Bid
Loan Tender Date and shall subsequently notify by telephone those
Banks whose bids were accepted and have not been revoked
(collectively, the "Second Round Bids") of the sum of the Second Round
Bids prior to 10:15 a.m. on the applicable Bid Loan Tender Date. If
any Bank whose bid was accepted as part of a Partially Accepted Bid
revokes its offer before 9:45 on the applicable Bid Loan Tender
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Date, as described in the second preceding sentence, then each Bank
whose bid has not previously been revoked may revoke its Second Round
Bid by notifying the Agent by telephone prior to 10:30 a.m. on the
applicable Bid Loan Tender Date. If any Second Round Bid is revoked
by any Bank, or if the Borrower fails to notify the Agent by 9:15 a.m.
on the applicable Bid Loan Tender Date that a Partially Accepted Bid
occurred, all Bid Loan Tenders submitted in response to the related
Bid Loan Tender Request Notice shall be deemed withdrawn. If any
Second Round Bid is revoked, the Agent shall notify the Borrower by
telephone prior to 10:45 a.m. on the applicable Bid Loan Tender Date
and shall notify those Banks whose offers have not previously been
revoked by telephone prior to 11:00 a.m. on the applicable Bid Loan
Tender Date.
(2) If offers to make Bid Loans are made by two or more of
the Banks at the same interest rate for the same maturity date for a
greater aggregate face amount of Bid Loans than the amount in respect
of which offers to make Bid Loans are accepted at that interest rate
for that maturity date, the principal amount of Bid Loans in respect
of which such offers are accepted at such interest rate for such
maturity date shall be allocated between or among such Banks as nearly
as possible PROVIDED THAT each resulting Bid Loan must be in a face
amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof.
(3) NOTIFICATION OF BID LOANS TO BANKS. Prior to 9:30 a.m.
(Minneapolis time) on the applicable Bid Loan Tender Date, the Agent
shall notify by telephone each Bank that has made a Bid Loan Tender
whether a Partially Accepted Bid has occurred and whether that Bank's
offer or offers have been accepted, and whether in whole or in part,
specifying the date, principal amount and maturity date of each Bid
Loan to be made by such Bank as part of the applicable Bid Loan
Financing and the interest rate applicable to each such Bid Loan to be
made by such Bank. Any Bank not receiving such notification by the
time indicated in the second preceding sentence may conclusively
presume that its offer or offers were not accepted.
(g) FUNDING OF BID LOANS; NOTES TO EVIDENCE BID LOANS. Upon
receipt of the telephonic notification contemplated by subsection 2.22(f)(3) by
a Bank whose offer or offers to make a Bid Loan or Bid Loans have been accepted,
such Bank shall make the aggregate principal amount of such Bid Loan or Bid
Loans available to the Agent for the account of the Borrower in Immediately
Available Funds prior to 2:00 p.m., Minneapolis, Minnesota time on the
applicable Bid Loan Borrowing Date as the Agent may direct. The amounts so made
available to the Agent shall be made available on such date to the Borrower by
the Agent by crediting the account of the Borrower on the books of such office
of the Agent with the aggregate of such amounts in like funds as received by the
Agent or in such manner as the Borrower may request in writing. Bid Loans made
by a Bank shall be evidenced by a master
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promissory note of the Borrower in form of Exhibit 2.22(g) hereto (individually,
a "Bid Loan Note," and collectively as to all the Banks, the "Bid Loan Notes")
payable to the order of such Bank. Promptly after giving the telephonic
notifications to the Banks contemplated by subsection 2.22(f)(3), the Agent
shall complete and transmit by telecopier to each Bank whose offer or offers
have been accepted one or more Bid Loan Schedules, substantially in the form
thereof as attached to Exhibit 2.22(g), showing for each such Bid Loan the name
of such Bank, the amount of such Bid Loan, the applicable Borrowing Date and
maturity date therefor and the interest rate applicable thereto. Each such Bid
Loan Schedule shall be attached by such Bank to its applicable Bid Loan Note and
shall constitute a part of such Bid Loan Note. Each Bank is hereby authorized
to record the date and amount of each payment and prepayment of a Bid Loan on
the applicable Bid Loan Schedule attached to its Bid Loan Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however that the failure by any Bank to make
any such entry or any error in making such entry shall not limit or otherwise
affect the obligation of the Borrower hereunder and on that Bank's Bid Loan
Note, and, in all events, the principal amounts owing by the Borrower in respect
of a Bid Loan Note held by a Bank shall be the aggregate amount of all Bid Loans
made by that Bank less all payments of principal thereof made by the Borrower.
Interest on each Bid Loan shall be computed on the basis of actual days elapsed
and a year of 360 days and shall be payable: (i) on the maturity date of such
Bid Loan; (i) on the date of earlier repayment in full of such Bid Loan; and
(iii) the 90th day after such Bid Loan is made available to the Borrower, if
prior to the maturity date of such Bid Loan. Principal of each Bid Loan shall
be payable on the maturity date therefor as specified in the applicable Bid Loan
Schedule.
(h) REPAYMENT OBLIGATION OF THE BORROWER; PREPAYMENTS. The
Borrower hereby unconditionally agrees to pay to each Bank that has made a Bid
Loan the principal amount of such Bid Loan not later than 12:00 noon
(Minneapolis time) on the maturity date thereof or such earlier date as may be
required pursuant to any other provision of this Agreement. In the absence of
instructions from such Bank to the contrary, such payments shall be made by wire
transfer of immediately available funds in accordance with the payment
instructions set forth in Exhibit 2.22(h), hereto as such instructions may from
time to time be changed by written notice from a Bank to the Agent and the
Borrower. The Borrower shall have no right to prepay any Bid Loan in whole or
in part unless, and then only on the terms, specified by the Borrower in the
applicable Bid Loan Tender Request Notice.
(i) NOTICE OF PAYMENT DEFAULT. Each Bank that has made a Bid
Loan pursuant to this subsection 2.22 shall notify the Agent and the Borrower as
soon as practicable, and in no event later than 9:00 a.m. (Minneapolis time) on
the Business Day immediately following the date payment is due with respect to
such Bid Loan pursuant to paragraph (h) of this subsection 2.22, of any failure
by the Borrower to remit the amounts payable pursuant to subparagraph (h) of
this subsection 2.22, and PROVIDED, HOWEVER, that failure by any Bank to give
notice as required by this
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sentence shall not release the Borrower from, nor have any other effect on, such
obligation to remit.
(j) EFFECT ON COMMITMENTS. Although each Bid Loan shall reduce
the amount available to the Borrower in the form of Revolving Loans by the
principal amount of such Bid Loan during the period in which said Bid Loan is
outstanding, each Bank's obligation to make its Revolving Percentage of any
subsequently requested Revolving Loans shall not in any way be affected by that
Bank's making of Bid Loans.
(k) NO PRO RATA SHARING. NO BANK SHALL BE OBLIGATED OR ENTITLED
TO PARTICIPATE IN ANY WAY IN ANY BID LOAN MADE BY ANY OTHER BANK.
(l) ADDITIONAL PAYMENTS. If by reason of (a) any Regulatory
Change or (b) compliance by the Bank making a Bid Loan with any direction,
request or requirement (whether or not having the force of law) of any
governmental authority or monetary authority including, without limitation,
Regulation D of the Board:
(1) that Bank shall be subject to any tax, levy, charge or
withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this subsection 2.22;
(2) any reserve, deposit, or capital adequacy or similar
requirement is or shall be applicable, imposed or modified in respect
of any Bid Loan made by that Bank; or
(3) there shall be imposed on that Bank any other condition
regarding this subsection 2.22, or any Bid Loan;
and the result of the foregoing is directly or indirectly to increase the cost
to that Bank of making or maintaining any Bid Loan, or to reduce the amount
receivable in respect thereof by that Bank, or in the case of capital adequacy
requirements, the result is to increase the amount of capital required to be
maintained by that Bank with respect to any Bid Loan above the amount of capital
which would otherwise be required to be maintained by that Bank with respect
thereto (taking into account such Bank's internal policies and practices with
respect to capital maintenance as of the date hereof), then and in any such case
such Bank may, at any time within a reasonable period after the additional cost
is incurred or additional capital is required or the amount received is reduced,
notify the Borrower, and the Borrower shall pay on demand such amounts as such
Bank may specify to be necessary to compensate such Bank for such additional
cost or additional capital or reduced receipt, together with interest on such
amount from the date demanded until
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payment in full thereof at a rate equal at all times to the Reference Rate. The
determination by any Bank of any amount due pursuant to this subsection 2.22(l)
as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall be rebuttable presumptive evidence of the matters
stated therein. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this subsection, will give prompt written
notice thereof to the Borrower, which notice shall show the basis for
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrower' obligations to pay
additional amounts pursuant to this subsection.
(m) INDEMNIFICATION AND EXCULPATION OF THE BID LOAN BANKS. In
addition to amounts payable as elsewhere provided in this subsection 2.22, the
Borrower hereby agrees to protect, indemnify, pay and save each Bank that makes
a Bid Loan harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees and allocated costs of internal counsel) which that Bank may incur or be
subject to as a consequence, direct or indirect, of the making of the Bid Loan,
other than as a result of the gross negligence or willful misconduct of that
Bank as determined by a court of competent jurisdiction. In furtherance and not
in limitation of the foregoing, no Bank shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and making of any
such Bid Loan, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Bid Loan or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (iv) for errors in interpretation
of technical terms; (v) for any loss or delay in the transmission or other
handling of any document related to any such Bid Loan or of the proceeds
thereof; and (vi) for any consequences arising from causes beyond the control of
that Bank. In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Bank under
or in connection with the Bid Loans made by it or the related documents, if
taken or omitted in good faith, shall not put that Bank under any resulting
liability to any Borrower. The Borrower further agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of a default by any of the Borrower in
borrowing a Bid Loan after the Borrower has given notice of its acceptance of a
Bid Loan Tender as provided in the last paragraph of subsection 2.22(f)(1) or in
the event of any prepayment of a Bid Loan on a day which is not a maturity date
therefor, including, but not limited to, any such loss or expense arising from
interest or fees payable by such Bank to lenders of funds obtained by it in
order to maintain its Bid Loans hereunder and any loss or expense incurred in
liquidating or redeploying deposits from which such
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funds were obtained. This covenant shall survive termination of this Agreement
and payment of the outstanding Notes.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS OF INITIAL TRANSACTION. The making of
the initial Revolving Loans shall be subject to the prior or simultaneous
fulfillment of the following conditions:
3.1(a) DOCUMENTS. The Agent shall have received the
following in sufficient counterparts (except for the Notes) for each Bank:
(i) A Revolving Note drawn to the order of each Bank executed by
a duly authorized officer (or officers) of the Borrower and dated the
Closing Date.
(ii) A Bid Loan Note drawn to the order of each Bank executed by
a duly authorized officer (or officers) of the Borrower and dated the
Closing Date.
(iii) The Swing-Line Note drawn to the order of the Agent
executed by a duly authorized officer (or officers) of the Borrower
and dated the Closing Date.
(iv) A copy of the corporate resolution of the Borrower
authorizing the execution, delivery and performance of the Loan
Documents, certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Borrower.
(v) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of the Borrower authorized to
execute the Loan Documents and to request Bid Loans, Revolving Loans
and Swing-Line Loans and conversions and continuations of Advances
hereunder, certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Borrower.
(vi) A copy of the Certificate of Incorporation of the Borrower
with all amendments thereto, certified by the appropriate governmental
official of the jurisdiction of its incorporation as of a date not
more than fifteen days prior to the Closing Date.
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(vii) A long-form certificate of good standing for the Borrower
in the jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than fifteen days prior
to the Closing Date.
(viii) A copy of the bylaws of the Borrower, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the
Borrower.
(ix) A certificate dated the Closing Date of the chief executive
officer or chief financial officer of the Borrower certifying as to
the matters set forth in Sections 3.2 (a) and 3.2 (b) below.
3.1(b) OPINION. The Borrower shall have requested Jon J.
Solberg, Esq., its Corporate Counsel, to prepare a written opinion, addressed to
the Banks and dated the Closing Date, covering the matters set forth in Exhibit
3.1 hereto, and such opinion shall have been delivered to the Agent in
sufficient counterparts for each Bank.
3.1(c) COMPLIANCE. The Borrower shall have performed and
complied with all agreements, terms and conditions contained in this Agreement
required to be performed or complied with by the Borrower prior to or
simultaneously with the Closing Date.
3.1(d) OTHER MATTERS. All corporate and legal proceedings
relating to the Borrower and all instruments and agreements in connection with
the transactions contemplated by this Agreement shall be satisfactory in scope,
form and substance to the Agent, the Banks and the Agent's special counsel, and
the Agent shall have received all information and copies of all documents,
including records of corporate proceedings, as any Bank or such special counsel
may reasonably have requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental authorities.
3.1(e) FEES AND EXPENSES. The Agent shall have received
for itself and for the account of the Banks all fees and other amounts due and
payable by the Borrower on or prior to the Closing Date, including the
reasonable fees and expenses of counsel to the Agent payable pursuant to Section
9.2.
Section 3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation
of the Banks to make any Loans hereunder (including the initial Bid Loans,
Revolving Loans and Swing-Line Loans) shall be subject to the fulfillment of
the following conditions:
3.2(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article IV shall be true and correct on
and as of the Closing Date and on the date of each Loan, with the same
force and effect as if made on such date.
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3.2(b) NO DEFAULT. No Default or Event of Default shall
have occurred and be continuing on the Closing Date and on the date
of each Loan or will exist after giving effect to the Loans made on
such date so issued.
3.2(c) NOTICES AND REQUESTS. The Agent shall have received
the Borrower's request for such Loans as required under Section 2.2,
2.21 or 2.22, as appropriate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants to the Banks:
Section 4.1. ORGANIZATION, STANDING, ETC. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly licensed or qualified to do business in
every jurisdiction where the nature of the business requires it to be so
qualified and where failure to do so might materially affect its business or
properties, or the validity or enforceability of the Loan Documents. Borrower
has full corporate power and authority to carry on its business as presently
conducted and has complied with all applicable laws and regulations in the
conduct of its business.
Section 4.2. AUTHORIZATION AND VALIDITY; NO CONFLICT.
Borrower's execution, delivery and performance of this Agreement, the Loan
Documents contemplated hereby and each other instrument and document to be
delivered by Borrower hereunder: (a) are within Borrower's corporate power; (b)
have been duly authorized by all necessary or proper corporate action; (c) do
not or will not conflict with or result in a breach of or a default under (i)
any provision of law, (ii) Borrower's certificate of incorporation or bylaws,
(iii) any court or administrative regulation, order or ruling to which Borrower
or its property is subject or (iv) any contract, agreement, instrument,
indenture, decree, injunction, order or judgment to which Borrower is a party or
by which its property is bound; and (d) do not require the order, consent or
approval of, or registration with, any governmental body, agency, authority or
any other Person which has not been obtained and a copy thereof furnished to the
Agent.
Section 4.3. ENFORCEABILITY OF AGREEMENTS AND LOAN DOCUMENTS.
This Agreement has been duly executed and delivered by Borrower and is a valid
and binding agreement of Borrower enforceable in accordance with its terms.
Each Note, upon delivery to the Agent, will have been duly executed and
delivered by Borrower and will constitute a valid and binding obligation of the
Borrower enforceable against Borrower in accordance with its terms.
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Section 4.4. NO DEFAULT. Borrower is not in default under any
loan agreement, indenture or other contract or agreement to which it is a party
or by which its property is bound.
Section 4.5. FINANCIAL STATEMENTS AND CONDITION. The Borrower's
audited consolidated financial statements as at December 31, 1994 and its
unaudited financial statements as at October 7, 1995, as heretofore furnished to
the Agent, have been prepared in accordance with GAAP on a consistent basis
(except for year-end audit adjustments as to the interim statements) and fairly
present the financial condition of the Borrower and its Subsidiaries as at such
dates and the results of their operations and changes in financial position for
the respective periods then ended. As of the dates of such financial
statements, neither the Borrower nor any Subsidiary had any material obligation,
contingent liability, liability for taxes or long-term lease obligation which is
not reflected in such financial statements or in the notes thereto. Since
December 31, 1994, there has been no material adverse change in the business,
operations, property, assets or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole.
Section 4.6. ERISA. Each Plan is in substantial compliance with
all applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and the
Code setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA. With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan and previously furnished in
writing to the Banks) of such Plan's projected benefit obligations did not
exceed the fair market value of such Plan's assets.
Section 4.7. REGULATION U. Neither the Borrower nor any
Subsidiary is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined in Regulation U of the Board). The value of all margin stock
owned by the Borrower does not constitute more than 25% of the value of the
assets of the Borrower. None of the proceeds of the Loans hereunder will be
used, whether immediately, incidentally or ultimately, for any purpose violative
of or inconsistent with any of the provisions of Regulation U of the Board.
Section 4.8. TAXES. Each of the Borrower and the Subsidiaries
has filed all federal, state and local tax returns required to be filed and has
paid or made provision for the payment of all taxes due and payable pursuant to
such returns and pursuant to any assessments made against it or any of its
property and all other
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taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrower). No tax Liens have been filed with respect to any
such taxes, fees or charges. The charges, accruals and reserves on the books of
the Borrower in respect of taxes and other governmental charges are adequate and
the Borrower knows of no proposed material tax assessment against it or any
Subsidiary, or any basis therefor.
Section 4.9. LEGAL REQUIREMENTS. To the best of its knowledge,
the Borrower and each of its Subsidiaries is in compliance with all applicable
laws, statutes, ordinances, decrees, requirements, orders, judgments, rules,
regulations of, and the terms of any license or permit issued by, any
governmental authority, the failure to comply with which might have a material
adverse effect on the Borrower or such Subsidiary.
Section 4.10. LITIGATION. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary or any of their properties before any
court or arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such
Subsidiary would have a material adverse effect on the business, operations,
property or condition (financial or otherwise) of the Borrower and the
Subsidiaries taken as a whole, or on the ability of the Borrower to perform its
obligations under this Agreement.
Section 4.11. ENVIRONMENTAL, HEALTH AND SAFETY LAWS. To the
best knowledge of the Financial Officers of the Borrower, there does not exist
any violation by the Borrower or any Subsidiary of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Subsidiary or which would require a material
expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower
nor any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole.
Section 4.12. INVESTMENT COMPANY ACT. Neither the Borrower nor
any Subsidiary is an "investment company" or a company "controlled" by an
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investment company within the meaning of the Investment Company Act of 1940, as
amended.
Section 4.13. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a holding company or an "affiliate" of a holding company or of a subsidiary
company of a holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 4.14. RETIREMENT BENEFITS. Except as required under
Section 4980B of the Code, Section 601 of ERISA or applicable state law, neither
the Borrower nor any Subsidiary is obligated to provide post-retirement medical
or insurance benefits with respect to employees or former employees.
Section 4.15. FULL DISCLOSURE. Subject to the following
sentence, neither the financial statements referred to in Section 4.5 nor any
other certificate, written statement, exhibit or report furnished by or on
behalf of the Borrower in connection with or pursuant to this Agreement contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
Certificates or statements furnished by or on behalf of the Borrower to the
Agent or the Banks consisting of projections or forecasts of future results or
events have been prepared in good faith and based on good faith estimates and
assumptions of the management of the Borrower, and the Borrower has no reason to
believe that such projections or forecasts are not reasonable.
Section 4.16 TITLE TO PROPERTY; LEASES; LIENS; SUBORDINATION.
Each of the Borrower and the Subsidiaries has (a) good and marketable title to
its real properties and (b) good and sufficient title to, or valid, subsisting
and enforceable leasehold interest in, its other material properties, including
all real properties, other properties and assets, referred to as owned by the
Borrower and its Subsidiaries in the most recent financial statement referred to
in Section 4.5 (other than property disposed of since the date of such financial
statements in the ordinary course of business and minor defects in title that do
not interfere with the Borrower's and its Subsidiaries' use and proposed use of
such properties). None of such properties is subject to a Lien, except as
allowed under Section 6.3. The Borrower has not subordinated any of its rights
under any obligation for borrowed money owing to it to the rights of any other
person, except that certain loans to customers that do not evidence or replace
accounts receivable, in an aggregate amount that does not exceed $30,000,000,
may be subordinated to the claims of other lenders to such customers.
Section 4.17 TRADEMARKS, PATENTS. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology,
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know-how, processes, methods and designs used in or necessary for the conduct of
its business, without known conflict with the rights of others.
Section 4.18 BURDENSOME RESTRICTIONS. Neither the Borrower nor
any Subsidiary is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which would foreseeably have a
material adverse effect on the business, properties, assets, operations or
condition (financial or otherwise) of the Borrower or such Subsidiary or on the
ability of the Borrower or any Subsidiary to carry out its obligations under any
Loan Document.
Section 4.19 FORCE MAJEURE. Since the date of the most recent
audited financial statement referred to in Section 4.5, the business, properties
and other assets of the Borrower and the Subsidiaries have not been materially
and adversely affected in any way as the result of any fire or other casualty,
strike, lockout, or other labor trouble, embargo, sabotage, confiscation,
condemnation, riot, civil disturbance, activity of armed forces or act of God.
Section 4.20 SUBSIDIARIES. Exhibit 4.20 sets forth as of the
date of this Agreement a list of all Subsidiaries and the percentage of the
shares of each class of capital stock or percentage of general and limited
partnership interests owned beneficially or of record by the Borrower or any
Subsidiary therein, and the jurisdiction of incorporation or organization of
each Subsidiary.
ARTICLE V
AFFIRMATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving
Loans and the Swing-Line Loans shall have expired or been terminated and the
Bid Loan Notes, the Revolving Notes, the Swing-Line Note and all of the other
Obligations have been paid in full, unless the Majority Banks shall otherwise
consent in writing:
Section 5.1. FINANCIAL STATEMENTS. Borrower shall deliver to
the Banks:
5.1(a) As soon as available and in any event within 110
days after the end of each fiscal year of the Borrower, the
consolidated financial statements of the Borrower and its consolidated
Subsidiaries consisting of at least statements of income, cash flow
and changes in stockholders' equity, and a consolidated balance sheet
as at the end of such year, setting forth in each case in comparative
form corresponding figures from the previous annual audit, certified
without qualification by Ernst & Young or other independent certified
public accountants of recognized national standing selected by the
Borrower and acceptable to the Majority Banks.
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5.1(b) As soon as available and in any event within 60 days
after the end of each fiscal quarter of the Borrower, unaudited
consolidated statements of income and stockholder's equity for the
Borrower and its Subsidiaries for such quarter and cash flow for the
period from the beginning of such fiscal year to the end of such
quarter, and a consolidated balance sheet of the Borrower as at the
end of such quarter, setting forth in comparative form income and
cash flow for the corresponding period for the preceding fiscal year,
and a consolidated balance sheet of the Borrower as of the end of the
preceding fiscal year, accompanied by a certificate signed by a
Financial Officer of the Borrower stating that such financial
statements present fairly the financial condition of the Borrower and
its Subsidiaries and that the same have been prepared in accordance
with GAAP.
5.1(c) As soon as practicable and in any event within 60
days after the end of each fiscal quarter of the Borrower, a
compliance certificate signed by a Financial Officer of the Borrower
demonstrating in reasonable detail compliance (or noncompliance, as
the case may be) with Sections 6.4 through 6.6 as at the end of such
quarter and stating that as at the end of such quarter there did not
exist any Default or Event of Default or, if such Default or Event of
Default existed, specifying the nature and period of existence thereof
and what action the Borrower proposes to take with respect thereto.
5.1(d) As soon as practicable and in any event within 90
days after the beginning of each fiscal year of the Borrower,
consolidated statements of forecasted income, forecasted cash flow and
forecasted changes in stockholders' equity and a forecasted balance
sheet of the Borrower and the Subsidiaries for such fiscal year,
together with supporting assumptions.
5.1(e) Immediately upon any officer of the Borrower
becoming aware of any Default or Event of Default, a notice describing
the nature thereof and what action the Borrower proposes to take with
respect thereto.
5.1(f) Immediately upon any officer of the Borrower
becoming aware of the occurrence, with respect to any Plan, of any
Reportable Event or any Prohibited Transaction, a notice specifying
the nature thereof and what action the Borrower proposes to take with
respect thereto, and, when received, copies of any notice from PBGC of
intention to terminate or have a trustee appointed for any Plan.
5.1(g) Promptly upon the mailing or filing thereof, copies
of all financial statements, reports and proxy statements mailed to
the Borrower's shareholders, and copies of all registration
statements, periodic reports and other documents filed with the
Securities and Exchange Commission (or any successor thereto) or any
national securities exchange.
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5.1(h) From time to time, such other information regarding
the business, operation and financial condition of the Borrower and
the Subsidiaries as the Bank may reasonably request.
Section 5.2. CORPORATE EXISTENCE. The Borrower will maintain
its corporate existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude the Borrower from
enforcing its rights with respect to any material asset or would expose the
Borrower to any material liability.
Section 5.3. INSURANCE. The Borrower shall maintain, and shall
cause each Subsidiary to maintain, with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable firms engaged in the same or similar business and similarly
situated.
Section 5.4. PAYMENT OF TAXES AND CLAIMS. The Borrower shall
file, and cause each Subsidiary to file, all tax returns and reports which are
required by law to be filed by it and will pay, and cause each Subsidiary to
pay, before they become delinquent all taxes, assessments and governmental
charges and levies imposed upon it or its property and all claims or demands of
any kind (including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property; provided that the foregoing items need
not be paid if they are being contested in good faith by appropriate
proceedings, and as long as the Borrower's or such Subsidiary's title to its
property is not materially adversely affected, its use of such property in the
ordinary course of its business is not materially interfered with and adequate
reserves with respect thereto have been set aside on the Borrower's or such
Subsidiary's books in accordance with GAAP.
Section 5.5. BOOKS AND RECORDS. The Borrower will keep, and
will cause each Subsidiary to keep, adequate and proper records and books of
account in which full and correct entries will be made of its dealings, business
and affairs.
Section 5.6. COMPLIANCE. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject; provided, however, that failure so to comply shall not be a
breach of this covenant if such failure does not have, or is not reasonably
expected to have, a materially adverse effect on the properties, business,
prospects or condition (financial or otherwise) of the Borrower or such
Subsidiary and the Borrower or such Subsidiary is acting in good faith and with
reasonable dispatch to cure such noncompliance.
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Section 5.7. NOTICE OF LITIGATION. The Borrower will give
prompt written notice to the Agent of the commencement of (a) any action, suit
or proceeding before any court in which the uninsured damages claimed exceed
$2,000,000 or (b) any action, suit or proceeding before any other governmental
department, board, agency or other instrumentality or before an arbitrator
affecting the Borrower or any Subsidiary or any property of the Borrower or a
Subsidiary or to which the Borrower or a Subsidiary is a party in which an
adverse determination or result could have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole or on the ability of the Borrower
to perform its obligations under this Agreement, stating the nature and status
of such action, suit or proceeding.
Section 5.8. ERISA. The Borrower will maintain, and cause each
ERISA Affiliate to maintain, each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code and will not and not permit any of the ERISA Affiliates to (a) engage
in any transaction in connection with which the Borrower or any of the ERISA
Affiliates would be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code in an
amount in excess of $1,000,000, (b) fail to make full payment when due of all
amounts which, under the provisions of any Plan, the Borrower or any ERISA
Affiliate is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect to any Plan,
in an amount in excess of $1,000,000 for all Plans, or (c) fail to make any
payments to any Multiemployer Plan that the Borrower or any of the ERISA
Affiliates may be required to make under any agreement relating to such
Multiemployer Plan or any law pertaining thereto in an amount in excess of
$1,000,000. The Borrower will not permit, and will not allow any Subsidiary to
permit, any event to occur or condition to exist which would permit any Plan to
terminate under any circumstances which would cause the Lien provided for in
Section 4068 of ERISA to attach to any assets of the Borrower or any Subsidiary;
and the Borrower will not permit, as of the most recent valuation date for any
Plan subject to Title IV of ERISA, the present value (determined on the basis of
reasonable assumptions employed by the independent actuary for such Plan and
previously furnished in writing to the Banks) of such Plan's projected benefit
obligations to exceed the fair market value of such Plan's assets.
Section 5.9. ENVIRONMENTAL MATTERS; REPORTING. The Borrower
will observe and comply with, and cause each Subsidiary to observe and comply
with, all laws, rules, regulations and orders of any government or government
agency relating to health, safety, pollution, hazardous materials or other
environmental matters to the extent non-compliance could result in a material
liability or otherwise have a material adverse effect on the Borrower and the
Subsidiaries taken as a whole. The Borrower will give the Agent prompt written
notice of any
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violation as to any environmental matter by the Borrower or any Subsidiary and
of the commencement of any judicial or administrative proceeding relating to
health, safety or environmental matters (a) in which an adverse determination or
result could result in the revocation of or have a material adverse effect on
any operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by the Borrower or any Subsidiary which are
material to the operations of the Borrower or such Subsidiary, or (b) which will
or threatens to impose a material liability on the Borrower or such Subsidiary
to any Person or which will require a material expenditure by the Borrower or
such Subsidiary to cure any alleged problem or violation.
Section 5.10. INSPECTION. The Borrower shall permit any Person
designated by the Agent or any Bank to visit and inspect any of the financial
records of the Borrower and the Subsidiaries, to examine the financial records
of the Borrower and the Subsidiaries, to make copies of all records of the
Borrower and the Subsidiaries relating to the Loan Documents, and to discuss the
affairs, finances and accounts of the Borrower and the Subsidiaries with, and to
be advised as to the same by, its officers at such reasonable times and
intervals as the Agent or any Bank may designate. So long as no Event of
Default exists, the expenses of the Agent or the Banks for such visits,
inspections and examinations shall be at the expense of the Agent or the Banks,
but any such visits, inspections and examinations made while any Event of
Default is continuing shall be at the expense of the Borrower.
Section 5.11 MAINTENANCE OF PROPERTIES. The Borrower will
maintain, and cause each Subsidiary to maintain (except to the extent a landlord
of the Borrower or a Subsidiary is required to maintain), its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
ARTICLE VI
NEGATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving
Loans and the Swing-Line Loans shall have expired or been terminated and the Bid
Loan Notes, the Revolving Notes, the Swing-Line Note and all of the other
Obligations have been paid in full, unless the Majority Banks shall otherwise
consent in writing:
Section 6.1. RESTRICTIONS ON FUNDAMENTAL CHANGES. The Borrower
will not, and will not permit any Subsidiary to:
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6.1(a) engage in any business activities or operations
substantially different from or unrelated to those in which it is engaged on the
Closing Date;
6.1(b) enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), except for the merger of any Subsidiary with and
into the Borrower or any other Subsidiary, or for any merger or consolidation to
effectuate an acquisition permitted by Section 6.1(d), as long as the Borrower
or a wholly-owned Subsidiary of the Borrower is the surviving corporation;
6.1(c) convey, sell, lease, transfer or otherwise dispose
of (or enter into any commitment to convey, sell, lease, transfer or otherwise
dispose of), in one or more transactions, all or any part of its business or
assets, whether now owned or hereafter acquired, other than the sale of
inventory in the ordinary course of business, except the Borrower and its
Subsidiaries may dispose of any of their respective assets as long as the
aggregate book value of all assets disposed of by the Borrower and its
Subsidiaries in any fiscal year of the Borrower does not exceed $25,000,000;
6.1(d) acquire by purchase or otherwise all or
substantially all the business or property of, or stock or other evidence of
beneficial ownership of, any Person, if the aggregate amount of the Borrower's
investment (including the amount of Indebtedness incurred) in connection with
all such acquisitions entered into in any fiscal year of the Borrower would
exceed $125,000,000;
6.1(e) enter into any partnership, joint venture or other
combination with any other Person, if (A) the amount of the Borrower's
investment (including the amount of any Indebtedness incurred) in connection
with any such combination would exceed twenty percent (20%) of Borrower's Net
Worth as of the end of its most recently completed fiscal year, or (B) the
aggregate amount of the Borrower's investments (including the amount of any
Indebtedness incurred) in connection with all such combinations entered into
after the Closing Date would exceed thirty percent (30%) of Borrower's Net Worth
as of the end of its most recently completed fiscal year; or
6.1(f) own (in the case of all Subsidiaries, other than the
Guarantor Subsidiaries, if any), in the aggregate, more than twenty-five percent
(25%) of the consolidated assets of the Borrower and its Subsidiaries.
Section 6.2. ACCOUNTING CHANGES. The Borrower will not, and
will not permit any Subsidiary to, make any change in accounting treatment or
reporting practices, except as required by GAAP, that would have a significant
effect on any determination made or required to be made hereunder, or change its
fiscal year or the fiscal year of any Subsidiary.
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Section 6.3. LIENS. The Borrower will not create, incur, assume
or suffer to exist any Lien, or enter into, or make any commitment to enter
into, any arrangement for the acquisition of any property through conditional
sale, lease-purchase or other title retention agreements, with respect to any
property now owned or hereafter acquired by the Borrower, except:
6.3(a) Liens granted to the Banks or to the Agent for the
benefit of the Banks.
6.3(b) Liens existing on the date of this Agreement
disclosed on Schedule 6.3 hereto, and Liens securing any extension or
refinancing thereof that do not secure Indebtedness in an amount greater than
the amount secured by such Liens, or cover any property other than the property
subject to such Liens, in each case immediately prior to such extension or
refinancing.
6.3(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower.
6.3(d) Liens for taxes, fees, assessments and governmental
charges not delinquent or to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of Section 5.4.
6.3(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of business,
for sums not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 5.4.
6.3(f) Liens incurred or deposits or pledges made or given
in connection with, or to secure payment of, indemnity, performance or other
similar bonds.
6.3(g) Liens arising solely by virtue of any statutory or
common law provision relating to buyer's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED THAT (i) such deposit account is not a
dedicated cash collateral account and is not subject to restriction against
access by the Borrower in excess of those set forth by regulations promulgated
by the Board, and (ii) such deposit account is not intended by the Borrower to
provide collateral to the depository institution.
6.3(h) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property and
landlord's Liens under leases on the premises rented, which do not materially
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detract from the value of such property or impair the use thereof in the
business of the Borrower.
6.3(i) The interest of any lessor under any capitalized
lease entered into after the Closing Date or purchase money Liens on property
acquired after the Closing Date; provided, that, such Liens are limited to the
property acquired and do not secure Indebtedness other than the related
capitalized lease obligations or the purchase price of such property.
6.3(j) Liens securing other Indebtedness of the Borrower,
provided the aggregate principal amount of Indebtedness secured by Liens
permitted under Sections 6.3(b), 6.3(i) and this Section 6.3(j) does not at any
time exceed twenty five percent (25%) of the Borrower's Indebtedness.
Section 6.4. NET WORTH. Not at any time permit Net Worth to be
less than the sum of (i) $100,000,000 PLUS (ii) twenty-five percent of the
Borrower's consolidated net income for each fiscal year ended after October 7,
1995, if positive, PLUS (iii) one hundred percent of the amount added to Net
Worth of the Borrower as a result of the issuance and sale by the Borrower of
additional shares of its capital stock after the Closing Date.
Section 6.5. LEVERAGE RATIO. Not at any time permit the
Leverage Ratio to exceed 0.60 to 1.00.
Section 6.6. INTEREST COVERAGE RATIO. Not permit the Interest
Coverage Ratio for any period of four consecutive fiscal quarters ending on the
last day of any fiscal quarter to be less than 1.25 to 1.00.
Section 6.7. TRANSACTIONS WITH AFFILIATES. The Borrower will
not, and will not permit any Subsidiary to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary.
Section 6.8. RESTRICTED PAYMENTS. The Borrower will not, and
will not permit any Subsidiary to, make any Restricted Payments, except that:
(a) the Borrower and any wholly-owned Subsidiary may declare and
make dividend payments or other distributions payable solely in its
common stock;
(b) any Subsidiary may pay cash dividends to the Borrower; and
(c) the Borrower may declare or pay cash dividends to its
shareholders and purchase, redeem or otherwise acquire shares of its
capital stock or
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warrants or options to acquire any such shares for cash PROVIDED that,
before and immediately after giving effect to such action, no Default
or Event of Default exists or would exist; and PROVIDED FURTHER that
the aggregate of all cash paid by the Borrower pursuant to this clause
6.8(c) may not exceed the sum of (i) $50,000,000 PLUS (ii) seventy-
five percent of the Borrower's consolidated net income for each fiscal
year ended after October 7, 1995, if positive.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 EVENTS OF DEFAULT. The occurrence of any one or
more of the following events shall constitute an Event of Default:
7.1(a) Borrower shall fail to pay when due any amounts
required to be paid to the Agent or any Bank pursuant hereto.
7.1(b) Borrower shall fail to perform or observe any other
term, covenant or agreement contained in Section 5.2 or any Section of Article
VI of this Agreement on its part to be performed or observed.
7.1(c) The Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this Agreement
(other than those hereinabove set forth in this Section 7.1) and such failure to
comply shall continue for fifteen calendar days after whichever of the following
dates is the earliest: (i) the date the Borrower gives notice of such failure
to the Agent or the Banks, (ii) the date the Borrower should have given notice
of such failure to the Agent or the Banks pursuant to Section 6.1, or (iii) the
date the Agent or the Majority Banks gives notice of such failure to the
Borrower.
7.1(d) This Agreement shall, at any time after the
execution and delivery hereof, cease to be in full force and effect or shall be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower, or Borrower shall deny that it has any or further
liability or obligation under this Agreement.
7.1(e) Any representation or warranty made by or on behalf
of the Borrower or any Subsidiary in this Agreement or by or on behalf of the
Borrower or any Subsidiary in any certificate, statement, report or document
herewith or hereafter furnished to the Banks or the Agent pursuant to this
Agreement shall prove to have been false or misleading in any material respect
on the date as of which the facts set forth are stated or certified.
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7.1(f) The Borrower or any Subsidiary shall become
insolvent or shall generally not pay its debts as they mature or shall apply
for, shall consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Subsidiary or for a substantial part
of the property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for the
Borrower or a Subsidiary or for a substantial part of the property thereof and
shall not be discharged within 45 days, or the Borrower or any Subsidiary shall
make an assignment for the benefit of creditors.
7.1(g) Any bankruptcy, reorganization, debt arrangement or
other proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower or any Subsidiary, and, if instituted against the
Borrower or any Subsidiary, shall have been consented to or acquiesced in by the
Borrower or such Subsidiary, or shall remain undismissed for 60 days, or an
order for relief shall have been entered against the Borrower or such
Subsidiary.
7.1(h) Any dissolution or liquidation proceeding not
permitted by Section 6.1 shall be instituted by or against the Borrower or a
Subsidiary, and, if instituted against the Borrower or any Subsidiary, shall be
consented to or acquiesced in by the Borrower or such Subsidiary or shall remain
for 45 days undismissed.
7.1(i) A judgment or judgments for the payment of money in
excess of the sum of $10,000,000 in the aggregate shall be rendered against the
Borrower or a Subsidiary and either (i) the judgment creditor executes on such
judgment or (ii) such judgment remains unpaid or undischarged for more than 60
days from the date of entry thereof or such longer period during which execution
of such judgment shall be stayed during an appeal from such judgment.
7.1(j) The maturity of any material Indebtedness of the
Borrower (other than Indebtedness under this Agreement) or a Subsidiary shall be
accelerated, or the Borrower or a Subsidiary shall fail to pay any such material
Indebtedness when due (after the lapse of any applicable grace period) or, in
the case of such Indebtedness payable on demand, when demanded (after the lapse
of any applicable grace period), or any event shall occur or condition shall
exist and shall continue for more than the period of grace, if any, applicable
thereto and shall have the effect of causing, or permitting the holder of any
such Indebtedness or any trustee or other Person acting on behalf of such holder
to cause, such material Indebtedness to become due prior to its stated maturity
or to realize upon any collateral given as security therefor. For purposes of
this Section, Indebtedness of the Borrower or a Subsidiary shall be deemed
"material" if it exceeds $5,000,000 as to any item of Indebtedness or in the
aggregate for all items of Indebtedness with respect to which any of the events
described in this Section 11(j) has occurred.
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7.1(k) Any execution or attachment shall be issued whereby
any substantial part of the property of the Borrower or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 30 days after the issuance thereof.
7.1(l) One or more ERISA Events shall occur and, in
connection therewith, the Borrower shall be obligated to make aggregate payments
in excess of $5,000,000.
7.1(m) A Change of Control shall occur.
Section 7.2 REMEDIES. If (a) any Event of Default described in
Sections 7.1(f), (g) or (h) shall occur with respect to the Borrower , the
Revolving Commitments shall automatically terminate and the Bid Loan Notes, the
Revolving Notes, the Swing-Line Note and all other Obligations shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may, and upon receipt by
the Agent of a request in writing from the Majority Banks, the Agent shall, take
any of the following actions so requested: (i) declare the Revolving Commitments
terminated, whereupon the Revolving Commitments shall terminate and (ii) declare
the outstanding unpaid principal balance of the Bid Loan Notes, the Revolving
Notes, the Swing-Line Note, the accrued and unpaid interest thereon and all
other Obligations to be forthwith due and payable, whereupon the Bid Loan Notes,
the Revolving Notes, the Swing-Line Note, all accrued and unpaid interest
thereon and all such Obligations shall immediately become due and payable, in
each case without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, anything in this Agreement or in the Notes
to the contrary notwithstanding. Upon the occurrence of any of the events
described in clause (a) of the preceding sentence, or upon the occurrence of any
of the events described in clause (b) of the preceding sentence, the Agent may
exercise all rights and remedies under any of the Loan Documents, and enforce
all rights and remedies under any applicable law.
Section 7.3 OFFSET. In addition to the remedies set forth in
Section 7.2, upon the occurrence of any Event of Default and thereafter while
the same be continuing, the Borrower hereby irrevocably authorizes each Bank and
any Affiliate thereof to set off any Obligations owed to such Bank against all
deposits and credits of the Borrower with, and any and all claims of the
Borrower against, such Bank or any Affiliate thereof. Such right shall exist
whether or not such Bank shall have made any demand hereunder or under any other
Loan Document, whether or not the deposits and credits held for the account of
the Borrower is or are matured or unmatured, and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to such Bank or the Banks. Each Bank agrees that, as promptly as is
reasonably possible after the exercise of any such setoff right, it shall notify
the Borrower of its or its Affiliate's exercise of such setoff right;
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provided, however, that the failure of such Bank to provide such notice shall
not affect the validity of the exercise of such setoff rights. Nothing in this
Agreement shall be deemed a waiver or prohibition of or restriction on any Bank
or any Affiliate thereof to all rights of banker's Lien, setoff and counterclaim
available pursuant to law.
ARTICLE VIII
THE AGENT
The following provisions shall govern the relationship of the
Agent with the Banks.
Section 8.1 APPOINTMENT AND AUTHORIZATION. Each Bank appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such respective powers under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted to be taken by it
under or in connection with the Loan Documents, except for its own gross
negligence or willful misconduct. The Agent shall act as an independent
contractor in performing its obligations as Agent hereunder and nothing herein
contained shall be deemed to create any fiduciary relationship among or between
the Agent, the Borrower or the Banks.
Section 8.2 NOTE HOLDERS. The Agent may treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
filed with it, signed by such payee and in form satisfactory to the Agent.
Section 8.3 CONSULTATION WITH COUNSEL. The Agent may consult
with legal counsel selected by it and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
Section 8.4 LOAN DOCUMENTS. The Agent shall not be under a duty
to examine or pass upon the validity, effectiveness, genuineness or value of any
of the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
Section 8.5 FIRST BANK AND AFFILIATES. With respect to its
Revolving Commitment and the Revolving Loan made by it, First Bank shall have
the same rights and powers under the Loan Documents as any other Bank and may
exercise the same as though it were not the Agent consistent with the terms
thereof, and First Bank and its Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with the Borrower as if it were
not the Agent.
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Section 8.6 ACTION BY AGENT. Except as may otherwise be
expressly stated in this Agreement, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, or with respect to taking or refraining from
taking any action or actions which it may be able to take under or in respect
of, the Loan Documents. The Agent shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all holders of Notes; provided, however, that the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to the Loan Documents or applicable law. The Agent shall
incur no liability under or in respect of any of the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties and to be consistent with the terms of this Agreement.
Section 8.7 CREDIT ANALYSIS. Each Bank has made, and shall
continue to make, its own independent investigation or evaluation of the
operations, business, property and condition, financial and otherwise, of the
Borrower in connection with entering into this Agreement and has made its own
appraisal of the creditworthiness of the Borrower. Except as explicitly
provided herein, the Agent has no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other information
with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before the first Event of Default or at any time thereafter.
Section 8.8 NOTICES OF EVENT OF DEFAULT, ETC. In the event that
the Agent shall have acquired actual knowledge of any Event of Default or
Default, the Agent shall promptly give notice thereof to the Banks.
Section 8.9 INDEMNIFICATION. Each Bank agrees to indemnify the
Agent, as Agent (to the extent not reimbursed by the Borrower), ratably
according to such Bank's share of the aggregate Revolving Commitment Amounts
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on or incurred by the Agent in
any way relating to or arising out of the Loan Documents or any action taken or
omitted by the Agent under the Loan Documents, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. No payment by any Bank
under this Section shall relieve the Borrower of any of its obligations under
this Agreement.
Section 8.10 PAYMENTS AND COLLECTIONS. All funds received by
the Agent prior to the termination of the Revolving Commitments in respect of
any
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payments made by the Borrower on the Revolving Notes or Revolving Commitment
Fees shall be distributed forthwith by the Agent among the Banks, in like
currency and funds as received, ratably according to each Bank's Revolving
Percentage. After termination of the Revolving Commitments, all funds received
by the Agent or any of the Banks (except funds received by any Bank as a result
of a purchase pursuant to the provisions of subsection 8.11 hereof) shall be
remitted to the Agent if received by any Bank and applied by the Agent in the
following manner and order:
(a) first, to reimburse the Agent and the Banks for any expenses
due from the Borrower pursuant to the provisions of subsection 9.6
hereof;
(b) second, to the payment to the Agent, of the outstanding
principal balance of, and accrued but unpaid interest on, any
outstanding Swing-Line Loans;
(c) third, to the payment to each Bank of accrued and unpaid
interest on the outstanding Loans and fees, ratably in the proportion
which the aggregate accrued and unpaid interest on the outstanding
Loans and fees payable to such Bank bears to the aggregate accrued and
unpaid interest on all outstanding Loans and fees payable to any and
all of the Banks;
(d) fourth, to the payment to each Bank of the outstanding
unpaid principal balance of the Loans, ratably in accordance with the
proportion which the Loans payable to each Bank have to the Total
Outstandings, in such order as the Agent in its sole discretion may
determine; and
(e) fifth, to the payment to each Bank and the Agent of any
other amount owing under this Agreement or any of the Loan Documents.
Section 8.11 SHARING OF PAYMENTS. If any Bank shall receive and
retain any payment, voluntary or involuntary, whether by setoff, application of
deposit balance or security, or otherwise,
(i) in respect of the Revolving Notes, or
(ii) in respect of the Bid Loan Notes at any time after termination of
the Revolving Commitments,
in excess of such Bank's share thereof as determined under this Agreement, then
such Bank shall purchase from the other Banks for cash and at face value and
without recourse, such participation in the Revolving Notes or Bid Loan Notes
held by such other Banks, as appropriate, as shall be necessary to cause such
excess payment to be shared ratably as aforesaid with such other Banks;
provided, that if such excess payment or part thereof is thereafter recovered
from such purchasing
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Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest. Subject to the participation purchase
obligation above, each Bank agrees to exercise any and all rights of setoff,
counterclaim or banker's lien first fully against any Notes and participations
therein held by such Bank, next to any other Indebtedness of the Borrower to
such Bank arising under or pursuant to this Agreement and to any participations
held by such Bank in Indebtedness of the Borrower arising under or pursuant to
this Agreement, and only then to any other Indebtedness of the Borrower to such
Bank.
Section 8.12 ADVICE TO BANKS. The Agent shall forward to the
Banks copies of all notices, financial reports and other communications received
hereunder from the Borrower by it as Agent, excluding, however, notices, reports
and communications which by the terms hereof are to be furnished by the Borrower
directly to each Bank.
Section 8.13 RESIGNATION. If at any time First Bank shall deem
it advisable, in its sole discretion, it may submit to each of the Banks and the
Borrower a written notification of its resignation as Agent under this
Agreement, such resignation to be effective upon the appointment of a successor
Agent, but in no event later than 30 days from the date of such notice. Upon
submission of such notice, the Majority Banks may appoint a successor Agent.
ARTICLE IX
MISCELLANEOUS
Section 9.1 MODIFICATIONS. Any term of this Agreement may be
amended with the written consent of the Borrower; provided that no amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document or consent to any departure therefrom by the Borrower or other party
thereto shall in any event be effective unless the same shall be in writing and
signed by the Majority Banks, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. (The Agent may enter into amendments or modifications of, and
grant consents and waivers to departure from the provisions of, those Loan
Documents to which the Banks are not signatories without the Banks joining
therein, PROVIDED the Agent has first obtained the separate prior written
consent to such amendment, modification, consent or waiver from the Majority
Banks.) Notwithstanding the forgoing, no such amendment, modification, waiver
or consent shall:
9.1(a) Reduce the rate or extend the time of payment of
interest thereon, or reduce the amount of the principal thereof, or
modify any of the provisions of any Note with respect to the payment
or repayment thereof, without the consent of all the Banks; or
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9.1(b) Increase the amount or extend the time of any
Revolving Commitment of any Bank, without the consent of all the
Banks, or increase the amount or extend the time of the Swing-Line
Loan Facility, without the consent of the Agent and all the Banks; or
9.1(c) Reduce the rate or extend the time of payment of any
fee payable to a Bank, without the consent of all the Banks; or
9.1(d) Except as may otherwise be expressly provided in any
of the other Loan Documents, release any material portion of
collateral securing, or any guaranties for, all or any part of the
Obligations without the consent of all the Banks; or
9.1(e) Amend the definition of Majority Banks or otherwise
reduce the percentage of the Banks required to approve or effectuate
any such amendment, modification, waiver, or consent, without the
consent of all the Banks; or
9.1(f) Amend any of the foregoing Sections 9.1 (a) through
(e) or this Section 9.1 (f) without the consent of all the Banks; or
9.1(g) Amend any provision of this Agreement relating to
the Agent in its capacity as Agent without the consent of the Agent.
Section 9.2 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse the Agent
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Agent (including filing and recording costs and fees and expenses of Dorsey &
Whitney P.L.L.P., counsel to the Agent) in connection with the negotiation,
preparation, approval, review, execution, delivery, administration, amendment,
modification and interpretation of this Agreement and the other Loan Documents
and any commitment letters relating thereto. The Borrower shall also reimburse
the Agent and each Bank upon demand for all reasonable out-of-pocket expenses
(including expenses of legal counsel) paid or incurred by the Agent or any Bank
in connection with the collection and enforcement of this Agreement and any
other Loan Document. The obligations of the Borrower under this Section shall
survive any termination of this Agreement.
Section 9.3 WAIVERS, ETC. No failure on the part of the Agent
or the holder of a Note to exercise and no delay in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The remedies herein and in the
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other Loan Documents provided are cumulative and not exclusive of any remedies
provided by law.
Section 9.4 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent or any Bank under Article II hereof shall be deemed to
have been given only when received by the Agent or such Bank.
Section 9.5 TAXES. The Borrower agrees to pay, and save the
Agent and the Banks harmless from all liability for, any stamp or other taxes
which may be payable with respect to the execution or delivery of this Agreement
or the issuance of the Notes, which obligation of the Borrower shall survive the
termination of this Agreement.
Section 9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; FOREIGN AND
PURCHASING BANKS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Banks, the Agent, all future holders of the Notes,
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("PARTICIPANTS") participating interests in any
Revolving Loan, Bid Loan or other Obligation owing to such Bank, any Revolving
Note or Bid Loan Note held by such Bank, and any Revolving Commitment of such
Bank, or any other interest of such Bank hereunder. In the event of any such
sale by a Bank of participating interests to a Participant, (i) such Bank's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, (ii) such Bank shall remain solely responsible for the
performance thereof, (iii) such Bank shall remain the holder of any such
Revolving Note or Bid Loan Note for all purposes under this Agreement, (iv) the
Borrower and the Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement and
(v) the agreement pursuant to which such
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Participant acquires its participating interest herein shall provide that such
Bank shall retain the sole right and responsibility to enforce the Obligations,
including, without limitation the right to consent or agree to any amendment,
modification, consent or waiver with respect to this Agreement or any other Loan
Document, PROVIDED that such agreement may provide that such Bank will not
consent or agree to any such amendment, modification, consent or waiver with
respect to the matters set forth in Sections 9.1(a) - (c) without the prior
consent of such Participant. The Borrower agrees that if amounts outstanding
under this Agreement, the Revolving Notes, the Bid Loan Notes and the Loan
Documents are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have, to the extent permitted by applicable law, the right of
setoff in respect of its participating interest in amounts owing under this
Agreement and any Revolving Note or other Loan Document to the same extent as if
the amount of its participating interest were owing directly to it as a Bank
under this Agreement or any Revolving Note, Bid Loan Note or other Loan
Document; PROVIDED, that such right of setoff shall be subject to the obligation
of such Participant to share with the Banks, and the Banks agree to share with
such Participant, as provided in subsection 8.11. The Borrower also agrees that
each Participant shall be entitled to the benefits of subsections 2.14, 2.15,
2.16, 2.17, 2.18 and 9.2 with respect to its participation in the Revolving
Commitments and the Revolving Loans; PROVIDED, that no Participant shall be
entitled to receive any greater amount pursuant to such subsections than the
transferor Bank would have been entitled to receive in respect of the amount of
the participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Each Bank may, from time to time, with the consent of
the Agent and the Borrower (neither of which consents shall be unreasonably
withheld), assign to other lenders ("ASSIGNEES") part of the Indebtedness
evidenced by any Revolving Note then held by that Bank, together with an
equivalent proportion of its Revolving Commitments, then held by that Bank,
pursuant to written agreements executed by such assigning Bank, such
Assignee(s), the Borrower and the Agent in substantially the form of Exhibit
9.6, which agreements shall specify in each instance the portion of the
Obligations evidenced by the Revolving Notes which is to be assigned to each
Assignee and the portion of the Revolving Commitments of such Bank to be assumed
by each Assignee (each, an "Assignment Agreement"); PROVIDED, HOWEVER, that
unless the Agent otherwise consents, (i) the amount of the Revolving Commitment
of the assigning Bank being assigned pursuant to each such assignment, and the
amount of the Revolving Commitment (if any) retained by the assigning Bank
(determined in each case as of the effective date of the relevant Assignment
Agreement), shall each in no event be less than $5,000,000, (ii) the amount of
Revolving Commitment assigned to each Assignee (determined in each case as of
the effective date of the relevant Assignment Agreement) shall be an integral
multiple of $1,000,000 and (iii) the assigning Bank must pay to the Agent a
processing and recordation fee of $2,500. Upon the
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<PAGE>
execution of each Assignment Agreement by the assigning Bank, the relevant
Assignee, the Borrower and the Agent, payment to the assigning Bank by such
Assignee of the purchase price for the portion of the Obligations being acquired
by it and receipt by the Borrower of a copy of the relevant Assignment
Agreement, (x) such Assignee lender shall thereupon become a "Bank" for all
purposes of this Agreement with a Revolving Commitment in the amount set forth
in such Assignment Agreement and with all the rights, powers and obligations
afforded a Bank under this Agreement, (y) such assigning Bank shall have no
further liability for funding the portion of its Revolving Commitment assumed by
such Assignee and (z) the address for notices to such Assignee shall be as
specified in the Assignment Agreement executed by it. Concurrently with the
execution and delivery of each Assignment Agreement, the assigning Bank shall
surrender to the Agent the Revolving Note a portion of which is being assigned,
and the Borrower shall execute and deliver a Revolving Note to the Assignee in
the amount of its Revolving Commitment, and a new Revolving Note to the
assigning Bank in the amount of its Revolving Commitment after giving effect to
the reduction occasioned by such assignment, all such Notes to constitute
"Revolving Notes" for all purposes of this Agreement and of the other Loan
Documents
(d) The Borrower shall not be liable for any costs incurred by
the Banks in effecting any participation or assignment under subparagraphs (b)
or (c) of this subsection.
(e) Each Bank may disclose to any Assignee or Participant and to
any prospective Assignee or Participant any and all financial information in
such Bank's possession concerning the Borrower or any of its Subsidiaries which
has been delivered to such Bank by or on behalf of the Borrower or any of its
Subsidiaries pursuant to this Agreement or which has been delivered to such Bank
by or on behalf of the Borrower or any of its Subsidiaries in connection with
such Bank's credit evaluation of the Borrower or any of its Subsidiaries prior
to entering into this Agreement, PROVIDED that prior to disclosing such
information, such Bank shall first obtain the agreement of such prospective
Assignee or Participant to comply with the provisions of Section 9.7 and the
Confidentiality Agreement in connection with such Bank's receipt from the Agent
of the Information Memorandum regarding the Borrower.
Section 9.7 CONFIDENTIALITY OF INFORMATION. Each Bank will
comply with the terms of the Confidentiality Agreement in connection with its
receipt from the Agent of the Information Memorandum regarding the Borrower.
The Agent and each Bank shall use reasonable efforts to assure that information
about the Borrower and its operations, affairs and financial condition, not
generally disclosed to the public or to trade and other creditors, which is
furnished to the Agent or such Bank pursuant to the provisions hereof is used
only for the purposes of this Agreement and any other relationship between any
Bank and the Borrower and shall not be divulged to any Person other than the
Banks, their Affiliates and their
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respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of the rights
of the Banks hereunder and under the Notes or otherwise in connection with
applicable litigation, (c) in connection with assignments and participations and
the solicitation of prospective assignees and participants referred to in the
immediately preceding Section, and (d) as may otherwise be required or
requested by any regulatory authority having jurisdiction over any Bank or by
any applicable law, rule, regulation or judicial process, the opinion of such
Bank's counsel concerning the making of such disclosure to be binding on the
parties hereto. No Bank shall incur any liability to the Borrower by reason of
any disclosure permitted by this Section 9.7.
Section 9.8 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision
of this Agreement and the other Loan Documents and any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto.
Section 9.9 CONSENT TO JURISDICTION. AT THE OPTION OF THE
AGENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN OR RAMSEY COUNTY,
MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN
THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
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Section 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER , THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 9.11 SURVIVAL OF AGREEMENT. All representations,
warranties, covenants and agreement made by the Borrower herein or in the other
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Banks and shall survive
the making of the Loans by the Banks and the execution and delivery to the Banks
by the Borrower of the Notes, regardless of any investigation made by or on
behalf of the Banks, and shall continue in full force and effect as long as any
Obligation is outstanding and unpaid and so long as the Revolving Commitments
have not been terminated; provided, however, that the obligations of the
Borrower under Section 9.2, 9.5 and 9.12 shall survive payment in full of the
Obligations and the termination of the Revolving Commitments.
Section 9.12 INDEMNIFICATION. The Borrower hereby agrees to
defend, protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of the
foregoing being an "Indemnitee" and all of the foregoing being collectively the
"Indemnitees") from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of any Loan Document,
any commitments relating thereto, or any transaction contemplated by
any Loan Document; or
(b) by reason of, relating to or in connection with any
credit extended or used under the Loan Documents or any act done or
omitted by any Person under or with respect to any Loan Document or
any such credit, or the exercise of any rights or remedies thereunder,
including the acquisition of any collateral by the Banks by way of
foreclosure of the Lien thereon, deed or bill of sale in lieu of such
foreclosure or otherwise;
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provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses: (i) resulting
from such Indemnitee's gross negligence or willful misconduct; or (ii) relating
to any Bank's claims against such Indemnitee. In the event this indemnity is
unenforceable as a matter of law as to a particular matter or consequence
referred to herein, it shall be enforceable to the full extent permitted by law.
This indemnification applies, without limitation, to any act,
omission, event or circumstance existing or occurring on or prior to the later
of the Termination Date or the date of payment in full of the Obligations,
including specifically Obligations arising under clause (b) of this Section.
The indemnification provisions set forth above shall be in addition to any
liability the Borrower may otherwise have. Without prejudice to the survival of
any other obligation of the Borrower hereunder the indemnities and obligations
of the Borrower contained in this Section shall survive the payment in full of
the other Obligations.
Section 9.13 CAPTIONS. The captions or headings herein and any
table of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 9.14 ENTIRE AGREEMENT. This Agreement and the other
Loan Documents embody the entire agreement and understanding between the
Borrower, the Agent and the Banks with respect to the subject matter hereof and
thereof. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Nothing contained in this Agreement or
in any other Loan Document, expressed or implied, is intended to confer upon any
Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.
Section 9.15 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 9.16 BORROWER ACKNOWLEDGEMENTS. The Borrower hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b)
neither the Agent nor any Bank has any fiduciary relationship to the Borrower,
the relationship being solely that of debtor and creditor, (c) no joint venture
exists between the Borrower and the Agent or any Bank, and (d) neither the Agent
nor any Bank undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its own
judgment with respect to its business, and any review, inspection or supervision
of, or information
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supplied to, the Borrower by the Agent or any Bank is for the protection of the
Banks and neither the Borrower nor any third party is entitled to rely thereon.
THE REMAINING OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
NASH-FINCH COMPANY
By /s/ Robert F. Nash
----------------------------------
Robert F. Nash
Treasurer and Vice President
Address for Borrower:
7600 France Avenue South
Minneapolis, Minnesota 55435
Attention: Ms. Suzanne Allen
Telecopier No: (612)844-1239
SIGNATURE PAGE TO CREDIT AGREEMENT
S-1
<PAGE>
REVOLVING COMMITMENT
AMOUNT:
$30,000,000 FIRST BANK NATIONAL ASSOCIATION,
As a Bank and as Agent
By /s/ Mark R. Olmon
----------------------------------
Mark R. Olmon
Vice President
Address:
First Bank Place
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Mark R. Olmon, MPFP 0702
Telecopier No: (612) 973-0825
SIGNATURE PAGE TO CREDIT AGREEMENT
S-2
<PAGE>
$20,000,000 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Jeffrey S. Sjolander
----------------------------------
Jeffrey S. Sjolander
Vice President
Address:
Bloomington Office
7900 Xerxes Avenue South
Bloomington, MN 55431-2206
Attention: Jeffrey S. Sjolander
Telecopier No: (612) 830-8924
SIGNATURE PAGE TO CREDIT AGREEMENT
S-3
<PAGE>
$20,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Karen C. Brogan
----------------------------------
Karen C. Brogan
Commercial Banking Officer
Address:
500 W. Madison Street
Suite 3140
Chicago, IL 60661
Attention: Karen C. Brogan
Telecopier No: (312) 906-3420
SIGNATURE PAGE TO CREDIT AGREEMENT
S-4
<PAGE>
$15,000,000 MITSUBISHI BANK, LIMITED
CHICAGO BRANCH
By /s/ Jeffrey R. Arnold
----------------------------------
Jeffrey R. Arnold
Vice President
Address:
5100 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4222
Attention: Jeffrey R. Arnold
Telecopier No: (612) 333-3735
SIGNATURE PAGE TO CREDIT AGREEMENT
S-5
<PAGE>
$15,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry L. Akins
----------------------------------
Terry L. Akins
Senior Vice President
Address:
191 Peachtree Street N. E., 28th Floor
Atlanta, GA 30303
Attention: Terry L. Akins
Telecopier No: (404) 332-6898
SIGNATURE PAGE TO CREDIT AGREEMENT
S-6
<PAGE>
EXHIBIT 1.1
TO CREDIT AGREEMENT
REVOLVING NOTE
$[ ] December 27, 1995
Minneapolis, Minnesota
FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation,
hereby promises to pay to the order of [ ] (the "Bank") at the
main office of First Bank National Association in Minneapolis, Minnesota, in
lawful money of the United States of America in Immediately Available Funds (as
such term and each other capitalized term used herein are defined in the Credit
Agreement hereinafter referred to) on the Revolving Commitment Ending Date, the
principal amount of [
] AND NO/100 DOLLARS ($[ .00]) or, if less, the
aggregate unpaid principal amount of all Advances made by the Bank under the
Credit Agreement, and to pay interest (computed on the basis of actual days
elapsed and a year of 360 days) in like funds on the unpaid principal amount
hereof from time to time outstanding at the rates and times set forth in the
Credit Agreement.
This note is one of the Revolving Notes referred to in the Credit
Agreement dated as of December 27, 1995 (as the same may hereafter be from time
to time amended, restated or otherwise modified, the "Credit Agreement") among
the undersigned, the Bank and the other banks named therein. This note is
subject to certain permissive prepayments and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
NASH-FINCH COMPANY
By
----------------------------------
Robert F. Nash
Treasurer and Vice President
1-1
<PAGE>
EXHIBIT 2.2
FORM OF LOAN REQUEST
_____________________, 199_
First Bank National Association,
as Agent
First Bank Place
601 Second Avenue South
Minneapolis, MInnesota 55402-4302
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Agreement") dated
as of December 27, 1995, among Nash-Finch Company, certain Banks and First Bank
National Association as Agent for the Banks (as the same may be amended,
supplemented or modified, the "Agreement").
Pursuant to the Agreement, the undersigned Financial Officer of the
Borrower hereby certifies as follows:
1. All of the representations and warranties of the Borrower that
were made in connection with the Agreement and the Loan Documents, including but
not limited to the Notes executed thereunder, are true and correct as of the
date hereof to the same extent as if made and given on the date hereof. All
conditions and covenants to the Agreement have been satisfied or complied with.
2. No Default or Event of Default exists on the date hereof.
3. There has been no material adverse change in the condition,
financial or otherwise, of any of the Borrowers or its Subsidiaries.
2.2-1
<PAGE>
[ ] The Borrower hereby requests that on _____________, 199__, the
Banks (make, continue or convert) a (LIBOR Advance or Reference, Rate Advance)
to the Borrower in the principal amount of ______________ dollars ($ ____ ),
which Loan constitutes all or part of Revolving Loan. If the request relates to
a LIBOR Advance, the Borrower agrees that it be (made, continued, converted) for
the following Interest Period: ___________________.
[ ] The Borrower hereby requests that on _______, 199_ the Agent make
a Swing-Line Loan in the principal amount of ______________ dollars ($
__________).
[ ] The Borrower hereby confirms that on _______, 199_, _______, 199_
and _______, 199_, the Borrower requested that the Agent make Swing-Line
Loan(s) in the principal amount of ______________ dollars ($ __________), =
______________ dollars ($ __________) and ______________ dollars ($
__________).
Very truly yours,
NASH-FINCH COMPANY
By:____________________________
Name:__________________________
Title: __________________________
2.2-2
<PAGE>
EXHIBIT 2.21
TO CREDIT AGREEMENT
SWING-LINE NOTE
$10,000,000.00 December 27, 1995
Minneapolis, Minnesota
FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation, hereby
promises to pay to the order of FIRST BANK NATIONAL ASSOCIATION, a national
banking association (the "Bank") at the main office of First Bank National
Association in Minneapolis, Minnesota, in lawful money of the United States of
America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Credit Agreement hereinafter referred to) on
the dates set forth in the Credit Agreement, but in any event no later than the
Revolving Commitment Ending Date, the principal amount of TEN MILLION AND NO/100
DOLLARS ($10,000,000.00) or, if less, the aggregate unpaid principal amount of
all Swing-Line Loans made by the Bank under the Credit Agreement, and to pay
interest (computed on the basis of actual days elapsed and a year of 360 days)
in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement.
This note is the Swing-Line Note referred to in the Credit Agreement
dated as of December 27, 1995 (as the same may hereafter be from time to time
amended, restated or otherwise modified, the "Credit Agreement") among the
undersigned, the Bank and the other banks named therein. This note is subject
to certain permissive prepayments and its maturity is subject to acceleration,
in each case upon the terms provided in said Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
NASH-FINCH COMPANY
By
----------------------------------
Robert F. Nash
Treasurer and Vice President
2.21-1
<PAGE>
EXHIBIT 2.22(b) TO
CREDIT AGREEMENT
[FORM OF BID LOAN TENDER REQUEST NOTICE]
BID LOAN TENDER REQUEST NOTICE
[Date]
To: First Bank National Association (the "Agent")
From: Nash-Finch Company (the "Borrower")
Re: Credit Agreement (the "Agreement") dated as of December 27, 1995
among the Borrower, the Banks named therein and the Agent
We hereby give notice pursuant to subsection 2.22(b) of the Agreement
that we propose a Bid Loan Financing as follows:
Bid Loan Borrowing Date:
Aggregate Principal Amount of Loans
MATURITY DATES (not more than four) FOR EACH MATURITY DATE*
$
**____________
2.22(b)-1
<PAGE>
Interest to be: ___ at a margin over LIBOR, or
___ at a fixed rate.
We confirm that at the date hereof the applicable conditions precedent
set forth in subsections 2.22 and 3.2 of the Agreement relating to, or to be
satisfied by, the Borrower are satisfied as of the date hereof.
NASH-FINCH COMPANY
By:____________________________
Name:__________________________
Title: __________________________
* Aggregate face amount of all Bid Loans for each maturity date may not
be less than $2,000,000 or an integral multiple of $1,000,000 in
excess thereof.
** Aggregate face amount of all Bid Loans may not be less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof.
2.22(b)-2
<PAGE>
EXHIBIT 2.22(c) TO
CREDIT AGREEMENT
[FORM OF INVITATION TO TENDER FOR BID LOANS]
First Bank National Association
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
To: [Name of Addressee Bank]
Re: Invitation to Tender for Bid Loans to Nash-Finch Company (the
"Borrower")
Pursuant to Subsection 2.22 of the Credit Agreement (the "Agreement")
dated as of December 27, 1995 among the Borrower, the Banks named therein and
ourselves as Agent, we are pleased to invite you on behalf of the Borrower to
tender for some or all of the Bid Loans proposed to be made to the Borrower upon
the following terms:
Bid Loan Borrowing Date: ____________
Principal Amount of Loans
Maturity Date for each Maturity Date*
- ------------- -------------------------
$
Interest to be: ___ at a margin over LIBOR, or
___ at a fixed rate.
2.22(c)-1
<PAGE>
All bids made in response to this invitation must comply with the
provisions of Subsection 2.20 of the Agreement and be submitted to the Agent by
telephone so as to be received by the Agent no later than 8:45 a.m. (Minneapolis
time) on the applicable Bid Loan Tender Date at one of the following telephone
numbers:
(612) 973-
(612) 973-
In fairness to all participants and due to the competitive aspect of
the proposed Bid Loan Financing, compliance with the 9:00 a.m. (Minneapolis
time) deadline for receipt will be strictly enforced.
If you have any questions regarding the above, please contract:
_______ (612) 973-___, or
________ at (612) 973-____.
Capitalized terms used herein have the meanings assigned to them in
the Agreement.
Very truly yours,
FIRST BANK NATIONAL ASSOCIATION,
as Agent
Dated: _______ By:____________________________________
Title:_____________________________
* Face amount bid at each interest rate may not exceed face amount
requested for such maturity date. Bids must be made for $2,000,000 or
an integral multiple of $1,000,000 in excess thereof.
2.22(c)-2
<PAGE>
EXHIBIT 2.22(g)
TO CREDIT AGREEMENT
BID LOAN NOTE
$50,000,000.00 December 27, 1995
Minneapolis, Minnesota
FOR VALUE RECEIVED, NASH-FINCH COMPANY, a Delaware corporation, hereby
promises to pay to the order of [ ] (the "Bank") at the main
office of First Bank National Association in Minneapolis, Minnesota, in lawful
money of the United States of America in Immediately Available Funds (as such
term and each other capitalized term used herein are defined in the Credit
Agreement hereinafter referred to) on the dates set out in the Credit Agreement,
but in any event no later than the Revolving Commitment Ending Date, the
principal amount of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) or, if
less, the aggregate unpaid principal amount of all Bid Loans made by the Bank
under the Credit Agreement, and to pay interest (computed on the basis of actual
days elapsed and a year of 360 days) in like funds on the unpaid principal
amount hereof from time to time outstanding at the rates and times set forth in
the Credit Agreement.
This note is one of the Bid Loan Notes referred to in the Credit
Agreement dated as of December 27, 1995 (as the same may hereafter be from time
to time amended, restated or otherwise modified, the "Credit Agreement") among
the undersigned, the Bank and the other banks named therein. This note is
subject to certain permissive prepayments and its maturity is subject to
acceleration, in each case upon the terms provided in said Credit Agreement.
The holder of this Note is hereby authorized to attach to this Note
the separate Bid Loan Schedules delivered to the holder by the Agent and to
record thereon the date and amount of each prepayment of principal, which Bid
Loan Schedules and recordation shall thereupon become a part hereof and shall
constitute prima facie evidence of the accuracy of the information contained
therein; PROVIDED, HOWEVER, that the failure to attach any such Bid Loan
Schedule to the Notes or to make such recordation shall not affect the
obligations of the Borrower under this Note.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice of
protest and notice of dishonor.
2.22(g)-1
<PAGE>
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
NASH-FINCH COMPANY
By
----------------------------------
Robert F. Nash
Treasurer and Vice President
2.22(g)-2
<PAGE>
BID LOAN SCHEDULE
(TO BE ATTACHED TO THE BID LOAN NOTE OF * )
-----------------
BORROWING DATE:
------------------
INITIAL PRINCIPAL
AMOUNT OF BID LOAN: $
-----------------
INTEREST RATE: % per annum
------
MATURITY DATE:
-----------------
RECORD OF PREPAYMENTS
Principal Amount Unpaid Notation
Date Prepaid Principal Balance Made By
- ---- ------- ----------------- -------
- ---------- --------------- ----------------- ---------------
- ---------- --------------- ----------------- ---------------
- ---------- --------------- ----------------- ---------------
- ---------- --------------- ----------------- ---------------
2.22(g)-3
<PAGE>
- ---------- --------------- ----------------- ---------------
- ---------- --------------- ----------------- ---------------
*Insert name of Bank
2.22(g)-4
<PAGE>
EXHIBIT 2.22(h) TO
CREDIT AGREEMENT
WIRE TRANSFER INSTRUCTIONS
First Bank National Association
Minneapolis, MN
ABA No. 091000022
Credit: Commercial Loans Service Center
Account No. 30000472160600
Reference: Nash-Finch
Norwest Bank Minnesota, National Association
Minneapolis, MN
ABA No. 091000019
Commercial Loan Clearing Account
Ref: Nash-Finch
PNC Bank, National Asssociation
Pittsburgh, PA
ABA No. 043000096
Attn: Commercial Loan Department
Re: Nash-Finch Company
Mitsubishi Bank, Ltd. Chicago Branch
A/C FRB of Chicago
Chicago, IL
ABA No. 071002341
Attention: Loan Administration
Reference: Nash-Finch
Wachovia Bank of Georgia, N.A.
Atlanta, GA
ABA No. 061000010
Account No. 18171498
U.S. Corp. MTS
Ref: Nash-Finch
2.22(h)-1
<PAGE>
EXHIBIT 3.1 TO
CREDIT AGREEMENT
MATTERS TO BE COVERED BY
OPINION OF COUNSEL
TO THE BORROWER
The opinion of counsel to the Borrower which is called for
by Article III of the Credit Agreement (the "Credit Agreement") shall be
addressed to the Banks and dated the Closing Date. It shall be satisfactory in
form and substance to the Banks and shall cover the matters set forth below,
subject to such assumptions, exceptions and qualifications as may be acceptable
to the Banks and counsel to the Banks. Capitalized terms used herein have the
respective meanings given such terms in the Credit Agreement.
(i) The Borrower is a corporation duly incorporated and
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on its business as
now conducted, to enter into the Loan Documents and to perform all of its
obligations under each and all of the foregoing.
(ii) The execution, delivery and performance by the
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action by the Borrower.
(iii) The Loan Documents constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
(iv) The execution, delivery and performance by the
Borrower of the Loan Documents will not (i) violate any provision of any law,
statute, rule or regulation or, to the best knowledge of such counsel, any
order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
the Borrower, (ii) violate or contravene any provision of the Certificate of
Incorporation or bylaws of the Borrower, or (iii) result in a breach of or
constitute a default under any indenture, loan or credit agreement or any other
agreement, lease or instrument known to such counsel to which the Borrower is a
party or by which it or any of its properties may be bound or result in the
creation of any Lien thereunder.
(v) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority is required on the part of the Borrower
to
3.1-1
<PAGE>
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
the Loan Documents.
(vi) To the best knowledge of such counsel, there are no
actions, suits or proceedings pending or threatened against or affecting the
Borrower or any of its properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which (i)
challenge the legality, validity or enforceability of the Loan Documents, or
(ii) if determined adversely to the Borrower, would have a material adverse
effect on the business, operations, property or condition (financial or
otherwise) of the Borrower and the Subsidiaries as a consolidated enterprise or
on the ability of the Borrower to perform its obligations under the Loan
Documents.
3.1-2
<PAGE>
EXHIBIT 4.20
SUBSIDIAIRIES OF NASH FINCH COMPANY
(which subsidiaries are included in the
Consolidated Financial Statements of Nash Finch Company)
A. Diret subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subsidiary, 100 percent by Nash Finch Company):
Subsidiary State of
Corporation Incorporation
----------- -------------
Nash-DeCamp Company California
Visalia, California
Piggly Wiggly Northland Corporation Minnesota
Edina, Minnesota
GTL Truck Lines, Inc. Nebraska
Norfolk, Nebraska
B. Direct subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subsidiary, 66.6 percent by Nash Finch Company):
Subsidiary State of
Corporation Incorporation
----------- -------------
Gillette Dairy of the Black Hills, Inc. South Dakota
Rapid City, South Dakota
Nebraska Dairies, Inc. Nebraska
Norfolk, Nebraska
C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned,
with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent
by Nash-DeCamp Company):
Subsidiary State/Country of
Corporation Incorporation
----------- -------------
Forrest Transportation Service, Inc. California
Visalia, California
Agricola Nadco Limitada* Chile
- -------------
*Ninety-nine percent (99%) of Agricola Nadco Limitada
is owned by Nash-DeCamp Company.
<PAGE>
EXHIBIT 5.1 (d) TO
CREDIT AGREEMENT
[FORM OF COMPLIANCE CERTIFICATE]
To: First Bank National Association
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected chief financial officer of NASH-FINCH
COMPANY (the "Borrower");
(2) I have reviewed the terms of the Credit Agreement dated as of
December 27, 1995 among the Borrower, First Bank National Association and
certain Banks named therein (the "Credit Agreement") and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower during the accounting period covered by the
Attachment hereto;
(3) The examination described in paragraph (2) did not disclose, and
I have no knowledge, whether arising out of such examinations or otherwise, of
the existence of any condition or event which constitutes a Default or an Event
of Default (as such terms are defined in the Credit Agreement) during or at the
end of the accounting period covered by the Attachment hereto or as of the date
of this Certificate, except as described below (or on a separate attachment to
this Certificate). The exceptions listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
the Borrower has taken, is taking or proposes to take with respect to each such
condition or event are as follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The foregoing certification, together with the computations in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _ day of ___________, 199__,
pursuant to Section 5.1 (d) of the Credit Agreement.
NASH-FINCH COMPANY
By______________________________
Name____________________________
Title __________________________
5.1(d)-1
<PAGE>
ATTACHMENT TO COMPLIANCE CERTIFICATE
AS OF ___________, 199__ WHICH PERTAINS
TO THE PERIOD FROM ___________, 199__
TO ____________, 199__
1. Minimum Net Worth (Section 6.4) $__________
(Sum of $100,000,000, plus $________________ (25% of consolidated net
income since October 7, 1995) plus $_____________ (all additions to Net
Worth due to sales of stock after Closing Date)
2. Actual Net Worth $__________
3. Net Worth In Excess (Below) Requirement $__________
(Line 2 minus Line 1)
4. Indebtedness $__________
(Sum of interest bearing debt ($_____________________), capitalized leases
($__________), Contingent Obligations ($_____________) and other
Indebtedness ($__________)).
5. Total Capitalization $__________
(Sum of Line 2 plus Line 4)
6. Leverage Ratio (Maximum 0.60 to 1.0) __ to 1.0
(Section 6.5; ratio of Line 4 to Line 5)
7. Earnings Before Interest and Taxes $__________
8. Interest Expense $__________
3. Interest Coverage Ratio (Minimum 1.25 to 1.0) __ to 1.0
(Section 6.6; ratio of Line 7 to Line 8)
<PAGE>
EXHIBIT 6.3
LIENS AGAINST NASH FINCH COMPANY PROPERTY
<TABLE>
<S> <C>
MORTGAGE LOANS:
Metropolitan Life Ins. (Dubuque) $1,295,925
Royal Neighbors (Cedar Rapids) 3,415,501
Schuft Trust (Rapid City) 345,499
Evleco (Fargo Warehouse) 2,812,543
American Federal S&L (Marion, IA) 14,754
Spooner, WI 392,247
Nash DeCamp Company 199,008
Food Folks (North Carolina) 209,695
TOTAL MORTGAGE LOAN $8,685,172
----------
----------
INDUSTRIAL DEVELOPMENT BONDS:
City of Appleton, WI $ 600,000
City of Bluefield, VA 600,000
City of Minot, ND 1,100,000
City of Rapid City, SD 2,385,000
City of Spooner, WI 940,000
TOTAL IRB $5,625,000
----------
----------
</TABLE>
Amounts are as of October 7, 1995.
<PAGE>
EXHIBIT 9.6
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT, dated as of 199 ,
among ____________ (the "TRANSFEROR BANK"), _____________ (the "PURCHASING
BANK"), Nash-Finch Company, a Delaware corporation (the "BORROWER") and First
Bank National Association, as Agent for the Banks under the Credit Agreement
described below (in such capacity, the "AGENT").
W I T N E S S E T H
WHEREAS, this Assignment Agreement is being executed and delivered in
accordance with subsection 9.6(c) of the Credit Agreement, dated as of December
27, 1995, among the Borrower, the Transferor Bank and the other Banks parties
thereto, and the Agent (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms
defined therein being used herein as therein defined);
WHEREAS, the Purchasing Bank (if it is not already a Bank party to the
Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to the Purchasing
Bank rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon the execution and delivery of this Assignment Agreement by the
Purchasing Bank, the Transferor Bank, the Agent [and the Borrower], the
Purchasing Bank [shall be] [shall continue to be] a Bank party to the Credit
Agreement for all purposes thereof.
2. Prior to the execution and delivery of this Assignment Agreement, the
Transferor Bank's and the Purchasing Bank's Revolving Commitment Amounts were
$____________ and $___________, respectively (the "Original Revolving
Commitments"). Upon the execution and delivery of this Assignment Agreement,
the Revolving Commitment Amounts of the Transferor Bank and the Purchasing Bank
shall be $________ and $__________, respectively, and the sum of their Revolving
Commitment Amounts shall equal the Original Revolving Commitments. Prior to the
execution and delivery of this Assignment Agreement, the Transferor Bank's and
the Purchasing Bank's Revolving Percentages were
9.6-1
<PAGE>
_____ and _____, respectively (the "Original Revolving Percentages"). Upon the
execution and delivery of this Assignment Agreement, the Revolving Percentages
of the Transferor Bank and the Purchasing Bank shall be ______ and ______,
respectively, and the sum of their Revolving Percentages shall equal the
Original Revolving Percentages. The Transferor Bank acknowledges receipt from
the Purchasing Bank of an amount equal to the purchase price, as agreed between
the Transferor Bank and such Purchasing Bank, of the portion of the Transferor
Bank's Revolving Commitment being purchased by such Purchasing Bank (the
"PURCHASED COMMITMENT"). The Transferor Bank hereby irrevocably sells, assigns
and transfers to the Purchasing Bank, without recourse, representation or
warranty, and the Purchasing Bank hereby irrevocably purchases, takes and
assumes from the Transferor Bank, the Purchased Commitment and the appropriate
portion of all presently outstanding Revolving Loans and other amounts owing to
the Transferor Bank under the Credit Agreement and the Transferor Bank's
Revolving Note, together with all guarantees thereof and all collateral security
therefor and all instruments and documents pertaining thereto.
3. The Transferor Bank has made arrangements with the Purchasing Bank
with respect to the portion, if any, to be paid by the Transferor Bank to the
Purchasing Bank of fees heretofore received by the Transferor Bank pursuant to
the Credit Agreement.
4. From and after the date hereof, principal, interest, fees and other
amounts that would otherwise be payable to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Transferor Bank's Revolving Note
shall, instead, be payable to or for the account of the Transferor Bank and the
Purchasing Bank, as the case may be, in accordance with their respective
interests as reflected in this Assignment Agreement, whether such amounts have
accrued prior to the date hereof or accrue subsequent to the date hereof.
5. Concurrently with the execution and delivery hereof, (i) the Borrower,
the Transferor Bank and the Purchasing Bank shall make appropriate arrangements
so that a replacement Revolving Note is issued to the Transferor Bank (unless it
has transferred its entire Revolving Commitment), and a new Revolving Note is
issued to the Purchasing Bank, in each case in principal amounts reflecting, in
accordance with the Credit Agreement, their Revolving Commitments (as adjusted
pursuant to this Assignment Agreement), and (ii) the Transferor Bank shall pay
to the Agent a processing and recordation fee of [$2,500].
6. Concurrently with the execution and delivery hereof, the Agent will,
at the expense of the Transferor Bank, provide to the Purchasing Bank (if it is
not already a Bank party to the Credit Agreement) conformed copies of all
documents delivered to the Agent on the date of the initial Loans under the
Credit Agreement in satisfaction of the conditions precedent set forth in the
Credit Agreement.
9.6-2
<PAGE>
7. Each of the parties to this Assignment Agreement agrees that at any
time and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Assignment Agreement.
8. The address for notices to the Purchasing Bank as well as
administrative information with respect to the Purchasing Bank is as set out
below:
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date first set forth above.
__________________________________,
Transferor Bank
By:________________________________
Name:______________________________
Title: ____________________________
__________________________________,
as Purchasing Bank
By:_______________________________
Name:_____________________________
Title: ___________________________
9.6-3
<PAGE>
FIRST BANK NATIONAL ASSOCIATION,
as Agent
By:_______________________________
Name:_____________________________
Title: ___________________________
CONSENTED AND ACKNOWLEDGED
NASH-FINCH COMPANY
By:_______________________________
Name:_____________________________
Title: ___________________________
[Required only when Purchasing Bank
is not already a Bank]
9.6-4
<PAGE>
EXHIBIT 10.10
NASH-FINCH COMPANY
PROFIT SHARING PLAN
1994 REVISION
SECOND DECLARATION OF AMENDMENT
Pursuant to the retained power of amendment contained in Section 11.1 of the
Nash-Finch Company Profit Sharing Plan -- 1994 Revision, in conjunction with the
sale by the Company of all of the issued and outstanding capital stock of Thomas
& Howard Company of Hickory, Inc. (Thomas & Howard), the undersigned hereby
amends the Plan in the following manner:
"Notwithstanding any other provision of Section 3.2 of the Plan to the
contrary if the sale by the Company of all of the issued and outstanding
capital stock of Thomas & Howard closes before December 31, 1995 -
(1) Each individual who had entered the Plan as a Participant for the
purpose of being eligible to share in his or her Participating
Employers Profit Sharing Contribution on or before October 1, 1995 and
received Eligible Earnings from Thomas & Howard for the portion of the
1995 Plan Year ending on December 2, 1995 will be eligible to share in
Thomas & Howard's Profit Sharing Contribution, if any, for the 1995
Plan Year if he or she (a) either actually satisfied as of December 2,
1995 the condition set forth in Section 3.2(B)(3) of the Plan or would
have satisfied such condition had he or she continued to perform
services for an Affiliated Organization through December 31, 1995 in
accordance with his or her regular work schedule in effect as of
December 2, 1995 and (b) would satisfy the condition set forth in
Section 3.2(B)(4) of the Plan if 'December 2, 1995' were substituted
for 'last day of the Plan Year' therein; and
(2) Any Thomas & Howard Profit Sharing Contribution for the 1995 Plan Year
will be allocated among the Profit Sharing Accounts of eligible
Participants so that each such Participant's share of the contribution
bears the same ratio to the total contribution as his or her Eligible
Earnings from Thomas & Howard for the portion of the 1995 Plan Year
ending on December 2, 1995 bears to the aggregate Eligible Earnings
from Thomas & Howard for such portion of the Plan Year for all such
eligible Participants."
The foregoing amendment is effective as of the date of this instrument. In
light of the nature of the amendment, the amendment will not be permanently
incorporated into the Plan document but this instrument nevertheless constitutes
part of the Plan document.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized officers this 1st day of December, 1995.
NASH-FINCH COMPANY
Attest: By
------------------------------ ------------------------------
Secretary President
<PAGE>
EXHIBIT 10.13
EXCERPTS FROM MINUTES OF
BOARD OF DIRECTORS MEETING OF
NASH FINCH COMPANY ON
FEBRUARY 13, 1996
WHEREAS, the Arbitrary Pension Plan No. 1 Supplement (the "Unfunded Plan")
to the Nash Finch Company Profit Sharing Plan, as restated by resolution
adopted by this Board of Directors on November 11, 1996, and amended by
resolution adopted by this Board of Directors on April 25, 1995, provides
for the payment of benefits to certain eligible retirees; and
WHEREAS, the Compensation Committee of this Board of Directors (the
"Compensation Committee") has concluded that the underlying purposes for
which the Unfunded Plan was established have basically been or are being
satisfied, and has recommended that this Board of Directors take certain
actions regarding eligibility for participation in the Unfunded Plan and
the determination of annual additional payments thereunder;
RESOLVED, that the following rules be and hereby are adopted, effective
immediately, concerning interpretation and administration of the Unfunded
Plan:
1. Concerning Paragraph 1 of the Unfunded Plan, as amended, eligibility
for participation shall be limited to (a) those persons who have
retired and are receiving, or are eligible to receive, benefits under
the Unfunded Plan, and (b) any person who, if still employed, has
previously been determined to be eligible to participate upon
retirement based upon the position held by such person on January 2,
1966.
2. Concerning the additional annual payment provided for in
Paragraphs 3(c) and 5 of the Unfunded Plan, the amount of such payment
for 1996 and future years shall not be increased, as compared to the
amount paid for the prior year, by a factor greater than the
percentage increase in the Consumer Price Index (All Items) for the
appropriate period.
RESOLVED FURTHER, that this Board of Directors hereby delegates to the
chief executive officer of the Company the authority to exercise its right
to declare additional payments under the Unfunded Plan, as provided in
Paragraph 6 thereof, in accordance with the foregoing policy concerning
such payments.
<PAGE>
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.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Total Revenues . . . . . . . . . . 100.0% 100.0% 100.0%
----- ----- -----
----- ----- -----
Gross Margin . . . . . . . . . . . 14.5 14.9 14.6
Operating Expense. . . . . . . . . 12.1 12.5 12.2
Depreciation and Amortization. . . 1.0 1.1 1.1
Interest Expense . . . . . . . . . .4 .4 .4
Earnings before Income Taxes . . . 1.0 .9 .9
Income Taxes . . . . . . . . . . . .4 .4 .4
----- ----- -----
Net Earnings . . . . . . . . . . . .6 .5 .5
----- ----- -----
----- ----- -----
</TABLE>
REVENUES
Total revenues increased 2.0% during fiscal 1995 to $2.889 billion compared to
$2.832 billion in 1994 and $2.724 billion in 1993. The increase in 1995 is
largely attributable to continued growth of the military wholesale business from
two distribution centers on the east coast and the addition of several new
independent retail accounts during the year.
Wholesale segment revenues increased 6.2% to $1.969 billion from $1.855
billion in 1994. The sale of Thomas & Howard of Hickory, Inc. ("T & H"), the
Company's convenience store distributor, on December 2, 1995, had a negative
effect on revenue gains for the year. Had the sale taken place as of year end,
revenues would have been $20 million higher. The volume lost as a result of the
T & H divestiture is expected to be more than offset in fiscal 1996 by the
acquisition of Military Distributors of Virginia ("MDV"), which was completed
January 2, 1996. Fiscal 1994 wholesale revenues increased 1.0% over 1993 due to
the addition of new store accounts in the Southeast.
Retail segment revenues declined 7.1% from $926 million in fiscal 1994 to
$860 million in 1995. The reduction is primarily the result of the sale of three
stores to existing independent customers and the closing of eight stores which
were not meeting the Company's revenue and profit expectations. In spite of low
food price inflation, deflation in some product groups and increasing
competitive pressures in certain market areas, same store sales remained
constant compared to last year. Retail revenues during 1994 increased 10% over
1993 largely due to the the acquisition of 23 Food Folks stores in North
Carolina and six supermarkets in eastern Kentucky.
GROSS MARGINS
Gross margins were 14.5% in 1995 compared to 14.9% in 1994 and 14.6% in 1993.
The decline reflects a growing proportion of wholesale revenues which achieve
lower margins than retail. Wholesale revenues represented 68.4% of total
revenues compared to 65.7% of total revenues last year. Although consolidated
gross margins are lower, both wholesale and retail margins have improved
compared to last year. Centralization of buying functions for several warehouses
and increased margins on perishable products contributed to improved margins at
the wholesale level. Further centralization of buying functions in fiscal 1996
should result in operational efficiencies and lower product costs. Overall
retail margin improvements resulted from a greater sales mix of higher margin
specialty departments in the stores. In 1994, retail margin improvements were
attributed to the acquisition of a number of smaller conventional stores which
operate at higher margins than larger warehouse-type stores.
The LIFO charge for the year was $.1 million compared to $1.4 million in
1994 and a credit of $2.0 million in 1993. The current year charge is net of a
$1.5 million credit related to a reduction in inventory levels by T & H prior to
the sale of this subsidiary. The credit recognized in fiscal 1993 reflected the
price declines initiated by tobacco companies during that year.
OPERATING EXPENSES
Operating expenses as a percent of total revenues were 12.1% in 1995 compared to
12.5% and 12.2% in 1994 and 1993, respectively. Expense levels this year were
favorably impacted by an increasing proportion of wholesale business which
typically operates at lower expense levels than retail. Productivity gains and
tighter cost controls at the wholesale level also contributed to a reduction in
overall expenses compared to last year.
Operating expenses were negatively affected by a pretax provision of $1.6
million for continuing lease costs related to two closed stores. In addition,
when comparing 1995 to 1994, the Company incurred an additional $3.6 million in
information systems costs, largely related to preliminary research
and initial project development of new computer systems.
The upward trend in these computer-related costs is expected to continue
through fiscal 1996 as further development occurs and the project moves toward
implementation in late 1996 and throughout fiscal 1997.
In 1994, operating expenses increased over 1993 due to a higher proportion
of business by the Company owned retail stores.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense decreased 7.6% from 1994 expense levels.
The decline reflects the reduction in the number of corporate stores owned,
lower capital expenditures and several significant projects still in progress at
the end of the fiscal year. The increase in 1994 compared to 1993 was primarily
due to the full year depreciation and amortization costs resulting from the
acquisition of the Easter supermarket chain in mid-year 1993.
INTEREST EXPENSE
Interest expense decreased 5.2% in 1995 due to a reduction in average short-term
borrowings. Although average borrowing rates increased compared to last year,
proceeds from both the sale of notes receivables and the T & H operation
significantly reduced borrowing requirements in the second half of the year. As
a percent of revenues, interest expense was .37%, .40% and .37% for 1995, 1994
and 1993, respectively.
EARNINGS BEFORE TAXES
Earnings before income taxes increased 10.8% compared to fiscal 1994. Wholesale
performance improved due to the growth in military business, new independent
customers and better expense controls. Retail segment results were negatively
impacted by continuing competitive pressures and store closing costs. Nash
DeCamp, the Company's produce marketing subsidiary showed improved earnings from
both its domestic and South American farming operations over last year, when an
excessive supply of quality product depressed product prices. Also, the sale of
T & H capital stock resulted in the recognition of a pretax gain of $1.8 million
this year, with an additional $1.7 million in consulting fees to be recognized
over the next three years.
14
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
INCOME TAXES
The effective tax rate decreased to 39.1% in 1995 from 40.0% in 1994 and 40.5%
in 1993. The reduction was due to the utilization of available capital loss
carryforwards to partially offset the taxable gain from the sale of T & H. The
effective tax rate is expected to return to previous levels in 1996.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its capital needs through a combination
of internal and external sources. These sources include cash flow from
operations, short-term bank borrowings, various types of long-term debt, leasing
and equity financing. As external financing is required in the future, the
Company believes that its debt structure and financial position will continue to
support its ability to obtain the required funds.
Cash provided from operating activities was $75.4 million in 1995, an
increase of $39.1 million over 1994. Improved asset management as well as the
sale of T & H for cash, contributed largely to an overall reduction in the
non-cash elements of working capital. As a result, working capital at December
30, 1995 of $104.0 million included cash and cash equivalents of $26.0 million.
In addition, the sale or closing of a number of corporate stores during 1995
also contributed to the increase in positive cash flow from operations. In
fiscal 1994, cash provided from operations decreased $46.6 million from the 1993
levels due primarily to the net increase in working capital, particularly
inventories.
At December 30, 1995 the Company had no outstanding short-term borrowings
compared to $41.4 million and $38.3 million at the end of 1994 and 1993,
respectively. The Company has committed lines of credit totaling $7.5 million
and uncommitted lines of $47.5 million with a number of banks.
On December 27, 1995, the Company entered into a 5-year, $100.0 million
revolving credit facility with several participating banks. This financing was
placed to provide sufficient funding for acquisitions, capital projects and
working capital requirements. Management believes the Company will continue to
have adequate access to short-term and long-term credit to meet its needs in the
foreseeable future.
Capital projects designed to maintain operating capacity, expand operations
or improve efficiency totaled $33.3 million in 1995 compared to $34.9 and $36.4
in 1994 and 1993, respectively. These projects have typically been funded
through operating cash flows. For 1996, capital spending is projected to be
$62.1 million, a substantial increase over 1995 due to several retail store
replacements, expansions and remodels, and information systems improvements.
During 1995, the Company provided financial assistance
in the form of secured loans totaling $9.2 million to new or existing
independent retailers. These loans are generally used to maintain and grow their
businesses. In September 1995, the Company established an on-going agreement
with a bank to sell qualified customer notes at face value with recourse.
Dividend payments in 1995 were $.74 per share, up from $.73 in 1994. These
amounts represented 46% and 51% of net earnings in each year, respectively.
Return on average stockholders' equity was 8.3% in 1995, up from 7.6% in 1994.
PRICE RANGE OF COMMON STOCK
AND DIVIDENDS
- -------------------------------------------------------------------------------
NASH Finch Company Common Stock is traded in the national over-the-counter
market under the symbol NAFC. The following table sets forth, for each of the
calendar periods indicated, the range of high and low closing sales prices for
the Common Stock as reported by the NASDAQ National Market System, and the cash
dividends paid per share of Common Stock. Prices do not include adjustments for
retail mark-ups, mark-downs or commissions. At December 31, 1995 there were
1,940 stockholders of record.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Dividends
1995 1994 Per Share
-------------- ---------------- -------------------
HIGH LOW High Low 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter. . . . . . . . . . . 16 3/4 15 1/4 18 1/4 16 .18 .18
Second Quarter . . . . . . . . . . 16 3/4 15 5/8 18 16 .18 .18
Third Quarter. . . . . . . . . . . 20 1/2 16 18 16 1/4 .18 .18
Fourth Quarter . . . . . . . . . . 19 15/16 17 1/4 17 15 3/8 .20 .19
- --------------------------------------------------------------------------------------------------
</TABLE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
A SUMMARY OF QUARTERLY FINANCIAL FIRST QUARTER SECOND QUARTER
INFORMATION IS PRESENTED. 12 WEEKS 12 WEEKS
----------------------- ------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and other revenues . . . $ 623,598 618,165 676,514 670,362
Cost of sales. . . . . . . . . . . 534,312 527,696 575,582 566,167
Earnings before income taxes . . . 4,519 4,320 9,835 8,761
Income taxes . . . . . . . . . . . 1,830 1,749 3,983 3,549
Net earnings . . . . . . . . . . . 2,689 2,571 5,852 5,212
Percent to sales and revenues. . . .43 .41 .86 .78
Net earnings per share . . . . . . $ .25 .24 .54 .48
Average number of
shares outstanding. . . . . . . 10,874 10,872 10,875 10,872
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
A SUMMARY OF QUARTERLY FINANCIAL THIRD QUARTER FOURTH QUARTER
INFORMATION IS PRESENTED. 16 WEEKS 12 Weeks
-------------------- ------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and other revenues . . . 918,825 886,956 669,899 656,517
Cost of sales. . . . . . . . . . . 785,623 754,113 574,324 562,316
Earnings before income taxes . . . 8,491 6,806 5,750 5,923
Income taxes . . . . . . . . . . . 3,439 2,756 1,929 2,276
Net earnings . . . . . . . . . . . 5,052 4,050 3,821 3,647
Percent to sales and revenues. . . .55 .46 .57 .56
Net earnings per share . . . . . . .46 .37 .35 .33
Average number of
shares outstanding . . . . . . . . 10,875 10,874 10,877 10,874
- -------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Fiscal years ended December 30, 1995,
December 31, 1994 and January 1, 1994 1995 1994 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . $2,831,114 2,779,330 2,679,410
Other revenues. . . . . . . . . . . . . . . . . . . . . . . 57,722 52,670 44,125
---------- ---------- ----------
Total revenues. . . . . . . . . . . . . . . . . . . . . 2,888,836 2,832,000 2,723,535
COST AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . 2,469,841 2,410,292 2,325,249
Selling, general and administrative,
and other operating expenses. . . . . . . . . . . . . . 350,201 352,683 332,349
Depreciation and amortization . . . . . . . . . . . . . . . 29,406 31,831 29,145
Interest expense. . . . . . . . . . . . . . . . . . . . . . 10,793 11,384 10,114
---------- ---------- ----------
Total costs and expenses. . . . . . . . . . . . . . . . 2,860,241 2,806,190 2,696,857
Earnings before income taxes. . . . . . . . . . . . . . 28,595 25,810 26,678
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 11,181 10,330 10,804
---------- ---------- ----------
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $ 17,414 15,480 15,874
---------- ---------- ----------
---------- ---------- ----------
Weighted average number of common shares outstanding . . . . . 10,875 10,873 10,872
---------- ---------- ----------
---------- ---------- ----------
Earnings per share . . . . . . . . . . . . . . . . . . . . . . $ 1.60 1.42 1.46
---------- ---------- ----------
---------- ---------- ----------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
INDEPENDENT AUDITORS' REPORT [LOGO] ERNST & YOUNG LLP
- -------------------------------------------------------------------------------
The Board of Directors and Stockholders
Nash Finch Company
We have audited the accompanying consolidated balance sheet of Nash Finch
Company and Subsidiaries as of December 30, 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Nash Finch Company
for the years ended December 31, 1994 and January 1, 1994, were audited by other
auditors whose report dated March 3, 1995, expressed an unqualified opinion on
those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1995 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Nash
Finch Company and subsidiaries at December 30, 1995,
and the consolidated results of their operations and their cash flows for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
February 19, 1996
16
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Fiscal years ended December 30, 1995,
December 31, 1994, and January 1, 1994 1995 1994 1993
(IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $17,414 15,480 15,874
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . 29,406 31,831 29,145
Provision for bad debts . . . . . . . . . . . . . . . . 3,997 2,187 10,146
Provision for (recovery from) losses on
closed lease locations. . . . . . . . . . . . . . . . 1,361 366 (499)
Deferred income taxes . . . . . . . . . . . . . . . . . (4,187) 2,874 (4,395)
Deferred compensation . . . . . . . . . . . . . . . . . (901) (539) (573)
Earnings of equity investments. . . . . . . . . . . . . (501) (902) (1,534)
Other . . . . . . . . . . . . . . . . . . . . . . . . . (157) (545) 65
Changes in operating assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . 8,115 (9,418) (161)
Inventories . . . . . . . . . . . . . . . . . . . . . . 14,680 (6,880) 26,464
Prepaid expenses. . . . . . . . . . . . . . . . . . . . (3,441) (1,087) (411)
Accounts payable. . . . . . . . . . . . . . . . . . . . 4,990 2,631 6,238
Accrued expenses. . . . . . . . . . . . . . . . . . . . 2,160 2,553 5,385
Income taxes. . . . . . . . . . . . . . . . . . . . . . 2,508 (2,172) (2,785)
-------- --------- --------
Net cash provided by operating activities . . . . . . 75,444 36,379 82,959
-------- --------- --------
INVESTING ACTIVITIES:
Dividends received. . . . . . . . . . . . . . . . . . . 890 618 506
Disposals of property, plant and equipment. . . . . . . 14,858 12,501 13,435
Additions to property, plant and equipment
excluding capital leases . . . . . . . . . . . . . . . (33,264) (34,965) (36,382)
Businesses acquired . . . . . . . . . . . . . . . . . . -- (8,614) (27,087)
Investment in an affiliate. . . . . . . . . . . . . . . (1,379) -- --
Loans to customers. . . . . . . . . . . . . . . . . . . (9,199) (7,958) (15,942)
Payments from customers on loans. . . . . . . . . . . . 8,788 8,093 8,286
Loans sold including current portion. . . . . . . . . . 13,744 -- --
Other . . . . . . . . . . . . . . . . . . . . . . . . . (137) (902) (261)
-------- --------- --------
Net cash used in investing activities . . . . . . . (5,699) (31,227) (57,445)
-------- --------- --------
FINANCING ACTIVITIES:
Dividends paid. . . . . . . . . . . . . . . . . . . . . (8,048) (7,938) (7,828)
Proceeds (payments) of short-term debt. . . . . . . . . (41,400) 3,100 (9,200)
Proceeds from long-term debt. . . . . . . . . . . . . . 352 -- --
Payments of long-term debt. . . . . . . . . . . . . . . (5,568) (2,933) (2,352)
Payments of capitalized lease obligations . . . . . . . (540) (1,576) (458)
Other . . . . . . . . . . . . . . . . . . . . . . . . . 56 35 14
-------- --------- --------
Net cash used in financing activities. . . . . . . . (55,148) (9,312) (19,824)
-------- --------- --------
Net increase (decrease) in cash. . . . . . . . . . . $14,597 (4,160) 5,690
-------- --------- --------
-------- --------- --------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
17
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
DECEMBER 30, 1995 AND DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 26,024 1,078
Accounts and notes receivable, net. . . . . . . . . . . . . 85,968 98,859
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 183,957 198,637
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . 12,067 8,626
Deferred tax assets . . . . . . . . . . . . . . . . . . . . 3,674 2,322
-------- --------
Total current assets. . . . . . . . . . . . . . . . . . 311,690 309,522
Investments in affiliates. . . . . . . . . . . . . . . . . . . 8,421 7,432
Notes receivable, noncurrent . . . . . . . . . . . . . . . . . 5,051 16,441
PROPERTY, PLANT AND EQUIPMENT:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,638 27,556
Buildings and improvements. . . . . . . . . . . . . . . . . 110,887 107,149
Furniture, fixtures, and equipment. . . . . . . . . . . . . 204,054 214,564
Leasehold improvements. . . . . . . . . . . . . . . . . . . 25,786 28,205
Construction in progress. . . . . . . . . . . . . . . . . . 6,538 2,039
Assets under capitalized leases . . . . . . . . . . . . . . 12,923 12,423
-------- --------
388,826 391,936
Less accumulated depreciation and amortization. . . . . . . (210,787) (204,985)
-------- --------
Net property, plant and equipment . . . . . . . . . . . 178,039 186,951
Intangible assets, net. . . . . . . . . . . . . . . . . . . 6,282 7,810
Deferred tax asset -- net . . . . . . . . . . . . . . . . . 2,835 --
Other assets. . . . . . . . . . . . . . . . . . . . . . . . 1,942 3,448
-------- --------
Total assets. . . . . . . . . . . . . . . . . . . . . . $514,260 531,604
-------- --------
-------- --------
- ----------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
18
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Outstanding checks, net of cash in banks. . . . . . . . . . $ 28,998 18,649
Short-term debt payable to banks. . . . . . . . . . . . . . -- 41,400
Current maturities of long-term debt and
capitalized lease obligations . . . . . . . . . . . . . . 14,701 5,685
Accounts payable. . . . . . . . . . . . . . . . . . . . . . 127,592 122,602
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . 31,745 29,585
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 4,652 2,144
-------- --------
Total current liabilities. . . . . . . . . . . . . . . . 207,688 220,065
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 71,030 85,289
Capitalized lease obligations. . . . . . . . . . . . . . . . . 10,158 10,671
Deferred compensation. . . . . . . . . . . . . . . . . . . . . 7,625 8,526
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,446 784
STOCKHOLDERS' EQUITY:
Preferred stock -- no par value
Authorized 500 shares; none issued. . . . . . . . . . . . -- --
Common stock of $1.66 2/3 par value
Authorized 25,000 shares, issued 11,224 shares in
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 18,706 18,706
Additional paid-in capital. . . . . . . . . . . . . . . . . 12,013 11,977
Foreign currency translation adjustment--
net of a $623 deferred tax benefit. . . . . . . . . . . . (950) (572)
Retained earnings . . . . . . . . . . . . . . . . . . . . . 188,578 179,212
-------- --------
218,347 209,323
Less cost of 346 shares and 349 shares of
common stock in treasury, respectively. . . . . . . . . . (3,034) (3,054)
-------- --------
Total stockholders' equity. . . . . . . . . . . . . . . 215,313 206,269
-------- --------
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . -- --
-------- --------
Total liabilities and stockholders' equity. . . . . . . $514,260 531,604
-------- --------
-------- --------
- ----------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Fiscal period ended December 30, 1995
December 31, 1994 and January 1, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Common stock Additional
------------------- paid-in Retained
Shares Amount capital earnings
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 2, 1993 . . . . . . . . . 11,224 $18,706 11,944 163,624
Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,874
Dividend declared of $.72 per share. . . . . -- -- -- (7,828)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- -- 10 --
------- ------- -------- --------
BALANCE AT JANUARY 1, 1994 . . . . . . . . . 11,224 18,706 11,954 171,670
Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,480
Dividend declared of $.73 per share. . . . . -- -- -- (7,938)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- -- 23 --
Foreign currency translation
adjustment -- net of a
$381 deferred tax benefit . . . . . . . . -- -- -- --
------- ------- -------- --------
BALANCE AT DECEMBER 31, 1994 . . . . . . . . 11,224 18,706 11,977 179,212
Net earnings . . . . . . . . . . . . . . . . -- -- -- 17,414
Dividend declared of $.74 per share. . . . . -- -- -- (8,048)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- -- 36 --
Foreign currency translation
adjustment --net of a
$252 deferred tax benefit . . . . . . . . -- -- -- --
------- ------- -------- --------
BALANCE AT DECEMBER 30, 1995 . . . . . . . . 11,224 $18,706 12,013 188,578
------- ------- -------- --------
------- ------- -------- --------
- --------------------------------------------------------------------------------------------------
<CAPTION>
Foreign
currency Treasury stock Total
translation ---------------------- stockholders'
adjustment Shares Amount equity
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 2, 1993 . . . . . . . . . -- (352) $(3,070) 191,204
Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,874
Dividend declared of $.72 per share. . . . . -- -- -- (7,828)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- 1 4 14
------- ------- -------- --------
BALANCE AT JANUARY 1, 1994 . . . . . . . . . -- (351) (3,066) 199,264
Net earnings . . . . . . . . . . . . . . . . -- -- -- 15,480
Dividend declared of $.73 per share. . . . . -- -- -- (7,938)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- 2 12 35
Foreign currency translation
adjustment --net of a
$381 deferred tax benefit . . . . . . . . (572) -- -- (572)
------- ------- -------- --------
BALANCE AT DECEMBER 31, 1994 . . . . . . . . (572) (349) (3,054) 206,269
Net earnings . . . . . . . . . . . . . . . . -- -- -- 17,414
Dividend declared of $.74 per share. . . . . -- -- -- (8,048)
Treasury stock issued upon
exercise of options . . . . . . . . . . . -- 3 20 56
Foreign currency translation
adjustment -- net of a
$252 deferred tax benefit . . . . . . . . (378) -- -- (378)
------- ------- -------- --------
BALANCE AT DECEMBER 30, 1995 . . . . . . . . (950) (346) $(3,034) 215,313
------- ------- -------- --------
------- ------- -------- --------
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -----------------------------------------------
(1) ACCOUNTING POLICIES
FISCAL YEAR
Nash Finch Company's fiscal year ends on the Saturday nearest to December 31.
Fiscal years 1995, 1994 and 1993 consisted of 52 weeks.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of Nash Finch Company
(the Company), its majority-owned subsidiaries and the Company's share of net
earnings or losses of 50%-owned companies. All material intercompany accounts
and transactions have been eliminated in the consolidated financial statements.
CASH AND CASH EQUIVALENTS
In the accompanying financial statements, freely transferable cash in banks has
been netted for presentation purposes against checks outstanding that have been
drawn on other bank accounts. For purposes of the statements of cash flows, cash
and cash equivalents include cash on hand, short-term investments with original
maturities of three months or less, and outstanding checks, net of cash in
banks.
INVENTORIES
Inventories are stated at the lower of cost or market. At both December 30, 1995
and December 31, 1994, approximately 89% of the Company's inventories are valued
on the last-in, first-out (LIFO) method. During fiscal 1995 the Company recorded
a LIFO charge of $.1 million compared to $1.4 million in 1994. During 1995,
inventory quantities were reduced prior to the sale of a subsidiary. The
reduction resulted in a liquidation of LIFO inventory, the effect of which
increased pretax income by approximately $1.5 million. The remaining inventories
are valued on the first-in, first-out (FIFO) method. If the FIFO method of
accounting for inventories had been used, inventories would have been $40.0
million and $43.9 million higher at December 30, 1995 and December 31, 1994,
respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Assets under capitalized
leases are recorded at the present value of future lease payments or fair
market value, whichever is lower. Expenditures which improve or extend the
life of the respective assets are capitalized while maintenance and repairs
are expensed as incurred.
20
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
INTANGIBLE ASSETS
Intangible assets consist primarily of covenants not to compete and goodwill,
and are carried at cost less accumulated amortization. Costs are amortized over
the estimated useful lives of the related assets ranging from 2-20 years.
Amortization expense charged to operations for fiscal years ended December
30, 1995, December 31, 1994 and January 1, 1994 was $1.8 million, $2.2
million and $1.3 million, respectively. The accumulated amortization of
intangible assets was $5.1 million and $3.7 million at December 30, 1995 and
December 31, 1994, respectively.
DEPRECIATION AND AMORTIZATION
Property, plant and equipment are depreciated on a straight-line basis over the
estimated useful lives of the assets. Leasehold improvements and capitalized
leases are amortized to expense on a straight-line basis over the term of the
lease.
INCOME TAXES
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.
EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted average
number of common shares outstanding during each year. Options granted under the
Company's stock option plans are considered common stock equivalents but have
been excluded from the computation since the effect
is not material.
FOREIGN CURRENCY TRANSLATION
Adjustments resulting from the translation of assets and liabilities of a
foreign investment are included in stockholders' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NEW PRONOUNCEMENTS
The Company will adopt Statement of Financial Accounting Standards (SFAS) No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF, effective December 31, 1995. The Company does not
expect the adoption of this standard to have a material impact on the Company's
financial position or results of operations.
(2) TROUBLED DEBT RESTRUCTURE
On January 31, 1994, the Company acquired the assets of Food Folks, Inc. a
former customer with twenty-three stores located primarily in North Carolina, as
part of a troubled debt restructuring agreement. Under the terms of the
agreement, assets with a fair market value of approximately $12.1 million were
transferred to the Company in exchange for $1.6 million in cash, the assumption
of liabilities of $3.3 million and the forgiveness of $7.2 million in debt, net
of a bad debt reserve established by the Company. The notes representing this
debt were sold with limited recourse on April 2, 1992 .
On December 1, 1994, the Company acquired certain operating assets and
real estate of six supermarkets, with a fair market value of $4.6 million.
The supermarkets, located in eastern Kentucky, were acquired from the
bankrupt estates of Paintsville Foods, Inc., a former customer, and Wal-Lyn
Management, Inc., one of its affiliates. The settlement, net of the fair
market value of the assets transferred, resulted in a bad debt write-off of
$5.5 million, substantially all of which was provided for as of January 1,
1994.
(3) ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable at the end of fiscal years
1995 and 1994 are comprised of the following components
(in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------
<S> <C> <C>
Customer notes receivable --
current portion. . . . . . . . . . . . . $ 2,232 2,861
Customer accounts receivable . . . . . . . 73,153 82,394
Other receivables. . . . . . . . . . . . . 11,992 15,173
Allowance for doubtful accounts. . . . . . (1,409) (1,569)
------- -------
Net current accounts and
notes receivable . . . . . . . . . . . . $85,968 98,859
------- -------
------- -------
Noncurrent customer
notes receivable . . . . . . . . . . . . 8,522 19,492
Allowance for doubtful accounts. . . . . . (3,471) (3,051)
------- -------
Net noncurrent notes receivable. . . . . . $ 5,051 16,441
------- -------
------- -------
</TABLE>
Operating results include bad debt expense totaling $4.0 million, $2.2
million, and $10.1 million during fiscal years 1995, 1994 and 1993,
respectively.
On September 8, 1995, the Company entered into an agreement with a
financial institution whereby the Company initially sold $13.7 million in
customer notes and can continue to sell on an ongoing basis additional customer
notes receivable. The notes, which have maturities through the year 2002, were
sold at face value with recourse. The Company is responsible for collection of
the notes and remits the principal plus a floating rate of interest to the
purchaser on a monthly basis. Proceeds from the sale of the notes receivable
were used to pay off short-term bank debt.
The remaining balances of such sold notes receivable totaled $15.0 million
and $2.7 million at December 30, 1995 and December 31, 1994, respectively. The
Company is contingently liable should these notes become uncollectible.
Substantially all notes receivable are based on floating interest rates
which adjust to changes in market rates. As a result, the carrying value of
notes receivable approximates market value.
(4) LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt at the end of the fiscal years 1995 and 1994 is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
Industrial development bonds,
5.4% to 7.8% due in various
installments through 2009. . . . . . . . $ 5,385 5,875
Term loans, 7.5% to 9.9% due
in various installments
through 2008 . . . . . . . . . . . . . . 71,167 75,000
Notes payable and mortgage
notes, 9.3% to 12.0% due
in various installments
through 2003 . . . . . . . . . . . . . . 8,666 9,559
------- -------
85,218 90,434
Less current maturities. . . . . . . . . . 14,188 5,145
------- -------
$71,030 85,289
------- -------
------- -------
</TABLE>
21
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
At December 30, 1995, land, buildings, and other assets pledged to secure
outstanding mortgage notes and obligations under issues of industrial
development bonds have a depreciated cost of approximately $5.7 million and
$4.8 million, respectively.
On December 27, 1995, the Company finalized a 5-year revolving credit
facility commitment with five participating banks in the amount of $100 million.
Borrowings under this agreement will bear interest at variable rates generally
equal to the London Interbank Offered Rate (LIBOR) plus .35%. The revolving
credit will be used to fund acquisitions and working capital requirements. There
were no borrowings under this agreement at December 30, 1995.
Aggregate annual maturities of long-term debt for the five fiscal years
after December 30, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . $14,188
1997 . . . . . . . . . . . . . . . . . . 6,061
1998 . . . . . . . . . . . . . . . . . . 6,627
1999 . . . . . . . . . . . . . . . . . . 17,105
2000 and thereafter. . . . . . . . . . . 41,237
- ---------------------------------------------------
</TABLE>
Interest paid was $10.8 million, $11.4 million and $10.1 million, for the
fiscal years 1995, 1994 and 1993, respectively.
The Company entered into a three-year swap agreement with a major financial
institution as a means of managing its interest expense. The agreement which is
based on a notional amount of $25 million, calls for an exchange of interest
payments with the company receiving payments based on fixed rate and making
payments based on a LIBOR floating rate. The differential to be paid or received
is accrued as interest rates change and recognized as an adjustment to interest
expense related to the debt. The related amount payable to or receivable from
counterparties is included in other liabilities or assets. The agreement expires
in December 1996. The fair values of the swap agreements are not recognized in
the financial statements.
In addition, the Company maintains formal and informal lines of credit at
various banks. Generally banks are compensated through fees on used and unused
lines of credit. At December 30, 1995 unused formal lines of credit amounted to
$7.5 million.
Based on borrowing rates currently available to the Company for long-term
financing with similar terms and average maturities, the fair value of long-term
debt utilizing discounted cash flows is $90.1 million.
(5) INCOME TAXES
Effective January 3, 1993, the Company adopted the provisions of SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. The effect of this change in accounting for income
taxes was not material. Prior years' financial statements were not restated to
apply the provisions of SFAS No. 109.
Income tax expense for fiscal years 1995, 1994 and 1993 is made up of the
following components (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . $12,244 5,799 12,344
State . . . . . . . . . . . . . . . 2,872 1,296 2,865
Deferred:
Federal . . . . . . . . . . . . . . (3,145) 2,691 (3,558)
State . . . . . . . . . . . . . . . (790) 564 (837)
------- ------ -------
Total. . . . . . . . . . . . . . $11,181 10,330 10,804
------- ------ -------
------- ------ -------
</TABLE>
Total income tax expense represents effective tax rates of 39.1%, 40.0% and
40.5%, for the fiscal years 1995, 1994, and 1993, respectively. The reasons for
differences compared with the U.S. federal statutory tax rate (expressed as a
percentage of pretax income) are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate . . . . . . . . . . . . . 35.0% 35.0% 35.0%
Items affecting federal
income tax rate:
State taxes, net of federal
income tax benefit. . . . . . . . . . . . . . . . 4.9 4.7 4.9
Other net. . . . . . . . . . . . . . . . . . . . . . (.8) .3 .6
---- ---- ----
Effective tax rate . . . . . . . . . . . . . . . . . 39.1% 40.0% 40.5%
---- ---- ----
---- ---- ----
</TABLE>
Income taxes paid were $10.8 million, $9.2 million and $18.0 million during
fiscal years 1995, 1994 and 1993, respectively.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 30,
1995, December 31, 1994 and January 1, 1994, are presented below (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Accounts and notes receivable,
principally due to allowance
for doubtful accounts. . . . . . . . . . . . . . $ 1,964 1,412 6,235
Inventories, principally due to
additional costs inventoried
for tax purposes pursuant to
the Tax Reform Act of 1986 . . . . . . . . . . . 1,654 1,745 1,653
Health care claims, principally
due to accrual for financial
reporting purposes . . . . . . . . . . . . . . . 1,073 684 345
Deferred compensation,
principally due to accrual for
financial reporting purposes . . . . . . . . . . 3,173 3,329 3,608
Compensated absences,
principally due to accrual for
financial reporting purposes . . . . . . . . . . 1,379 1,263 1,124
Compensation and casualty loss,
principally due to accrual for
financial reporting purposes . . . . . . . . . . 2,135 1,842 1,407
Purchased intangibles . . . . . . . . . . . . . . 1,958 846 424
Closed locations. . . . . . . . . . . . . . . . . 1,110 500 589
Other . . . . . . . . . . . . . . . . . . . . . . 1,193 757 359
-------- -------- --------
Total gross deferred tax assets. . . . . . . 15,639 12,378 15,744
Less valuation allowance. . . . . . . . . . . . . -- -- --
-------- -------- --------
Net deferred tax assets. . . . . . . . . . . 15,639 12,378 15,744
-------- -------- --------
Deferred tax liabilities:
Plant and equipment,
principally due to
differences in depreciation. . . . . . . . . . . 5,978 6,402 7,255
Inventories, principally due to
differences in LIFO basis. . . . . . . . . . . . 2,070 2,661 2,724
Other . . . . . . . . . . . . . . . . . . . . . . 1,082 993 569
-------- -------- --------
Total gross deferred
tax liabilities . . . . . . . . . . . . . . 9,130 10,056 10,548
-------- -------- --------
Net deferred tax asset . . . . . . . . . . . $ 6,509 2,322 5,196
-------- -------- --------
-------- -------- --------
</TABLE>
Since it is more likely than not that the deferred tax asset of $15,639,
$12,378 and $15,744 at December 30, 1995, December 31, 1994 and January 1, 1994,
respectively, will be principally realized through carry back to taxable income
in prior years, in future reversals of existing taxable temporary differences,
and, to a lesser extent, future taxable income and tax planning strategies, the
Company has determined that
22
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
there is no need to establish a valuation allowance for the deferred tax asset
at December 30, 1995, December 31, 1994 and January 1, 1994, as required by
Statement 109.
(6) STOCK RIGHTS AND OPTIONS
Under the Company's 1986 Stockholder Rights Plan, as amended January 18, 1990,
one right is attached to each outstanding share of common stock. Each right
entitles the holder to purchase, under certain conditions, one-half share of
common stock at a price of $28.75 ($57.50 per full share). The rights are not
yet exercisable and no separate rights certificates have been distributed. All
rights expire on March 31, 1996.
The rights become exercisable 20 days after a "flip-in event" has occurred
or 10 business days (subject to extension) after a person or group makes a
tender offer for 15% or more of the Company's outstanding common stock. A
flip-in event would occur if a person or group acquires (1) 15% of the Company's
outstanding common stock, or (2) an ownership level set by the Board of
Directors at less than 15% if the person or group is deemed by the Board of
Directors to have interests adverse to those of the Company and its
stockholders. The rights may be redeemed by the Company at any time prior to the
occurrence of a flip-in event at $.01 per right. The power to redeem may be
reinstated within 20 days after a flip-in event occurs if the cause of the
occurrence is removed.
Upon the rights becoming exercisable, subject to certain adjustments or
alternatives, each right would entitle the holder (other than the acquiring
person or group, whose rights become void) to purchase a number of shares of the
Company's common stock having a market value of twice the exercise price of the
right. If the Company is involved in a merger or other business combination, or
certain other events occur, each right would entitle the holder to purchase
common shares of the acquiring company having a market value of twice the
exercise price of the right. Within 30 days after the rights become exercisable
following a flip-in event, the Board of Directors may exchange shares of Company
common stock or cash or other property for exercisable rights.
On February 13, 1996, the Board of Directors adopted a 1996 Stockholder
Rights Plan, which will be effective April 1, 1996. The terms of the new plan
are essentially the same as the 1986 Stockholder Rights Plan, as amended.
The Company follows Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related interpretations in accounting
for its employee stock options. Under APB 25, when the exercise price of
employee stock options equals the market price of the underlying stock on the
date of the grant, no compensation expense is recognized.
On May 10, 1994, the stockholders approved a new stock incentive plan for
officers and key employees. As a result of this action, a previous plan was
terminated. For purposes of the new plan, a total of 645,296 shares (including
245,296 shares remaining from the previous plan) were reserved for the granting
of stock options, restricted stock awards and performance unit awards. Stock
options are granted at 100% of fair market value at date of grant and are
exercisable over a term which may not exceed 10 years from date of grant.
Restricted stock awards are subject to restrictions on transferability and such
conditions for vesting, including continuous employment for specified periods of
time, as may be determined at the date of grant. Performance unit awards are
grants of rights to receive shares of stock if certain performance goals or
criteria, determined at the time of grant, are achieved in accordance with the
terms of the grants.
All stock options granted under the former plan expired August 15, 1994.
These options were also granted at 100% of fair market value at date of grant
and were exercisable over a term of five years. No restricted stock awards were
granted under the previous plan.
On May 9, 1995 the stockholders approved a stock option plan for
non-employee directors. Under this plan, for which a total of 40,000 shares were
reserved, annual grants of options to purchase 500 shares are made automatically
to each eligible director following each annual meeting of stockholders. The
stock options are granted at 100% of fair market value at date of grant, become
exercisable six months following the date of grant and may be exercised over a
term of five years from the date of grant.
At December 30, 1995 under the 1994 plan, options to purchase 253,089
shares of common stock of the Company at an average price of $16.86 per share
and exercisable over a term of five years from the dates of grant, have been
granted and are outstanding. No restricted stock awards have been granted.
Performance unit awards having a maximum potential payout of 139,702 shares have
also been granted and are outstanding. Reserved for the granting of future stock
options, restricted stock awards and performance unit awards are 248,814 shares.
At December 30, 1995 under the Director Plan, options to purchase 3,500
shares of common stock of the Company, at a price of $16.06 per share and
exercisable over a term of five years from the date of grant, have been granted
and are outstanding. Reserved for the granting of future stock options are
36,000 shares.
Changes in outstanding options during the three fiscal years ended December
30, 1995 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Average
Option Price
Shares Per Share
- -------------------------------------------------------------------------
<S> <C> <C>
Options outstanding January 2, 1993. . . . 110 $ 25.34
Exercised . . . . . . . . . . . . . . . --
Surrendered . . . . . . . . . . . . . . (109) 25.37
Granted . . . . . . . . . . . . . . . . --
- -------------------------------------------------------------------------
Options outstanding January 1, 1994. . . . 1 23.00
Exercised . . . . . . . . . . . . . . . (1) 16.88
Surrendered . . . . . . . . . . . . . . (7) 18.19
Granted . . . . . . . . . . . . . . . . 298 16.86
- -------------------------------------------------------------------------
Options outstanding December 31 1994 . . . 291 16.86
Exercised . . . . . . . . . . . . . . . (3) 16.72
Surrendered . . . . . . . . . . . . . . (36) 16.88
Granted . . . . . . . . . . . . . . . . 4 16.06
- -------------------------------------------------------------------------
Options outstanding December 30 1995 . . . 256 16.85
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Options Exercisable At
December 30, 1995 . . . . . . . . . . . 105 16.83
December 31, 1994 . . . . . . . . . . . 65 16.86
</TABLE>
(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):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Buildings and improvements . . . . . . . . $12,923 12,423
Less accumulated amortization. . . . . . . (4,011) (4,103)
------- -------
Net assets under capitalized leases . . $ 8,912 8,320
------- -------
- --------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
At December 30, 1995, future minimum rental payments under noncancelable
leases and subleases are as follows
(in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Operating Capital
leases leases
- -------------------------------------------------------------------------
<S> <C> <C>
1996 . . . . . . . . . . . . . . . . . . . $ 16,816 1,535
1997 . . . . . . . . . . . . . . . . . . . 14,219 1,511
1998 . . . . . . . . . . . . . . . . . . . 12,625 1,475
1999 . . . . . . . . . . . . . . . . . . . 10,957 1,439
2000 and thereafter. . . . . . . . . . . . 56,250 15,242
-------- --------
Total minimum lease payments (a) . . . . . $110,867 21,202
-------- --------
--------
Less imputed interest (rates
ranging from 7.9% to 11.5%). . . . . . . (10,531)
--------
Present value of net minimum
lease payments . . . . . . . . . . . . . 10,671
Less current maturities. . . . . . . . . . (513)
--------
Capitalized lease obligations. . . . . . . 10,158
--------
--------
</TABLE>
(a) Future minimum payments for operating and capital leases have not been
reduced by minimum sublease rentals receivable under noncancelable
subleases. Total future minimum sublease rentals related to operating and
capital lease obligations as of December 30, 1995 are $42 million and $1
million, respectively.
Total rental expense under operating leases for fiscal years 1995, 1994
and 1993 is as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total rentals. . . . . . . . . . . . . . $27,533 28,978 27,706
Less real estate taxes, insurance
and other occupancy costs. . . . . . . (2,095) (2,429) (2,312)
------- ------- -------
Minimum rentals. . . . . . . . . . . . . 25,438 26,549 25,394
Contingent rentals . . . . . . . . . . . 312 148 248
Sublease rentals . . . . . . . . . . . . (7,964) (7,716) (7,060)
------- ------- -------
$17,786 18,981 18,582
------- ------- -------
</TABLE>
Most of the Company's leases provide that the Company pay real estate
taxes, insurance and other occupancy costs applicable to the leased premises.
Contingent rentals are determined on the basis of a percentage of sales in
excess of stipulated minimums for certain store facilities. Operating leases
often contain renewal options. Management expects that, in the normal course of
business, leases that expire will be renewed or replaced by other leases.
The Company has guaranteed certain lease and promissory note obligations of
customers aggregating approximately $16.6 million.
(8) CONCENTRATION OF CREDIT RISK
The Company provides financial assistance in the form of secured loans to some
of its affiliated independent retailers for inventories, store fixtures and
equipment, working capital and store improvements. Loans are secured by liens on
inventory or equipment or both, by personal guarantees and by other types of
collateral. In addition, the Company guarantees lease and promissory note
obligations of customers.
As of December 30, 1995, the Company has guaranteed outstanding promissory
note obligations of one customer in the amount of $8.9 million and of another
customer in the amount of $3.9 million.
In the normal course of business, the Company's produce marketing operation
in California makes cash advances to produce growers during various product
growing seasons, to fund production costs. Such advances are repayable at the
end of the respective growing seasons. Unpaid advances are generally secured by
liens on real estate. At December 30, 1995, $8.0 million in notes and growers
advances were outstanding.
The Company establishes allowances for doubtful accounts based upon the
credit risk of specific customers, historical trends and other information.
Management believes that adequate provisions have been made for any doubtful
accounts.
(9) EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan covering substantially all employees
meeting specified requirements. Contributions, determined by the Board of
Directors, are made to a noncontributory profit sharing trust based on profit
performances. Profit sharing expense for 1995, 1994 and 1993 was $3.8 million,
$3.5 million and $3.6 million, respectively.
Certain officers and key employees are participants in a deferred
compensation plan providing fixed benefits payable in equal monthly installments
upon retirement. Annual increments to the deferred compensation plan are charged
to earnings.
(10) POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides certain health care benefits for retired employees.
Substantially all of the Company's employees become eligible for those benefits
when they reach normal retirement age and have a minimum of 15 years of service
with the Company. Prior to 1994, the cost of retiree health care benefits was
recognized as expense as claims were paid.
During the fourth quarter of 1994, the Company adopted SFAS No. 106,
EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The
Company has adopted this Statement on a prospective basis, electing to amortize
the liability of $4.9 million over the next twenty years.
The periodic postretirement benefit costs under SFAS No. 106 were as
follows (in thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
Service costs. . . . . . . . . . . . . . $273 235
Interest costs . . . . . . . . . . . . . 382 361
Amortization of unrecognized
transition obligation. . . . . . . . . 249 248
---- ---
Net postretirement costs . . . . . . . . $904 844
---- ---
---- ---
</TABLE>
The actuarial present value of benefit obligations at December 30, 1995
and December 31, 1994 are as follows
(in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
Retirees eligible for benefits . . . . . $1,903 1,612
Active employees fully eligible. . . . . 493 466
Active employees not fully eligible. . . 3,147 3,191
------ ------
$5,543 5,269
------ ------
------ ------
</TABLE>
The assumed annual rate of future increases in per capita cost of health
care benefits was 11.5% in fiscal 1995 declining at a rate of .5% per year to
6.5% in 2005 and thereafter. Increasing the health care cost trend by 1% in each
year would increase the accumulated benefit obligation by $277,000 at December
30, 1995 and the service and interest costs by $48,000 for fiscal 1995. The
discount rate used in determining the accumulated benefit obligation was 7.5%.
(11) SEGMENT INFORMATION
The Company and its subsidiaries sell and distribute food and nonfood products
that are typically found in supermarkets.
The Company's wholesale distribution segment sells to independently owned
retail food stores and institutional customers while the retail distribution
segment sells directly to the consumer. Produce marketing includes farming,
24
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
packing and marketing operations. The Company's market areas are in the Midwest,
West, Mid-Atlantic and Southeastern United States.
Operating profit is net sales and revenues, less operating expenses. In
computing operating profit, none of the following items have been added or
deducted: general corporate expenses, interest expense, interest income, income
taxes and equity in income from equity-owned companies. Wholesale distribution
operating profits on sales through company-owned stores have been allocated to
the retail segment.
Identifiable assets are those used exclusively by that industry segment or
an allocated portion of assets used jointly by two industry segments. Corporate
assets are principally cash and cash equivalents, notes receivable, corporate
office facilities and equipment.
MAJOR SEGMENTS OF BUSINESS (IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and other
operating revenues:
Wholesale distribution . . . . . . . . . . . . . . $1,968,982 1,854,629 1,836,405
Retail distribution. . . . . . . . . . . . . . . . 859,956 925,772 841,664
Produce marketing
and other . . . . . . . . . . . . . . . . . . . . 48,154 41,861 37,718
---------- ---------- ----------
Total net sales and
other operating
revenues. . . . . . . . . . . . . . . . . . . . $2,877,092 2,822,262 2,715,787
---------- ---------- ----------
---------- ---------- ----------
Operating profit:
Wholesale distribution . . . . . . . . . . . . . . $ 30,047 24,593 23,697
Retail distribution. . . . . . . . . . . . . . . . 4,143 8,804 7,704
Produce marketing
and other.. . . . . . . . . . . . . . . . . . . . 2,439 1,122 2,786
---------- ---------- ----------
Total operating profit . . . . . . . . . . . . . 36,629 34,519 34,187
---------- ---------- ----------
Interest income. . . . . . . . . . . . . . . . . . . 2,759 2,675 2,604
Interest expense . . . . . . . . . . . . . . . . . . (10,793) (11,384) (10,113)
---------- ---------- ----------
Earnings before
income taxes. . . . . . . . . . . . . . . . . . $ 28,595 25,810 26,678
---------- ---------- ----------
---------- ---------- ----------
Identifiable assets:
Wholesale distribution . . . . . . . . . . . . . . $ 205,289 240,415 237,554
Retail distribution. . . . . . . . . . . . . . . . 201,493 203,317 195,454
Produce marketing
and other . . . . . . . . . . . . . . . . . . . . 45,662 42,597 37,394
Corporate 61,817 45,275 51,252
---------- ---------- ----------
$ 514,261 531,604 521,654
---------- ---------- ----------
---------- ---------- ----------
Capital Expenditures:
Wholesale distribution . . . . . . . . . . . . . . $ 8,704 8,372 9,199
Retail distribution. . . . . . . . . . . . . . . . 15,517 25,821 18,947
Produce marketing
and other . . . . . . . . . . . . . . . . . . . . 5,259 2,072 5,564
Corporate. . . . . . . . . . . . . . . . . . . . . 3,784 1,913 2,672
---------- ---------- ----------
$ 33,264 38,178 36,382
---------- ---------- ----------
---------- ---------- ----------
Depreciation and
amortization:
Wholesale distribution . . . . . . . . . . . . . . $ 11,121 11,660 11,641
Retail distribution. . . . . . . . . . . . . . . . 14,454 16,600 14,093
Produce marketing
and other . . . . . . . . . . . . . . . . . . . . 1,597 1,513 1,396
Corporate. . . . . . . . . . . . . . . . . . . . . 2,234 2,058 2,015
---------- ---------- ----------
$ 29,406 31,831 29,145
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(12) SALE OF SUBSIDIARY
On December 2, 1995, the Company sold the outstanding stock of Thomas & Howard
Company of Hickory, Inc., a wholly owned subsidiary located in Newton, North
Carolina, and T & H Service Merchandisers, Inc., a wholly-owned subsidiary of
Thomas & Howard, to H. T. Hackney Co. of Knoxville, Tennessee. The sale, which
netted proceeds of approximately $22.3 million in cash resulted in the
recognition of a pretax gain of $1.8 million.
(13) SUBSEQUENT EVENT
On January 2, 1996 the Company acquired substantially all of the business and
assets of Military Distributors of Virginia, Inc., (MDV) located in Norfolk,
Virginia for approximately $56.0 million in cash and the assumption of certain
liabilities totaling approximately $54.0 million. MDV is a major distributor of
grocery products to military commissaries in the eastern United States and
Europe.
The purchase price exceeded the fair value of the net assets acquired by
approximately $43 million. The resulting goodwill is being amortized on a
straight line basis over 15 years. Funding of the acquisition was financed
through cash on hand and borrowing under a new credit facility (Note 4).
The following unaudited pro forma summary presents information as if the
acquisition had occurred at the beginning of each fiscal year. The pro forma
information is provided for information purposes only. It is based on historical
information and does not necessarily reflect results that would have occurred
had the acquisition been made as of those dates or results which may occur in
the future.
PRO FORMA INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Net revenues . . . . . . . . . . . . . . . . $3,305,292 3,183,337
Earnings before income taxes . . . . . . . . 33,172 28,620
Net income . . . . . . . . . . . . . . . . . 20,160 17,166
Earnings per share . . . . . . . . . . . . . $ 1.85 1.58
---------- ----------
</TABLE>
25
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Eleven years ended December 30, 1995
(not covered by Independent Auditors' Report)
1995 1994 1993
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (52 WEEKS) (52 weeks) (52 weeks)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,877,092 2,822,262 2,715,787
Other income . . . . . . . . . . . . . . . . . . . . . . . 11,744 9,738 7,748
---------- --------- ---------
Total sales, revenues and other income . . . . . . . . . . 2,888,836 2,832,000 2,723,535
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 2,469,841 2,410,292 2,325,249
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . . . . . 346,442 349,190 328,703
Interest expense . . . . . . . . . . . . . . . . . . . . . 10,793 11,384 10,114
Depreciation and amortization. . . . . . . . . . . . . . . 29,406 31,831 29,145
Profit sharing contribution. . . . . . . . . . . . . . . . 3,759 3,493 3,646
Provision for income taxes . . . . . . . . . . . . . . . . 11,181 10,330 10,804
---------- --------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 17,414 15,480 15,874
---------- --------- ---------
---------- --------- ---------
Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.60 1.42 1.46
---------- --------- ---------
---------- --------- ---------
Cash dividends declared per common share . . . . . . . . . $ .74 .73 .72
---------- --------- ---------
---------- --------- ---------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,875 10,873 10,872
---------- --------- ---------
---------- --------- ---------
Pre-tax earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .99 .91 .98
Net earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .60 .55 .58
Effective income tax rate. . . . . . . . . . . . . . . . . 39.1 40.0 40.5
Current assets . . . . . . . . . . . . . . . . . . . . . . $ 311,690 309,522 294,925
Current liabilities. . . . . . . . . . . . . . . . . . . . $ 207,688 220,065 215,021
Net working capital. . . . . . . . . . . . . . . . . . . . $ 104,002 89,457 79,904
Ratio of current assets to current liabilities . . . . . . 1.50 1.41 1.37
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 514,260 531,604 521,654
Capital expenditures . . . . . . . . . . . . . . . . . . . $ 33,264 34,965 36,382
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . . . . . $ 81,188 95,960 97,887
Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 215,313 206,269 199,264
Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 19.80 18.97 18.33
Return on average stockholders' equity . . . . . . . . . . 8.26 7.63 8.13
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . . . . . 1,940 2,074 2,074
Common stock high price,(2),(3). . . . . . . . . . . . . . 20 1/2 18 1/4 23 1/4
Common stock low price,(2),(3) . . . . . . . . . . . . . . 15 3/4 15 3/8 17
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Eleven years ended December 30, 1995
(not covered by Independent Auditors' Report)
1992 1991 1990
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (53 weeks) (52 weeks) (52 weeks)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,509,464 2,337,560 2,369,054
Other income . . . . . . . . . . . . . . . . . . . . . . . 5,974 5,718 5,799
---------- --------- ---------
Total sales, revenues and other income . . . . . . . . . . 2,515,438 2,343,278 2,374,853
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 2,147,845 1,997,462 2,036,335
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . . . . . 294,700 276,144 271,735
Interest expense . . . . . . . . . . . . . . . . . . . . . 9,294 8,966 8,670
Depreciation and amortization. . . . . . . . . . . . . . . 27,038 26,124 25,551
Profit sharing contribution. . . . . . . . . . . . . . . . 3,963 3,789 3,603
Provision for income taxes . . . . . . . . . . . . . . . . 12,530 11,738 11,129
---------- --------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 20,068 19,055 17,830
---------- --------- ---------
---------- --------- ---------
Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.85 1.75 1.64
---------- --------- ---------
---------- --------- ---------
Cash dividends declared per common share . . . . . . . . . $ .71 .70 .69
---------- --------- ---------
---------- --------- ---------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,872 10,871 10,870
---------- --------- ---------
---------- --------- ---------
Pre-tax earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . 1.30 1.31 1.22
Net earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .80 .81 .75
Effective income tax rate. . . . . . . . . . . . . . . . . 38.4 38.1 38.4
Current assets . . . . . . . . . . . . . . . . . . . . . . $ 310,170 239,850 234,121
Current liabilities. . . . . . . . . . . . . . . . . . . . $ 213,691 154,993 159,439
Net working capital. . . . . . . . . . . . . . . . . . . . $ 96,479 84,857 74,682
Ratio of current assets to current liabilities . . . . . . 1.45 1.55 1.47
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 513,615 429,648 416,233
Capital expenditures . . . . . . . . . . . . . . . . . . . $ 42,991 36,836 36,129
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . . . . . $ 94,145 82,532 74,333
Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 191,204 178,846 167,388
Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 17.59 16.45 15.40
Return on average stockholders' equity . . . . . . . . . . 10.85 11.01 10.99
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . . . . . 2,087 2,122 2,138
Common stock high price,(2),(3). . . . . . . . . . . . . . 19 3/4 20 1/4 25 1/4
Common stock low price,(2),(3) . . . . . . . . . . . . . . 16 1/4 16 1/2 16 1/4
- -----------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Eleven years ended December 30, 1995
(not covered by Independent Auditors' Report)
1989 1988 1987
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (52 weeks) (52 weeks) (52 weeks)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and revenues . . . . . . . . . . . . . . . . . . . . $2,219,451 2,091,822 1,938,758
Other income . . . . . . . . . . . . . . . . . . . . . . . 4,312 6,012 4,590
---------- --------- ----------
Total sales, revenues and other income . . . . . . . . . . 2,223,763 2,097,834 1,943,348
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 1,904,041 1,807,448 1,682,667
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . . . . . 264,024 230,221 198,553
Interest expense . . . . . . . . . . . . . . . . . . . . . 8,277 8,106 8,087
Depreciation and amortization. . . . . . . . . . . . . . . 23,170 20,193 18,389
Profit sharing contribution. . . . . . . . . . . . . . . . 3,089 2,832 2,734
Provision for income taxes . . . . . . . . . . . . . . . . 8,010 10,859 14,416
---------- --------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 13,152 18,175 18,502
---------- --------- ----------
---------- --------- ----------
Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.21 1.67 1.75
---------- --------- ----------
---------- --------- ----------
Cash dividends declared per common share . . . . . . . . . $ .67 .65 .57
---------- --------- ----------
---------- --------- ----------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,868 10,881 10,576
---------- --------- ----------
---------- --------- ----------
Pre-tax earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .95 1.38 1.69
Net earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .59 .87 .95
Effective income tax rate. . . . . . . . . . . . . . . . . 37.9 37.4 43.8
Current assets . . . . . . . . . . . . . . . . . . . . . . $ 212,264 219,956 209,305
Current liabilities. . . . . . . . . . . . . . . . . . . . $ 128,159 153,068 127,608
Net working capital. . . . . . . . . . . . . . . . . . . . $ 84,105 66,888 81,697
Ratio of current assets to current liabilities . . . . . . 1.66 1.44 1.64
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 380,771 388,269 352,187
Capital expenditures . . . . . . . . . . . . . . . . . . . $ 34,635 52,019 29,680
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . . . . . $ 77,950 66,216 66,988
Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 157,024 151,043 140,850
Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 14.45 13.90 12.97
Return on average stockholders' equity . . . . . . . . . . 8.54 12.45 14.38
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . . . . . 2,146 2,227 2,234
Common stock high price,(2),(3). . . . . . . . . . . . . . 25 3/4 27 1/2 26 1/2
Common stock low price,(2),(3) . . . . . . . . . . . . . . 21 1/4 18 14 3/4
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------
Eleven years ended December 30, 1995
(not covered by Independent Auditors' Report)
1986 1985
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (53 weeks) (52 weeks)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Sales and revenues . . . . . . . . . . . . . . . . . . . . $1,573,717 1,323,294
Other income . . . . . . . . . . . . . . . . . . . . . . . 3,640 4,106
---------- ---------
Total sales, revenues and other income . . . . . . . . . . 1,577,357 1,327,400
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . 1,360,537 1,142,464
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . . . . . 165,713 140,798
Interest expense . . . . . . . . . . . . . . . . . . . . . 6,497 5,732
Depreciation and amortization. . . . . . . . . . . . . . . 16,249 14,279
Profit sharing contribution. . . . . . . . . . . . . . . . 2,349 2,101
Provision for income taxes . . . . . . . . . . . . . . . . 12,178 10,020
---------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 13,834 12,006
---------- ---------
---------- ---------
Earnings per share:. . . . . . . . . . . . . . . . . . . . $ 1.35 1.18
---------- ---------
---------- ---------
Cash dividends declared per common share . . . . . . . . . $ .52 .50
---------- ---------
---------- ---------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . . . . . 10,244 10,196
---------- ---------
---------- ---------
Pre-tax earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . 1.65 1.66
Net earnings as a percent
of sales and revenues. . . . . . . . . . . . . . . . . . .88 .90
Effective income tax rate. . . . . . . . . . . . . . . . . 46.8 45.5
Current assets . . . . . . . . . . . . . . . . . . . . . . $ 182,676 125,051
Current liabilities. . . . . . . . . . . . . . . . . . . . $ 120,687 77,867
Net working capital. . . . . . . . . . . . . . . . . . . . $ 61,989 47,183
Ratio of current assets to current liabilities . . . . . . 1.51 1.61
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 313,908 239,767
Capital expenditures . . . . . . . . . . . . . . . . . . . $ 26,969 25,438
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . . . . . $ 61,588 42,250
Stockholders' equity . . . . . . . . . . . . . . . . . . . $ 116,416 107,384
Stockholders' equity per share,(1),(2) . . . . . . . . . . $ 11.34 10.51
Return on average stockholders' equity . . . . . . . . . . 12.36 11.57
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . . . . . 1,829 1,868
Common stock high price,(2),(3). . . . . . . . . . . . . . 19 1/8 15 5/8
Common stock low price,(2),(3) . . . . . . . . . . . . . . 14 3/4 9 1/4
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Based on outstanding shares at year-end.
(2) Adjusted to reflect 2-for-1 stock split 1987.
(3) High and low closing sale price. Prior to February 1985 high and low bid
quotation.
[GRAPHIC]
27
<PAGE>
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):
<TABLE>
<CAPTION>
Subsidiary State of
Corporation Incorporation
----------- -------------
<S> <C>
Nash-DeCamp Company California
Visalia, California
Piggly Wiggly Northland Corporation Minnesota
Edina, Minnesota
GTL Truck Lines, Inc. Nebraska
Norfolk, Nebraska
</TABLE>
B. Direct subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subsidiary, 66.6 percent by Nash Finch Company):
<TABLE>
<CAPTION>
Subsidiary State of
Corporation Incorporation
----------- -------------
<S> <C>
Gillette Dairy of the Black Hills, Inc. South Dakota
Rapid City, South Dakota
Nebraska Dairies, Inc. Nebraska
Norfolk, Nebraska
</TABLE>
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):
<TABLE>
<CAPTION>
Subsidiary State/Country of
Corporation Incorporation
----------- -------------
<S> <C>
Forrest Transportation Service, Inc. California
Visalia, California
Agricola Nadco Limitada* Chile
*Ninety-nine percent (99%) of Argicola Nadco Limitada
is owned by Nash-DeCamp Company.
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Nash Finch Company of our report dated February 19, 1996, included in the
1995 Annual Report to Shareholders of Nash Finch Company.
Our audit also included the financial statement schedule of Nash Finch Company
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audit. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein in so far as such
information relates to periods covered by our report.
We also consent to the incorporation by reference in Registration Statement No.
33-64313 and Registration Statement No. 33-54487 on Form S-8 of our report dated
February 19, 1996, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Nash Finch Company.
Minneapolis, Minnesota
March 27, 1996
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Nash Finch Company:
We consent to incorporation by reference in the Registration Statements (no.
33-54487 and no. 33-64313) on Form S-8 of Nash Finch Company of our reports
dated March 3 ,1995, relating to the consolidated balance sheets of Nash Finch
Company and subsidiaries as of December 31, 1994 and January 1, 1994 and the
related consolidated statements of earnings, stockholders' equity, and cash
flows and the related consolidated financial statement schedule for each of the
years in the three-year period ended December 31, 1994, which reports are
included or incorporated by reference in the December 31, 1995 annual report on
Form 10-K of Nash Finch Company.
Minneapolis, Minnesota KPMG Peat Marwick LLP
March 27, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 26,024
<SECURITIES> 0
<RECEIVABLES> 87,377
<ALLOWANCES> 1,409
<INVENTORY> 183,957
<CURRENT-ASSETS> 311,690
<PP&E> 388,826
<DEPRECIATION> 210,787
<TOTAL-ASSETS> 514,260
<CURRENT-LIABILITIES> 207,688
<BONDS> 71,030
0
0
<COMMON> 18,706
<OTHER-SE> 199,641
<TOTAL-LIABILITY-AND-EQUITY> 514,260
<SALES> 2,831,114
<TOTAL-REVENUES> 2,888,836
<CGS> 2,469,841
<TOTAL-COSTS> 375,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,997
<INTEREST-EXPENSE> 10,793
<INCOME-PRETAX> 28,595
<INCOME-TAX> 11,181
<INCOME-CONTINUING> 17,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,414
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.60
</TABLE>
