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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 28, 1996 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
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
As of March 24, 1997, 11,300,488 shares of Common Stock of the
Registrant were outstanding, and the aggregate market value of the Common
Stock of the Registrant as of that date (based upon the last reported sale
price of the Common Stock at that date by the Nasdaq National Market),
excluding outstanding shares deemed beneficially owned by directors and
officers, was approximately $202,780,250.
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Parts I, II and IV of this Annual Report on Form 10-K incorporate by
reference information (to the extent specific pages are referred to herein)
from the Registrant's Annual Report to Stockholders for the Year Ended
December 28, 1996 (the "1996 Annual Report"). Parts II and III of this
Annual Report on Form 10-K incorporate by reference information (to the
extent specific sections are referred to herein) from the Registrant's Proxy
Statement for its Annual Meeting to be held May 13, 1997 (the "1997 Proxy
Statement").
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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. Furthermore, the information contained in this document
includes the applicable figures of corporations which have been acquired by
the Company during fiscal year 1996.
The Company is one of the largest food wholesalers in the United States,
serving approximately 2,350 affiliated and other independent retail
supermarkets, other retail stores and outlets, and institutional accounts,
such as military base commissaries, restaurants, schools and hospitals, as of
December 28, 1996. No one customer accounts for a significant portion of the
Company's sales. The Company also operates and supplies, as of December 28,
1996, 104 Company-owned supermarkets and warehouse stores. The Company's
affiliated and Company-owned stores operate under a number of tradenames,
including ECONOFOODS-Registered Trademark-, FOOD BONANZA-Registered
Trademark-, SUN MART-TM-, FAMILY THRIFT CENTER-TM-, EASTER FOODS-TM-, FOOD
FOLKS-Registered Trademark-, JACK & JILL-Registered Trademark-,
ECONOMART-TM-, OUR FAMILY FOODS-Registered Trademark-, FOOD PRIDE-Registered
Trademark-, SAX FOOD & DRUG -Registered Trademark- and IGA -Registered
Trademark- (a registered trademark of IGA, INC.). The Company's market areas
are in approximately 30 states in the Midwest, West, Mid-Atlantic and
Southeast and are serviced through 20 wholesale distribution centers and one
general merchandise warehouse. The Company packages, ships and markets fresh
produce from California and the countries of Chile and Mexico to a variety of
buyers across the United States, Canada and overseas.
In January, 1996, the Company acquired substantially all of the business
and assets of Military Distributors of Virginia, Inc. ("MDV"), a Virginia
corporation based in Norfolk, Virginia. MDV engages in the business of
distributing groceries and related products to military commissaries in the
eastern United States and Europe. The MDV operation has been consolidated
with the Company's existing military distribution operations in Baltimore,
Maryland, and Chesapeake, Virginia, into a single military division.
Currently, this military division is operating from two distribution centers
- - one in Norfolk and the other in Baltimore.
In July 1996, the Company acquired all of the outstanding shares of
capital stock of T. J. Morris Company, a Georgia corporation based in
Statesboro, Georgia. T. J. Morris Company is a wholesale distributor of a
full-line of food and related non-food products to independent grocery
retailers, including IGA Stores. The Company's existing operations based in
Macon, Georgia have been consolidated with the operations of T. J. Morris
Company at its Statesboro facility. Currently, the Company is operating T. J.
Morris Company as a wholly-owned subsidiary.
In December 1996, the Company completed the acquisition of all of the
outstanding shares of capital stock of Super Food Services, Inc. ("Super
Food"), a Delaware corporation based in Dayton, Ohio. Super Food was
incorporated in 1957 and, prior to the acquisition by the Company, was ranked
as the 14th largest grocery wholesaler in the United States, with sales for
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its fiscal year ended August 31, 1996 of of approximately $1.2 billion.
Super Food services independent stores, including IGA stores, across six
states, including primarily Ohio, Michigan and Kentucky. Super Foods has four
distribution centers located in Bellefontaine, Ohio, Cincinnati, Ohio,
Bridgeport, Michigan, and Lexington, Kentucky, which provide a full line of
groceries and related products, other than produce. The distribution center
in Bellefontaine, Ohio also has a portion of its space dedicated to
distributing general merchandise to the other distribution centers. Since the
completion of the acquisition, the Company has been engaged in the process of
coordinating the distribution operations of Super Food with existing
distribution operations of the Company and consolidating the general and
administrative functions of Super Food with the general and administrative
functions of the Company in Edina, Minnesota.
In connection with the acquisition of Super Food, the Company obtained a
$500 million credit facility provided by a syndicate of banks for whom Harris
Trust and Savings Bank acts as the administrative agent and Bank of Montreal
and PNC Bank, National Association, act as co-syndication agents. This
credit facility is a $500 million senior credit unsecured revolving facility
maturing in five years, with a mandatory commitment reduction to $400 million
by December 31, 1998.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about the Company's business segments for the most
recent three fiscal years is contained on page 25 of the 1996 Annual Report
(Note 12 to Consolidated Financial Statements). For segment financial
reporting purposes, a portion of the operational profits of wholesale
distribution centers are allocated to retail operations to the extent that
merchandise is purchased by these distribution centers and transferred to
retail stores directly operated by the Company. For fiscal 1996, 44% of such
warehouse operational profits were allocated to retail operations.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
1. PRODUCTS SUPPLIED.
The Company distributes and sells a full line of food products,
including dry groceries, fresh fruits and vegetables, frozen foods, fresh and
processed meat products and dairy products, and a variety of non-food
products, including health and beauty aids, tobacco products, paper products,
cleaning supplies and small household items. The Company primarily
distributes and sells nationally advertised brand products and a number of
unbranded products (principally meats and produce) purchased directly from
various manufacturers, processors and suppliers or through manufacturers'
representatives and brokers. Many of the major suppliers of the Company are
large companies. The Company has no significant long-term purchase
obligations and believes that adequate and alternative sources of supply are
generally available to meet the Company's needs.
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The Company also distributes and sells private label products using the
Company's own trademarks. A wide variety of grocery, dairy, packaged meat,
frozen foods, health and beauty products, paper and household products,
beverages, and other packaged products are manufactured or processed by
others for the Company and sold under Company brand names.
2. DISTRIBUTION.
The Company distributes products to Company-owned supermarkets and
warehouse stores and to independent customers and military base commissaries
from 20 distribution centers, as of December 28, 1996, located in Colorado,
Georgia, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Nebraska (2),
North Carolina (2), North Dakota (2), Ohio (2), South Dakota, Virginia (2),
and Wisconsin. The Company's distribution centers are located at strategic
points to efficiently serve Company-owned stores, independent customers, and
military base commissaries. The distribution centers are equipped with
modern materials handling equipment for receiving, storing and shipping goods
and merchandise and are designed for high-volume operations at low unit
costs. The Company also distributes health and beauty products, general
merchandise and specialty grocery products from a dedicated area of the
distribution center located in Bellefontaine, Ohio, and from a warehouse
facility located in Sioux Falls, South Dakota. In addition, the Company
distributes produce from a separate warehouse facility in Wilmington, North
Carolina.
The distribution centers serve as central sources of supply for
Company-owned and independent stores, military base commissaries and other
institutional customers within their operating areas. The distribution
centers maintain complete inventories containing virtually every national
brand grocery product sold in supermarkets, together with a wide variety of
high-volume private label items. In addition, the distribution centers
provide full lines of perishables, including fresh meats and poultry, fresh
fruits and vegetables, (except Super Food) dairy and delicatessen products
and frozen foods. Retailers order their inventory requirements at regular
intervals through direct linkage with Company computers. Deliveries are made
primarily by the Company's transportation fleet. The frequency of deliveries
varies, depending upon customer needs. The Company currently has a modern
fleet of approximately 500 tractors, 1,200 semi-trailers, and 75 small trucks
and vans, most of which are owned by the Company. In addition, many types of
meats, dairy products, bakery and other products are sold by the Company but
are delivered by the suppliers directly to retail food stores.
Virtually all of the Company's wholesale sales to independent customers
are made on a market price-plus-fee and freight basis, with the fee based on
the type of commodity and quantity purchased. Selling prices are changed
promptly, based on the latest market information.
The Company distributes products to military base commissaries primarily
under contractual arrangements with the manufacturers of those products. The
Company provides storage, handling and transportation services for the
manufacturers; and, as products ordered from the Company by the commissaries
are delivered to them, the Company invoices the manufacturer for the cost of
the merchandise delivered plus negotiated fees.
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3. WHOLESALE OPERATIONS.
As of December 28, 1996, the Company distributed food products and
non-food items, on a wholesale basis, to approximately 2,350 affiliated and
other independent retail supermarkets, other retail stores and outlets, and
institutional accounts, such as military base commissaries, restaurants,
schools and hospitals. The Company's retail supermarket customers are
primarily self-service supermarkets that carry a wide variety of grocery
products, health and beauty products and general merchandise. Many stores
also have one or more specialty departments such as delicatessens, in-store
bakeries, restaurants, pharmacies and flower shops. The stores served by the
Company's wholesale operations range in size from small stores to large
supermarkets containing approximately 65,000 square feet.
The Company offers to its affiliated independent retailers a broad range
of services, including promotion, advertising and merchandising programs, the
installation of computerized ordering, receiving and scanning systems, the
establishment and supervision of computerized retail accounting, budgeting
and payroll systems, personnel management assistance and employee training,
consumer and market research, store development services and insurance
programs. The Company's retail counselors and other Company personnel advise
and counsel the affiliated independents, and directly provide many of the
above services. Separate charges are made for some of these services. Other
independent stores are charged for services on a negotiated basis. The
Company also provides retailers with marketing and store upgrade services,
many of which have been developed in connection with Company-owned stores.
For example, the Company assists retailers in installing and operating
delicatessens and other specialty food sections. Rather than develop a
single pattern for the services it provides, the Company has developed
flexible programs to serve the needs of most of its affiliated independents,
whether rural or urban, large or small.
The Company's assistance to its affiliated independent stores in store
development provides a means of continued growth for the Company through the
development of new retail store locations and the enlargement or remodeling
of existing retail stores. The services provided include site selection,
marketing studies, building design, store layout and equipment planning and
procurement. The Company assists its retail customers in securing existing
supermarkets that are for sale from time to time in market areas serviced by
the Company and, occasionally, acquires existing stores for resale to
customers.
The Company also may provide financial assistance to independent
retailers it services, generally in connection with new store development and
the upgrading or expansion of existing stores. The Company makes secured
loans to some of its affiliated independent operators, generally repayable
over a period of five or seven years, for inventories, store fixtures and
equipment, working capital and store improvements. Loans are secured by
liens on inventory or equipment or both, by personal guarantees and by other
types of security. As of December 28, 1996, the Company had outstanding
$33,858,000 in such secured loans to 171 independent operators. In addition,
the Company may provide such assistance to independent retailers by
guarantying loans from financial institutions and leases entered into
directly with lessors. The
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Company also uses its credit strength to lease supermarket locations and
sublease them to independent operators, at rates that are at least as high as
the rent paid by the Company.
4. RETAIL OPERATIONS.
As of December 28, 1996, the Company owned and operated 108 retail
outlets, including 74 supermarkets, 30 warehouse stores and 4 combination
general merchandise/food stores. The Company has devoted considerable
resources in recent years to acquire, construct, enlarge and modernize
Company-owned stores; and, by constructing new stores or expanding existing
stores, seeks to add either larger conventional supermarkets (at least 30,000
square feet) or warehouse stores (at least 45,000 square feet), as
appropriate. The Company has implemented a number of automated systems,
including scanning and direct store delivery for its stores. These systems
provide inventory control at delivery and checkout points, reduce shrinkage
and increase labor efficiency.
The Company operates its supermarkets principally under the names SUN
MART-TM-, EASTER FOODS-TM- and FOOD FOLKS-Registered Trademark-. These
stores, thirteen of which the Company owns (the remainder are leased), range
in size up to approximately 46,000 square feet. These stores are primarily
self-service supermarkets that carry a wide variety of grocery products,
health and beauty products, and general merchandise. Many stores also
have one or more specialty departments such as delicatessens, in-store
bakeries, restaurants, pharmacies and flower shops.
The Company operates 30 warehouse stores principally under the names
ECONOFOODS-Registered Trademark- and FOOD BONANZA-Registered Trademark-.
These stores, seven of which the Company owns (the remainder are leased),
range in size up to approximately 106,000 square feet. The Company's
warehouse stores offer a wide variety of high quality groceries, fresh fruits
and vegetables, dairy products, frozen foods, fresh fish, fresh and processed
meat and health and beauty products, all at lower prices. Many have
specialty departments such as delicatessens, in-store bakeries, pharmacies,
banks and floral and video departments. These stores appeal to quality and
price-conscious customers who want national brands, broad selection, and
availability of convenience foods, but are willing, in some cases, to forgo
standard supermarket services. The stores are able to offer lower prices due
to increased business volume as well as the limited services available.
The Company also operates four combination general merchandise/food
stores under the name FAMILY THRIFT CENTER-TM-. These stores, three of which
are owned, range in size up to approximately 60,000 square feet. In addition
to traditional supermarket food departments, these stores have expanded
general merchandise and health and beauty products departments and
pharmacies, and some also have sit-down restaurants, full-service floral
departments and book departments.
5. PRODUCE MARKETING OPERATIONS.
Through a wholly-owned subsidiary, Nash-DeCamp Company, the Company
grows, packs, ships and markets fresh fruits and vegetables from locations in
California and the
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countries of Chile and Mexico to customers across the United States and
Canada, and also overseas. For regulatory reasons, the amount of business
between Nash-DeCamp Company and the Company is limited. The Company owns and
operates three modern packing, shipping and/or cold storage facilities that
ship fresh grapes, plums, peaches, nectarines, apricots, pears, persimmons,
kiwi fruit and other products. The Company also acts as marketing agent for
other packers of fresh produce in California and in the countries of Chile
and Mexico. For the above services, the Company receives, in addition to a
selling commission, a fee for packing, handling and shipping produce. The
Company also owns vineyards and orchards for the production of table grapes,
tree fruit, kiwi and citrus.
6. COMPETITION.
All segments of the Company's business are highly competitive. The
Company competes directly at the wholesale level with a number of wholesalers
that supply independent retailers, including "cooperative" wholesalers that
are owned by their retail customers and "voluntary" wholesalers who, like the
Company, are not owned by their retail customers but sponsor a program under
which single-unit or multi-unit independent retailers may affiliate under a
common name. Certain of these competing wholesalers may also engage in
distribution to military bases. The Company also competes indirectly with
the warehouse and distribution operations of the large integrated chains,
which consist of single entities owning both wholesale and retail operations.
At the wholesale level, the principal methods of competition are location of
distribution centers, the services offered to independent retailers, such as
store financing and use of store names, and the services offered to
manufacturers of products sold to military base commissaries. The success of
the Company's wholesale business also depends upon the ability of its retail
store customers to compete successfully with other retail food stores.
The Company competes on the retail level in a fragmented market with
many organizations of various sizes, ranging from national chains and
voluntary or cooperative groups to local chains and privately owned
unaffiliated stores. Depending on the product and location involved, the
principal methods of competition at the retail level include price, service,
quality, display, selection and store location.
The Company competes directly in its produce marketing operations with a
large number of other firms that pack, ship and market produce, and competes
indirectly with larger, integrated firms that grow, pack, ship and market
produce. The principal methods of competition in this segment are service
provided to growers and the ability to sell produce at the most favorable
prices.
7. EMPLOYEES.
As of December 28, 1996, the Company employed approximately 12,775
persons (approximately 7,000 full-time and 5,775 part-time).
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ITEM 2. PROPERTIES.
The principal executive offices of the Company are located in Edina,
Minnesota, and consist of approximately 68,000 square feet of office space in
a building owned by the Company. In addition to the executive offices, the
Company leases an additional 15,275 square feet of office space in Edina,
Minnesota. The locations and sizes of the Company's distribution centers, as
of December 28, 1996, are listed below (all of which are owned, except as
indicated). The distribution center facilities which are leased have varying
terms, all with remaining terms of less than 20 years. Total rent in fiscal
year 1996 for the leased facilities was $5,868,813.
Approx. Size
Location (Square Feet)
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Midwest/West:
Denver, Colorado (1) 335,800
Cedar Rapids, Iowa 351,900
Liberal, Kansas 176,500
St. Cloud, Minnesota 325,100
Grand Island, Nebraska 177,700
Lincoln, Nebraska 226,000
Fargo, North Dakota 288,800
Minot, North Dakota 185,200
Rapid City, South Dakota 186,600
Sioux Falls, South Dakota (2) 252,400
Appleton, Wisconsin 430,900
Southeast:
Stateboro, Georgia (1)(3) 287,800
Baltimore, Maryland (1)(4) 234,500
Lumberton, North Carolina (1)(5) 256,600
Rocky Mount, North Carolina (1) 191,800
Bluefield, Virginia 186,400
Norfolk, Virginia (1)(6) 567,900
Super Food Services, Inc.
Lexington, Kentucky (1) 319,400
Bellefontaine, Ohio (7) 773,700
Cincinnati, Ohio (8) 572,750
Bridgeport, Michigan (1) 581,300
Total Square Footage 6,909,050
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(1) Leased facility.
(2) Includes 79,300 square feet of warehouse space which is leased by the
Company.
(3) Includes 46,400 square feet of space which is owned by the Company.
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(4) Includes 60,000 square feet of refrigerated warehouse space located in
Jessup, Maryland. Since year-end, the operations have been
consolidated with those in Norfolk, Virginia and the Company no longer
operates from the Jessup facility.
(5) Includes 16,100 square feet of produce warehouse space located in
Wilmington, North Carolina which is owned by the Company.
(6) Includes 49,645 square feet which is owned by the Company.
(7) Includes 162,700 square feet which is leased by the Company. General
merchandising services utilizes approximately 480,000 square feet of the
total space (owned and leased).
(8) Includes 151,600 square feet which was leased by the Company as of
year-end. As of February 14, 1997, the Company no longer occupies 81,000
square feet of such leased space.
The following table shows the number and aggregate size of Company-owned
and operated supermarkets and warehouse stores operated at December 28, 1996:
Supermarkets:
Number of stores 74
Total square feet 1,641,670
Warehouse stores:
Number of stores 30
Total square feet 1,288,000
Combination General Merchandise/Food:
Number of stores 4
Total square feet 172,000
Totals:
Number of stores 108
Total square feet 3,101,670
The Company leases 61 of its supermarket store buildings and one (1)
combination general merchandise/food store building (the remainder are
owned), which range in size up to approximately 60,000 square feet. The
Company also leases 23 of its warehouse store buildings, which range in size
up to approximately 106,000 square feet. These leases are for varying terms,
primarily under 20 years. The total rent in fiscal year 1996 for store
buildings was approximately $8,834,000.
Further information about the lease obligations of the Company is given
in Note 7 to the Consolidated Financial Statements on page 24 of the 1996
Annual Report, incorporated herein by reference.
Nash-DeCamp Company has executive offices comprising approximately 9,000
square feet of leased space in an office building located in Visalia,
California. It owns and operates three packing, shipping and/or cold storage
facilities in California in connection with its produce marketing operations,
with total space of approximately 174,000 square feet. In addition to such
storage facilities, Nash-DeCamp Company also owns approximately 713 acres for
the production
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of table grapes, 40 acres for the production of kiwi fruit, 903 acres for the
production of peaches, plums, apricots and nectarines, 614 acres for the
production of citrus, and 198 acres of open ground for future development, all
in San Joaquin Valley of California. Nash-DeCamp Company also leases 123
acres of tree fruit located in the San Joaquin Valley and, through a
wholly-owned Chilean subsidiary, approximately 740 acres in Chile for the
production of table grapes.
Nash-DeCamp Company makes a continuing effort to keep all of its
properties and facilities modern, efficient and adequate for its operational
needs, through the acquisition, disposition, expansion and improvement of
such properties and facilities. As a result, Nash-DeCamp Company believes
that its properties and facilities are, on an aggregate basis, fully utilized
and adequate for the conduct of its business.
ITEM 3 LEGAL PROCEEDINGS.
In November 1992, Jin Ku Kim, currently an employee of the Company,
commenced an action against the Company in U.S. District Court for the
Northern District of Iowa claiming damages as a result of the alleged failure
of the Company to promote Mr. Kim to the position of shipping foreman in
November 1990 and April 1992 because of his national origin and race, and the
alleged retaliation against him by the Company in terms and conditions of
employment after he filed charges of employment discrimination with the Cedar
Rapids, Iowa, Civil Rights Commission. On September 16, 1994, a jury verdict
was entered against the Company in the amount of $8,786,000, including
$36,000 in back pay, $1,750,000 in mental anguish and loss of enjoyment of
life and $7,000,000 in punitive damages. On April 13, 1995, the U.S.
District Court entered an Amended Judgment reducing the jury award to a total
of $421,000 plus attorneys' fees and costs of $114,556. Both Mr. Kim and the
Company have filed appeals from the Amended Judgment with the United States
Court of Appeals for the Eighth Circuit. Mr. Kim's appeal seeks reinstatement
of the jury verdict and the Company's appeal seeks judgment as a matter of
law or further reduction of the damage award; both parties seek a new trial
in the alternative. Briefs have been submitted and the case was argued on
December 14, 1995. No decision has been issued. The Company continues to
deny that Mr. Kim has suffered any discrimination or retaliation, or any
damages as a result thereof. The Company believes that there is substantial
basis, both in the facts of this case and in law, supporting the Company's
position before the Eighth Circuit. Although no assurance can be given that
the Eighth Circuit will award the relief the Company seeks, the Company
believes that the jury verdict will not be reinstated and that the reserves
it has established are reasonably adequate to cover its liability.
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On April 2, 1996 an individual engaged in growing citrus crops in Fresno
County commenced an action entitled EMILIANO MORENO V. NASH-DECAMP COMPANY,
ET. AL., against Nash-DeCamp Company and others, including three of its
officers and directors, in the United States District Court for the Eastern
District of California. Nash-DeCamp Company provided services to the
plaintiff relating to the packing, marketing and distribution of produce
grown by the plaintiff, and advanced financing to assist the plaintiff in
growing and harvesting his crops. Plaintiff's complaint alleges that the
defendants engaged in various acts of misconduct relating to the handling,
packaging and pricing of such produce in violation of various federal and
state laws, resulting in unspecified damages to the plaintiff. In his
complaint, plaintiff sought unspecified compensatory damages, punitive and
exemplary damages, treble damages, attorneys' fees and costs of suit, as well
as injunctive relief. The defendants filed an answer raising various
defenses to and denying the allegations set forth in the complaint. In
addition, Nash-DeCamp Company has filed a counterclaim to recover monies owed
to it by plaintiff, costs of suit, attorneys' fees, all proceeds from any
disposition of the 1995-1996 citrus crops, and other damages and interest.
As of March 24, 1997, this matter was still in the discovery stages.
Nash-DeCamp Company intends to vigorously defend plantiff's claims and to
pursue the recovery of sums owed to it by plaintiff.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company, their ages, the year first
elected or appointed as an executive officer and the offices held as of March
1, 1997 are as follows:
<TABLE>
<CAPTION>
Year First Elected
or Appointed as an
Name (Age) Executive Officer Title
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<S> <C> <C>
Alfred N. Flaten (62) 1991 President and Chief Executive Officer
William T. Bishop (56) 1994 Senior Vice President, Sales and Logistics
William E. May, Jr. (48) 1996 Vice President, Strategic Technology Programs
and Marketing Services
David J. Richards (48) 1996 Vice President, Corporate Retail Stores
Norman R. Soland (56) 1986 Vice President, Secretary and General
Counsel
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Clarence T. Walters (60) 1988 Vice President, Management Information
Systems
Charles F. Ramsbacher (54) 1991 Vice President, Marketing
Steven L. Lumsden (51) 1992 Vice President, Warehouse and
Transportation
Gerald D. Maurice (63) 1993 Vice President, Store Development
John R. Scherer (46) 1994 Vice President and Chief Financial Officer
Charles M. Seiler (49) 1995 Vice President, Corporate Retail Operations
Edgar F. Timberlake (49) 1995 Vice President, Human Resources
John M. McCurry (48) 1996 Vice President, Independent Store Operations
Lawrence A. Wojtasiak (51) 1990 Controller
Suzanne S. Allen (32) 1996 Treasurer
</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.
Mr. Flaten was elected Chief Executive Officer in November 1994. His
election as President and Chief Operating Officer was effective in November
1991. He had been elected Executive Vice President, Sales and Operations of
Nash Finch in February 1991.
Mr. Bishop was elected as Senior Vice President, Sales and Logistics
effective in December 1994 after joining the Company in the same month. He
was previously employed by Scrivner, Inc., a wholesale and retail food
distribution company, serving as its President and Chief Operating Officer
from 1987 to 1994.
Mr. May was elected as Vice President, Strategic Technology Programs and
Marketing Services in July 1996 joining the Company in June. He was
previously employed by Spartan Stores Inc., a wholesale food distribution
company, serving as its Senior Vice President, Operations, Procurement, MIS
and Customer Service from July 1988 to June 1996.
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Mr. Richards was elected as Vice President, Corporate Retail Stores in
July 1996. He previously served as operating Vice President, Southeast
Division from December 1994 to June 1996. Prior to joining the Company, he
was employed by Scrivner, Inc., a wholesale and retail food distribution
company, serving as its Senior Vice President, Store Development from July
1993 to August 1994 and its Executive Vice President, Corporate Stores from
January 1992 to July 1993.
Mr. Lumsden was elected Vice President, Warehouse and Transportation in
May 1992. He previously served as Director, Warehouse and Transportation
from May 1990 to May 1992.
Mr. Maurice was elected Vice President, Store Development in May 1993.
He previously served as operating Vice President, Central Division for more
than five years.
Mr. Scherer was appointed as Chief Financial Officer in November 1995.
His election as Vice President was effective in December 1994, and he served
as Vice President, Planning and Financial Services from December 1994 to
November 1995. He previously served as Director of Strategic Planning and
Financial Services from April 1994 to December 1994, and Director of Planning
and Budgets from January 1988 through April 1994.
Mr. Seiler was elected as Vice President, Corporate Retail Operations
effective as of October 1994. He previously served as operating Vice
President, Iowa Division from May 1993 to October 1994 and Iowa Division
Manager from June 1991 to May 1993.
Mr. Timberlake was elected as Vice President, Human Resources in
November 1995. He previously served as Director of Human Resources from
January 1993 to November 1995 and Director of Training and Management
Development from February 1988 to January 1993.
Mr. McCurry was elected as Vice President, Independent Store Operations
in May 1996. He previously served as Director of Independent Store
Operations from August 1993 to May 1996 and as Distribution Center Manager,
Sioux Falls, South Dakota, from January 1991 to August 1993.
Ms. Allen was elected as Treasurer effective as of January 1996. She
previously served as Assistant Treasurer from May 1995 to January 1996,
Treasury Manager from January 1993 to May 1995, and Treasury Assistant from
September 1987 to January 1993.
12
<PAGE>
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information under the caption "Price Range of Common Stock and
Dividends" on page 15 of the Company's 1996 Annual Report is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The financial information under the caption "Consolidated Summary of
Operations" on pages 26 and 27 of the Company's 1996 Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 14 and 15 of the
Company's 1996 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements and the report of its
independent auditors on pages 16-25 of the Company's 1996 Annual Report are
incorporated herein by reference, as is the unaudited information set forth
under the caption "Quarterly Financial Information" on page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
A. Directors of the Registrant.
The information under the captions "Election of Directors--Information
About Directors and Nominees" and "Election of Directors--Other Information
About Directors and Nominees" in the Company's 1997 Proxy Statement is
incorporated herein by reference.
13
<PAGE>
B. Executive Officers of the Registrant.
Information concerning executive officers of the Company is included in
this Report under Item 4A, "Executive Officers of the Registrant."
C. Compliance with Section 16(a) of the Exchange Act of 1934.
Information under the caption "Compliance with Section 16(a) of the
Exchange Act" in the Company's 1997 Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Election of Directors--Compensation
of Directors" and "Executive Compensation and Other Benefits" in the
Company's 1997 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Principal Stockholders and Beneficial
Ownership of Management" in the Company's 1997 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors--Other
Information About Directors and Nominees" in the Company's 1997 Proxy
Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Financial Statements.
The following Financial Statements are incorporated herein by reference
from the pages indicated in the Company's 1996 Annual Report:
Independent Auditors' Report -- page 16
Consolidated Statements of Earnings for the years ended December 28,
1996, December 30, 1995, and December 31, 1994 -- page 16
14
<PAGE>
Consolidated Statements of Stockholders' Equity for the years ended
December 28, 1996, December 30, 1995, and December 31, 1994 -- page 20
Notes to Consolidated Financial Statements -- pages 20-25
2. Financial Statement Schedules.
The following financial statement schedules are included herein and
should be read in conjunction with the consolidated financial statements
referred to above (page numbers refer to pages in this Report):
Page
----
(a) Valuation and Qualifying Accounts . . . . . . . . . . 18
(b) Other Schedules. Other schedules are omitted as the required
information is inapplicable or the information is presented
in the consolidated financial statements or related notes.
3. EXHIBITS.
The exhibits to this Report are listed in the Exhibit Index on pages E-1
to E-7 herein.
A copy of any of these exhibits will be furnished at a reasonable cost
to any person who was a stockholder of the Company as of March 24, 1997, upon
receipt from any such person of a written request for any such exhibit. Such
request should be sent to Nash Finch Company, 7600 France Avenue South, P.O.
Box 355, Minneapolis, Minnesota, 55440-0355, Attention: Secretary.
The following is a list of each management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c):
A. Nash Finch Profit Sharing Plan -- 1994 Revision and Nash Finch
Profit Sharing Trust Agreement (as restated effective January 1,
1994) (incorporated by reference to Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 (File No. 0-785)).
B. Nash Finch Profit Sharing Plan -- 1994 Revision -- First
Declaration of Amendment (incorporated by reference to Exhibit
10.7 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (File No. 0-785)).
C. Nash Finch Profit Sharing Plan -- 1994 Revision -- Second
Declaration of Amendment (incorporated by reference to Exhibit
10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 (File No. 0-785)).
15
<PAGE>
D. Nash Finch Executive Incentive Bonus and Deferred Compensation
Plan (as amended and restated effective December 31, 1993)
(incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 1,
1994 (File No. 0-785)).
E. Excerpts from minutes of the Board of Directors regarding Nash
Finch Pension Plan, as amended (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1987 (File No. 0-785)).
F. Excerpts from minutes of the Board of Directors regarding Nash
Finch Pension Plan, as amended (incorporated by reference to
Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 1995 (File No. 0-785)).
G. Excerpts from minutes of the Board of Directors regarding
director compensation (filed herewith as Exhibit 10.22).
H. Excerpts from minutes of the Board of Directors regarding
director compensation (filed herewith as Exhibit 10.23).
I. Form of Director Fee Deferral Agreement (incorporated by
reference to Exhibit 10.19 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 1990
(File No. 0-785)).
J. Form of letter agreement specifying benefits in the event of
termination of employment following a change in control of
Nash Finch (incorporated by reference to Exhibit 10.20 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 (File No. 0-785)).
K. Nash Finch Income Deferral Plan (incorporated by reference
to Exhibit 10.17 to the Company's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994 (File No. 0-785)).
16
<PAGE>
L. Nash Finch 1994 Stock Incentive Plan (incorporated by reference
to Exhibit 10.1 to the Registration Statement on Form S-8 filed
July 8, 1994 (File No. 33-54487)).
M. Nash Finch 1995 Director Stock Option Plan (incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended June 17, 1995 (File No. 0-785)).
(b) Reports on Form 8-K:
On November 22, 1996, the Company filed a Form 8-K with the Securities
and Exchange Commission to report the Company's purchase of shares of
outstanding common stock of Super Food Services, Inc. pursuant to a cash
tender offer and the consummation of the merger of Super Food Services, Inc.
with NFC Acquisition Corporation. On January 31, 1997, Amendment No. 1 on
Form 8-K/A, amending the November 22, 1996 filing to include financial
statements for the most recent fiscal year of Super Food Services, Inc. and
required pro forma financial information, was filed.
17
<PAGE>
<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES SCHEDULE II
Valuation and Qualifying Accounts
Fiscal years ended December 28, 1996, December 30, 1995, and December 31, 1994
(In thousands)
Additions
------------------------- Charged
Balance at Charged to (credited) Balance
beginnning costs and Due to to other at end
Description of year expenses acquisitions accounts Deductions of year
- ----------------------------- ---------- --------- ------------ --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
52 weeks ended December 31, 1994:
Allowance for doubtful receivables (d) $8,522 2,187 961 7,123 (e) 14,207 (b) 4,620
34 (a)
Provision for losses relating to
leases on closed locations 168 1,451 - (618) (c) 467 534
-------- -------- -------- -------- -------- --------
$8,690 3,638 961 6,539 14,674 5,154
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
52 weeks ended December 30, 1995:
Allowance for doubtful receivables (d) $4,620 3,997 - 78 (a) 3,815 (b) 4,880
Provision for losses relating to
leases on closed locations 534 1,864 - (106)(c) 397 1,895
-------- -------- -------- -------- -------- --------
$5,154 5,861 - (28) 4,212 6,775
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
52 weeks ended December 28, 1996:
Allowance for doubtful receiveables (d) $4,880 1,893 23,314 126 (a) 2,120 (b) 28,093
Provision for losses relating to
leases on closed locations 1,895 195 - 21 (c) 674 1,437
-------- -------- -------- -------- -------- --------
$6,775 2,088 23,314 147 2,794 29,530
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</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.
<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 28, 1997 NASH-FINCH COMPANY
By/s/Alfred N. Flaten
-----------------------------
Alfred N. Flaten
President, Chief Executive Officer,
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on March 28, 1997 by the following persons
on behalf of the Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ Alfred N. Flaten /s/ Lawrence A. Wojtasiak
- ---------------------------------- ---------------------------------
Alfred N. Flaten, President, Lawrence A. Wojtasiak, Controller
Chief Executive Officer (Principal Executive (Principal Accounting Officer)
Officer) and Director
/s/ John R. Scherer /s/ Carole F. Bitter
- ---------------------------------- ---------------------------------
John R. Scherer, Vice President and Chief Carole F. Bitter, Director
Financial Officer (Principal Financial Officer)
/s/ Richard A. Fisher /s/ Allister P. Graham
- ---------------------------------- ---------------------------------
Richard A. Fisher, Director Allister P. Graham, Director
/s/ Richard G. Lareau
- ---------------------------------- ---------------------------------
John H. Grunewald, Director Richard G. Lareau, Director
/s/ Russell N. Mammel /s/ Don E. Marsh
- ---------------------------------- ---------------------------------
Russell N. Mammel, Director Don E. Marsh, Director
/s/ Donald R. Miller
- ---------------------------------- ---------------------------------
Donald R. Miller, Director Robert F. Nash, Director
/s/ Jerome O. Rodysill
- ----------------------------------
Jerome O. Rodysill, Director
</TABLE>
<PAGE>
NASH FINCH COMPANY
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
For Fiscal Year Ended December 28, 1996
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
2.1 Agreement and Plan of
Merger dated as of October 8,
1996 among the Company,
NFC Acquisition Corporation,
and Super Food Services, Inc. Incorporated by reference to
Exhibit 2.1 to the Company's
Current Report on Form 8-K
dated November 22, 1996
(File No. 0-785).
3.1 Restated Certificate of
Incorporation of the
Company . . . . . . . . . . . . . Incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 28,
1985 (File No. 0-785).
3.2 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 29, 1986 . . . . . . . . . . . . Incorporated by reference to Exhibit 19.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
October 4, 1986 (File No. 0-785).
3.3 Amendment to Restated
Certificate of Incorporation
of the Company, effective
May 15, 1987. . . . . . . . . . . . Incorporated by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-3 (File No. 33-14871).
3.4 Bylaws of the Company
as amended, effective
November 21, 1995. . . . . . . . . Incorporated by reference to Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 30, 1995
(File No. 0-785).
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
4.1 Stockholder Rights
Agreement, dated
February 13, 1996, between
the Company and Norwest
Bank Minnesota,
National Association . . . . . . . Incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated February 13, 1996 (File
No. 0-785).
10.1 Note Agreements, dated
September 15, 1987, between
the Company and IDS Life
Insurance Company, and
between the Company and IDS
Life Insurance Company of
New York
("1987 Note Agreements"). . . . . Incorporated by reference to Exhibit 19.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
October 10, 1987 (File No. 0-785).
10.2 Note Agreements, dated
September 29, 1989,
between the Company
and Nationwide Life Insurance
Company, and between the
Company and West Coast Life
Insurance Company
("1989 Note Agreements"). . . . . Incorporated by reference to Exhibit 19.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
October 7, 1989 (File No. 0-785).
10.3 Note Agreements dated
March 22, 1991, between the
Company and The Minnesota
Mutual Life Insurance
Company, and between the
Company and The Minnesota
Mutual Life Insurance Company
- Separate Account F
("1991 Note Agreements") . . . . . Incorporated by reference to Exhibit 19.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 23, 1991 (File No. 0-785).
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
10.4 Note Agreements, dated as of
February 15, 1993, between
the Company and Principal
Mutual Life Insurance Company,
and between the Company and
Aid Association for Lutherans
("1993 Note Agreements"). . . . . . Incorporated by reference to Exhibit 19.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 27, 1993 (File No. 0-785).
10.5 Note Agreement, dated March 22,
1996, between the Company and
The Variable Annuity Life Insurance
Company, Independent Life and
Accident Insurance Company,
Northern Life Insurance Company,
and Northwestern National Life
Insurance Company
("1996 Note Agreements"). . . . . . . Incorporated by reference to Exhibit 10.6 to
the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995 (File No. 0-785).
10.6 First Amendment to the
1987 Note Agreements, 1989 Note
Agreements, 1991 Note Agreements,
1993 Note Agreements and 1996
Note Agreements dated as of
November 15, 1996 . . . . . . . . . . Filed herewith.
10.7 Second Amendment to the
1987 Note Agreements, 1989 Note
Agreements, 1991 Note Agreement,
1993 Note Agreements and 1996
Note Agreements dated as of
November 15, 1996 . . . . . . . . . . Filed herewith.
10.8 Third Amendment to the
1987 Note Agreements
dated as of January 15, 1997. . . . . Filed herewith.
10.9 Third Amendment to the
1989 Note Agreements
dated as of January 15, 1997 . . . . Filed herewith.
10.10 Third Amendment to the
1991 Note Agreements
dated as of January 15, 1997 . . . . Filed herewith.
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
10.11 Third Amendment to the
1993 Note Agreements
dated as of January 15, 1997 . . . . Filed herewith.
10.12 Third Amendment to the
1996 Note Agreements
dated as of January 15, 1997 . . . . Filed herewith.
10.13 Note Agreements dated
November 1, 1989, between
Super Food Services, Inc. and
Nationwide Life Insurance Co.,
Employers Life Insurance
Company of Wausau, and
West Coast Life Insurance
Company . . . . . . . . . . . . . . Filed herewith.
10.14 Credit Agreement dated as of
October 8, 1996 among the
Company, NFC Acquisition Corp.,
Harris Trust and Savings Bank,
as Adminstrative Agent, and
Bank of Montreal and PNC Bank,
N.A., as Co-Syndication Agents
("Credit Agreement") . . . . . . . . Incorporated by reference to
Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q
for the quarter ended October 5,
1996 (File No. 0-785).
10.15 First Amendment to Credit
Agreement dated as of
December 18, 1996 . . . . . . . . . Filed herewith.
10.16 Nash Finch Profit Sharing
Plan -- 1994 Revision and Nash
Finch Profit Sharing Trust
Agreement (as restated effective
January 1, 1994) . . . . . . . . . . Incorporated by reference to
Exhibit 10.6 to the Company's
Annual Report on Form 10-K for
the fiscal year ended January 1,
1994 (File No. 0-785).
</TABLE>
E-4
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
10.17 Nash Finch Profit Sharing
Plan -- 1994 Revision --
First Declaration of
Amendment. . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.7 to the Company's
Annual Report on Form 10-K
for the fiscal year ended
December 31, 1994 (File
No. 0-785).
10.18 Nash Finch Profit Sharing
Plan -- 1994 Revision --
Second Declaration of
Amendment. . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.10 to the Company's
Annual Report on Form 10-K
for the fiscal year ended
December 30, 1995 (File
No. 0-785).
10.19 Nash Finch Executive
Incentive Bonus and
Deferred Compensation Plan
(as amended and restated
effective December 31, 1993. . . . . . Incorporated by reference to
Exhibit 10.7 to the Company's
Annual Report on Form 10-K
for the fiscal year ended
January 1, 1994 (File
No. 0-785).
10.20 Excerpts from minutes of Board of
Directors regarding Nash Finch Pension
Plan, as amended effective January 2,
1966 . . . . . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.9 to the Company's
Annual Report on Form 10-K
for the fiscal year ended
January 3, 1987 (File
No. 0-785).
10.21 Excerpts from minutes of the
Board of Directors regarding
Nash Finch Pension Plan, as
amended . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the
fiscal year ended December 30,
1995 (File No. 0-785).
</TABLE>
E-5
<PAGE>
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
10.22 Excerpts from minutes of the
Board of Directors regarding
director compensation . . . . . . Filed herewith.
10.23 Excerpts from minutes of the
Board of Directors regarding
director compensation . . . . . . Filed herewith.
10.24 Form of Director Fee
Deferral Agreement . . . . . . . . . . Incorporated by reference to
Exhibit 10.19 to the Company's
Annual Report on Form 10-K for
the fiscal year ended
December 29, 1990 (File
No. 0-785).
10.25 Form of Letter Agreement
Specifying Benefits in the
Event of Temination of
Employment Following a
Change in Control of
Nash Finch. . . . . . . . . . . . . . Incorporated by reference to
Exhibit 10.20 to the Company's
Annual Report on Form 10-K for
the fiscal year ended
December 29, 1990 (File
No. 0-785).
10.26 Nash Finch Income Deferral Plan. . . Incorporated by reference to
Exhibit 10.17 to the Company's
Annual Report on Form 10-K for
the fiscal year ended
January 1, 1994 (File No. 0-785).
10.27 Nash Finch 1994
Stock Incentive Plan . . . . . . . Incorporated by reference to
Exhibit 10.1 to the Company's
Registration Statement on
Form S-8 filed July 8, 1994
(File No. 33-54487).
</TABLE>
E-6
<PAGE>
<TABLE>
<CAPTION>
Item
No. Item Method of Filing
- --- ---- ----------------
<S> <C> <C>
10.28 Nash Finch 1995
Stock Option Plan . . . . . . . . Incorporated by reference to
Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q
for the quarter ended June 17,
1995 (File No. 0-785).
13.1 1996 Annual Report to
Stockholders (selected portions
of pages 14-27). . . . . . . . . Filed herewith.
21.1 Subsidiaries of the
Company. . . . . . . . . . . . . Filed herewith.
23.1 Consent of Ernst & Young LLP . . Filed herewith.
23.2 Consent of KPMG Peat
Marwick, LLP . . . . . . . . . . Filed herewith.
27.1 Financial Data Schedule. . . . . Filed herewith.
</TABLE>
E-7
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NASH-FINCH COMPANY
----------------------------------
FIRST AMENDMENT
Dated as of November 15, 1996
to
NOTE AGREEMENTS
Dated as of September 15, 1987,
Re: $10,000,000 9.9% Senior Notes
Due September 30, 2002
NOTE AGREEMENTS
Dated as of September 29, 1989,
Re: $15,000,000 9.0% Senior Notes
Due September 29, 1999
NOTE AGREEMENTS
Dated as of March 22, 1991,
Re: $15,000,000 8.98% Senior Notes
Due March 22, 2006
NOTE AGREEMENTS
Dated as of March 17, 1993,
Re: $25,000,000 7.54% Senior Notes
Due March 17, 2008
and
NOTE AGREEMENTS
Dated as of March 22, 1996
Re: $30,000,000 7.13% Senior Notes
Due October 1, 2011
<PAGE>
----------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
-2-
<PAGE>
FIRST AMENDMENT TO NOTE AGREEMENTS
THIS FIRST AMENDMENT dated as of November 15, 1996 (the or this "FIRST
AMENDMENT") to the following Note Agreements between the Company and the
respective purchasers listed on Schedule I thereto:
(i) Note Agreements dated as of September 15, 1987;
(ii) Note Agreements dated as of September 29, 1989;
(iii) Note Agreements dated as of March 22, 1991;
(IV) Note Agreements dated as of March 17, 1993; AND
(v) Note Agreements dated as of March 22, 1996,
(collectively, the "NOTE AGREEMENTS") is between NASH-FINCH COMPANY, INC., a
Delaware corporation (the "COMPANY"), and each of the institutions which is a
signatory to this First Amendment (collectively, the "NOTEHOLDERS").
RECITALS:
A. The Company has heretofore entered the Note Agreements with the
respective purchasers listed on Schedule I thereto pursuant to which the
Company has heretofore respectively issued the $10,000,000 9.9% Senior Notes
due September 30, 2002, the $15,000,000 9.0% Senior Notes due September 29,
1999, the $15,000,000 8.98% Senior Notes due March 22, 2006, the $25,000,000
7.54% Senior Notes due March 17, 2008 and $30,000,000 7.13% Senior Notes due
October 1, 2011.
B. The Company and the Noteholders now desire to amend the Note
Agreements in the respects, but only in the respects, hereinafter set forth.
C. Terms used herein shall have the respective meanings ascribed
thereto in the Note Agreements unless herein defined or the context shall
otherwise require.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this First Amendment a valid, legal and
binding instrument according to its terms for the purposes herein expressed
have been done or performed.
<PAGE>
NOW, THEREFORE, the Company and the Noteholders, in consideration of
good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, do hereby agree as follows:
-4-
<PAGE>
SECTION 1. AMENDMENTS.
1.1 Section 6.8(a)(4) (or Section 6.8(a)(iv) as the case may be)
of each of the Note Agreements is hereby amended by deleting the reference to
"60%" set forth therein and inserting in its place the following: "60% (or
70% during the period from November 15, 1996 to December 27, 1996)".
Section 2 of the Existing Note Agreements is hereby amended by inserting
as the last Section (either Section 2.5 or Section 2.6) of Section 2 the
following:
PREPAYMENT AT OPTION OF HOLDERS.
At any time after November 15, 1996 and prior to December 27, 1996, the
holder of any Notes may give the Company notice (the "NOTICE OF ELECTION") at
its address set forth in SECTION 9.6 hereof of the election of such holder to
require the Company to redeem all, but not less than all, of the outstanding
Notes held by such holder (an "ELECTING HOLDER"). The Company shall redeem
the Notes of each Electing Holder on the date which is five (5) business days
after receipt of such Notice of Election by payment of an amount equal to
100% of the principal amount of such Notes, plus the Make Whole Premium
determined for the date of prepayment with respect to such principal amount,
together with interest on such Notes accrued to the date of such prepayment.
Upon any prepayment of less than all of the Notes pursuant to this Section,
the principal amount of each required prepayment of the Notes, if any,
becoming due under Section 2.1 on and after the date of such prepayment shall
be reduced in the same proportion as the aggregate unpaid principal amount of
the Notes is reduced as a result of such prepayment.
The Company will at all times maintain amounts permitted to be actually
borrowed under its Bank Facility equal to or greater than the amount
necessary to prepay all of the Notes pursuant to this Section.
Section 5.1 of the Existing Note Agreements is hereby amended by
inserting the following definition in alphabetical order:
"BANK FACILITY" shall mean Credit Agreement dated as of October 8, 1996
among Nash-Finch Company and the banks signatory thereto.
SECTION 2. MISCELLANEOUS
2.1 This First Amendment shall be construed in connection with and
as part of each of the Note Agreements, and except as modified and expressly
amended by this First
-5-
<PAGE>
Amendment, all terms, conditions and covenants contained in the Note
Agreements and the Notes are hereby ratified and shall be and remain in full
force and effect.
2.2 Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
First Amendment may refer to the Note Agreements without making specific
reference to this First Amendment but nevertheless all such references shall
include this First Amendment unless the context otherwise requires.
2.3 In accordance with the Note Agreements, the Company hereby
agrees to pay, concurrently with the execution and delivery of this First
Amendment, the fees and disbursements of Chapman and Cutler, special counsel
to the Noteholders.
2.4 The descriptive headings of various sections or parts of this
First Amendment are for convenience only, and shall not affect the meaning or
construction of any of the provisions hereof.
2.5 This First Amendment shall be governed by and construed in
accordance with Minnesota law.
2.6 The execution of this First Amendment shall constitute a
contract between us for the uses and purposes hereinabove set forth, and this
First Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but altogether only one agreement.
2.7 The Company hereby represents and warrants that as of the date
hereof, and after giving effect to the amendments set forth herein, no
Default or Event of Default under any of the Note Agreements has occurred and
is continuing.
-6-
<PAGE>
IN WITNESS WHEREOF, the Company and the Noteholders have caused this
instrument to be executed, all as of the day and year first above written.
NASH-FINCH COMPANY
By
Its
------------------------------------
Accepted and Agreed to as of the date aforesaid, and the Undersigned hereby
confirms that on November 15, 1996 it held Notes of the Company as indicated
on Schedule I attached hereto and that on the date of actual execution hereof
it continues to hold such Notes:
IDS LIFE INSURANCE COMPANY
By
Its
------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK
By
Its
------------------------------------
NATIONWIDE LIFE INSURANCE COMPANY
By
Its
------------------------------------
-7-
<PAGE>
WEST COAST LIFE INSURANCE COMPANY
By
Its
------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By
Its
------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY-SEPARATE ACCOUNT F
By
Its
------------------------------------
By
Its
------------------------------------
AID ASSOCIATION FOR LUTHERANS
By
Its
------------------------------------
-8-
<PAGE>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By
Its
------------------------------------
By:
Its
------------------------------------
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By
Its
------------------------------------
INDEPENDENT LIFE AND ACCIDENT INSURANCE
COMPANY
By
Its
------------------------------------
-9-
<PAGE>
NORTHERN LIFE INSURANCE COMPANY
By
Its
------------------------------------
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By
Its
------------------------------------
-10-
<PAGE>
SCHEDULE I
IDS Life Insurance Company $5,400,000
9.9% Senior
Notes
IDS Life Insurance Company of New York $600,000
9.9% Senior
Notes
Nationwide Life Insurance Company $14,000,000
9.0% Senior
Notes
West Coast Life Insurance Company $1,000,000
9.0% Senior
Notes
The Minnesota Mutual Life Insurance Company $11,261,047
8.98% Senior
Notes
The Minnesota Mutual Life Insurance Company $405,553
8.98% Senior
Notes
Principal Mutual Life Insurance Company $13,000,000
7.54% Senior
Notes
Principal Mutual Life Insurance Company $2,000,000
7.54% Senior
Notes
Aid Association for Lutherans $10,000,000
7.54% Senior
Notes
<PAGE>
The Variable Annuity Life Insurance Company $17,000,000
7.13% Senior
Notes
Independent Life and Accident Insurance Company $3,000,000
7.13% Senior
Notes
Northern Life Insurance Company $6,000,000
7.13% Senior
Notes
Northwestern National Life Insurance Company $4,000,000
7.13% Senior
Notes
-12-
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NASH-FINCH COMPANY
-----------------------------------
SECOND AMENDMENT
Dated as of November 15, 1996
to
NOTE AGREEMENTS
Dated as of September 15, 1987,
Re: $10,000,000 9.9% Senior Notes
Due September 30, 2002
NOTE AGREEMENTS
Dated as of September 29, 1989,
Re: $15,000,000 9.0% Senior Notes
Due September 29, 1999
NOTE AGREEMENTS
Dated as of March 22, 1991,
Re: $15,000,000 8.98% Senior Notes
Due March 22, 2006
NOTE AGREEMENTS
Dated as of March 17, 1993,
Re: $25,000,000 7.54% Senior Notes
Due March 17, 2008
and
NOTE AGREEMENTS
Dated as of March 22, 1996
Re: $30,000,000 7.13% Senior Notes
Due October 1, 2011
-----------------------------------
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
-2-
<PAGE>
SECOND AMENDMENT TO NOTE AGREEMENTS
THIS SECOND AMENDMENT dated as of November 15, 1996 (the or this "SECOND
AMENDMENT") to the following Note Agreements between the Company and the
respective purchasers listed on Schedule I thereto:
(i) Note Agreements dated as of September 15, 1987;
(ii) Note Agreements dated as of September 29, 1989;
(iii) Note Agreements dated as of March 22, 1991;
(IV) Note Agreements dated as of March 17, 1993; AND
(v) Note Agreements dated as of March 22, 1996,
(collectively, as amended pursuant to that certain First Amendment dated as
of November 15, 1996 between the Company (as defined hereinbelow) and the
Noteholders (as defined hereinbelow), (the "NOTE AGREEMENTS") is between
NASH-FINCH COMPANY, INC., a Delaware corporation (the "COMPANY"), and each of
the institutions which is a signatory to this Second Amendment (collectively,
the "NOTEHOLDERS").
RECITALS:
A. The Company has heretofore entered into the Note Agreements with
the respective purchasers listed on Schedule I thereto pursuant to which the
Company has heretofore respectively issued the $10,000,000 9.9% Senior Notes
due September 30, 2002, the $15,000,000 9.0% Senior Notes due September 29,
1999, the $15,000,000 8.98% Senior Notes due March 22, 2006, the $25,000,000
7.54% Senior Notes due March 17, 2008 and $30,000,000 7.13% Senior Notes due
October 1, 2011.
B. The Company and the Noteholders now desire to amend the Note
Agreements in the respects, but only in the respects, hereinafter set forth.
C. Terms used herein shall have the respective meanings ascribed
thereto in the Note Agreements unless herein defined or the context shall
otherwise require.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this Second Amendment a valid, legal and
binding instrument according to its terms for the purposes herein expressed
have been done or performed.
<PAGE>
NOW, THEREFORE, the Company and the Noteholders, in consideration of
good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1 Section 6.8(a)(4) (or Section 6.8(a)(iv) as the case may be)
of each of the Note Agreements is hereby amended by deleting the reference to
"December 27, 1996" set forth therein and inserting in its place the
following: "January 17, 1997".
The last section of Section 2 of the Note Agreements (either Section 2.5
or Section 2.6 thereof) is hereby amended by deleting the reference to
"December 27, 1996" set forth therein and inserting in its place the
following: "January 17, 1997"
SECTION 2. MISCELLANEOUS
2.1 This Second Amendment shall be construed in connection with
and as part of each of the Note Agreements, and except as modified and
expressly amended by this Second Amendment, all terms, conditions and
covenants contained in the Note Agreements and the Notes are hereby ratified
and shall be and remain in full force and effect.
2.2 Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Second Amendment may refer to the Note Agreements without making specific
reference to this Second Amendment but nevertheless all such references shall
include this Second Amendment unless the context otherwise requires.
2.3 In accordance with the Note Agreements, the Company hereby
agrees to pay, concurrently with the execution and delivery of this Second
Amendment, the fees and disbursements of Chapman and Cutler, special counsel
to the Noteholders.
2.4 The descriptive headings of various sections or parts of this
Second Amendment are for convenience only, and shall not affect the meaning
or construction of any of the provisions hereof.
2.5 This Second Amendment shall be governed by and construed in
accordance with Minnesota law.
2.6 The execution of this Second Amendment shall constitute a
contract between us for the uses and purposes hereinabove set forth, and this
Second Amendment may be
-4-
<PAGE>
executed in any number of counterparts, each executed counterpart
constituting an original, but altogether only one agreement.
2.7 The Company hereby represents and warrants that as of the date
hereof, and after giving effect to the amendments set forth herein, no
Default or Event of Default under any of the Note Agreements has occurred and
is continuing.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company and the Noteholders have caused this
instrument to be executed, all as of the day and year first above written.
NASH-FINCH COMPANY
By
Its
-----------------------------------
Accepted and Agreed to as of the date aforesaid, and the Undersigned hereby
confirms that on December 16, 1996 it held Notes of the Company as indicated
on Schedule I attached hereto and that on the date of actual execution hereof
it continues to hold such Notes:
IDS LIFE INSURANCE COMPANY
By
Its
-----------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK
By
Its
-----------------------------------
NATIONWIDE LIFE INSURANCE COMPANY
By
Its
-----------------------------------
-6-
<PAGE>
WEST COAST LIFE INSURANCE COMPANY
By
Its
-----------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By
Its
-----------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY-SEPARATE ACCOUNT F
By
Its
-----------------------------------
By
Its
-----------------------------------
AID ASSOCIATION FOR LUTHERANS
By
Its
-----------------------------------
-7-
<PAGE>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By
Its
-----------------------------------
By:
Its
-----------------------------------
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By
Its
-----------------------------------
INDEPENDENT LIFE AND ACCIDENT INSURANCE
COMPANY
By
Its
-----------------------------------
-8-
<PAGE>
NORTHERN LIFE INSURANCE COMPANY
By
Its
-----------------------------------
NORTHWESTERN NATIONAL LIFE INSURANCE
COMPANY
By
Its
-----------------------------------
-9-
<PAGE>
SCHEDULE I
IDS Life Insurance Company $5,400,000
9.9% Senior
Notes
IDS Life Insurance Company of New York $600,000
9.9% Senior
Notes
Nationwide Life Insurance Company $14,000,000
9.0% Senior
Notes
West Coast Life Insurance Company $1,000,000
9.0% Senior
Notes
The Minnesota Mutual Life Insurance Company $11,261,047
8.98% Senior
Notes
The Minnesota Mutual Life Insurance Company $405,553
8.98% Senior
Notes
Principal Mutual Life Insurance Company $13,000,000
7.54% Senior
Notes
Principal Mutual Life Insurance Company $2,000,000
7.54% Senior
Notes
Aid Association for Lutherans $10,000,000
7.54% Senior
Notes
<PAGE>
The Variable Annuity Life Insurance Company $17,000,000
7.13% Senior
Notes
Independent Life and Accident Insurance Company $3,000,000
7.13% Senior
Notes
Northern Life Insurance Company $6,000,000
7.13% Senior
Notes
Northwestern National Life Insurance Company $4,000,000
7.13% Senior
Notes
-11-
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Dated as of January 15, 1997
Re: Note Agreements Dated as of September 15, 1987
and
$10,000,000 original principal amount of 9.9%
Senior Notes Due September 30, 2002
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2
Section 1.1. General Reference Amendment 2
Section 1.2. Amendments to Section 1.1 2
Section 1.3. Amendments to Section 2 2
Section 1.4. Amendments to Section 5.1 5
Section 1.5. Amendment to Section 6.7 6
Section 1.6. Amendment to Section 6.8 6
SECTION 2. AMENDMENT OF EXISTING NOTES 7
Section 2.1. Amendment of Existing Notes. 7
Section 3. Exchange of Notes 7
Section 3.1. Issuance of Notes 7
Section 3.2. Form and Registration 8
Section 3.3. Delivery of Notes 8
Section 3.4. Exchange Not Deemed Prepayment 8
Section 4. Conditions Precedent and Additional Agreements 8
Section 4.1. Conditions Precedent 8
Section 5. Representations 9
Section 5.1. Representations of the Company 9
Section 6. Miscellaneous 9
Section 6.1. Capitalized Terms 9
Section 6.2. Existing Note Agreements 10
Section 6.3. References 10
Section 6.4. Successors and Assigns 10
Section 6.5. Governing Law 10
Section 6.6. Expenses 10
Section 6.7. Counterparts 11
-2-
<PAGE>
Signature 11
-3-
<PAGE>
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Re:
Note Agreements Dated as of September 15, 1987
and
$10,000,000 original principal amount of 9.9%
Senior Notes Due September 30, 2002
Dated as of
January 15, 1997
(the "EFFECTIVE DATE")
To Each of the Holders
of Notes listed in Schedule I
to the Note Agreements described below
Gentlemen:
Reference is made to (i) the separate Note Agreements each dated as of
September 15, 1987 between NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by
that certain First Amendment dated as of November 15, 1996 and that certain
Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING
NOTE AGREEMENTS"), and (ii) the $10,000,000 original principal amount of 9.9%
Senior Notes due September 30, 2002 issued pursuant to the Existing Note
Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended
hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing
Notes, as amended hereby, shall be referred to as the "NOTES."
For good and valuable consideration, the Company requests the amendment
of certain provisions of the Existing Note Agreements and the Existing Notes
as hereinafter provided.
<PAGE>
Upon your acceptance hereof and the satisfaction of all conditions
precedent hereto, this Third Amendment Agreement shall constitute a contract
between us amending the Existing Note Agreements and the Existing Notes, but
only in the respects hereinafter set forth:
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS.
SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15,
1997, each reference in the Existing Note Agreements and the Existing Notes
to the "$10,000,000 9.9% Senior Notes Due September 30, 2002", is hereby
amended to refer to the "$10,000,000 First Amended and Restated 10.9% Senior
Notes Due September 30, 2004";
SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January
15, 1997, Section 1.1 of the Existing Note Agreements is hereby amended to
change the references in such section from "9.9%" and "10.9" to "10.9%" and
"11.9%", respectively and to change the references in such section from
"September 30, 2002" to "September 30, 2004" .
(b) Section 1.1 of the Existing Note Agreements is hereby amended by
inserting the following paragraph at the end thereof:
Notwithstanding anything contained herein to the contrary, in
addition to the stated interest rate applicable to the Notes
(including, without limitation, the interest rate applicable to
overdue payments in respect of the Notes), the Notes shall bear
additional interest at the rate of .50% per annum during any
Interest Rate Event Period.
SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the
Existing Note Agreements is hereby amended to read in its entirety as follows:
SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The Company
agrees that it will prepay and apply, and there shall become due
and payable an amount equal to $750,000 on October 1 in each year
beginning September 30, 1997 up to and including September 30, 2003
in respect of the aggregate principal indebtedness evidenced by the
Notes. The remaining unpaid principal amount of the Notes and
accrued and unpaid interest thereon shall be due and payable on
September 30, 2004.
No premium shall be payable in connection with any required
prepayment made pursuant to this SECTION 2.1. Upon any
-5-
<PAGE>
repurchase of less than all of the outstanding Notes pursuant to
SECTION 2.6, SECTION 2.7 or SECTION 6.13, the principal amount of
each required principal prepayment of the Notes becoming due under
this SECTION 2.1 on and after the date of such prepayment or
purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such
repurchase. For purposes of this SECTION 2.1, any prepayment of
less than all of the outstanding Notes pursuant to SECTION 2.2
shall be deemed to be applied first to the amount of principal
scheduled to remain unpaid on September 30, 2004, and then to the
remaining scheduled principal payments in inverse chronological
order.
(b) Section 2 of the Existing Note Agreements is hereby amended to
insert the following new Section 2.7 at the end thereof:
SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE IN
CONTROL OR CONTROL EVENT. The Company will, within 3 days after
any Change in Control or Control Event, give written notice of such
Change in Control or Control Event to each holder of Notes UNLESS
notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given
pursuant to subparagraph (b) of this SECTION 2.7. If a Change in
Control has occurred, such notice shall contain and constitute an
offer to prepay Notes as described in subparagraph (c) of this
SECTION 2.7 and shall be accompanied by the certificate described
in subparagraph (g) of this SECTION 2.7.
(b) CONDITION TO COMPANY ACTION. The Company will not take
any action that consummates or finalizes a Change in Control unless
(i) at least 45 days prior to such action it shall have given to
each holder of Notes written notice containing and constituting an
offer to prepay Notes as described in subparagraph (c) of this
SECTION 2.7, accompanied by the certificate described in
subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously
with such action, it prepays all Notes required to be prepaid in
accordance with this SECTION 2.7.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by subparagraphs (a) and (b) of this SECTION 2.7 shall
be an offer to prepay, in accordance with and subject to this
SECTION 2.7, all, but
-6-
<PAGE>
not less than all, of the Notes held by each holder (in this case
only, "HOLDER" in respect of any Note registered in the name of a
nominee for a disclosed beneficial owner shall mean such beneficial
owner) on a date specified in such offer (the "PROPOSED PREPAYMENT
DATE"). If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this SECTION 2.7, such
date shall be not less than 30 days and not more than 45 days after
the date of such offer (if the Proposed Prepayment Date shall not
be specified in such offer, the Proposed Prepayment Date shall be
the 45th day after the date of such offer).
(d) ACCEPTANCE. A holder of Notes may accept the offer to
prepay made pursuant to this SECTION 2.7 by causing a notice of
such acceptance to be delivered to the Company at least 5 days
prior to the Proposed Prepayment Date. A failure by a holder of
Notes to respond to an offer to prepay made pursuant to this
SECTION 2.7 shall be deemed to constitute an acceptance of such
offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this SECTION 2.7 shall be at 100% of the principal
amount of such Notes, plus the Make Whole Premium determined for
the date of prepayment with respect to such principal amount,
together with interest on such Notes accrued to the date of
prepayment. On the business day preceding the date of prepayment,
the Company shall deliver to each holder of Notes being prepaid a
statement showing the Make Whole Premium due in connection with
such prepayment and setting forth the details of the computation of
such amount. The prepayment shall be made on the Proposed
Prepayment Date except as provided in subparagraph (f) of this
SECTION 2.7.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of
the Company to prepay Notes pursuant to the offers required by
subparagraph (b) and accepted in accordance with subparagraph (d)
of this SECTION 2.7 is subject to the occurrence of the Change in
Control in respect of which such offers and acceptances shall have
been made. In the event that such Change in Control does not occur
on the Proposed Prepayment Date in respect thereof, the prepayment
shall be deferred until and shall be made on the date on which such
Change in Control occurs. The Company shall keep each holder of
Notes reasonably and timely
-7-
<PAGE>
informed of (i) any such deferral of the date of prepayment, (ii)
the date on which such Change in Control and the prepayment are
expected to occur, and (iii) any determination by the Company that
efforts to effect such Change in Control have ceased or been
abandoned (in which case the offers and acceptances made pursuant
to this SECTION 2.7 in respect of such Change in Control shall be
deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this SECTION 2.7 shall be accompanied by a certificate,
executed by a senior financial officer of the Company and dated the
date of such offer, specifying: (i) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this SECTION 2.7; (iii)
the principal amount of each Note offered to be prepaid; (iv) the
estimated Make Whole Premium due in connection with such prepayment
(calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation; (v) the
interest that would be due on each Note offered to be prepaid,
accrued to the Proposed Prepayment Date; (vi) that the conditions
of this SECTION 2.7 have been fulfilled; and (vii) in reasonable
detail, the nature and date or proposed date of the Change in
Control.
(h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means
any of the following events or circumstances:
if any person (as such term is used in section 13(d) and
section 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") or related persons constituting a
group (as such term is used in Rule 13d-5 under the Exchange
Act), become the "beneficial owners" (as such term is used in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than 35% of the total voting power of all classes then
outstanding of the Company's voting stock.
(i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
-8-
<PAGE>
(i) the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or letter of
intent with respect to any proposed transaction or event or
series of transactions or events which, individually or in the
aggregate, may reasonably be expected to result in a Change in
Control,
(ii) the execution of any written agreement which, when
fully performed by the parties thereto, would result in a
Change in Control, or
(iii) the making of any written offer by any person
(as such term is used in section 13(d) and section 14(d)(2) of
the Exchange Act) or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange Act) to the
holders of the common stock of the Company, which offer, if
accepted by the requisite number of holders, would result in a
Change in Control.
SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the
Existing Note Agreements is hereby amended as follows: (a) by inserting the
following definitions in alphabetical order:
"DEBT" with respect to any Person shall mean, without
duplication, the sum of:
(a) the obligations of such Person for borrowed money or
which have been incurred in connection with the acquisition of
assets;
(b) liabilities secured by any Lien existing on Property
owned by such Person (whether or not such liabilities have been
assumed);
(c) Capitalized Rentals under any Capitalized Lease; and
-9-
<PAGE>
(d) all Guarantees of Debt of others, whether or not
reflected in the balance sheet of such Person.
"INTEREST RATE EVENT PERIOD" shall mean any period during
which the Company fails to have outstanding unsecured long-term
Indebtedness which has a then current rating of BBB- or higher by
Standard & Poor's Corporation.
(b) by amending the definition of "Make Whole Premium" so that the
reference to "the original yield to maturity of the Notes" contained therein
shall read "10.9%" as and after the effective date hereof.
SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any
time, permit Stockholders' Equity to be less than the sum of (a)
$170,000,000, plus (b) an aggregate amount equal to 25% of its
Consolidated Net Income (but, in each case, only if a positive number)
for each completed fiscal year beginning with the fiscal year ended
January 3, 1998.
SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any
Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Debt, except:
(i) the Notes;
(ii) Debt of the Company and its Subsidiaries outstanding as
of the date of this Agreement and reflected on the consolidated
balance sheet of the Company and its Subsidiaries as of June 20,
1987;
(iii) additional unsecured Debt of the Company; PROVIDED
that at the time of issuance thereof and after giving effect
thereto and to the application of the proceeds thereof Debt of the
Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP shall not, during any fiscal year set forth
below, exceed the percent of Total Capitalization set forth
opposite such period:
-10-
<PAGE>
PERCENTAGE OF DEBT TO
FISCAL YEAR TOTAL CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(iv) additional Debt of the Company and its Subsidiaries
secured by Liens permitted by and incurred within the limitations
of SECTION 6.9(a)(8) or SECTION 6.9(a)(9); PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP shall not, during any fiscal year set forth below, exceed the
percent of Total Capitalization set forth opposite such period:
PERCENTAGE OF
DEBT TO TOTAL
FISCAL YEAR CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(v) Debt of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary.
SECTION 2. AMENDMENT OF EXISTING NOTES.
SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be
and are hereby amended to be in the form of Exhibit A hereto.
SECTION 3. EXCHANGE OF NOTES.
-11-
<PAGE>
SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver
on the Effective Date of this Third Amendment Agreement the new Notes in the
form of Exhibit A hereto to the Noteholders in exchange for their outstanding
Existing Notes. The Noteholders agree to surrender their Existing Notes to the
Company in exchange for the new Notes, and the Existing Notes shall be canceled
by the Company and shall be void. The Company shall pay any stamp tax or
governmental charge imposed upon such exchange (including, without limitation,
any income or similar tax that is imposed upon the gain, if any, that is
realized by such Noteholder in connection with the exchange). Notwithstanding
anything contained herein to the contrary, the Notes shall bear interest at the
rate of 9.9% per annum for the period from September 30, 1996 to and including
January 14, 1997.
SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a
single registered Note, shall be registered in the name of the Noteholder
surrendering such Existing Note as reflected on the books and records of the
Company, shall be issued for the same principal amount (after giving effect to
all prepayments of Notes prior to January 15, 1997) as the outstanding principal
amount of the Existing Note surrendered in exchange therefor, and shall be dated
September 30, 1996.
SECTION 3.3. DELIVERY OF NOTES . The Company shall deliver the Notes in
proper form at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, to be held by such firm for delivery against surrender
by the Noteholders in exchange therefor of the Existing Notes.
SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and
the Company agrees that the amendments affected pursuant to this Third Amendment
Agreement and the exchange of Notes for Existing Notes pursuant to this Third
Amendment Agreement shall not be deemed a prepayment, redemption or repurchase
of the Existing Notes for any purpose, including Section 2 or Section 6.13 of
the Note Agreements.
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS.
SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set
forth in Section 1 of this Third Amendment Agreement are effective subject to
the satisfaction of the following conditions precedent:
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
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<PAGE>
(b) The holders of 100% of the outstanding principal amount of the
Notes shall have consented to this Third Amendment Agreement as
evidenced by their execution hereof.
(c) The Company shall have provided to the holders of the Notes an
opinion of Jon J. Solberg, Esq., counsel to the Company, substantially
in the form Exhibit B hereto and otherwise in form and substance
satisfactory to the holders of the Notes.
(d) The fees and disbursements of special counsel to the holders
of the Notes incurred through the Closing Date shall have been satisfied
by the Company.
SECTION 5. REPRESENTATIONS.
SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants that as of the date of execution and delivery of this
Third Amendment Agreement and as of the Effective Date:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation.
(b) The Company has the requisite power to own its property and to
carry on its business as now being conducted.
(c) The Company is duly qualified and in good standing as a
foreign corporation, authorized to do business in each jurisdiction in
which the failure to do so would, individually or in the aggregate, have
a material adverse effect on the business, condition (financial or
other), assets, operations, properties or prospects of the Company.
(d) This Third Amendment Agreement and the Note Agreements and
Notes (as amended hereby) are within the corporate powers of the Company
and have been duly authorized by all necessary corporate action on the
part of the Company and constitute (or, in the case of this Third
Amendment Agreement, when executed and delivered by holders of 100% of
the outstanding principal amount of the Notes will constitute) legal,
valid and binding obligations of the Company enforceable in accordance
with their respective terms.
(e) The execution, delivery and performance of this Third
Amendment Agreement by the Company does not and will not result in a
violation of or default under (A) the certificate of incorporation or
bylaws of the Company, (B) any agreement to which the Company is a party
or by which it is bound or to which the Company or any of
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<PAGE>
its properties is subject, (C) any order, writ, injunction or decree
binding on the Company, or (D) any statute, regulation, rule or other
law applicable to the Company.
(f) No material authorization, consent, approval, exemption or
action by or notice to or filing with any court or administrative or
governmental body is required in connection with the execution and
delivery of this Third Amendment Agreement or the consummation of the
transactions contemplated hereby.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment Agreement shall have the respective meanings specified in the Existing
Note Agreements unless otherwise herein defined or the context hereof shall
otherwise require.
SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all
terms and provisions of the Existing Note Agreements are hereby ratified,
confirmed and approved in all respects.
SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and
other instruments, including the Notes, may refer to the "Note Agreements," or
the "Note Agreements each dated as of September 15, 1987" without making
specific reference to this Third Amendment Agreement, but nevertheless all such
references shall be deemed to include this Third Amendment Agreement unless the
context shall otherwise require.
SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment Agreement and
all covenants herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereunder. All covenants
made by the Company and the Noteholders herein shall survive the closing and the
delivery of this Third Amendment Agreement.
SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be
governed by and construed in accordance with Minnesota law.
SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all
reasonable expenses of the Noteholders in connection with the negotiation,
preparation, execution and delivery of this Amendment and the transactions
contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements.
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<PAGE>
SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one instrument.
NASH-FINCH COMPANY
By:
Its
--------------------------------
--
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed
to as of the Effective Date and the undersigned hereby confirms that on
January 15, 1997 and as of the date of execution and delivery hereof
immediately prior to the exchange of Notes provided for herein it held Notes
of the Company as indicated on Schedule I hereto.
IDS LIFE INSURANCE COMPANY
By:
Its
IDS LIFE INSURANCE COMPANY OF NEW
YORK
By:
Its
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<PAGE>
NASH-FINCH COMPANY
First Amended and Restated 10.9% Senior Note Due September 30, 2004
PPN: _________________
No. R- September 30, 1996
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS
($ ) on September 30, 2004 together with interest on the principal
amount from time to time remaining unpaid hereon at the rate of 9.9% per
annum from and after the date hereof through and including January 14, 1997
and at the rate of 10.9% per annum from January 15, 1997 until maturity
(computed on the basis of a 360-day year of 12 consecutive 30-day months) in
installments payable on March 31, 1997 and on the last day of each March and
September thereafter to and including the date of maturity hereof. The
Company further promises to pay interest on each overdue installment of
principal, premium, if any, and (to the extent legally enforceable) upon each
overdue installment of interest at the rate of 11.9% per annum in each case
from and after the maturity of each such installment, whether by acceleration
or otherwise, until paid. Subject only to SECTION 2.5 of the Note Agreements
hereinafter referred to, both the principal hereof, premium, if any, and
interest at the rate of 10.9% per annum hereon are payable at the principal
office of the Company in Minneapolis, Minnesota, in coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is one of the First Amended and Restated 10.9% Senior Notes due
September 30, 2004 of the Company in the aggregate principal amount of
$10,000,000 issued or to be issued under and pursuant to the terms and
provisions of separate and several Note Agreements each dated as of
September 15, 1987 (collectively, the "NOTE AGREEMENTS") entered into by the
Company with the institutional investors named in Schedule I thereto as amended
by that certain First Amendment dated as of November 15, 1996, as amended by
that certain Second Amendment dated as of November 15, 1996 and as amended by
that certain Third Amendment Agreement dated as of January 15, 1997. This Note
and the holder hereof are entitled equally
Exhibit A
(to Third Amentment Agreement)
<PAGE>
and ratably with the holders of all other Notes outstanding under the Note
Agreements to all the benefits provided for thereby or referred to therein,
to which Note Agreements reference is hereby made for the statement thereof.
This Note amends and restates in its entirety that certain 9.9% Senior Note
Number R-___, in the original principal amount of $__________ issued by the
Company on ____ and registered in the name of __________________.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity date and certain
prepayments are required to be made thereon by the Company, all in the
events, on the terms and in the manner and amounts as provided in the Note
Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
Notwithstanding anything contained herein to the contrary, in addition
to the stated interest rate applicable to the Notes (including, without
limitation, the interest rate applicable to overdue payments in respect of
the Notes), the Notes shall bear additional interest at the rate of .50% per
annum during any Interest Rate Event Period (as defined in the Note
Agreements).
A-18
<PAGE>
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly
endorsed or accompanied by a written statement of transfer duly executed by
the registered holder of this Note or his attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Note shall be made only to or upon the order in writing of the
registered holder.
NASH-FINCH COMPANY
By
Its
A-19
<PAGE>
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of counsel for the Company called for by SECTION
4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date
and addressed to the Noteholders, shall be satisfactory in scope and form to
the Noteholders and shall be to the effect that:
1. The Company is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite power and the authority to execute and
perform the Note Agreements, as amended, and to issue the Notes, as
amended, and has the full requisite power and the authority to conduct
the activities in which it is now engaged.
2. Each Note Agreement, as amended, has been duly authorized by
all necessary action on the part of the Company, has been duly executed
and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. The Notes, as amended, have been duly authorized by all
necessary action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
The opinion of Jon J. Solberg, Esq. shall cover such other matters relating
to the Third Amendment Agreement as the holders of the Notes may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
EXHIBIT B
(to Third Amendment Agreement)
<PAGE>
SCHEDULE I
SHER CO. (AS NOMINEE OF IDS $5,400,000 R-1
Life Insurance Company) 9.9% Senior Notes
Wallar & Co. (as nominee of $600,000 R-2
IDS Life Insurance Company 9.9% Senior Notes
of New York)
Schedule I
<PAGE>
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- ------------------------------------------------------------------------------
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Dated as of January 15, 1997
Re: Note Agreements Dated as of September 29, 1989
and
$15,000,000 original principal amount of 9.0%
Senior Notes Due September 29, 1999
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2
Section 1.1. General Reference Amendment 2
Section 1.2. Amendments to Section 1.1 2
Section 1.3. Amendment to Section 2 2
Section 1.4. Amendment to Section 5.1 5
Section 1.5. Amendment to Section 6.7 6
Section 1.6. Amendment to Section 6.8 6
SECTION 2. AMENDMENT OF EXISTING NOTES 7
Section 2.1. Amendment of Existing Notes 7
SECTION 3. EXCHANGE OF NOTES 7
Section 3.1. Issuance of Notes 7
Section 3.2. Form and Registration 8
Section 3.3. Delivery of Notes 8
Section 3.4. Exchange Not Deemed Prepayment 8
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 8
Section 4.1. Conditions Precedent 8
SECTION 5. REPRESENTATIONS 9
Section 5.1. Representations of the Company 9
SECTION 6. MISCELLANEOUS 9
Section 6.1. Capitalized Terms 9
Section 6.2. Existing Note Agreements 10
Section 6.3. References 10
Section 6.4. Successors and Assigns 10
Section 6.5. Governing Law 10
Section 6.6. Expenses 10
Section 6.7. Counterparts 11
<PAGE>
Signature 11
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<PAGE>
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Re:
NOTE AGREEMENTS DATED AS OF SEPTEMBER 29, 1989
and
$15,000,000 original principal amount of 9.0%
Senior Notes Due September 29, 1999
Dated as of
January 15, 1997
(the "EFFECTIVE DATE")
To Each of the Holders
of Notes listed in Schedule I
to the Note Agreements described below
Gentlemen:
Reference is made to (i) the separate Note Agreements each dated as of
September 29, 1989 between NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by
that certain First Amendment dated as of November 15, 1996 and that certain
Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING
NOTE AGREEMENTS"), and (ii) the $15,000,000 original principal amount of 9.0%
Senior Notes due September 29, 1999 issued pursuant to the Existing Note
Agreements (the "EXISTING NOTES"). The Existing Note Agreements, as amended
hereby, shall be referred to as the "NOTE AGREEMENTS," and the Existing Notes,
as amended hereby, shall be referred to as the "NOTES."
For good and valuable consideration, the Company requests the amendment of
certain provisions of the Existing Note Agreements and the Existing Notes as
hereinafter provided.
<PAGE>
Upon your acceptance hereof and the satisfaction of all conditions
precedent hereto, this Third Amendment Agreement shall constitute a contract
between us amending the Existing Note Agreements and the Existing Notes, but
only in the respects hereinafter set forth:
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS.
SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15,
1997, each reference in the Existing Note Agreements and the Existing Notes to
the "$15,000,000 9.0% Senior Notes Due September 29, 1999", is hereby amended to
refer to the "$15,000,000 First Amended and Restated 10.0% Senior Notes Due
September 29, 2001";
SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15,
1997, Section 1.1 of the Existing Note Agreements is hereby amended to change
the references in such section from "9.0%" and "10.0" to "10.0%" and "11.0%",
respectively and to change the references in such section from "September 29,
1999" to "September 29, 2001" .
(b) Section 1.1 of the Existing Note Agreements is hereby amended by
inserting the following paragraph at the end thereof:
Notwithstanding anything contained herein to the
contrary, in addition to the stated interest rate applicable
to the Notes (including, without limitation, the interest
rate applicable to overdue payments in respect of the
Notes), the Notes shall bear additional interest at the rate
of .50% per annum during any Interest Rate Event Period.
SECTION 1.3. AMENDMENT TO SECTION 2. Section 2 of the Existing Note
Agreements is hereby amended to insert the following new Section 2.6 at the end
thereof:
SECTION 2.6. CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will,
within 3 days after any Change in Control or Control Event, give written
notice of such Change in Control or Control Event to each holder of Notes
UNLESS notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given pursuant
to subparagraph (b) of this SECTION 2.6. If a Change in Control has
occurred, such notice shall contain and constitute an offer to prepay Notes
as described in subparagraph (c) of this SECTION 2.6 and shall be
accompanied by the certificate described in subparagraph (g) of this
SECTION 2.6.
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<PAGE>
(b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless (i) at
least 45 days prior to such action it shall have given to each holder of
Notes written notice containing and constituting an offer to prepay Notes
as described in subparagraph (c) of this SECTION 2.6, accompanied by the
certificate described in subparagraph (g) of this SECTION 2.6, and
(ii) contemporaneously with such action, it prepays all Notes required to
be prepaid in accordance with this SECTION 2.6.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this SECTION 2.6 shall be an offer to prepay,
in accordance with and subject to this SECTION 2.6, all, but not less than
all, of the Notes held by each holder (in this case only, "HOLDER" in
respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified in
such offer (the "PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment
Date is in connection with an offer contemplated by subparagraph (a) of
this SECTION 2.6, such date shall be not less than 30 days and not more
than 45 days after the date of such offer (if the Proposed Prepayment Date
shall not be specified in such offer, the Proposed Prepayment Date shall be
the 45th day after the date of such offer).
(d) ACCEPTANCE. A holder of Notes may accept the offer to prepay
made pursuant to this SECTION 2.6 by causing a notice of such acceptance to
be delivered to the Company at least 5 days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond to an offer to
prepay made pursuant to this SECTION 2.6 shall be deemed to constitute an
acceptance of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to
this SECTION 2.6 shall be at 100% of the principal amount of such Notes,
plus the Make Whole Premium determined for the date of prepayment with
respect to such principal amount, together with interest on such Notes
accrued to the date of prepayment. On the business day preceding the date
of prepayment, the Company shall deliver to each holder of Notes being
prepaid a statement showing the Make Whole Premium due in connection with
such prepayment and setting forth the details of the computation of such
amount. The prepayment shall be made on the Proposed Prepayment Date
except as provided in subparagraph (f) of this SECTION 2.6.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
Company to prepay Notes pursuant to the offers required by subparagraph (b)
and accepted in accordance with subparagraph (d) of this SECTION 2.6 is
subject to the occurrence of the Change in Control in respect of which such
offers and acceptances shall have been made. In the event that such Change
in Control does not occur on the Proposed Prepayment Date in
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<PAGE>
respect thereof, the prepayment shall be deferred until and shall be
made on the date on which such Change in Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of (i)
any such deferral of the date of prepayment, (ii) the date on which such
Change in Control and the prepayment are expected to occur, and (iii)
any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and
acceptances made pursuant to this SECTION 2.6 in respect of such Change
in Control shall be deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant
to this SECTION 2.6 shall be accompanied by a certificate, executed by a
senior financial officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this SECTION 2.6; (iii) the principal amount of each Note
offered to be prepaid; (iv) the estimated Make Whole Premium due in
connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such
computation; (v) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions
of this SECTION 2.6 have been fulfilled; and (vii) in reasonable detail,
the nature and date or proposed date of the Change in Control.
(h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means any of
the following events or circumstances:
if any person (as such term is used in section 13(d) and section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act), become the
"beneficial owners" (as such term is used in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 35% of the
total voting power of all classes then outstanding of the Company's
voting stock.
(i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of its Subsidiaries
or Affiliates of any agreement or letter of intent with respect to
any proposed transaction or event or series of transactions or
events which, individually or in the aggregate, may reasonably be
expected to result in a Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in
Control, or
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<PAGE>
(iii) the making of any written offer by any person (as such
term is used in section 13(d) and section 14(d)(2) of the Exchange
Act) or related persons constituting a group (as such term is used
in Rule 13d-5 under the Exchange Act) to the holders of the common
stock of the Company, which offer, if accepted by the requisite
number of holders, would result in a Change in Control.
SECTION 1.4. AMENDMENT TO SECTION 5.1. Section 5.1 of the Existing Note
Agreements is hereby amended as follows: (a) by inserting the following
definitions in alphabetical order:
"DEBT" with respect to any Person shall mean, without duplication, the
sum of:
(a) the obligations of such Person for borrowed money or which have
been incurred in connection with the acquisition of assets;
(b) liabilities secured by any Lien existing on Property owned by
such Person (whether or not such liabilities have been assumed);
(c) Capitalized Rentals under any Capitalized Lease; and
(d) all Guarantees of Debt of others, whether or not reflected in the
balance sheet of such Person.
"INTEREST RATE EVENT PERIOD" shall mean any period
during which the Company fails to have outstanding unsecured
long-term Indebtedness which has a then current rating of
BBB- or higher by Standard & Poor's Corporation.
(b) by amending the definition of "Make Whole Premium" so that the
reference to "the original yield to maturity of the Notes" contained therein
shall read 10.0% as and after the effective date hereof.
Section 1.5. Amendment to Section 6.7. Section 6.7 of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any
time, permit Stockholders' Equity to be less than the sum of (a)
$170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated
Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ended January 3, 1998.
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<PAGE>
SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any
Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Debt, except:
(i) the Notes;
(ii) Debt of the Company and its Subsidiaries outstanding as
of the date of this Agreement and reflected on the consolidated
balance sheet of the Company and its Subsidiaries as of June 17,
1989;
(iii) additional unsecured Debt of the Company; PROVIDED
that at the time of issuance thereof and after giving effect
thereto and to the application of the proceeds thereof Debt of the
Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP shall not, during any fiscal year set forth
below, exceed the percent of Total Capitalization set forth
opposite such period:
PERCENTAGE OF DEBT TO
FISCAL YEAR TOTAL CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(iv) additional Debt of the Company and its Subsidiaries
secured by Liens permitted by and incurred within the limitations
of SECTION 6.9(a)(8) or SECTION 6.9(a)(9); PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP shall not, during any fiscal year set forth below, exceed the
percent of Total Capitalization set forth opposite such period:
PERCENTAGE OF
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<PAGE>
DEBT TO TOTAL
FISCAL YEAR CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(v) Debt of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary.
SECTION 2. AMENDMENT OF EXISTING NOTES.
SECTION 2.1. AMENDMENT OF EXISTING NOTES. The
Existing Notes shall be and are hereby amended to be in the form of Exhibit A
hereto.
SECTION 3. EXCHANGE OF NOTES.
SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver
on the Effective Date of this Third Amendment Agreement the new Notes in the
form of Exhibit A hereto to the Noteholders in exchange for their outstanding
Existing Notes. The Noteholders agree to surrender their Existing Notes to the
Company in exchange for the new Notes, and the Existing Notes shall be canceled
by the Company and shall be void. The Company shall pay any stamp tax or
governmental charge imposed upon such exchange (including, without limitation,
any income or similar tax that is imposed upon the gain, if any, that is
realized by such Noteholder in connection with the exchange). Notwithstanding
anything contained herein to the contrary, the Notes shall bear interest at the
rate of 9.0% per annum for the period from September 30, 1996 to and including
January 14, 1997.
SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a
single registered Note, shall be registered in the name of the Noteholder
surrendering such Existing Note as reflected on the books and records of the
Company, shall be issued for the same principal amount (after giving effect to
all prepayments of Notes prior to January 15, 1997) as the outstanding principal
amount of the Existing Note surrendered in exchange therefor, and shall be dated
September 30, 1996.
SECTION 3.3. DELIVERY OF NOTES . The Company shall deliver the Notes in
proper form at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, to be
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<PAGE>
held by such firm for delivery against surrender by the Noteholders in
exchange therefor of the Existing Notes.
SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and
the Company agrees that the amendments affected pursuant to this Third Amendment
Agreement and the exchange of Notes for Existing Notes pursuant to this Third
Amendment Agreement shall not be deemed a prepayment, redemption or repurchase
of the Existing Notes for any purpose, including Section 2 or Section 6.13 of
the Note Agreements.
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS.
SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set
forth in Section 1 of this Third Amendment Agreement are effective subject to
the satisfaction of the following conditions precedent:
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
(b) The holders of 100% of the outstanding principal amount of the
Notes shall have consented to this Third Amendment Agreement as evidenced
by their execution hereof.
(c) The Company shall have provided to the holders of the Notes an
opinion of John J. Solberg, Esq., counsel to the Company, substantially in
the form Exhibit B hereto and otherwise in form and substance satisfactory
to the holders of the Notes.
(d) The fees and disbursements of special counsel to the holders of
the Notes incurred through the Closing Date shall have been satisfied by
the Company.
SECTION 5. REPRESENTATIONS.
SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants that as of the date of execution and delivery of this
Third Amendment Agreement and as of the Effective Date:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation.
(b) The Company has the requisite power to own its property and to
carry on its business as now being conducted.
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<PAGE>
(c) The Company is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction in which the
failure to do so would, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other), assets,
operations, properties or prospects of the Company.
(d) This Third Amendment Agreement and the Note Agreements and Notes
(as amended hereby) are within the corporate powers of the Company and have
been duly authorized by all necessary corporate action on the part of the
Company and constitute (or, in the case of this Third Amendment Agreement,
when executed and delivered by holders of 100% of the outstanding principal
amount of the Notes will constitute) legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms.
(e) The execution, delivery and performance of this Third Amendment
Agreement by the Company does not and will not result in a violation of or
default under (A) the certificate of incorporation or bylaws of the
Company, (B) any agreement to which the Company is a party or by which it
is bound or to which the Company or any of its properties is subject, (C)
any order, writ, injunction or decree binding on the Company, or (D) any
statute, regulation, rule or other law applicable to the Company.
(f) No material authorization, consent, approval, exemption or action
by or notice to or filing with any court or administrative or governmental
body is required in connection with the execution and delivery of this
Third Amendment Agreement or the consummation of the transactions
contemplated hereby.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment Agreement shall have the respective meanings specified in the Existing
Note Agreements unless otherwise herein defined or the context hereof shall
otherwise require.
SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all
terms and provisions of the Existing Note Agreements are hereby ratified,
confirmed and approved in all respects.
SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and
other instruments, including the Notes, may refer to the "Note Agreements," or
the "Note Agreements each dated as of September 29, 1989" without making
specific reference to this Third Amendment Agreement, but nevertheless all such
references shall be deemed to include this Third Amendment Agreement unless the
context shall otherwise require.
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<PAGE>
SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment Agreement and
all covenants herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereunder. All covenants
made by the Company and the Noteholders herein shall survive the closing and the
delivery of this Third Amendment Agreement.
SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be
governed by and construed in accordance with Minnesota law.
SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all
reasonable expenses of the Noteholders in connection with the negotiation,
preparation, execution and delivery of this Amendment and the transactions
contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements.
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<PAGE>
SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one instrument.
NASH-FINCH COMPANY
By:
Its
---------------------------
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed to
as of the Effective Date and the undersigned hereby confirms that on January 15,
1997 and as of the date of execution and delivery hereof immediately prior to
the exchange of Notes provided for herein it held Notes of the Company as
indicated on Schedule I hereto.
NATIONWIDE LIFE INSURANCE COMPANY
By:
Its
WEST COAST LIFE INSURANCE COMPANY
By:
Its
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<PAGE>
NASH-FINCH COMPANY
First Amended and Restated 10.0% Senior Note Due September 29, 2001
PPN: _________________
No. R- September 30, 1996
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS
($ ) on September 29, 2001 together with interest on the principal
amount from time to time remaining unpaid hereon at the rate of 9.0% per
annum from and after the date hereof through and including January 14, 1997
and at the rate of 10.0% per annum from January 15, 1997 until maturity
(computed on the basis of a 360-day year of 12 consecutive 30-day months) in
installments payable on March 31, 1997 and on the last day of each March and
September thereafter to and including the date of maturity hereof. The
Company further promises to pay interest on each overdue installment of
principal, premium, if any, and (to the extent legally enforceable) upon each
overdue installment of interest at the rate of 11.0% per annum in each case
from and after the maturity of each such installment, whether by acceleration
or otherwise, until paid. Subject only to SECTION 2.4 of the Note Agreements
hereinafter referred to, both the principal hereof, premium, if any, and
interest at the rate of 10.0% per annum hereon are payable at the principal
office of the Company in Minneapolis, Minnesota, in coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is one of the First Amended and Restated 10.0% Senior Notes
due September 29, 2001 of the Company in the aggregate principal amount of
$15,000,000 issued or to be issued under and pursuant to the terms and
provisions of separate and several Note Agreements each dated as of September
29, 1989 (collectively, the "NOTE AGREEMENTS") entered into by the Company
with the institutional investors named in Schedule I thereto as amended by
that certain First Amendment dated as of November 15, 1996, as amended by
that certain Second Amendment dated as of November 15, 1996 and as amended by
that certain Third Amendment Agreement dated as of January 15, 1997. This
Note and the holder hereof are entitled equally
EXHIBIT A
(to Third Amendment Agreement)
<PAGE>
and ratably with the holders of all other Notes outstanding under the Note
Agreements to all the benefits provided for thereby or referred to therein,
to which Note Agreements reference is hereby made for the statement thereof.
This Note amends and restates in its entirety that certain 9.0% Senior Note
Number R-___, in the original principal amount of $__________ issued by the
Company on ____ and registered in the name of __________________.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity date and voluntary
prepayments may be made thereon by the Company, all in the events, on the
terms and in the manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
Notwithstanding anything contained herein to the contrary, in addition
to the stated interest rate applicable to the Notes (including, without
limitation, the interest rate applicable to overdue payments in respect of
the Notes), the Notes shall bear additional interest at the rate of .50% per
annum during any Interest Rate Event Period (as defined in the Note
Agreements).
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly
endorsed or accompanied by a written statement of transfer duly executed by
the registered holder of this Note or his attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Note shall be made only to or upon the order in writing of the
registered holder.
NASH-FINCH COMPANY
By
Its
A-17
<PAGE>
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of counsel for the Company called for by SECTION
4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date
and addressed to the Noteholders, shall be satisfactory in scope and form to
the Noteholders and shall be to the effect that:
1. The Company is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite power and the authority to execute and
perform the Note Agreements, as amended, and to issue the Notes, as
amended, and has the full requisite power and the authority to conduct the
activities in which it is now engaged.
2. Each Note Agreement, as amended, has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes, as amended, have been duly authorized by all necessary
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
The opinion of __________________ shall cover such other matters relating
to the Third Amendment Agreement as the holders of the Notes may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
EXHIBIT B
(to Third Amendment Agreement)
<PAGE>
SCHEDULE I
Nationwide Life Insurance Company $14,000,000
9.0% Senior Notes
West Coast Life Insurance Company $1,000,000
9.0% Senior Notes
Schedule I
<PAGE>
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NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Dated as of January 15, 1997
Re: Note Agreements Dated as of March 22, 1991
and
$15,000,000 original principal amount of 8.98%
Senior Notes Due March 22, 2006
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2
Section 1.1. General Reference Amendment 2
Section 1.2. Amendments to Section 1.1 2
Section 1.3. Amendment to Section 2.1 2
Section 1.4. Amendment to Section 5.1 3
Section 1.5. Amendment to Section 6.7 3
Section 1.6. Amendment to Section 6.8 3
SECTION 2. AMENDMENT OF EXISTING NOTES 5
Section 2.1. Amendment of Existing Notes 5
SECTION 3. EXCHANGE OF NOTES 5
Section 3.1. Issuance of Notes 5
Section 3.2. Form and Registration 5
Section 3.3. Delivery of Notes 5
Section 3.4. Exchange Not Deemed Prepayment 5
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 5
Section 4.1. Conditions Precedent 5
SECTION 5. REPRESENTATIONS. 6
Section 5.1. Representations of the Company 6
SECTION 6. MISCELLANEOUS 7
Section 6.1. Capitalized Terms 7
Section 6.2. Existing Note Agreements 7
Section 6.3. References 7
Section 6.4. Successors and Assigns 7
Section 6.5. Governing Law 7
Section 6.6. Expenses 7
Section 6.7. Counterparts 8
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<PAGE>
Signature 8
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<PAGE>
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Re:
Note Agreements Dated as of March 22, 1991
and
$15,000,000 original principal amount of 8.98%
Senior Notes Due March 22, 2006
Dated as of
January 15, 1997
(the "EFFECTIVE DATE")
To Each of the Holders
of Notes listed in Schedule I
to the Note Agreements described below
Gentlemen:
Reference is made to (i) the separate Note Agreements each dated as of
March 22, 1991 between NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by
that certain First Amendment dated as of November 15, 1996 and that certain
Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING
NOTE AGREEMENTS"), and (ii) the $15,000,000 original principal amount of 8.98%
Senior Notes due March 22, 2006 issued pursuant to the Existing Note Agreements
(the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall
be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended
hereby, shall be referred to as the "NOTES."
For good and valuable consideration, the Company requests the amendment of
certain provisions of the Existing Note Agreements and the Existing Notes as
hereinafter provided.
<PAGE>
Upon your acceptance hereof and the satisfaction of all conditions
precedent hereto, this Third Amendment Agreement shall constitute a contract
between us amending the Existing Note Agreements and the Existing Notes, but
only in the respects hereinafter set forth:
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS.
SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15,
1997, each reference in the Existing Note Agreements and the Existing Notes to
the "$15,000,000 8.98% Senior Notes Due March 22, 2006", is hereby amended to
refer to the "$15,000,000 First Amended and Restated 9.98% Senior Notes Due
March 22, 2002";
SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15,
1997, Section 1.1 of the Existing Note Agreements is hereby amended to change
the references in such section from "8.98%" and "9.98" to "9.98%" and "10.98%",
respectively and to change the references in such section from "March 22, 2006"
to "March 22, 2002" .
(b) Section 1.1 of the Existing Note Agreements is hereby amended by
inserting the following paragraph at the end thereof:
Notwithstanding anything contained herein to the
contrary, in addition to the stated interest rate applicable
to the Notes (including, without limitation, the interest
rate applicable to overdue payments in respect of the
Notes), the Notes shall bear additional interest at the rate
of .50% per annum during any Interest Rate Event Period.
SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the
Existing Note Agreements is hereby amended to read in its entirety as follows:
SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The
Company agrees that it will prepay and apply, and there
shall become due and payable an amount equal to the amounts
set forth hereinbelow on March 22 in each year beginning
March 22, 1997 up to and including March 22, 2001 in respect
of the aggregate principal indebtedness evidenced by the
Notes. The remaining unpaid principal amount of the Notes
and accrued and unpaid interest thereon shall be due and
payable on March 22, 2002.
PRINCIPAL PRINCIPAL
PAYMENT DATE AMOUNT
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<PAGE>
March 22, 1997 $1,972,300
March 22, 1998 $2,472,300
March 22, 1999 $ 0
March 22, 2000 $2,472,200
March 22, 2001 $2,472,200
No premium shall be payable in connection with any
required prepayment made pursuant to this SECTION 2.1. Upon
any repurchase of less than all of the outstanding Notes
pursuant to SECTION 2.6, SECTION 2.7 or SECTION 6.13, the
principal amount of each required principal prepayment of
the Notes becoming due under this SECTION 2.1 on and after
the date of such prepayment or purchase shall be reduced in
the same proportion as the aggregate unpaid principal amount
of the Notes is reduced as a result of such repurchase.
(b) Section 2 of the Existing Note Agreements is hereby amended to
insert the following new Section 2.7 at the end thereof:
SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE
IN CONTROL OR CONTROL EVENT. The Company will, within 3
days after any Change in Control or Control Event, give
written notice of such Change in Control or Control Event to
each holder of Notes UNLESS notice in respect of such Change
in Control (or the Change in Control contemplated by such
Control Event) shall have been given pursuant to
subparagraph (b) of this SECTION 2.7. If a Change in
Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in
subparagraph (c) of this SECTION 2.7 and shall be
accompanied by the certificate described in subparagraph (g)
of this SECTION 2.7.
(b) CONDITION TO COMPANY ACTION. The Company will not
take any action that consummates or finalizes a Change in
Control unless (i) at least 45 days prior to such action it
shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as
described in subparagraph (c) of this SECTION 2.7,
accompanied by the certificate described in subparagraph (g)
of this SECTION 2.7, and (ii) contemporaneously with such
action, it prepays all Notes required to be prepaid in
accordance with this SECTION 2.7.
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<PAGE>
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by subparagraphs (a) and (b) of this SECTION
2.7 shall be an offer to prepay, in accordance with and
subject to this SECTION 2.7, all, but not less than all, of
the Notes held by each holder (in this case only, "HOLDER"
in respect of any Note registered in the name of a nominee
for a disclosed beneficial owner shall mean such beneficial
owner) on a date specified in such offer (the "PROPOSED
PREPAYMENT DATE"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of
this SECTION 2.7, such date shall be not less than 30 days
and not more than 45 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the 45th day
after the date of such offer).
(d) ACCEPTANCE. A holder of Notes may accept the
offer to prepay made pursuant to this SECTION 2.7 by causing
a notice of such acceptance to be delivered to the Company
at least 5 days prior to the Proposed Prepayment Date. A
failure by a holder of Notes to respond to an offer to
prepay made pursuant to this SECTION 2.7 shall be deemed to
constitute an acceptance of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this SECTION 2.7 shall be at 100% of the
principal amount of such Notes, plus the Make Whole Premium
determined for the date of prepayment with respect to such
principal amount, together with interest on such Notes
accrued to the date of prepayment. On the business day
preceding the date of prepayment, the Company shall deliver
to each holder of Notes being prepaid a statement showing
the Make Whole Premium due in connection with such
prepayment and setting forth the details of the computation
of such amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph
(f) of this SECTION 2.7.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The
obligation of the Company to prepay Notes pursuant to the
offers required by subparagraph (b) and accepted in
accordance with subparagraph (d) of this SECTION 2.7 is
subject to the occurrence of the Change in Control in
respect of which such offers and acceptances shall have been
made. In the event that such Change in Control does not
occur on the Proposed Prepayment Date in respect
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<PAGE>
thereof, the prepayment shall be deferred until and shall be made
on the date on which such Change in Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of
(i) any such deferral of the date of prepayment, (ii) the date on
which such Change in Control and the prepayment are expected to
occur, and (iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this SECTION
2.7 in respect of such Change in Control shall be deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the
Notes pursuant to this SECTION 2.7 shall be accompanied by a
certificate, executed by a senior financial officer of the
Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is
made pursuant to this SECTION 2.7; (iii) the principal
amount of each Note offered to be prepaid; (iv) the
estimated Make Whole Premium due in connection with such
prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of
such computation; (v) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed
Prepayment Date; (vi) that the conditions of this SECTION
2.7 have been fulfilled; and (vii) in reasonable detail, the
nature and date or proposed date of the Change in Control.
(h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL"
means any of the following events or circumstances:
if any person (as such term is used in section
13(d) and section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE
ACT") or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange
Act), become the "beneficial owners" (as such term
is used in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 35% of the
total voting power of all classes then outstanding
of the Company's voting stock.
-8-
<PAGE>
(i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of
its Subsidiaries or Affiliates of any agreement or
letter of intent with respect to any proposed
transaction or event or series of transactions or
events which, individually or in the aggregate,
may reasonably be expected to result in a Change
in Control,
(ii) the execution of any written agreement
which, when fully performed by the parties
thereto, would result in a Change in Control, or
(iii) the making of any written offer by
any person (as such term is used in section 13(d)
and section 14(d)(2) of the Exchange Act) or
related persons constituting a group (as such term
is used in Rule 13d-5 under the Exchange Act) to
the holders of the common stock of the Company,
which offer, if accepted by the requisite number
of holders, would result in a Change in Control.
SECTION 1.4. AMENDMENT TO SECTION 5.1. Section 5.1 of the
Existing Note Agreements is hereby amended as follows: (a) by inserting the
following definitions in alphabetical order:
"DEBT" with respect to any Person shall mean, without duplication, the
sum of:
(a) the obligations of such Person for borrowed money or which have
been incurred in connection with the acquisition of assets;
(b) liabilities secured by any Lien existing on Property owned by
such Person (whether or not such liabilities have been assumed);
(c) Capitalized Rentals under any Capitalized Lease; and
(d) all Guarantees of Debt of others, whether or not reflected in the
balance sheet of such Person.
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<PAGE>
"INTEREST RATE EVENT PERIOD" shall mean any period during which the
Company fails to have outstanding unsecured long-term Indebtedness which
has a then current rating of BBB- or higher by Standard & Poor's
Corporation.
(b) by amending the definition of "Make Whole Premium" so that the
reference to "the original yield to maturity of the Notes" contained therein
shall read "9.98%" as and after the effective date hereof.
SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing Note
Agreements is hereby amended to read in its entirety as follows:
SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any
time, permit Stockholders' Equity to be less than the sum of (a)
$170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated
Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ended January 3, 1998.
SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any
Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Debt, except:
(i) the Notes;
(ii) Debt of the Company and its Subsidiaries outstanding as
of the date of this Agreement and reflected on the consolidated
balance sheet of the Company and its Subsidiaries as of October 6,
1990;
(iii) additional unsecured Debt of the Company; PROVIDED that
at the time of issuance thereof and after giving effect thereto and
to the application of the proceeds thereof Debt of the Company and
its Subsidiaries determined on a consolidated basis in accordance
with GAAP shall not, during any fiscal year set forth below, exceed
the percent of Total Capitalization set forth opposite such period:
PERCENTAGE OF DEBT TO
FISCAL YEAR TOTAL CAPITALIZATION
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<PAGE>
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(iv) additional Debt of the Company and its Subsidiaries
secured by Liens permitted by and incurred within the limitations
of SECTION 6.9(a)(viii) OR SECTION 6.9(a)(ix); PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP shall not, during any fiscal year set forth below, exceed the
percent of Total Capitalization set forth opposite such period:
PERCENTAGE OF
DEBT TO TOTAL
FISCAL YEAR CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(v) Debt of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary.
SECTION 2. AMENDMENT OF EXISTING NOTES.
SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be
and are hereby amended to be in the form of Exhibit A hereto.
SECTION 3. EXCHANGE OF NOTES.
SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver
on the Effective Date of this Third Amendment Agreement the new Notes in the
form of Exhibit A hereto to the Noteholders in exchange for their outstanding
Existing Notes. The Noteholders agree to surrender their Existing Notes to the
Company in exchange for the new Notes, and the
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<PAGE>
Existing Notes shall be canceled by the Company and shall be void. The
Company shall pay any stamp tax or governmental charge imposed upon such
exchange (including, without limitation, any income or similar tax that is
imposed upon the gain, if any, that is realized by such Noteholder in
connection with the exchange). Notwithstanding anything contained herein to
the contrary, the Notes shall bear interest at the rate of 8.98% per annum
for the period from September 22, 1996 to and including January 14, 1997.
SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a
single registered Note, shall be registered in the name of the Noteholder
surrendering such Existing Note as reflected on the books and records of the
Company, shall be issued for the same principal amount (after giving effect to
all prepayments of Notes prior to January 15, 1997) as the outstanding principal
amount of the Existing Note surrendered in exchange therefor, and shall be dated
September 22, 1996.
SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in
proper form at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, to be held by such firm for delivery against surrender
by the Noteholders in exchange therefor of the Existing Notes.
SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and
the Company agrees that the amendments affected pursuant to this Third Amendment
Agreement and the exchange of Notes for Existing Notes pursuant to this Third
Amendment Agreement shall not be deemed a prepayment, redemption or repurchase
of the Existing Notes for any purpose, including Section 2 or Section 6.13 of
the Note Agreements.
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS.
SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set
forth in Section 1 of this Third Amendment Agreement are effective subject to
the satisfaction of the following conditions precedent:
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
(b) The holders of 100% of the outstanding principal amount of the
Notes shall have consented to this Third Amendment Agreement as evidenced
by their execution hereof.
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<PAGE>
(c) The Company shall have provided to the holders of the Notes an
opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in
the form Exhibit B hereto and otherwise in form and substance satisfactory
to the holders of the Notes.
(d) The fees and disbursements of special counsel to the holders of
the Notes incurred through the Closing Date shall have been satisfied by
the Company.
SECTION 5. REPRESENTATIONS.
SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants that as of the date of execution and delivery of this
Third Amendment Agreement and as of the Effective Date:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation.
(b) The Company has the requisite power to own its property and to
carry on its business as now being conducted.
(c) The Company is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction in which the
failure to do so would, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other), assets,
operations, properties or prospects of the Company.
(d) This Third Amendment Agreement and the Note Agreements and Notes
(as amended hereby) are within the corporate powers of the Company and have
been duly authorized by all necessary corporate action on the part of the
Company and constitute (or, in the case of this Third Amendment Agreement,
when executed and delivered by holders of 100% of the outstanding principal
amount of the Notes will constitute) legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms.
(e) The execution, delivery and performance of this Third Amendment
Agreement by the Company does not and will not result in a violation of or
default under (A) the certificate of incorporation or bylaws of the
Company, (B) any agreement to which the Company is a party or by which it
is bound or to which the Company or any of its properties is subject, (C)
any order, writ, injunction or decree binding on the Company, or (D) any
statute, regulation, rule or other law applicable to the Company.
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<PAGE>
(f) No material authorization, consent, approval, exemption or action
by or notice to or filing with any court or administrative or governmental
body is required in connection with the execution and delivery of this
Third Amendment Agreement or the consummation of the transactions
contemplated hereby.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment Agreement shall have the respective meanings specified in the Existing
Note Agreements unless otherwise herein defined or the context hereof shall
otherwise require.
SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all
terms and provisions of the Existing Note Agreements are hereby ratified,
confirmed and approved in all respects.
SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and
other instruments, including the Notes, may refer to the "Note Agreements," or
the "Note Agreements each dated as of March 22, 1991" without making specific
reference to this Third Amendment Agreement, but nevertheless all such
references shall be deemed to include this Third Amendment Agreement unless the
context shall otherwise require.
SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment Agreement and
all covenants herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereunder. All covenants
made by the Company and the Noteholders herein shall survive the closing and the
delivery of this Third Amendment Agreement.
SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be
governed by and construed in accordance with Minnesota law.
SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all
reasonable expenses of the Noteholders in connection with the negotiation,
preparation, execution and delivery of this Amendment and the transactions
contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements.
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<PAGE>
SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one instrument.
NASH-FINCH COMPANY
By:
Its
----------------------------
---
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed to
as of the Effective Date and the undersigned hereby confirms that on January 15,
1997 and as of the date of execution and delivery hereof immediately prior to
the exchange of Notes provided for herein it held Notes of the Company as
indicated on Schedule I hereto.
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY
By:
Its
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY -- Separate Account F
By:
Its
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<PAGE>
NASH-FINCH COMPANY
First Amended and Restated 9.98% Senior Note Due March 22, 2002
PPN: _________________
No. R- September 22, 1996
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS ($ ) on March 22, 2002 together with interest on the principal
amount from time to time remaining unpaid hereon at the rate of 8.98% per
annum from and after the date hereof through and including January 14, 1997
and at the rate of 9.98% per annum from January 15, 1997 until maturity
(computed on the basis of a 360-day year of 12 consecutive 30-day months) in
installments payable on March 22, 1997 and on the twenty-second day of each
March and September thereafter to and including the date of maturity hereof.
The Company further promises to pay interest on each overdue installment of
principal, premium, if any, and (to the extent legally enforceable) upon each
overdue installment of interest at the rate of 10.98% per annum in each case
from and after the maturity of each such installment, whether by acceleration
or otherwise, until paid. Subject only to SECTION 2.5 of the Note Agreements
hereinafter referred to, both the principal hereof, premium, if any, and
interest at the rate of 9.98% per annum hereon are payable at the principal
office of the Company in Minneapolis, Minnesota, in coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is one of the First Amended and Restated 9.98% Senior Notes
due March 22, 2002 of the Company in the aggregate principal amount of
$15,000,000 issued or to be issued under and pursuant to the terms and
provisions of separate and several Note Agreements each dated as of March 22,
1991 (collectively, the "NOTE AGREEMENTS") entered into by the Company with
the institutional investors named in Schedule I thereto as amended by that
certain First Amendment dated as of November 15, 1996, as amended by that
certain Second Amendment dated as of November 15, 1996 and as amended by that
certain Third Amendment Agreement dated as of January 15, 1997. This Note
and the holder hereof are entitled equally and ratably
EXHIBIT A
(to Third Amendment Agreement)
<PAGE>
with the holders of all other Notes outstanding under the Note Agreements to
all the benefits provided for thereby or referred to therein, to which Note
Agreements reference is hereby made for the statement thereof. This Note
amends and restates in its entirety that certain 8.98% Senior Note Number
R-___, in the original principal amount of $__________ issued by the Company
on ____ and registered in the name of __________________.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity date and certain
prepayments are required to be made thereon by the Company, all in the
events, on the terms and in the manner and amounts as provided in the Note
Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
Notwithstanding anything contained herein to the contrary, in addition
to the stated interest rate applicable to the Notes (including, without
limitation, the interest rate applicable to overdue payments in respect of
the Notes), the Notes shall bear additional interest at the rate of .50% per
annum during any Interest Rate Event Period (as defined in the Note
Agreements).
A-18
<PAGE>
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly
endorsed or accompanied by a written statement of transfer duly executed by
the registered holder of this Note or his attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Note shall be made only to or upon the order in writing of the
registered holder.
NASH-FINCH COMPANY
By
Its
A-19
<PAGE>
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of counsel for the Company called for by SECTION
4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date
and addressed to the Noteholders, shall be satisfactory in scope and form to
the Noteholders and shall be to the effect that:
1. The Company is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite power and the authority to execute and
perform the Note Agreements, as amended, and to issue the Notes, as
amended, and has the full requisite power and the authority to conduct the
activities in which it is now engaged.
2. Each Note Agreement, as amended, has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes, as amended, have been duly authorized by all necessary
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
The opinion of Jon J. Solberg. Esq. shall cover such other matters relating
to the Third Amendment Agreement as the holders of the Notes may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
EXHIBIT B
(to Third Amendment Agreement)
<PAGE>
SCHEDULE I
The Minnesota Mutual Life Insurance Company $10,000,000 R-
1
8.98% Senior Notes
Schedule I
<PAGE>
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- ------------------------------------------------------------------------------
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Dated as of January 15, 1997
Re: Note Agreements Dated as of February 15, 1993
and
$25,000,000 original principal amount of 7.54%
Senior Notes Due March 17, 2008
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2
Section 1.1. General Reference Amendment. 2
Section 1.2. Amendments to Section 1.1 2
Section 1.3. Amendments to Section 2 2
Section 1.4. Amendments to Section 5.1 6
Section 1.5. Amendment to Section 6.7 6
Section 1.6. Amendment to Section 6.8 7
SECTION 2. AMENDMENT OF EXISTING NOTES 8
Section 2.1. Amendment of Existing Notes 8
SECTION 3. EXCHANGE OF NOTES 8
Section 3.1. Issuance of Notes 8
Section 3.2. Form and Registration 8
Section 3.3. Delivery of Notes 8
Section 3.4. Exchange Not Deemed Prepayment 9
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 9
Section 4.1. Conditions Precedent 9
SECTION 5. REPRESENTATIONS. 9
Section 5.1. Representations of the Company 9
SECTION 6. MISCELLANEOUS 10
Section 6.1. Capitalized Terms 10
Section 6.2. Existing Note Agreements 10
Section 6.3. References 10
Section 6.4. Successors and Assigns 10
Section 6.5. Governing Law 10
Section 6.6. Expenses 11
Section 6.7. Counterparts 12
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<PAGE>
Signature 12
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<PAGE>
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Re:
Note Agreements Dated as of February 15, 1993
and
$25,000,000 original principal amount of 7.54%
Senior Notes Due March 17, 2008
Dated as of
January 15, 1997
(the "EFFECTIVE DATE")
To Each of the Holders
of Notes listed in Schedule I
to the Note Agreements described below
Gentlemen:
Reference is made to (i) the separate Note Agreements each dated as of
February 15, 1993 between NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by
that certain First Amendment dated as of November 15, 1996 and that certain
Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING
NOTE AGREEMENTS"), and (ii) the $25,000,000 original principal amount of 7.54%
Senior Notes due March 17, 2008 issued pursuant to the Existing Note Agreements
(the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall
be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended
hereby, shall be referred to as the "NOTES."
For good and valuable consideration, the Company requests the amendment of
certain provisions of the Existing Note Agreements and the Existing Notes as
hereinafter provided.
<PAGE>
Upon your acceptance hereof and the satisfaction of all conditions
precedent hereto, this Third Amendment Agreement shall constitute a contract
between us amending the Existing Note Agreements and the Existing Notes, but
only in the respects hereinafter set forth:
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS.
SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15,
1997, each reference in the Existing Note Agreements and the Existing Notes to
the "$25,000,000 7.54% Senior Notes Due March 17, 2008", is hereby amended to
refer to the "$25,000,000 First Amended and Restated 8.54% Senior Notes Due
March 17, 2008";
SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15,
1997, Section 1.1 of the Existing Note Agreements is hereby amended to change
the references in such section from "7.54%" and "8.54" to "8.54%" and "9.54%",
respectively.
(b) Section 1.1 of the Existing Note Agreements is hereby amended by
inserting the following paragraph at the end thereof:
Notwithstanding anything contained herein to the
contrary, in addition to the stated interest rate applicable
to the Notes (including, without limitation, the interest
rate applicable to overdue payments in respect of the
Notes), the Notes shall bear additional interest at the rate
of .50% per annum during any Interest Rate Event Period.
SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the
Existing Note Agreements is hereby amended to read in its entirety as follows:
SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The
Company agrees that it will prepay and apply, and there
shall become due and payable an amount equal to the amounts
set forth hereinbelow on March 17 in each year beginning
March 17, 1997 up to and including March 17, 2007 in respect
of the aggregate principal indebtedness evidenced by the
Notes. The remaining unpaid principal amount of the Notes
and accrued and unpaid interest thereon shall be due and
payable on March 17, 2008.
PRINCIPAL PRINCIPAL
PAYMENT DATE AMOUNT
March 17, 1997 $2,000,000
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<PAGE>
March 17, 1998 $2,000,000
March 17, 1999 $0
March 17, 2000 $2,000,000
March 17, 2001 $2,000,000
March 17, 2002 $2,000,000
March 17, 2003 $2,000,000
March 17, 2004 $3,000,000
March 17, 2005 $3,000,000
March 17, 2006 $3,000,000
March 17, 2007 $2,000,000
No premium shall be payable in connection with any
required prepayment made pursuant to this SECTION 2.1. Upon
any repurchase of less than all of the outstanding Notes
pursuant to SECTION 2.6, SECTION 2.7 OR SECTION 6.13, the
principal amount of each required principal prepayment of
the Notes becoming due under this SECTION 2.1 on and after
the date of such prepayment or purchase shall be reduced in
the same proportion as the aggregate unpaid principal amount
of the Notes is reduced as a result of such repurchase.
(b) Section 2 of the Existing Note Agreements is hereby amended to
insert the following new Section 2.7 at the end thereof:
SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE
IN CONTROL OR CONTROL EVENT. The Company will, within 3
days after any Change in Control or Control Event, give
written notice of such Change in Control or Control Event to
each holder of Notes UNLESS notice in respect of such Change
in Control (or the Change in Control contemplated by such
Control Event) shall have been given pursuant to
subparagraph (b) of this SECTION 2.7. If a Change in
Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in
subparagraph (c) of this SECTION 2.7 and shall be
accompanied by the certificate described in subparagraph (g)
of this SECTION 2.7.
(b) CONDITION TO COMPANY ACTION. The Company will not
take any action that consummates or finalizes a Change in
Control unless (i) at least 45 days prior to such action it
shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as
described in subparagraph
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<PAGE>
(c) of this SECTION 2.7, accompanied by the certificate described
in subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously
with such action, it prepays all Notes required to be prepaid in
accordance with this SECTION 2.7.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by subparagraphs (a) and (b) of this SECTION
2.7 shall be an offer to prepay, in accordance with and
subject to this SECTION 2.7, all, but not less than all, of
the Notes held by each holder (in this case only, "HOLDER"
in respect of any Note registered in the name of a nominee
for a disclosed beneficial owner shall mean such beneficial
owner) on a date specified in such offer (the "PROPOSED
PREPAYMENT DATE"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of
this SECTION 2.7, such date shall be not less than 30 days
and not more than 45 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the 45th day
after the date of such offer).
(d) ACCEPTANCE. A holder of Notes may accept the
offer to prepay made pursuant to this SECTION 2.7 by causing
a notice of such acceptance to be delivered to the Company
at least 5 days prior to the Proposed Prepayment Date. A
failure by a holder of Notes to respond to an offer to
prepay made pursuant to this SECTION 2.7 shall be deemed to
constitute an acceptance of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this SECTION 2.7 shall be at 100% of the
principal amount of such Notes, plus the Make Whole Premium
determined for the date of prepayment with respect to such
principal amount, together with interest on such Notes
accrued to the date of prepayment. On the business day
preceding the date of prepayment, the Company shall deliver
to each holder of Notes being prepaid a statement showing
the Make Whole Premium due in connection with such
prepayment and setting forth the details of the computation
of such amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph
(f) of this SECTION 2.7.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The
obligation of the Company to prepay Notes pursuant to the
offers
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<PAGE>
required by subparagraph (b) and accepted in accordance with
subparagraph (d) of this SECTION 2.7 is subject to the occurrence
of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in
Control does not occur on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until and shall be made
on the date on which such Change in Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of
(i) any such deferral of the date of prepayment, (ii) the date on
which such Change in Control and the prepayment are expected to
occur, and (iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this
SECTION 2.7 in respect of such Change in Control shall be
deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the
Notes pursuant to this SECTION 2.7 shall be accompanied by a
certificate, executed by a senior financial officer of the
Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is
made pursuant to this SECTION 2.7; (iii) the principal
amount of each Note offered to be prepaid; (iv) the
estimated Make Whole Premium due in connection with such
prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of
such computation; (v) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed
Prepayment Date; (vi) that the conditions of this SECTION
2.7 have been fulfilled; and (vii) in reasonable detail, the
nature and date or proposed date of the Change in Control.
(h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL"
means any of the following events or circumstances:
if any person (as such term is used in section
13(d) and section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE
ACT") or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange Act),
become the "beneficial owners" (as such term is
-8-
<PAGE>
used in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 35% of the total voting power of
all classes then outstanding of the Company's voting stock.
(i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of
its Subsidiaries or Affiliates of any agreement or
letter of intent with respect to any proposed
transaction or event or series of transactions or
events which, individually or in the aggregate,
may reasonably be expected to result in a Change
in Control,
(ii) the execution of any written agreement
which, when fully performed by the parties
thereto, would result in a Change in Control, or
(iii) the making of any written offer by
any person (as such term is used in section 13(d)
and section 14(d)(2) of the Exchange Act) or
related persons constituting a group (as such term
is used in Rule 13d-5 under the Exchange Act) to
the holders of the common stock of the Company,
which offer, if accepted by the requisite number
of holders, would result in a Change in Control.
SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the
Existing Note Agreements is hereby amended as follows: (a) by inserting the
following definitions in alphabetical order:
"DEBT" with respect to any Person shall mean, without
duplication, the sum of:
(a) the obligations of such Person for borrowed money
or which have been incurred in connection with the
acquisition of assets;
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<PAGE>
(b) liabilities secured by any Lien existing on
Property owned by such Person (whether or not such
liabilities have been assumed);
(c) Capitalized Rentals under any Capitalized Lease;
and
(d) all Guarantees of Debt of others, whether or not
reflected in the balance sheet of such Person.
"INTEREST RATE EVENT PERIOD" shall mean any period
during which the Company fails to have outstanding unsecured
long-term Indebtedness which has a then current rating of
BBB- or higher by Standard & Poor's Corporation.
(b) by amending the definition of "Make Whole Premium" so that the
reference to "7.54%" contained therein shall read "8.54%" as and after the
effective date hereof.
SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any
time, permit Stockholders' Equity to be less than the sum of (a)
$170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated
Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ended January 3, 1998.
SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any
Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Debt, except:
(1) the Notes;
(2) Debt of the Company and its Subsidiaries outstanding as of the
date of this Agreement and reflected on the consolidated balance sheet of
the Company and its Subsidiaries as of October 3, 1992;
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<PAGE>
(3) additional unsecured Debt of the Company; PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP
shall not, during any fiscal year set forth below, exceed the percent of
Total Capitalization set forth opposite such period:
PERCENTAGE OF DEBT TO
FISCAL YEAR TOTAL CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(4) additional Debt of the Company and its Subsidiaries secured by
Liens permitted by and incurred within the limitations of SECTION 6.9(a)(8)
or SECTION 6.9(a)(9); PROVIDED that at the time of issuance thereof and
after giving effect thereto and to the application of the proceeds thereof
Debt of the Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP shall not, during any fiscal year set forth below,
exceed the percent of Total Capitalization set forth opposite such period:
PERCENTAGE OF
DEBT TO TOTAL
FISCAL YEAR CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(5) Debt of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary.
SECTION 2. AMENDMENT OF EXISTING NOTES.
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<PAGE>
SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be
and are hereby amended to be in the form of Exhibit A hereto.
SECTION 3. EXCHANGE OF NOTES.
SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver
on the Effective Date of this Third Amendment Agreement the new Notes in the
form of Exhibit A hereto to the Noteholders in exchange for their outstanding
Existing Notes. The Noteholders agree to surrender their Existing Notes to the
Company in exchange for the new Notes, and the Existing Notes shall be canceled
by the Company and shall be void. The Company shall pay any stamp tax or
governmental charge imposed upon such exchange (including, without limitation,
any income or similar tax that is imposed upon the gain, if any, that is
realized by such Noteholder in connection with the exchange). Notwithstanding
anything contained herein to the contrary, the Notes shall bear interest at the
rate of 7.54% per annum for the period from September 17, 1996 to and including
January 14, 1997.
SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a
single registered Note, shall be registered in the name of the Noteholder
surrendering such Existing Note as reflected on the books and records of the
Company, shall be issued for the same principal amount (after giving effect to
all prepayments of Notes prior to January 15, 1997) as the outstanding principal
amount of the Existing Note surrendered in exchange therefor, and shall be dated
September 17, 1996.
SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in
proper form at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, to be held by such firm for delivery against surrender
by the Noteholders in exchange therefor of the Existing Notes.
SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and
the Company agrees that the amendments affected pursuant to this Third Amendment
Agreement and the exchange of Notes for Existing Notes pursuant to this Third
Amendment Agreement shall not be deemed a prepayment, redemption or repurchase
of the Existing Notes for any purpose, including Section 2 or Section 6.13 of
the Note Agreements.
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS.
SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set
forth in Section 1 of this Third Amendment Agreement are effective subject to
the satisfaction of the following conditions precedent:
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<PAGE>
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
(b) The holders of 100% of the outstanding principal amount of the
Notes shall have consented to this Third Amendment Agreement as evidenced
by their execution hereof.
(c) The Company shall have provided to the holders of the Notes an
opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in
the form Exhibit B hereto and otherwise in form and substance satisfactory
to the holders of the Notes.
(d) The fees and disbursements of special counsel to the holders of
the Notes incurred through the Closing Date shall have been satisfied by
the Company.
SECTION 5. REPRESENTATIONS.
SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants that as of the date of execution and delivery of this
Third Amendment Agreement and as of the Effective Date:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation.
(b) The Company has the requisite power to own its property and to
carry on its business as now being conducted.
(c) The Company is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction in which the
failure to do so would, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other), assets,
operations, properties or prospects of the Company.
(d) This Third Amendment Agreement and the Note Agreements and Notes
(as amended hereby) are within the corporate powers of the Company and have
been duly authorized by all necessary corporate action on the part of the
Company and constitute (or, in the case of this Third Amendment Agreement,
when executed and delivered by holders of 100% of the outstanding principal
amount of the Notes will constitute) legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms.
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<PAGE>
(e) The execution, delivery and performance of this Third Amendment
Agreement by the Company does not and will not result in a violation of or
default under (A) the certificate of incorporation or bylaws of the
Company, (B) any agreement to which the Company is a party or by which it
is bound or to which the Company or any of its properties is subject, (C)
any order, writ, injunction or decree binding on the Company, or (D) any
statute, regulation, rule or other law applicable to the Company.
(f) No material authorization, consent, approval, exemption or action
by or notice to or filing with any court or administrative or governmental
body is required in connection with the execution and delivery of this
Third Amendment Agreement or the consummation of the transactions
contemplated hereby.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment Agreement shall have the respective meanings specified in the Existing
Note Agreements unless otherwise herein defined or the context hereof shall
otherwise require.
SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all
terms and provisions of the Existing Note Agreements are hereby ratified,
confirmed and approved in all respects.
SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and
other instruments, including the Notes, may refer to the "Note Agreements," or
the "Note Agreements each dated as of February 15, 1993" without making specific
reference to this Third Amendment Agreement, but nevertheless all such
references shall be deemed to include this Third Amendment Agreement unless the
context shall otherwise require.
SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment Agreement and
all covenants herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereunder. All covenants
made by the Company and the Noteholders herein shall survive the closing and the
delivery of this Third Amendment Agreement.
SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be
governed by and construed in accordance with Minnesota law.
SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all
reasonable expenses of the Noteholders in connection with the negotiation,
preparation, execution and
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<PAGE>
delivery of this Amendment and the transactions contemplated hereby, in
accordance with SECTION 9.4 of the Note Agreements.
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<PAGE>
SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one instrument.
NASH-FINCH COMPANY
By:
Its
--------------------------
--
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed to
as of the Effective Date and the undersigned hereby confirms that on January 15,
1997 and as of the date of execution and delivery hereof immediately prior to
the exchange of Notes provided for herein it held Notes of the Company as
indicated on Schedule I hereto.
AID ASSOCIATION FOR LUTHERANS
By:
Its
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed to
as of the Effective Date and the undersigned hereby confirms that on January 15,
1997 and as of the date of execution and delivery hereof immediately prior to
the exchange of Notes provided for herein it held Notes of the Company as
indicated on Schedule I hereto.
PHOENIX AMERICAN LIFE INSURANCE
COMPANY
By:
Its
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY
By:
Its
<PAGE>
NASH-FINCH COMPANY
First Amended and Restated 8.54% Senior Note Due March 17, 2008
PPN: _________________
No. R- September 17, 1996
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS ($ ) on March 17, 2008 together with interest on the principal
amount from time to time remaining unpaid hereon at the rate of 7.54% per
annum from and after the date hereof through and including January 14, 1997
and at the rate of 8.54% per annum from January 15, 1997 until maturity
(computed on the basis of a 360-day year of 12 consecutive 30-day months) in
installments payable on March 17, 1997 and on the seventeenth day of each
March and September thereafter to and including the date of maturity hereof.
The Company further promises to pay interest on each overdue installment of
principal, premium, if any, and (to the extent legally enforceable) upon each
overdue installment of interest at the rate of 9.54% per annum in each case
from and after the maturity of each such installment, whether by acceleration
or otherwise, until paid. Subject only to SECTION 2.5 of the Note Agreements
hereinafter referred to, both the principal hereof, premium, if any, and
interest at the rate of 8.54% per annum hereon are payable at the principal
office of the Company in Minneapolis, Minnesota, in coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.
This Note is one of the First Amended and Restated 8.54% Senior Notes due
March 17, 2008 of the Company in the aggregate principal amount of $25,000,000
issued or to be issued under and pursuant to the terms and provisions of
separate and several Note Agreements each dated as of February 15, 1993
(collectively, the "NOTE AGREEMENTS") entered into by the Company with the
institutional investors named in Schedule I thereto as amended by that certain
First Amendment dated as of November 15, 1996, as amended by that certain Second
Amendment dated as of November 15, 1996 and as amended by that certain Third
Amendment Agreement dated as of January 15, 1997. This Note and the holder
hereof are entitled equally
EXHIBIT A
(to Third Amendment Agreement)
<PAGE>
and ratably with the holders of all other Notes outstanding under the Note
Agreements to all the benefits provided for thereby or referred to therein,
to which Note Agreements reference is hereby made for the statement thereof.
This Note amends and restates in its entirety that certain 7.54% Senior Note
Number R-___, in the original principal amount of $__________ issued by the
Company on ____ and registered in the name of __________________.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity date and certain
prepayments are required to be made thereon by the Company, all in the
events, on the terms and in the manner and amounts as provided in the Note
Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
Notwithstanding anything contained herein to the contrary, in addition
to the stated interest rate applicable to the Notes (including, without
limitation, the interest rate applicable to overdue payments in respect of
the Notes), the Notes shall bear additional interest at the rate of .50% per
annum during any Interest Rate Event Period (as defined in the Note
Agreements).
A-20
<PAGE>
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
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<PAGE>
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of counsel for the Company called for by SECTION
4.1(c) of the Third Amendment Agreement, shall be dated the Effective Date
and addressed to the Noteholders, shall be satisfactory in scope and form to
the Noteholders and shall be to the effect that:
1. The Company is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite power and the authority to execute and
perform the Note Agreements, as amended, and to issue the Notes, as
amended, and has the full requisite power and the authority to conduct the
activities in which it is now engaged.
2. Each Note Agreement, as amended, has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes, as amended, have been duly authorized by all necessary
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
The opinion of Jon J. Solberg, Esq. shall cover such other matters relating
to the Third Amendment Agreement as the holders of the Notes may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
EXHIBIT B
(to Third Amendment Agreement)
<PAGE>
SCHEDULE I
Phoenix American Life Insurance Company $5,000,000
7.54% Senior Notes
Phoenix American Life Insurance Company $5,000,000
7.54% Senior Notes
Phoenix Home Life Mutual Insurance Company $5,000,000
7.54% Senior Notes
Aid Association for Lutherans $10,000,000
7.54% Senior Notes
SCHEDULE I
<PAGE>
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NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Dated as of January 15, 1997
Re: Note Agreements Dated as of March 22, 1996
and
$30,000,000 original principal amount of 7.13%
Senior Notes Due October 1, 2011
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS 2
Section 1.1. General Reference Amendment. 2
Section 1.2. Amendments to Section 1.1 2
Section 1.3. Amendments to Section 2 2
Section 1.4. Amendments to Section 5.1 6
Section 1.5. Amendment to Section 6.7 6
Section 1.6. Amendment to Section 6.8 6
SECTION 2. AMENDMENT OF EXISTING NOTES 7
Section 2.1. Amendment of Existing Notes 7
SECTION 3. EXCHANGE OF NOTES 7
Section 3.1. Issuance of Notes 7
Section 3.2. Form and Registration 8
Section 3.3. Delivery of Notes 8
Section 3.4. Exchange Not Deemed Prepayment 8
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS 8
Section 4.1. Conditions Precedent 8
SECTION 5. REPRESENTATIONS. 9
Section 5.1. Representations of the Company 9
SECTION 6. MISCELLANEOUS 9
Section 6.1. Capitalized Terms 9
Section 6.2. Existing Note Agreements 10
Section 6.3. References 10
Section 6.4. Successors and Assigns 10
Section 6.5. Governing Law 10
Section 6.6. Expenses 10
Section 6.7. Counterparts 11
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<PAGE>
Signature 11
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<PAGE>
NASH-FINCH COMPANY
THIRD AMENDMENT AGREEMENT
Re:
Note Agreements Dated as of March 22, 1996,
and
$30,000,000 original principal amount of 7.13%
Senior Notes Due October 1, 2011
Dated as of
January 15, 1997
(the "EFFECTIVE DATE")
To Each of the Holders
of Notes listed in Schedule I
to the Note Agreements described below
Gentlemen:
Reference is made to (i) the separate Note Agreements each dated as of
March 22, 1996 between NASH-FINCH COMPANY, a Delaware corporation (the
"COMPANY"), and each of you, respectively (the "NOTEHOLDERS"), as amended by
that certain First Amendment dated as of November 15, 1996 and that certain
Second Amendment dated as of November 15, 1996 (as so amended, the "EXISTING
NOTE AGREEMENTS"), and (ii) the $30,000,000 original principal amount of 7.13%
Senior Notes due October 1, 2011 issued pursuant to the Existing Note Agreements
(the "EXISTING NOTES"). The Existing Note Agreements, as amended hereby, shall
be referred to as the "NOTE AGREEMENTS," and the Existing Notes, as amended
hereby, shall be referred to as the "NOTES."
For good and valuable consideration, the Company requests the amendment of
certain provisions of the Existing Note Agreements and the Existing Notes as
hereinafter provided.
<PAGE>
Upon your acceptance hereof and the satisfaction of all conditions
precedent hereto, this Third Amendment Agreement shall constitute a contract
between us amending the Existing Note Agreements and the Existing Notes, but
only in the respects hereinafter set forth:
SECTION 1. AMENDMENTS TO EXISTING NOTE AGREEMENTS.
SECTION 1.1. GENERAL REFERENCE AMENDMENT. From and after January 15,
1997, each reference in the Existing Note Agreements and the Existing Notes to
the "$30,000,000 7.13% Senior Notes Due October 1, 2011", is hereby amended to
refer to the "$30,000,000 First Amended and Restated 8.13% Senior Notes Due
October 1, 2006";
SECTION 1.2. AMENDMENTS TO SECTION 1.1. (a) From and after January 15,
1997, Section 1.1 of the Existing Note Agreements is hereby amended to change
the references in such section from "7.13%" and "8.13" to "8.13%" and "9.13%",
respectively and to change the references in such section from "OCTOBER 1, 2011"
to "OCTOBER 1, 2006".
(b) Section 1.1 of the Existing Note Agreements is hereby amended by
inserting the following paragraph at the end thereof:
Notwithstanding anything contained herein to the
contrary, in addition to the stated interest rate applicable
to the Notes (including, without limitation, the interest
rate applicable to overdue payments in respect of the
Notes), the Notes shall bear additional interest at the rate
of .50% per annum during any Interest Rate Event Period.
SECTION 1.3. AMENDMENTS TO SECTION 2. (a) Section 2.1 of the
Existing Note Agreements is hereby amended to read in its entirety as follows:
SECTION 2.1. REQUIRED PRINCIPAL PREPAYMENTS. The
Company agrees that it will prepay and apply, and there
shall become due and payable an amount equal to the amounts
set forth hereinbelow on October 1 in each year beginning
October 1, 2000 up to and including October 1, 2005 (each
such payment and the payment on October 1, 2006 being
hereinafter referred to collectively as the "PRINCIPAL
PAYMENT DATES") in respect of the aggregate principal
indebtedness evidenced by the Notes. The remaining unpaid
principal amount of the Notes and accrued and unpaid
interest thereon shall be due and payable on October 1,
2006.
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<PAGE>
PRINCIPAL PRINCIPAL
PAYMENT DATE AMOUNT
October 1, 2000 $2,500,000
October 1, 2001 $4,000,000
October 1, 2002 $4,500,000
October 1, 2003 $4,500,000
October 1, 2004 $4,500,000
October 1, 2005 $5,000,000
No premium shall be payable in connection with any
required prepayment made pursuant to this SECTION 2.1. Upon
any repurchase of less than all of the outstanding Notes
pursuant to SECTION 2.6, SECTION 2.7 or SECTION 6.13, the
principal amount of each required principal prepayment of
the Notes becoming due under this SECTION 2.1 on and after
the date of such prepayment or purchase shall be reduced in
the same proportion as the aggregate unpaid principal amount
of the Notes is reduced as a result of such repurchase.
(b) Section 2 of the Existing Note Agreements is hereby amended to
insert the following new Section 2.7 at the end thereof:
SECTION 2.7. CHANGE IN CONTROL. (a) NOTICE OF CHANGE
IN CONTROL OR CONTROL EVENT. The Company will, within 3
days after any Change in Control or Control Event, give
written notice of such Change in Control or Control Event to
each holder of Notes UNLESS notice in respect of such Change
in Control (or the Change in Control contemplated by such
Control Event) shall have been given pursuant to
subparagraph (b) of this SECTION 2.7. If a Change in
Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in
subparagraph (c) of this SECTION 2.7 and shall be
accompanied by the certificate described in subparagraph (g)
of this SECTION 2.7.
(b) CONDITION TO COMPANY ACTION. The Company will not
take any action that consummates or finalizes a Change in
Control unless (i) at least 45 days prior to such action it
shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as
described in subparagraph (c) of this SECTION 2.7, accompanied
by the certificate described in
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<PAGE>
subparagraph (g) of this SECTION 2.7, and (ii) contemporaneously
with such action, it prepays all Notes required to be prepaid in
accordance with this SECTION 2.7.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by subparagraphs (a) and (b) of this SECTION
2.7 shall be an offer to prepay, in accordance with and
subject to this SECTION 2.7, all, but not less than all, of
the Notes held by each holder (in this case only, "HOLDER"
in respect of any Note registered in the name of a nominee
for a disclosed beneficial owner shall mean such beneficial
owner) on a date specified in such offer (the "PROPOSED
PREPAYMENT DATE"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of
this SECTION 2.7, such date shall be not less than 30 days
and not more than 45 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the 45th day
after the date of such offer).
(d) ACCEPTANCE. A holder of Notes may accept the
offer to prepay made pursuant to this SECTION 2.7 by causing
a notice of such acceptance to be delivered to the Company
at least 5 days prior to the Proposed Prepayment Date. A
failure by a holder of Notes to respond to an offer to
prepay made pursuant to this SECTION 2.7 shall be deemed to
constitute an acceptance of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this SECTION 2.7 shall be at 100% of the
principal amount of such Notes, plus the Make Whole Premium
determined for the date of prepayment with respect to such
principal amount, together with interest on such Notes
accrued to the date of prepayment. On the business day
preceding the date of prepayment, the Company shall deliver
to each holder of Notes being prepaid a statement showing
the Make Whole Premium due in connection with such
prepayment and setting forth the details of the computation
of such amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph
(f) of this SECTION 2.7.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The
obligation of the Company to prepay Notes pursuant to the
offers required by subparagraph (b) and accepted in
accordance with
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<PAGE>
subparagraph (d) of this SECTION 2.7 is subject to the occurrence
of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in
Control does not occur on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until and shall be made
on the date on which such Change in Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of
(i) any such deferral of the date of prepayment, (ii) the date on
which such Change in Control and the prepayment are expected to
occur, and (iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this SECTION
2.7 in respect of such Change in Control shall be deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the
Notes pursuant to this SECTION 2.7 shall be accompanied by a
certificate, executed by a senior financial officer of the
Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is
made pursuant to this SECTION 2.7; (iii) the principal
amount of each Note offered to be prepaid; (iv) the
estimated Make Whole Premium due in connection with such
prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of
such computation; (v) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed
Prepayment Date; (vi) that the conditions of this SECTION
2.7 have been fulfilled; and (vii) in reasonable detail, the
nature and date or proposed date of the Change in Control.
(h) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL"
means any of the following events or circumstances:
if any person (as such term is used in section
13(d) and section 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE
ACT") or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange
Act), become the "beneficial owners" (as such term
is used in Rule 13d-3 under the Exchange Act),
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<PAGE>
directly or indirectly, of more than 35% of the
total voting power of all classes then outstanding
of the Company's voting stock.
(i) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of
its Subsidiaries or Affiliates of any agreement or
letter of intent with respect to any proposed
transaction or event or series of transactions or
events which, individually or in the aggregate,
may reasonably be expected to result in a Change
in Control,
(ii) the execution of any written agreement
which, when fully performed by the parties
thereto, would result in a Change in Control, or
(iii) the making of any written offer by
any person (as such term is used in section 13(d)
and section 14(d)(2) of the Exchange Act) or
related persons constituting a group (as such term
is used in Rule 13d-5 under the Exchange Act) to
the holders of the common stock of the Company,
which offer, if accepted by the requisite number
of holders, would result in a Change in Control.
SECTION 1.4. AMENDMENTS TO SECTION 5.1. Section 5.1 of the
Existing Note Agreements is hereby amended as follows: (a) by inserting the
following definition in alphabetical order:
"INTEREST RATE EVENT PERIOD" shall mean any period
during which the Company fails to have outstanding unsecured
long-term Indebtedness which has a then current rating of
BBB- or higher by Standard & Poor's Corporation.
(b) by amending the definition of "Make Whole Premium" so that the
reference to "7.13%" contained therein shall read "8.13%" as and after the
effective date hereof.
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<PAGE>
SECTION 1.5. AMENDMENT TO SECTION 6.7. Section 6.7 of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.7. STOCKHOLDERS' EQUITY. The Company will not, at any
time, permit Stockholders' Equity to be less than the sum of (a)
$170,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated
Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ended January 3, 1998.
SECTION 1.6. AMENDMENT TO SECTION 6.8. Section 6.8(a) of the Existing
Note Agreements is hereby amended to read in its entirety as follows:
SECTION 6.8. INCURRENCE OF DEBT. (a) Neither the Company nor any
Subsidiary will create, issue, assume, guarantee or otherwise incur or
become liable in respect of any Debt, except:
(1) the Notes;
(2) Debt of the Company and its Subsidiaries outstanding as of the
date of this Agreement and reflected on the consolidated balance sheet of
the Company and its Subsidiaries as of December 30, 1995;
(3) additional unsecured Debt of the Company; PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP
shall not, during any fiscal year set forth below, exceed the percent of
Total Capitalization set forth opposite such period:
PERCENTAGE OF DEBT TO
FISCAL YEAR TOTAL CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
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<PAGE>
(4) additional Debt of the Company and its Subsidiaries secured by
Liens permitted by and incurred within the limitations of SECTION
6.9(a)(8), SECTION 6.9(a)(9) or SECTION 6.9(a)(10); PROVIDED that at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP
shall not, during any fiscal year set forth below, exceed the percent of
Total Capitalization set forth opposite such period:
PERCENTAGE OF
DEBT TO TOTAL
FISCAL YEAR CAPITALIZATION
1996 70%
1997 70%
1998 67.5%
1999 65%
2000 and thereafter 60%
(5) Debt of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary.
SECTION 2. AMENDMENT OF EXISTING NOTES.
SECTION 2.1. AMENDMENT OF EXISTING NOTES. The Existing Notes shall be
and are hereby amended to be in the form of Exhibit A hereto.
SECTION 3. EXCHANGE OF NOTES.
SECTION 3.1. ISSUANCE OF NOTES. The Company agrees to issue and deliver
on the Effective Date of this Third Amendment Agreement the new Notes in the
form of Exhibit A hereto to the Noteholders in exchange for their outstanding
Existing Notes. The Noteholders agree to surrender their Existing Notes to the
Company in exchange for the new Notes, and the Existing Notes shall be canceled
by the Company and shall be void. The Company shall pay any stamp tax or
governmental charge imposed upon such exchange (including, without limitation,
any income or similar tax that is imposed upon the gain, if any, that is
realized by such Noteholder in connection with the exchange). Notwithstanding
anything contained herein to the contrary, the Notes shall bear interest at the
rate of 7.13% per annum for the period from October 1, 1996 to and including
January 14, 1997.
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<PAGE>
SECTION 3.2. FORM AND REGISTRATION. Each Note shall be in the form of a
single registered Note, shall be registered in the name of the Noteholder
surrendering such Existing Note as reflected on the books and records of the
Company, shall be issued for the same principal amount (after giving effect to
all prepayments of Notes prior to January 15, 1997) as the outstanding principal
amount of the Existing Note surrendered in exchange therefor, and shall be dated
October 1, 1996.
SECTION 3.3. DELIVERY OF NOTES. The Company shall deliver the Notes in
proper form at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, to be held by such firm for delivery against surrender
by the Noteholders in exchange therefor of the Existing Notes.
SECTION 3.4. EXCHANGE NOT DEEMED PREPAYMENT. Each of the Noteholders and
the Company agrees that the amendments affected pursuant to this Third Amendment
Agreement and the exchange of Notes for Existing Notes pursuant to this Third
Amendment Agreement shall not be deemed a prepayment, redemption or repurchase
of the Existing Notes for any purpose, including Section 2 or Section 6.13 of
the Note Agreements.
SECTION 4. CONDITIONS PRECEDENT AND ADDITIONAL AGREEMENTS.
SECTION 4.1. CONDITIONS PRECEDENT. Each Noteholder's agreements set
forth in Section 1 of this Third Amendment Agreement are effective subject to
the satisfaction of the following conditions precedent:
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
(b) The holders of 100% of the outstanding principal amount of the
Notes shall have consented to this Third Amendment Agreement as evidenced
by their execution hereof.
(c) The Company shall have provided to the holders of the Notes an
opinion of Jon J. Solberg, Esq., counsel to the Company, substantially in
the form Exhibit B hereto and otherwise in form and substance satisfactory
to the holders of the Notes.
(d) The fees and disbursements of special counsel to the holders of
the Notes incurred through the Closing Date shall have been satisfied by
the Company.
SECTION 5. REPRESENTATIONS.
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<PAGE>
SECTION 5.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants that as of the date of execution and delivery of this
Third Amendment Agreement and as of the Effective Date:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation.
(b) The Company has the requisite power to own its property and to
carry on its business as now being conducted.
(c) The Company is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction in which the
failure to do so would, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other), assets,
operations, properties or prospects of the Company.
(d) This Third Amendment Agreement and the Note Agreements and Notes
(as amended hereby) are within the corporate powers of the Company and have
been duly authorized by all necessary corporate action on the part of the
Company and constitute (or, in the case of this Third Amendment Agreement,
when executed and delivered by holders of 100% of the outstanding principal
amount of the Notes will constitute) legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms.
(e) The execution, delivery and performance of this Third Amendment
Agreement by the Company does not and will not result in a violation of or
default under (A) the certificate of incorporation or bylaws of the
Company, (B) any agreement to which the Company is a party or by which it
is bound or to which the Company or any of its properties is subject, (C)
any order, writ, injunction or decree binding on the Company, or (D) any
statute, regulation, rule or other law applicable to the Company.
(f) No material authorization, consent, approval, exemption or action
by or notice to or filing with any court or administrative or governmental
body is required in connection with the execution and delivery of this
Third Amendment Agreement or the consummation of the transactions
contemplated hereby.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. CAPITALIZED TERMS. The capitalized terms used in this Third
Amendment Agreement shall have the respective meanings specified in the Existing
Note Agreements unless otherwise herein defined or the context hereof shall
otherwise require.
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<PAGE>
SECTION 6.2. EXISTING NOTE AGREEMENTS. Except as amended herein, all
terms and provisions of the Existing Note Agreements are hereby ratified,
confirmed and approved in all respects.
SECTION 6.3. REFERENCES. Any and all notices, requests, certificates and
other instruments, including the Notes, may refer to the "Note Agreements," or
the "Note Agreements each dated as of November 15, 1993" without making specific
reference to this Third Amendment Agreement, but nevertheless all such
references shall be deemed to include this Third Amendment Agreement unless the
context shall otherwise require.
SECTION 6.4. SUCCESSORS AND ASSIGNS. This Third Amendment Agreement and
all covenants herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereunder. All covenants
made by the Company and the Noteholders herein shall survive the closing and the
delivery of this Third Amendment Agreement.
SECTION 6.5. GOVERNING LAW. This Third Amendment Agreement shall be
governed by and construed in accordance with Minnesota law.
SECTION 6.6. EXPENSES. The Company will pay and/or reimburse all
reasonable expenses of the Noteholders in connection with the negotiation,
preparation, execution and delivery of this Amendment and the transactions
contemplated hereby, in accordance with SECTION 9.4 of the Note Agreements.
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<PAGE>
SECTION 6.7. COUNTERPARTS. This Third Amendment Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one instrument.
NASH-FINCH COMPANY
By:
Its
---------------------------
---
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<PAGE>
This foregoing Third Amendment Agreement is hereby accepted and agreed to
as of the Effective Date and the undersigned hereby confirms that on January 15,
1997 and as of the date of execution and delivery hereof immediately prior to
the exchange of Notes provided for herein it held Notes of the Company as
indicated on Schedule I hereto.
THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY
By:
Its
INDEPENDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By:
Its
-17-
<PAGE>
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By:
-18-
<PAGE>
NORTHERN LIFE INSURANCE COMPANY
By:
Its
-19-
<PAGE>
NASH-FINCH COMPANY
First Amended and Restated 8.13% Senior Note Due October 1, 2006
PPN: _________________
No. R- October 1, 1996
$
NASH-FINCH COMPANY, a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to
or registered assigns the principal amount of
DOLLARS ($ ) on
October 1, 2006 together with interest on the principal amount from time to
time remaining unpaid hereon at the rate of 7.13% per annum from and after
the date hereof through and including January 14, 1997 and at the rate of
8.13% per annum from the date hereof until maturity (computed on the basis of
a 360-day year of 12 consecutive 30-day months) in installments payable on
April 1, 1997 and on the first day of each April and October thereafter to
and including the date of maturity hereof. The Company further promises to
pay interest on each overdue installment of principal, premium, if any, and
(to the extent legally enforceable) upon each overdue installment of interest
at the rate of 9.13% per annum in each case from and after the maturity of
each such installment, whether by acceleration or otherwise, until paid.
Subject only to SECTION 2.5 of the Note Agreements hereinafter referred to,
both the principal hereof, premium, if any, and interest hereon are payable
at the principal office of the Company in Minneapolis, Minnesota, in coin or
currency of the United States of America which at the time of payment shall
be legal tender for the payment of public and private debts.
This Note is one of the First Amended and Restated 8.13% Senior Notes due
October 1, 2006 of the Company in the aggregate principal amount of $30,000,000
issued or to be issued under and pursuant to the terms and provisions of
separate and several Note Agreements each dated as of March 22, 1996
(collectively, the "NOTE AGREEMENTS") entered into by the Company with the
institutional investors named in Schedule I thereto as amended by that certain
First Amendment dated as of November 15, 1996, as amended by that certain Second
Amendment dated as of November 15, 1996 and as amended by that certain Third
Amendment Agreement dated as of January 15, 1997. This Note and the holder
hereof are entitled equally and ratably with the holders of all other Notes
outstanding under the Note Agreements to all the benefits
EXHIBIT A
(to Third Amendment Agreement)
<PAGE>
provided for thereby or referred to therein, to which Note Agreements
reference is hereby made for the statement thereof. This Note amends and
restates in its entirety that certain 7.13% Senior Note Number R-___, in the
original principal amount of $__________ issued by the Company on ____ and
registered in the name of __________________.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity date and certain prepayments are
required to be made thereon by the Company, all in the events, on the terms and
in the manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
Notwithstanding anything contained herein to the contrary, in addition to
the stated interest rate applicable to the Notes (including, without limitation,
the interest rate applicable to overdue payments in respect of the Notes), the
Notes shall bear additional interest at the rate of .50% per annum during any
Interest Rate Event Period (as defined in the Note Agreements).
A-21
<PAGE>
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written statement of transfer duly executed by the
registered holder of this Note or his attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
NASH-FINCH COMPANY
By
Its
A-22
<PAGE>
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of counsel for the Company called for by SECTION 4.1(c)
of the Third Amendment Agreement, shall be dated the Effective Date and
addressed to the Noteholders, shall be satisfactory in scope and form to the
Noteholders and shall be to the effect that:
1. The Company is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite power and the authority to execute and
perform the Note Agreements, as amended, and to issue the Notes, as
amended, and has the full requisite power and the authority to conduct the
activities in which it is now engaged.
2. Each Note Agreement, as amended, has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
3. The Notes, as amended, have been duly authorized by all necessary
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
The opinion of Jon J. Solberg, Esq. shall cover such other matters relating
to the Third Amendment Agreement as the holders of the Notes may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
EXHIBIT B
(to Third Amendment Agreement)
<PAGE>
SCHEDULE I
The Variable Annuity Life Insurance Company $17,000,000
7.13% Senior Notes
Independent Life and Accident Insurance Company $3,000,000
7.13% Senior Notes
Var & Co. (as nominee of Northwestern National $4,000,000
Life Insurance Company) 7.13% Senior Notes
Var & Co. (as nominee of Northern Life $6,000,000
Insurance Company 7.13% Senior Notes
Schedule I
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SUPER FOOD SERVICES, INC.
NOTE AGREEMENT
Dated as of November 1, 1989
Re: $25,000,000 9.20% Senior Notes
Due January 10, 2000
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C> <C> <C>
1. DESCRIPTION OF NOTES AND COMMITMENT 1
1.1. Description of Notes 1
1.2. Commitment, Closing Date 1
1.3. Other Agreements 1
2. PREPAYMENT OF NOTES 2
2.1. Optional Prepayment 2
2.2. Prepayment on Failure of Holders to Grant
Certain Consents 3
2.3. Prepayment on Restricted Change of Control 3
2.4. Notice of Prepayments 5
2.5. Allocation of Prepayments 5
2.6. Direct Payment 5
3. REPRESENTATIONS 5
3.1. Representations of the Company 6
3.2. Representations of the Purchasers 6
4. CLOSING CONDITIONS 6
4.1. Closing Certificate 6
4.2. Legal Opinions 6
4.3. Related Transactions 6
4.4. Satisfactory Proceedings 6
4.5. Legality 7
4.6. Waiver of Conditions 7
5. COMPANY COVENANTS 7
5.1. Corporate Existence, etc 7
5.2. Insurance 7
5.3. Taxes, Claims for Labor and Materials, Compliance
with Laws 7
5.4. Maintenance Properties 8
5.5. Nature of Business 8
5.6. Consolidated Tangible Net Worth 8
5.7. Limitations on Indebtedness 8
5.8. Limitations on Liens 9
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<PAGE>
SECTION HEADING PAGE
5.9. Mergers, Consolidations and Sales of Assets 10
5.10. Guaranties 12
5.11. Repurchase of Notes 12
5.12. Designation of Joint Ventures 12
5.13. Transactions with Affiliates 12
5.14. Termination of Pension Plans 13
5.15. Reports and Rights of Inspection 13
6. EVENTS OF DEFAULT AND REMEDIES THEREFOR 15
6.1. Events of Default 15
6.2. Notice to Holders 16
6.3. Acceleration of Maturities 16
6.4. Recission of Acceleration 16
7. AMENDMENTS, WAIVERS AND CONSENTS 17
7.1. Consent Required 17
7.2. Solicitation of Noteholders 17
7.3. Effect of Amendment or Waiver 18
8. INTERPRETATION OF AGREEMENT; DEFINITIONS 18
8.1. Definitions 18
8.2. Accounting Principles 23
8.3. Directly or Indirectly 23
9. MISCELLANEOUS 23
9.1. Registered Notes 23
9.2. Exchange of Notes 23
9.3. Loss, Theft, etc. of Notes 24
9.4. Expenses, Stamp Tax Indemnity 24
9.5. Powers and Rights Not Waived; Remedies
Cumulative 25
9.6. Notices 25
9.7. Successors and Assigns 25
9.8. Survival of Covenants and Representations 25
9.9. Severability 25
9.10. Governing Law 25
9.11. Captions 25
Signature Page 26
</TABLE>
-ii-
<PAGE>
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Names and Addresses of Purchasers
Exhibit A - Form of 9.20% Senior Note due January 10,2000
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Closing Opinion of Special Counsel
Exhibit D - Description of Closing Opinion of Counsel to the Company
-iii-
<PAGE>
SUPER FOOD SERVICES, INC.
3233 NEWMARK DRIVE
MIAMISBURG, OHIO 45342
NOTE AGREEMENT
Re: $25,000,000 9.20% Senior Notes
Due January 10, 2000
Dated as of
November 1, 1989
To the Purchaser named in
Schedule I which is a signatory
to this Agreement
Gentlemen:
The undersigned, SUPER FOOD SERVICES, INC., a Delaware
corporation (the "COMPANY"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. DESCRIPTION OF NOTES. The Company will authorize the issue
and sale of $25,000,000 aggregate principal amount of its 9.20% Senior Notes
(the "NOTES") to be dated the date of issue, to bear interest from such date
at the rate of 9.20% per annum, payable quarterly on the tenth day of each
January, April, July and October in each year (commencing April 10, 1990) and
at maturity and to bear interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to
the extent legally enforceable) on any overdue installment of interest at the
rate of 10.20% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature of January 10, 2000, and to
be substantially in the form attached hereto as Exhibit A. Interest on the
Notes shall be computed on the basis of a 360-day year of twelve 30-day
months. The Notes are not subject to prepayment or redemption at the option
of the Company prior to their expressed maturity dates except on the terms
and conditions and in the amounts and with the premium, if any, set forth in
Section 2 of this Agreement. The term "NOTES" as used herein shall include
each Note delivered pursuant to this Agreement and the separate agreements
with the other purchasers named in Schedule I. You and the other purchases
named in Schedule I are hereinafter sometimes referred to as the "PURCHASERS".
1.2. COMMITMENT, CLOSING DATE. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes of the Company in the aggregate
principal amount set forth oposite your name
<PAGE>
Super Food Services, Inc.
Note Agreement
in Schedule I, at a price of 100% of the principal amount thereof on the
Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe, Chicago, Illinois 60603, against payment therefor in
Federal of other funds current and immediately available at the principal
office of Society Bank, N.A., in Dayton, Ohio in the amount of the purchase
price at 10:00 A.M., Chicago time, on February 6, 1990 or such later date
(not later that February 15, 1990) as shall be mutually agreed upon by the
Company and the Purchasers (the "CLOSING DATE"). The Notes delivered to you
on the Closing Date will be delivered to you in the form of a single
registered Note for the full amount of your purchase (unless different
denominations are specified by you), registered in your name or in the name
of such nominee as you may specify and in substantially the form attached
hereto as Exhibit A, all as you may specify at any time prior to the date
fixed for delivery.
1.3. OTHER AGREEMENTS. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into similar agreements
with the other Purchasers under which such other Purchasers agree to purchase
from the Company the principal amount of Notes set opposite such Purchasers'
names in Schedule I, and your obligation and the obligations of the Company
hereunder are subject to the execution and delivery of the similar
agreements by the other Purchasers. The obligations of each Purchaser shall
be several and not joint and no Purchaser shall be liable or responsible for
the acts of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
2.1. OPTIONAL PAYMENT. Upon compliance with Section 2.4, the
Company shall have the privilege at any time and from time to time, on or
after January 10, 1993, of prepaying the outstanding Notes, either in whole
or in part (but if in part, then in units in excess of $100,000) by payment
of the principal amount of the Notes, or portion thereof to be prepaid, and
accrued interest thereon to the date of such prepayment, together with a
premium equal to the Make-Whole Premium, determined five business Days prior
to the date of such prepayment.
"MAKE-WHOLE PREMIUM" shall mean, in connection with a prepayment
pursuant to this Section 2.1 (or a payment pursuant to an Event of Default),
the excess, if any, of (i) the aggregate present value as of the date of such
prepayment of each dollar of principal being prepaid and the amount of
interest (exclusive of interest accrued to the date of prepayment) that would
have been payable in respect of such dollar is such prepayment had not been
made, determined by discounting such amounts at the Reinvestment Rate from
January 10, 2000, over (ii) 100% of the principal amount of the outstanding
Notes being prepaid. If the Reinvestment Rate is equal to or higher than
9.20%, the Make-Whole Premium shall be zero.
"REINVESTMENT RATE" shall mean .60% plus the arithmetic mean of
the yields under the respective headings "THIS WEEK" and "LAST WEEK"
published in the Statistical Release under the caption "TREASURY CONSTANT
MATURITIES" for the maturity (rounded to the nearest month) corresponding to
the period from the date of determination of the premium hereunder up to but
not including, January 10, 2000, (such
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<PAGE>
Super Food Services, Inc.
Note Agreement
period being referred to as the "NOTE MATURITY PERIOD"). If no maturity
exactly corresponds to such Note Maturity Period, yields for the two
published maturities most closely corresponding to such Note Maturity Period
shall be calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding in each of such relevant periods to the nearest
month. For the purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
premium hereunder shall be used.
"STATISTICAL RELEASE" shall mean the statistical release
designated "H.15(519)" or any successor publication which is published weekly
by the Federal Reserve System and which established yields on actively traded
U.S. Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of the
outstanding Notes.
2.2. PREPAYMENT ON FAILURE OF HOLDERS TO GRANT CERTAIN CONSENTS.
In the event that the Company shall in good faith request in writing that the
holders of the Notes consent to an amendment of waiver of the provisions of
this Agreement to the extent necessary to permit a proposed bona fide merger,
acquisition, investment, corporate reorganization, recapitalization or other
transaction which would otherwise violate the provisions of this Agreement
and, in any such case, the holders of less than 66-2/3% in aggregate
principal amount of the Notes outstanding within a period of 30 days
following the date of receipt of such request (the "30-Day Period) shall have
irrevocably granted or irrevocably agreed to grant such consent, then the
Company may, in order to permit such transaction, upon giving the notice
required in Section 2.4 on any date within 90 days after the expiration of
the 30-Day Period, prepay all (and not less than all) Notes held by each
holder of a Note which has failed or refused to grant of agree to grant such
consent of execute and deliver appropriate amendments, consents or waivers
with respect thereto. Any such prepayment of Notes pursuant to this
Section 2.2 shall be made by payment of the aggregate principal amount
remaining unpaid on such Notes, and accrued interest thereon to the date of
such prepayment, together with a premium equal to the Nonconsent Make-Whole
Premium with respect to the principal amount of the Notes being prepaid,
determined five Business Days prior to the date of such prepayment.
The "NONCONSENT MAKE-WHOLE PREMIUM" shall be determined in the
same manner as the Make-Whole Premium except that the reference to ".60%"
contained in the definition of the term "REINVESTMENT RATE" shall read ".25%"
in the case of a determination of the Non-Consent Make-Whole Premium.
2.3. PREPAYMENT ON RESTRICTED CHANGE OF CONTROL. (a) In the event
that a Restricted Change of Control Date shall occur, the Company shall give
written notice (the "COMPANY NOTICE") of such fact not more than five
Business Days after any such Change in Control Date to all holders of the
Notes. The Company Notice shall (i) describe the facts and circumstances of
the Restricted Change of Control in reasonable detail, (ii) describe the
Consolidated Total Capitalization, Consolidated Tangible Net Worth and Debt
of the Company outstanding after such Restricted Change of Control, (iii)
contain an offer by the Company to purchase all of the outstanding Notes in
full
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<PAGE>
Super Food Services, Inc. Note Agreement
together with accrued interest to the date of purchase and (iv) set forth the
date which shall not be less than 30 nor more than 60 days following the date
of the Company Notice, on which the Company will make such purchase. Each
holder of the Notes shall have the right to accept such offer and require
purchase of the Notes held by such holder in full by written notice to the
Company given within 30 days following receipt of the Company Notice.
(b) In the event the Company fails to give the Company Notice as
required above, each holder of the Notes shall have the right to require the
Company to purchase such holder's Notes in full, together with accrued
interest thereon to the date of purchase. Notice of a required purchase
pursuant to this paragraph of Section 2.3(b) shall be delivered by any holder
of Notes to the Company not more than 90 days after such holder has actual
knowledge of such Restricted Change of Control. On the date designated in
such holder's notice (which shall be not less than 10 Business Days after the
date such notice is delivered to the Company), the Company shall purchase all
Notes held by such holder together with accrued interest thereon to the date
of purchase.
"CHANGE OF CONTROL" shall mean any event or happening which after
the Closing Date results in the legal or beneficial ownership of more than
50% of the outstanding shares of Voting Stock of the Company being owned by
any Control Group.
"CONTROL GROUP" shall mean any Person or group of Persons acting
in concert.
"MANAGEMENT BUY-OUT" shall mean a Change of Control which
satisfies the following conditions: (i) the Control Group includes, and is
under the general direction and control of, a member or members of the
Management Team; (ii) prior to the consummation of the Change of Control, (x)
the Board of Directors shall have approved the proposed Change of Control and
(y) a majority of the members of such Board of Directors shall have been duly
elected or appointed prior to any public announcement or public filing
relating to a proposed Change of Control; and (iii) immediately after giving
effect to such Change of Control, members of the Control Group who are
included in the Management Team are employed by the Company in positions of
the same or greater responsibility as the positions held by such members of
the Management Team immediately prior to the Change of Control.
"MANAGEMENT TEAM" shall mean Jack Twyman, John Demos, Sam
Robinson, I. James Potter, Al Bunshtan, Robert F. Koogler, George Gayda,
Richard Metzgar, John Batista, Doug Koenig and any other person who may from
time to time in the ordinary course of business be elected to serve as the
Chairman of the Board, Vice Chairman of the Board or President of the Company
by a majority vote of the Board of Directors PROVIDED, that those individuals
voting in favor of such election who were also on the Board of Directors of
the Company as of the Closing Date shall constitute a majority of the Board
of Directors of the Company at the time of such election.
"RESTRICTED CHANGE OF CONTROL" shall mean and include any Change
of Control which is not a Management Buy-Out.
"RESTRICTED CHANGE OF CONTROL DATE" shall mean any date upon which
a Restricted Change of Control shall have occurred.
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<PAGE>
Super Food Services, Inc. Note Agreement
2.4. NOTICE OF PREPAYMENTS. The Company will give notice of any
prepayment of the Notes pursuant to Section 2.1 or Section 2.2 to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (i) such date, (ii) the section of this
Agreement under which the prepayment is to be made, (iii) the entire
principal amount of the holder's Notes to be prepaid on such date, and (iv)
the estimated premium, if any, and (v) accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts which are
conditions precedent to any such prepayment. Notice of prepayment having been
so given, the aggregate principal amount of the Notes specified in such
notice, together with the premium, if any, and accrued interest thereon shall
become due and payable on the prepayment date. The Company will also give
written notice to each holder of the Notes, by telecopy or other same day
written communication, setting forth the computation and amount of any
premium payable in connection with such prepayment at least three Business
Days prior to the date of such prepayment.
2.5. ALLOCATION OF PREPAYMENTS. All partial prepayments pursuant
to Section 2.1 shall be applied on all outstanding Notes ratably in
accordance with the unpaid principal amounts thereof but only in units of
$1,000, and to the extent that such ratable application shall not result in
an even multiple of $1,000, adjustment may be made by the Company to the end
that successive applications shall result in substantially ratable payments.
2.6. DIRECT PAYMENT. Notwithstanding anything to the contrary in
this Agreement or the Notes, in the case of any Note owned by a Purchaser or
its nominee or owned by any other institutional holder who has given written
notice to the Company requesting that the provisions of this Section shall
apply, the Company will promptly and punctually pay when due the principal
thereof and premium, if any, and interest thereon, without any presentment
thereof directly to such Purchaser or such subsequent holder at the address
of such Purchaser set forth in Schedule I or at such other address as such
Purchaser or such subsequent holder may from time to time designate in
writing to the Company or, if a bank account is designated for such Purchaser
on Schedule I hereto or in any written notice to the Company from such
Purchaser or any such subsequent holder, the Company will make such payments
in immediately available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account of such Purchaser
or such holder in any bank in the United States as the Purchaser or any such
subsequent holder may from time to time direct in writing. The holder of any
Notes to which this Section applies agrees that in the event it shall sell or
transfer any such Notes (i) it will, prior to the delivery of such Notes
(unless it has already done so), make a notation thereon of all principal, if
any, prepaid on such Notes and will also note thereon the date to which
interest has been paid on such Notes, and (ii) it will promptly notify the
Company of the name and address of the transferee of any Notes so
transferred. With respect to Notes to which this Section applies, the Company
shall be entitled to presume conclusively that the original or such
subsequent institutional holder as shall have requested the provisions hereof
to apply to its Notes remains the holder of such Notes until (y) the Company
shall have received notice of the transfer of such Notes, and of the name and
address of the transferee, or (z) such Notes shall have been presented to the
Company as evidence of the transfer.
-5-
<PAGE>
Super Food Services, Inc. Note Agreement
SECTION 3. REPRESENTATIONS.
3.1. REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and
are incorporated herein by reference with the same force and effect as though
herein set forth in full.
3.2. REPRESENTATIONS OF THE PURCHASERS. You represent, and in
entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; PROVIDED that the
disposition of your property shall at all times be and remain within your
control. You further represent that you are acquiring the Notes for your own
account and with your general corporate assets and not with the assets of any
separate account in which any employee benefit plan has any interest. The
acquisition of the Notes by the Purchasers on the Closing Date shall
constitute the Purchasers reaffirmation of such representation. The
acquisition of the Notes by the Purchasers on the Closing Date shall
constitute the Purchasers reaffirmation of such representation. As used in
this Section, the terms "separate account" and "employee benefit plan" shall
have the respective meanings assigned to them in the Employee Retirement
Income Security Act of 1974.
SECTION 4. CLOSING CONDITIONS.
Your obligation to purchase the Notes on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which
by the terms hereof are to be performed at or prior to the time of delivery
of the Notes and to the following further conditions precedent:
4.1. CLOSING CERTIFICATE. Concurrently with the delivery of Notes
to you on the Closing Date, you shall have received a certificate dated the
Closing Date, signed by the Chairman of the Board, the Vice Chairman of the
Board, the President or a Vice President of the Company substantially in the
form attached hereto as Exhibit B, the truth and accuracy of which shall be a
condition to your obligation to purchase the Notes proposed to be sold to you.
4.2. LEGAL OPINIONS. Concurrently with the delivery of Notes to
you on the Closing Date, you shall have received from Chapman and Cutler, who
are acting as your special counsel in this transaction, and from John Demos,
Esquire, Vice Chairman of the Board, Secretary and General Counsel of the
Company, their respective opinions dated the Closing Date, in form and
substance satisfactory to you, and covering the matters set forth in Exhibits
C and D, respectively, hereto.
4.3. RELATED TRANSACTIONS. Prior to or concurrently with the
issuance and sale of Notes to you, the Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to this Agreement and the other agreements referred to
in Section 1.3.
4.4. SATISFACTORY PROCEEDINGS. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your
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<PAGE>
Super Food Services, Inc. Note Agreement
special counsel, and you shall have received a copy (executed or certified as
may be appropriate) of all legal documents or proceedings taken in connection
with the consummation of said transactions.
4.5. LEGALITY. The Notes shall qualify as a legal investment for
you under the laws and regulations of each jurisdiction to which you are
subject (without reference to any so-called "basket" provision which permits
the making of an investment without restrictions as to the character of the
particular investment being made) and you shall have received such
information as you shall reasonably request from the Company to establish
such fact.
4.6. WAIVER OF CONDITIONS. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in this Section 4 have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this
Agreement. Without limiting the foregoing, if the conditions specified in
this Section 4 have not been fulfilled, you may waive compliance by the
Company with any such condition to such extent as you may in your sole
discretion determine. Nothing in this Section 4.6 shall operate to relieve
the Company of any of its obligations hereunder or to waive any of your
rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any
amount remains unpaid on any Note:
5.1. CORPORATE EXISTENCE, ETC. The Company will preserve and keep
in force and effect, and will cause each Subsidiary to preserve and keep in
force and effect, its corporate existence and all licenses and permits
necessary to the proper conduct of its business, provided that the foregoing
shall not prevent any transaction permitted by Section 5.9.
5.2. INSURANCE. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are customary
for corporations of established reputation engaged in the same or a similar
business and owning and operating similar properties.
5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS.
The Company will promptly pay and discharge, and will cause each Subsidiary
promptly to pay and discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or such Subsidiary, respectively,
or upon or in respect of all or any part of the property or business of the
Company or such Subsidiary, all trade accounts payable in accordance with
usual and customary business terms, and all claims for work, labor or
materials, which if unpaid might become a lien or charge upon any property of
the Company or such Subsidiary; PROVIDED the Company or such Subsidiary shall
not be required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount thereof is
being contested in good faith by appropriate actions or proceedings which
will prevent the forfeiture or sale of any property of the Company or such
Subsidiary or any material interference with the use thereof by the Company
or such Subsidiary, and (ii) the Company or such Subsidiary shall set aside
on its books, reserves deemed by it to be adequate with respect thereto.
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Super Food Services, Inc. Note Agreement
The Company will promptly comply and will cause each Subsidiary to comply
with all laws, ordinances or governmental rules and regulations to which it
is subject including, without limitation, the Occupational Safety and Health
Act of 1970, the Employee Retirement Income Security Act of 1974 and all
laws, ordinances, governmental rules and regulations relating to
environmental protection in all applicable jurisdictions, the violation of
which would materially and adversely affect the properties, business,
prospects, profits or condition of the Company and its Subsidiaries or would
result in any lien or charge upon any property of the Company or any
Subsidiary.
5.4. MAINTENANCE OF PROPERTIES. The Company will maintain,
preserve and keep, and will cause each Subsidiary to maintain, preserve and
keep, its properties which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good repair and working
order and from time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the efficiency thereof shall be
maintained.
5.5. NATURE OF BUSINESS. The Company and its Subsidiaries are
primarily engaged in the distribution of food products, health and beauty
aids, general merchandise and non-food items. The Company and its
Subsidiaries are also engaged from time to time in the operation of retail
food stores, the distribution of institutional food service products and the
manufacture and distribution of food products. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in
by the Company and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Company and its Subsidiaries
on the date of this Agreement.
5.6. CONSOLIDATED TANGIBLE NET WORTH. The Company will at all
times keep and maintain Consolidated Tangible Net Worth at an amount not less
than the sum of (i) $70,000,000 PLUS (ii) 50% of Consolidated Net Income for
each fiscal year beginning on or after August 25, 1990; PROVIDED that for the
purposes of any determination under this Section 5.6, if Consolidated Net
Income for any particular fiscal year is a deficit figure, then Consolidated
Net Income shall, for that particular fiscal year, be deemed to be zero.
5.7. LIMITATIONS ON INDEBTEDNESS.
(a) The Company will not, and will not permit any Subsidiary to
create, assume or incur or in any manner be or become liable in respect of
any Funded Debt, except:
(1) the Notes;
(2) Funded Debt of the Company and its Subsidiaries outstanding on
the date hereof and described in Annex B to Exhibit B hereto, and all
extensions, renewals, refundings or replacements thereof, in each case,
without increase in principal amount;
(3) additional Funded Debt of the Company and its Subsidiaries,
PROVIDED that at the time of the issuance thereof, and after giving effect
thereto and to the application of the proceeds thereof, Consolidated Funded
Debt shall not exceed 60% of Consolidated Total Capitalization; and
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Super Food Services, Inc. Note Agreement
(4) Funded Debt of the Company to a Subsidiary; and
(5) Funded Debt of a Subsidiary to the Company or to another
Subsidiary.
(b) Any corporation which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 5.7 be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary all Funded Debt of
such corporation existing immediately after it becomes a Subsidiary.
5.8. LIMITATION ON LIENS. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations
in priority to the payment of its or their general creditors, or acquire or
agree to acquire, or permit any Subsidiary to acquire, any property or assets
upon conditional sales agreements or other title retention devices, expect:
(a) liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of mechanics and
materialmen, PROVIDED that payment thereof is not at the time required by
Section 5.3;
(b) liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review shall have
been secured;
(c) liens, charges, encumbrances and priority claims incidental to
the conduct of business or the ownership of properties and assets (including
warehousemen's and attorneys' liens and statutory landlords' liens) and
deposits, pledges or liens to secure the performance of bids, tenders or
trade contracts, or to secure statutory obligations, surety or appeal bonds
or other liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, PROVIDED in each
case, the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their use in the operation of the
business of the Company and its Subsidiaries;
(e) mortgages, liens or security interests securing Indebtedness of
a Subsidiary to the Company or to another Subsidiary;
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(f) mortgages, liens, conditional sale contracts, security
interests or other arrangements for the retention of title (including
Capitalized Leases) existing on the date hereof, securing Funded Debt of
the Company or any Subsidiary outstanding on such date (including any
renewals, extensions or replacements thereof, PROVIDED, that there is no
increase in the aggregate principal amount of the Funded Debt secured
thereby and no additional property is secured);
(g) mortgages, liens, conditional sale contracts, security
interests or other arrangements for the retention of title (including
Capitalized Leases) incurred after the date hereof given to secure the
payment of the purchase price incurred in connection with the
acquisition of property useful and intended to be used in carrying on
the business of the Company or a Subsidiary, including liens existing on
such property at the time of acquisition thereof or at the time of
acquisition by the Company or a Subsidiary of any business entity then
owning such property, whether or not such existing liens were given to
secure the payment of the purchase price of the property to which they
attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition, PROVIDED that (i) the lien or charge
shall attach solely to the property acquired or purchased, (ii) except
for liens existing on property at the time of acquisition thereof or of
any business entity then owning such property, the lien or charge shall
attach at the time of acquisition of such property or, if such property
is being constructed by the Company or a Subsidiary, within 150 days
after completion of construction, (iii) at the time of acquisition of
such property, the aggregate amount remaining unpaid on all Indebtedness
secured by liens on such property whether or not assumed by the Company
or a Subsidiary shall not exceed an amount equal to 100% of the lesser
of the total purchase price of fair market value at the time of
acquisition of such property (as determined in good faith by the Board
of Directors of the Company), and (iv) all such Indebtedness shall
consist of Funded Debt of the Company or any Subsidiary which shall have
been incurred within the limitations set forth in SECTION5.7(a)(3); and
(h) liens, in addition to the liens permitted by the preceding
clauses (a) through (g) hereof, securing Funded Debt of the Company or
any Subsidiary PROVIDED, that (i) all Funded Debt secured by such liens
shall not at any time exceed an amount equal to 20% of Consolidated
Tangible Net Worth and (ii) all such Funded Debt shall have been incurred
within the limitations set forth in SECTION5.7(a)(3).
5.9. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Company will not, and will not permit any Subsidiary to (i)
consolidate with or be a party to a merger with any other corporation or (ii)
sell, transfer or otherwise dispose of all or any substantial part (as
defined in paragraph (d) of this SECTION5.9) of assets of the Company and
Subsidiaries, PROVIDED, HOWEVER that:
(1) any Subsidiary may merge or consolidate with or into (i) the
Company or any Subsidiary so long as in any merger or consolidation
involving the Company, the Company shall be the surviving or continuing
corporation or, if the Company is not the surviving or continuing
corporation, the surviving or continuing corporation shall expressly
assume in writing the obligations of the Company under this Agreement
and under the Notes and, at the time of such
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merger or consolidation, and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing of (ii) any other
corporation so long as (x) at the time of such merger or consolidation and
after giving effect thereto no Default or Event of Default shall have
occurred and be continuing and (y) if the surviving corporation shall not
be a Subsidiary, the assets of such Subsidiary do not constitute a
substantial part of the assets of the Company and its Subsidiaries; and
(2) the Company may consolidate or merge with any other corporation
if the Company shall be the surviving or continuing corporation or, if
the Company is not the surviving or continuing corporation, the
surviving or continuing corporation shall expressly assume in writing
the obligations of the Company under this Agreement and under the Notes
and, at the time of such merger or consolidation and after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing; and
(3) any Subsidiary may sell, transfer or otherwise dispose of all
or any substantial part of its assets to the Company or any Subsidiary.
(b) The Company will not permit any Subsidiary to issue or sell any
shares of stock of any class (including as "stock" for the purpose of this
SECTION5.9, any warrants, rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into stock)
of such Subsidiary to any Person other than the Company or a Wholly-Owned
Subsidiary, except (i) for the purpose of qualifying directors, or (ii) in
satisfaction of the validly pre-existing preemptive rights of minority
shareholders in connection with the simultaneous issuance of stock to the
Company and/or a Subsidiary whereby the Company and/or such Subsidiary
maintain their same proportionate interest in such subsidiary of (iii) sales
of Minority Interests in Subsidiaries, but only if such Minority Interests
could then be sold without violation of any of the terms or provision of this
Agreement, including without limitation, limitations on the sale of assets
contained in SECTION5.9(a).
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Subsidiary (except to qualify directors), and will not
permit any Subsidiary to sell, transfer or otherwise dispose of (except to
the Company or a Subsidiary) any shares of stock of any other Subsidiary,
unless:
(1) the Board of Directors of the Company shall have determined, as
evidenced by resolution thereof, that the retention of such stock is no
longer in the best interests of the Company;
(2) such stock is sold, transferred or otherwise disposed of to a
Person, for consideration and on terms reasonably deemed by the Board of
Directors to be adequate and satisfactory; and
(3) such sale or other disposition does not involve a substantial
part of the assets of the Company and its Subsidiaries.
(d) As used in this SECTION5.9, a sale, transfer or other
disposition of assets shall be deemed to be or involve a "substantial part"
of the assets of the Company and its Subsidiaries only if the book value of
such assets (including Minority Interests issued or sold) when added to the
book value of all other assets (including Minority Interests
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issued or sold) sold, transferred or otherwise disposed of by the Company and
its Subsidiaries (other than in the ordinary course of business and other
than assets sold, transferred or disposed of to the Company or by a
Subsidiary to another Subsidiary) during the same fiscal year, exceeds 10% of
Consolidated Assets of the Company and its Subsidiaries determined as of the
end of the immediately preceding fiscal quarter, PROVIDED, that any such
sales or transfers shall be excluded from any determination hereunder if and
to the extent that the proceeds thereof are applied within 6 months after
such sale or transfer to the acquisition or construction of assets used and
useful in the business of the Company and its Subsidiaries.
(e) Notwithstanding the restrictions set forth in SECTION5.9(b)
and SECTION5.9(c), the Company and any Subsidiary may, at any time, issue
and sell shares of stock of any Joint Venture to any Person if at the time of
any such sale and after giving effect thereto, no Default or Event of Default
shall have occurred or be continuing (other than a Default or Event of
Default which would have occurred as a result of such sale in the absence of
the provisions of this SECTION5.9(e)).
5.10. GUARANTIES. The Company will not and will not permit any
Subsidiary to become or be liable in respect of any Guaranty except
Guaranties of the Company or any Subsidiary which are limited in amount to
stated maximum dollar exposure and either (i) are included in Consolidated
Funded Debt or (ii) consist of Retail Guaranties.
5.11. REPURCHASE OF NOTES. Neither the Company nor any Subsidiary
or Affiliate, directly or indirectly, may repurchase or make any offer to
repurchase any Notes unless the offer has been made to repurchase Notes, pro
rata, from all holders of the Notes at the same time and upon the same terms.
In case the Company repurchases any Notes, such Notes shall thereafter be
cancelled and no Notes shall be issued in substitution therefor.
5.12. JOINT VENTURES. (a) The Company may designate any Subsidiary
or investment as a Joint Venture by notifying, in writing, each holder of the
Notes that the chief financial officer of the Company has made such
designation, PROVIDED, that no Subsidiary or investment may be designated as
a Joint Venture under this SECTION5.12(a) unless, at the time of
designation, no Default or Event of Default shall have occurred and be
continuing (including any Default or Event of Default under SECTION5.12(b))
and any Subsidiary which is to be designated as a Joint Venture shall have no
investment in the Company or any other Restricted Subsidiary.
(b) The Company shall not at any time permit the aggregate amount
of assets of all Joint Ventures (determined in accordance with generally
accepted accounting principles) to exceed an amount equal to $5,000,000.
(c) Once a Subsidiary or investment has been designated as a Joint
Venture in accordance with SECTION5.12(a), such designation shall be
irrevocable.
5.13. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service
by or for, any Affiliate), except in the ordinary course of and pursuant to
the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the
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Super Food Services, Inc. Note Agreement
Company or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
5.14. TERMINATION OF PENSION PLANS. The Company will not and will not
permit any Subsidiary to permit any employee benefit plan maintained by it to
be terminated in a manner which could result in the imposition of a lien on
any property of the Company or any subsidiary pursuant to Section 4068 of
the Employee Retirement Income Security Act of 1974, as amended.
5.15. REPORTS AND RIGHTS OF INSPECTION. The Company will keep, and
will cause each Subsidiary to keep, proper books of record and account in which
full and correct entries will be made of all dealings or transactions of or
in relation to the business and affairs of the Company or such Subsidiary, in
accordance with generally accepted principles of accounting consistently
maintained (except for changes disclosed in the financial statements
furnished to you pursuant to this Section 5.15 and concurred in by the
independent public accountants referred to in Section 5.15(b) hereof), and
will furnish to you so long as you are the holder of any Note and to each
other institutional holder of the then outstanding Notes (in duplicate if so
specified below or otherwise requested):
(a) QUARTERLY STATEMENTS. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the
last) of each fiscal year, duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such quarter setting
forth in comparative form the consolidated figures for the end of the
preceding fiscal year,
(2) consolidated and consolidating statements of income and
retained earnings of the company and its Subsidiaries for such quarterly
period, setting forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year, and
(3) consolidated and consolidating statements of cash flows of
the Company and its Subsidiaries for the portion of the fiscal year
ending with such quarter, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company;
(b) ANNUAL STATEMENTS. As soon as available and in any event within
120 days after the close of each fiscal year of the Company, duplicate copies
of:
(1) consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
retained earnings and cash flows of the Company and its Subsidiaries
for such fiscal year,
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Super Foods Services, Inc. Note Agreement
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a
report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles and present fairly, in all
material respects, the financial condition of the Company and its
Subsidiaries and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and accordingly includes such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary;
(d) SEC AND OTHER REPORTS. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries;
(e) REQUESTED INFORMATION. Wish reasonable promptness, such other
data and information as you or any such institutional holder may reasonably
request;
(f) OFFICER'S CERTIFICATES. Within the periods provided in
paragraphs (9a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of the Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether
the Company was in compliance with the requirements of Section 5.6
through Section 5.14, inclusive, at the end of the period covered by the
financial statements then being furnished, and (ii) whether there existed
as of the date of such financial statements and whether, to the best of
such officer's knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial statements
any Default or Event of Default and, if any such condition or event exists
on the date of the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes to
take with respect thereto; and
(g) ACCOUNTANT'S CERTIFICATES. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an
opinion with respect to such financial statements, stating that they have
reviewed this Agreement and stating further whether, in making their
audit, such accountants have become aware of any Default or Event of
Default under any of the terms or provisions of this agreement insofar as
any such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying
the nature and period of existence thereof.
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Super Food Services, Inc. Note Agreement
Without limiting the foregoing, the Company will permit you, so long as you
are the holder of any Note, and each institutional holder of the then
outstanding Notes (or such Persons as either you or such holder may
designate), to visit and inspect, under the Company's guidance, any of the
properties of the Company or any subsidiary, to examine all their books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective officers, employees, and independent public accountants
(and by this provision the Company authorizes said accountants to discuss
with you the finances and affairs of the Company and its Subsidiaries) all at
such reasonable times and as often as may be reasonably requested. The
Company shall not be required to pay or reimburse you or any such holder for
expenses which you or any such holder may incur in connection with any such
visitation or inspection.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. EVENTS OF DEFAULT. Any one of more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and payable and such default shall have
continued for five business Days; or
(b) Default shall occur in the making of any payment of principal on
any Note or premium, if any, thereon at the expressed, or any accelerated,
maturity date or at any date fixed for prepayment; or
(c) Default shall be made in the payment of the principal of or
interest on any Material Indebtedness, as and when the same shall become due
and payable by the lapse of time, by declaration, by call for redemption or
otherwise, and such default shall continue beyond the period of grace, if
any, allowed with respect thereto; or
(d) Any holder or holders of any Material Indebtedness shall demand
payment of all or any portion or the principal amount of such Material
Indebtedness at any time prior to the scheduled installment payments thereof,
if any, or expressed maturity thereof, pursuant to the exercise by such
holder or holders of any right of acceleration, right to "put" or other
similar rights; or
(e) Default shall occur in the observance or performance of any
covenant, agreement or other provision of this Agreement which is not
remedied within 30 days after written notice thereof to the Company by the
holder of any Note; or
(f) Any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the Company
in connection with the consummation of the issuance and delivery of the Notes
or furnished by the Company pursuant hereto, is untrue in any material
respect as of the date of the issuance or making thereof; or
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Super Food Services, Inc. Note Agreement
(g) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary applies
for or consents to the appointment of a custodian, trustee or receiver
for the Company or such Subsidiary or for the major part of the property
of either; or
(h) A custodian, trustee or receiver is appointed for the Company
or any Subsidiary or for the major part of the property of either and is
not discharged within 30 days after such appointment; or
(i) Final judgement or judgments for the payment of money
aggregating in excess of $5,000,000 is or are outstanding against the
Company or any Subsidiary or against any property or assets of either and
any one of such judgements has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days from the date of
its entry; or
(j) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors, are instituted by or against the
Company or any Subsidiary and, if instituted against the Company or any
Subsidiary, are consented to or are not dismissed within 60 days after such
institution.
6.2. NOTICE TO HOLDERS. When any Event of Default described in the
foregoing SECTION 6.1 has occurred, or if the holder of any Note or of any
other evidence of Indebtedness of the Company gives any notice or takes any
other action with respect to a claimed default, the Company agrees to give
notice within three business days of such event to all holders of the Notes
then outstanding, such notice to be in writing and sent by registered mail,
certified mail, telegram or overnight courier.
6.3. ACCELERATION OF MATURITIES. When any Event of Default
described in paragraph (a) or (b) of SECTION 6.1 has happened and is
continuing, any holder of any Note may, and when any Event of Default
described in paragraphs (c) through (i), inclusive , of said SECTION 6.1 has
happened and is continuing, the holder or holders of 51% or more of the
principal amount of Notes at the time outstanding may, by notice in writing
sent by registered or certified mail to the Company, declare the entire
principal and all interest accrued on all Notes to be , and all Notes shall
thereupon become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived. When any Event of Default described in paragraph (j) of SECTION 6.1
has occurred, then all outstanding Notes shall immediately become due and
payable without presentment, demand or notice of any kind. Upon the Notes
becoming due and payable as a result of any Event of Default as aforesaid,
the Company will forthwith pay to the holders of the Notes the entire
principal and interest accrued on the Notes and, to the extent permitted by
law, a premium in the amount of the amount which would be payable if the
Company then had elected to prepay the Notes pursuant to SECTION 2.1
determined as of the date of the declaration of acceleration. No course of
dealing on the part of any Noteholder nor any delay or failure on the part of
any Noteholder to exercise any right shall operate as a waive of such right
or otherwise prejudice such holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to the holder or
holders of the Notes all costs and expenses incurred by them in the
collection of any Notes upon any default hereunder or thereon, including
reasonable compensation to such holder's or holders' attorneys for all
services rendered in connection therewith.
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Super Food Services, Inc. Note Agreement
6.4. RESCISSION OF ACCELERATION. The provisions of SECTION 6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default described in paragraphs
(a) through (i), inclusive, of SECTION 6.1, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, PROVIDED that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under SECTION 6.3) shall have duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to SECTION 7.1;
and PROVIDED FURTHER, that no such rescission and annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
7.1. CONSENT REQUIRED. Any term, covenant, agreement or condition
of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company shall
have obtained the consent in writing of the holders of at least 66-2/3% in
aggregate principal amount of outstanding Notes; PROVIDED that without the
written consent of the holders of all of the Notes then outstanding, no such
waiver, modification, alteration or amendment shall be effective (i) which
will change the time of payment (including any prepayment required by
SECTION 2.1) of the principal of or the interest on any Note or reduce the
principal amount thereof or change the rate of interest theron, or (ii) which
will change any of the provisions with respect to optional prepayments, or
(iii) which will change the percentage of holders of the Notes required to
consent to any such amendment, alteration or modification or any of the
provisions of this SECTION 7.
7.2. SOLICITATION OF NOTEHOLDERS. The Company will not solicit,
request or negotiate for or with respect to any proposed waiver or amendment
of any of the provisions of this Agreement or the Notes unless each holder of
the Notes (irrespective of the amount of Notes then owned by it) shall be
informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be applied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this SECTION 7.2 shall be delivered by the
Company to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The Company will
not, directly or indirectly, pay or
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Super Food Services, Inc. Note Agreement
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes of any
waiver or amendment of any of the terms and provisions of this Agreement
unless such remuneration is concurrently paid, on the same terms, ratably to
the holders of all of the Notes them outstanding.
7.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company, whether
or not such Note shall have been marked to indicate such amendment or waiver.
No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waiver or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
8.1 DEFINITIONS. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"AFFILIATE" shall mean any Person (other than a Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "CONTROL"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contrast or otherwise.
"BUSINESS DAY" shall mean any day of the week (excluding Saturday or
Sunday) on which bank in New York, New York are not obligated by law to close.
"CAPITALIZED LEASE" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"CAPITALIZED RENTALS" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Subsidiary is a lessee
would be reflected as a liability on a consolidated balance sheet of the
Company and its Subsidiaries.
"CONSOLIDATED ASSETS" shall mean as of the date of determination
thereof, all assets of the Company and its Subsidiaries determined to a
consolidated basis in accordance with generally accepted accounting
principles excluding Intangible Assets and assets consisting of the
investment of the Company or any Subsidiary in any Joint Venture.
"CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
shall mean assets and liabilities of the Company and its Restricted
Subsidiaries on a consolidated basis as shall be determined in accordance
with generally accepted accounting principles to constitute current assets
and current liabilities, respectively.
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Super Food Services, Inc. Note Agreement
"CONSOLIDATED NET INCOME" for any period shall mean the gross
revenues of the Company and its Subsidiaries for such period LESS all
expenses and other proper charges (including taxes on income), determined on
a consolidated basis in accordance with generally accepted accounting
principles consistently applied and after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in any event:
(a) any extraordinary gains or losses;
(b) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(c) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in
any manner, realized by such other corporation prior to the date of such
acquisition;
(d) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated
or which shall have merged into or with the Company or a Subsidiary prior
to the date of such consolidation or merger;
(e) net earnings of any business entity (other than a Subsidiary)
in which the Company or any Subsidiary has an ownership interest unless
such net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(f) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to the Company or any other
Subsidiary;
(g) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary; and
(i) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary; and
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of the date of any
determination thereof, the sum of (i) shareholders' equity PLUS (ii)
preferred stock PLUS (iii) Minority Interests (all as indicated on the most
recent quarterly or annual balance sheet of the Company and its Subsidiaries)
MINUS (a) Intangible Assets and (b) the value of the investment of the
Company and its Subsidiaries in Joint Ventures, all determined in accordance
with generally accepted accounting principles consolidating the Company and
its Subsidiaries.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean, as of the date of
any determination thereof, the sum of (i) Consolidated Funded Debt and (ii)
Consolidated Tangible Net Worth.
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Super Food Services, Inc. Note Agreement
"CONSOLIDATED WORKING CAPITAL" shall mean, as of the date of any
determination thereof, the total amount of all Current Assets of the Company
and its Subsidiaries minus the Current Liabilities of the Company and its
Subsidiaries, all determined in accordance of generally accepted accounting
principles.
"DEBT" shall mean, as of the date of any determination thereof;
(i) Indebtedness for borrowed money;
(ii) Indebtedness representing the deferred purchase price of
property, but excluding accounts payable and accrued liabilities arising
in, and on terms customary in, the ordinary course of the business of the
Company and its Subsidiaries;
(iii) Indebtedness which is evidenced by acceptances, notes or
other instruments;
(iv) Capitalized Rentals;
(v) Reimbursement obligations under all letters of credit; and
(vi) Guaranties;
of the Company or any of its Subsidiaries. Debt shall not include any
unfunded obligations which the Company or any Subsidiary may have from time
to time in respect of pension plans of the Company or any Subsidiary.
"DEFAULT" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.
"FUNDED DEBT" of any person shall mean (i) all Debt having a final
maturity of one or more than one year from the date of origin thereof (or
which is renewable or extendible at the option of the obligor for a period or
periods more than one year from the date of origin), (ii) Revolving Credit
Debt, (iii) all Capitalized Rentals, and (iv) all Guaranties of Funded Debt
of others. Funded Debt shall not include (i) Retail Guaranties in an
aggregate amount not in excess of 5% of Concolidated working Capital and (ii)
the so-called "current portion" of long term debt. "Concolidated" when used
as a prefix to any Funded Debt shall mean the aggregate amount of all such
Funded Debt of the Company and its Subsidiaries on a consolidated basis
eliminating intercompany items.
"GUARANTIES" by any person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
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Super Food Services, Inc. Note Agreement
obligation, (y) to maintain working capital or other balance sheet condition
or otherwise to advance or make available funds for the purchase or payment
of such Indebtedness or obligation, or (iii) to lease property or to purchase
Securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of all
computations made under this Agreement, a Guaranty in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum
aggregate amount of such obligation, liability, or dividend.
"INDEBTEDNESS" of any Person shall mean and include all obligations
of such Person which in accordance with generally accepted accounting
principles shall be classified upon a balance sheet of such Person as
liabilities of such Person, and in any event shall include all (i)
obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (ii) obligations
secured by any lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, and (iv) Capitalized
Rentals under any Capitalized Lease. For the purpose of computing the
"Indebtedness" of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof, there
shall have been deposited with the proper depositary in trust the necessary
funds (or evidence of such Indebtedness, if permitted by the instrument
creating such Indebtedness) for the payment, redemption, or satisfaction of
such Indebtedness; and thereafter such funds and evidences of Indebtedness so
deposited shall not be included in any computation of the assets of such
Person.
"INTANGIBLE ASSETS" shall mean as of the date of any determination
thereof, the total amount of all assets of the Company and it Subsidiaries
consisting of goodwill, patents, trade names, trademarks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance, workers
compensation insurance and prepaid taxes, the excess of cost of shares acquired
over book value of related assets and such other assets as are properly
classified as "intangible assets" in accordance with generally acceptable
accounting principles.
"JOINT VENTURES" shall mean any Subsidiary or other investments of
the Company or any Subsidiary which has been designated as a Joint Venture by
the Company's chief financial officer in accordance with the provisions of
Section 5.12(a) hereof, it being agreed that any Subsidiary shall no longer
be deemed to be a Subsidiary for the purposes of this Agreement after it has
been properly designated as a Joint Venture.
"MATERIAL INDEBTEDNESS" shall mean at any time one or more
obligations of the Company or any Subsidiaries for borrowed money or in
respect of interest rate
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Super Food Services, Inc.
Note Agreement
swaps, interest rate exchange agreements, currency swaps or currency exchange
agreements (however denominated) which individually or in the aggregate have,
or relate to, an unpaid principal amount of more than $5,000,000.
"MINORITY INTERESTS" shall mean any shares of stock of any class
of a Subsidiary (other than directors' qualifying shares as required by law)
that are not owned by the Company and/or one or more of its Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority
Interests in preferred stock.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
"RENTALS" shall mean and include all fixed rents (including as
such all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the Company
or a Subsidiary, as lessee or sublessee under a lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Company or a Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, in any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"RETAIL GUARANTIES" shall mean, as of the date of determination
thereof, all Guaranties of the Company entered into in the ordinary course of
business guaranteeing the obligations of any retail grocer that is a regular
customer of the Company, which obligations of such retail grocer were
incurred for valid business purposes.
"REVOLVING CREDIT DEBT" shall mean any Indebtedness for borrowed
money outstanding under a revolving credit or similar agreement the terms of
which provide for borrowing money (including extensions and renewals thereof)
for a period equal to or exceeding one year, notwithstanding that such
Indebtedness for borrowed money may be payable on demand or within one year
from the date of creation thereof.
"SECURITY" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
The term "SUBSIDIARY" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of
the Voting Stock shall be owned by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation.
The term "SUBSIDIARY" shall mean a subsidiary of the Company.
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<PAGE>
Super Food Services, Inc. Note Agreement
"VOTING STOCK" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the board of directors (or Persons performing similar
functions).
"WHOLLY-OWNED" when used in connection with any Subsidiary shall
mean a Subsidiary of which all of the issued and outstanding shares of stock
(except shares required as directors' qualifying shares) and all Indebtedness
for borrowed money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
8.2. ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made
for the purposes of this Agreement, the same shall be done in accordance with
generally accepted accounting principles, to the extent applicable, except
where such principles are inconsistent with the requirements of the Agreement.
8.3. DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
9.1. REGISTERED NOTES. The Company shall cause to be kept at its
principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided
and under such reasonable regulations as it may prescribe, any Note issued
pursuant to this Agreement.
At any time and from time to time the registered holder of any
Note which has been duly registered as hereinabove provided may transfer such
Note upon surrender thereof at the principal office of the Company duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
of this Agreement. Payment of or on account of the principal, premium, if
any, and interest on any registered Note shall be made to or upon the written
order of such registered holder.
9.2. EXCHANGE OF NOTES. At any time and from time to time, upon
not less than ten days' notice to that effect given by the holder of any Note
initially delivered or of any Note substituted therefor pursuant to
SECTION9.1, this SECTION9.2 or SECTION9.3, and, upon surrender of such Note
at its office, the Company will deliver in exchange therefor, without expense
to the holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or any amount in excess thereof
as such holder shall specify, dated as of the date to which interest has been
paid on the Note so
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Super Food Services, Inc. Note Agreement
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event or such mutilation
upon surrender and cancellation of the Note, the Company will make and
deliver without expense to the holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If the Purchaser or
any subsequent institutional holder is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
the Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
9.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of your out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you
at your home office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof, including, without limitation, and amendments, waivers or
consents resulting from any work-out, restructuring or similar proceedings
relating to the performance by the Company of its obligations under this
Agreement and the Notes. The Company also agrees that it will pay and save
you harmless against any and all liability with respect to stamp and other
taxes, if any, which may be payable or which may be determined to be payable
in connection with the execution and delivery of this Agreement or the Notes,
whether or not any Notes are then outstanding. The Company agrees to protect
and indemnify you against any liability for any and all brokerage fees and
commissions payable or claimed to be payable to any Person in connection with
the transactions contemplated by this Agreement.
9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No delay
or failure on the part of the holder of any Note in the exercise of any power
or right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent,
given or extended pursuant to SECTION7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
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Super Food Services, Inc. Note Agreement
9.6. NOTICES. All communications provided for hereunder shall be in
writing and, if to you, delivered or mailed by registered mail, certified
mail, or overnight air courier, in each case prepaid and addressed to you at
your address appearing on Schedule I to this Agreement or such other address
as you or the subsequent holder of any Note initially issued to you may
designate to the Company in writing, and if to the Company, delivered or
mailed by registered mail, certified mail or by overnight air courier, in
each case prepaid and addressed to the Company at Kettering Box 2323, Dayton,
Ohio 45429, Attention: Secretary, or to such other address as the Company may
in writing designate to you or to a subsequent holder of the Note initially
issued to you.
9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement
and the Notes.
9.9. SEVERABILITY. Should any part of this Agreement for any reason
be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto
that they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion which may, for any reason
be hereafter declared invalid.
9.10. GOVERNING LAW. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with Ohio Law.
9.11. CAPTIONS. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
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Super Food Services, Inc. Note Agreement
The execution hereof by you shall constitute a contract between us
for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.
SUPER FOOD SERVICES, INC.
By
-----------------------------
Its
Accepted as of November 1, 1989.
[VARIATION]
By
-----------------------------
Its
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<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT
NAMES AND ADDRESSEES OF NOTES TO BE
OF PURCHASERS PURCHASED
- ------------------- -----------------
NATIONWIDE LIFE INSURANCE COMPANY $20,500,000
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Corporate Fixed-Income
Securities
PAYMENTS
ALL PAYMENTS on or in respect of the
Notes to be BY BANK WIRE TRANSFER of
Federal or other immediately available
funds (identifying each payment as
Super Food Services, Inc. 9.20% Senior
Notes Due 2000, principal or interest)
to:
AMERITRUST/TRUST No. 30352900
FAO Nationwide Life Insurance
Company
ABA No. 41000687
NOTICES
ALL NOTICES OF PAYMENT, on or in
respect of the Notes and written
confirmation of each such payment to:
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Cash Division,
Money and Banking
ALL NOTICES AND COMMUNICATIONS other
than those in respect to payments to be
addressed as first provided above.
NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: None
<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
- ------------------- -------------------
EMPLOYERS LIFE INSURANCE $ 3,000,000
COMPANY OF WAUSAU
2000 Westwood Drive
Wausau, Wisconsin 54401
Attention: Investment Department
PAYMENTS
ALL PAYMENTS on or in respect of the
Notes to be BY BANK WIRE TRANSFER of
Federal of other immediately available
funds (identifying each payment as
9.20% Senior Notes Due 2000 of Super Food
Services, Inc., principal, premium or
interest) to:
First Wisconsin National Bank
Milwaukee, Wisconsin
for credit to First Wisconsin Trust Company
(Account No. 112-950-027)
for further credit to Employers Life
Insurance Company of Wausau
Account No. 6600557511.
NOTICES
ALL NOTICES AND COMMUNICATIONS, including notices
with respect to payments and written confirmation
of each such payment, to be addressed:
Employers Life Insurance Company
of Wausau
One Nationwide Plaza-33T
Columbus, Ohio 43216
Attention: Corporate-Fixed Income Securities
NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: EMPL & Co.
<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT
NAME AND ADDRESS OF NOTES TO BE
OF PURCHASERS PURCHASED
- ------------------- -------------------
WEST COAST LIFE INSURANCE COMPANY $1,500,000
1275 Market Street
San Francisco, California 94103
Attention: Ms. Lina Cruz-Investments
PAYMENTS
ALL PAYMENTS on or in respect of the
Notes to be BY BANK WIRE TRANSFER of
Federal or other immediately available
funds (identifying each payment as Super
Food Services, Inc. 9.20% Senior Notes
Due 2000, principal, premium or interest) to:
Security Pacific National Bank
Los Angeles, California 90071
ABA # 122-0000-43
For the Account of West Coast
Life Insurance Company's
Account No. 811-161020
NOTICES
ALL NOTICES AND COMMUNICATIONS with
respect to payments shall be sent to
West Coast Life Insurance Company at
the address first described above and
all other notices and written confirmation
of each such payment, to be addressed:
West Coast Life Insurance Company
One Nationwide Plaza-33T
Columbus, Ohio 43216
Attention: Corporate-Fixed Income Securities
NAME OF NOMINEE IN WHICH NOTES ARE TO BE ISSUED: None
<PAGE>
SUPER FOOD SERVICES, INC.
9.20% Senior Note
Due January 10, 2000
NO. R- _____________,19___
$
SUPER FOOD SERVICES, INC., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
or registered assigns,
on the tenth day of January, 2000
the principal amount of
DOLLARS($ )
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 9.20% per annum from the date hereof until maturity, payable
quarterly on the tenth of each January, April, July and October in each
year commencing April 10, 1990, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the rate of 10.20%
per annum after maturity, whether by acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Miamisburg, Ohio in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts.
This Note is one of the 9.20% Senior Notes of the Company in the
aggregate principal amount of $25,000,000 issued or to be issued under and
pursuant to the terms and provisions of separate and several Note Agreements
each dated as of November 1, 1989, entered into by the Company with the
original purchasers therein referred to and this Note and the holder hereof
are entitled equally and ratably with the holders of all other Notes
outstanding under the Note Agreements to all the benefits and security
provided for thereby or referred to therein, to which Note Agreements
reference is hereby made for the statement thereof.
<PAGE>
This Note and the other Notes outstanding under the Note
Agreements may be declared due prior to their expressed maturity
dates and certain prepayments are required to be made thereon, all
in the events, on the terms and in the manner and amounts as
provided in the Note Agreements.
The Notes ate not subject to prepayment or redemption at
the option of the Company prior to their expressed maturity dates
except on the terms and conditions and in the amounts with the
premium, if any, set forth in Section 2 of the Note Agreements.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal office
of the Company duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of this Note or
its attorney duly authorized in writing. Payment of or on account
of principal, premium, if any, and interest on this Note shall be
made only to or upon the order in writing of the registered holder.
SUPER FOOD SERVICES, INC.
By-----------------------
Its
A-2
<PAGE>
SUPER FOOD SERVICES, INC.
CLOSING CERTIFICATE
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio
Employers Life Insurance Company
of Wausau
2000 West Wood Drive
Wausau, Wisconsin
West Coast Life Insurance Company
1275 Market Street
San Francisco, California
Gentlemen:
This certificate is delivered to you in compliance with
the requirements of the separate and several Note Agreements dated
as of November 1, 1989 (the "AGREEMENTS"), entered into by the
undersigned, Super Food Services, Inc., a Delaware corporation (the
"COMPANY"), with each of you, and as an inducement to and as part
of the consideration for your separate purchases on this date
aggregating $25,000,000 principal amount of the 9.20% Senior Notes
due January 10, 2000 (the "NOTES") of the Company pursuant to the
Agreements. The terms which are capitalized herein shall have the
same meanings as in the Agreements.
The Company represents and warrants to each of you as
follows:
1. SUBSIDIARIES AND JOINT VENTURES. Annex A attached
hereto states the name of each of the Company's Subsidiaries and
Joint Ventures, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or its
Subsidiaries. The Company and each Subsidiary has good and
marketable title to all of the shares it purports to own of the
stock of each Subsidiary and each Joint Venture, free and clear in
each case of any lien. All such shares have been duly issued and
are fully paid and non-assessable.
2. CORPORATE ORGANIZATION AND AUTHORITY. The Company,
and each Subsidiary.
(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties
and to carry on its business as now conducted and as presently
proposed to be conducted; and
(c) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction wherein the
nature of the business transacted by it
EXHIBIT B
(to Note Agreement)
<PAGE>
or the nature of the property owned or leased by it makes such
licensing or qualification necessary.
3. BUSINESS AND PROPERTY. You have heretofore been
furnished with an Annual Report dated August 26, 1989 (the "1989
REPORT") of the Company and its Subsidiaries prepared thereby which
generally sets forth the business conducted and proposed to be
conducted by the Company and its Subsidiaries and the principal
properties of the Company and its Subsidiaries.
4. FINANCIAL STATEMENTS. (a) The consolidated balance sheets of
the Company and its Subsidiaries as of the fiscal years ended August 31,
1985, August 30, 1986, August 29, 1987, August 27, 1988 and August 26, 1989,
and the statements of income and retained earnings and changes in financial
position or cash flows for each of the fiscal years ended on said dates
accompanied by a report thereon containing an opinion unqualified as to scope
limitations imposed by the Company and otherwise without qualification
except as therein noted, by Arthur Andersen & Co., have been prepared in
accordance with generally accepted accounting principles consistently applied
except as therein noted, are correct and complete and present fairly the
financial position of the Company and its Subsidiaries as of such dates and
the results of their operations and changes in their financial position for
such periods. The unaudited consolidated balance sheets of the Company
and its Subsidiaries as of November 18, 1989, and the unaudited statements of
income and retained earnings and cash flows for the three-month period ended
on said date prepared by the Company have been prepared in accordance with
generally accepted accounting principles consistently applied, are correct
and complete and present fairly the financial position of the Company and its
Subsidiaries as of said date and the results of their operations and cash
flows for such period.
(b) Since August 26, 1989, there has been no change in
the condition, financial or otherwise, of the Company and its
Subsidiaries as shown on the consolidated balance sheet as of such
date except changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse.
5. INDEBTEDNESS. Annex B attached hereto correctly
describes all Current Debt, Funded Debt, Capitalized Leases and
Long-Term Leases of the Company and its Subsidiaries outstanding on
November 18, 1989.
6. FULL DISCLOSURE. The financial statements referred
to in paragraph 4 do not, nor does the 1989 Report or any other
written statement furnished by the Company to you in connection
with the negotiation of the sale of the Note (including the 1989
Report), contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or
herein not misleading. There is no fact peculiar to the Company or
its Subsidiaries which the Company has not disclosed to you in
writing which materially affects adversely nor, so far as the
Company can now foresee, will materially affect adversely the
properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries.
7. PENDING LITIGATION. There are no proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary in any court or before any
governmental authority or arbitration board or tribunal which
involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries. Neither the Company
nor any Subsidiary is in default with respect to any order of any
court or governmental authority or arbitration board or tribunal.
B-2
<PAGE>
8. TITLE TO PROPERTIES. The Company and each subsidiary has good
and marketable title in fee simple (or its equivalent under applicable law) to
all the real property and has good title to all the other property it purports
to own, including that reflected in the most recent balance sheet referred to
in paragraph 4, except as sold or otherwise disposed of in the ordinary course
of business and except for liens disclosed in notes to the financial statements
referred to in paragraph 4 hereof or otherwise permitted by the Agreements.
9. PATENTS AND TRADEMARKS. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks, copyright,
licenses and rights with respect to the foregoing necessary for the present and
planned future conduct of its business, without any known conflict with the
rights of others.
10. SALE IS LEGAL AND AUTHORIZED. The sale of the Notes and
compliance by the Company with all of the provisions of the Agreements and the
Notes--
(a) are within the corporate powers of the Company and have been duly
authorized by proper corporate action on the part of the Company; and
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the charter or By-laws of the Company or any
indenture or other agreement or instrument to which the Company is a party
or by which it may be bound or result in the imposition of any liens or
encumbrances on any property of the Company.
11. NO DEFAULTS. No Default or Event of Default as defined in the
Agreements has occurred and is continuing. The Company is not in default in the
payment of principal or interest on any Indebtedness for borrowed money and is
not in default under any instrument or instruments or agreements under and
subject to which any Indebtedness for borrowed money has been issued and no
event has occurred and is continuing under the provisions of any such instrument
or agreement which with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.
12. GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of the
Agreements or the Notes or compliance by the company with any of the provisions
of the Agreements or the Notes.
13. TAXES. All tax returns required to be filed by the Company or
any subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. For all
taxable years ending on or before August 27,1983, the Federal income tax
liability of the Company and its Subsidiaries has been satisfied and either
the period of limitations on assessment of additional Federal income tax has
expired or the Company and its subsidiaries have entered into an agreement
with the Internal Revenue Service closing conclusively the total tax liability
for the taxable year. The Company does not know of any proposed additional
tax assessment against it for which adequate provision has not been made in its
accounts, and no material controversy in
B-3
<PAGE>
respect of additional Federal or state income taxes is pending or to the
knowledge to the Company threatened. The provisions for taxes on the books of
the Company and each Subsidiary are adequate for all open years, and for its
current fiscal period.
14. USE OF PROCEEDS. The net proceeds from the sale of the Notes
will be used to repay outstanding indebtedness, to provide additional working
capital and other corporate purposes. None of the transactions contemplated in
the Agreements (including, without limitation thereof, the use of proceeds from
the issuance of the notes) will violate or result in a violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulation issued
pursuant thereto, including, without limitation, Regulations G,T and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
Neither the Company nor any Subsidiary owns or intends to carry or purchase any
"margin stock" within the meaning of said Regulation G. None of the proceeds
from the sale of the Notes will be used to purchase, or refinance any borrowing,
the proceeds of which were used to purchase any "security" within the meaning of
the Securities Exchange Act of 1934, as amended.
15. PRIVATE OFFERING. Neither the Company, directly or
indirectly, nor any agent on its behalf has offered or will offer the Notes
or any similar Security or has solicited or will solicit an offer to acquire
the Notes or any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of the Notes or any
similar Security with any Person other than you and not more than two other
institutional investors, each of whom was offered a portion of the Notes at
private sale for investment. Neither the company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Notes or any similar
Security or has solicited or will solicit an offer to acquire the Notes or
any similar Security from any Person so as to bring the issuance and sale of
the Notes within the provisions of Section 5 of the Securities Act of 1933,
as amended.
16. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The
consummation of the transactions provided for in the agreement and compliance by
the Company with the provisions thereof and the Notes issued thereunder will not
involve any prohibited transaction within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA") or Section 4975 of the Internal Revenue
Code of 1986, as amended. No "employee pension benefit plans", as defined in
ERISA ("Plans"), maintained by the Company or any Person which is under common
control with the Company within the meaning of Section 4001(b) of ERISA nor does
the present value of all benefits vested under all Plans exceed, as of the last
annual valuation date, the value of the assets of the Plans allocable to such
vested benefits.
17. COMPLIANCE WITH LAW. neither the Company nor any Subsidiary (a)
is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (b) has failed to obtain any license,
permit, franchise or other governmental authorization necessary to the ownership
of its property or to the conduct of its business, which violation or failure to
obtain would materially adversely affect the business, prospects, profits,
properties or condition (financial or otherwise) of the company and its
Subsidiaries, taken as a whole, or the ability of the Company to perform its
obligations contained in the Agreements or the Notes.
18. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company is not in
violation of any applicable Federal, state, or local laws, statutes, rules,
regulations or
B-4
<PAGE>
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals
to air, water, land or ground water, to the withdrawal or use of ground
water, to the use, handling or disposal of polychlorinated biphenyls, asbestos
or urea formaldehyde, to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum, crude oil or any
fraction thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances which violation could have a material adverse effect on the business,
prospects, profits, properties or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole. The Company does not know of any
liability or class of liability of the Company or any Subsidiary under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 ET SEQ.), or the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901 ET SEQ.).
Dated: February 6, 1990
SUPER FOOD SERVICES, INC.
By_____________________________________
Its Vice Chairman of the Board,
Secretary and General Counsel
B-5
<PAGE>
SUBSIDIARIES AND JOINT VENTURES OF THE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
1. Subsidiaries:
Name of Jurisdiction of Percentage of Voting Stock
Subsidiary Incorporation Owned by Company
---------- --------------- --------------------------
Gray Bear, Inc. Michigan 100%
2. Joint Ventures:
Percentage of Voting Stock
Name of Jurisdiction of Owned by the Company
Joint Venture Incorporation and any Subsidiary
------------- --------------- --------------------------
Enon Supermarket, Inc. Ohio 52%
Whitten Enterprises, Inc. Ohio 67%
Monroeville Foods, Inc. Ohio 59%
Bad Axe Food Store, Inc. Michigan 49.6%
</TABLE>
ANNEX A
(to Closing Certificate)
<PAGE>
DESCRIPTION OF DEBT AND LEASES
<TABLE>
<CAPTION>
1. Current Debt of the Company and its Subsidiaries outstanding on November
18, 1989 was as follows:
<S> <C>
Current Portion of Long Term Debt $1,140,000
Current Maturities of Obligations Under 835,235
Capitalized Leases
Notes Payable to Banks 18,000,000
----------
$19,976,235
----------
----------
</TABLE>
<TABLE>
<CAPTION>
2. Funded Debt of the Company and its Subsidiaries outstanding on November
18, 1989 was as follows:
(a) Notes, Bonds and other Securities:
<S> <C> <C> <C>
Senior Notes 9.65% Teachers Insurance and Annuity $13,000,000
Association of America
Note Payable to Bank First National Bank 3,000,000 (1)
of Louisville
Revolving Credit Society Bank N.A. 5,000,000
Agreement
Revolving Credit Central Trust Bank N.A. 5,000,000
Agreement
Term Loan Agreement National Bank of Detroit 12,000,000 (2)
Term Loan Agreement National Bank of Detroit 680,000
Industrial Revenue Continental Illinois 5,600,000
Bonds National Bank ----------
44,280,000
----------
----------
</TABLE>
ANNEX B
(to Closing Certificate)
<PAGE>
<TABLE>
(b) Guaranteed Obligations
<S> <C>
Hyland Foods, Inc. $ 16,500
Stanley Olszewski 125,000
Bush, Inc. 100,000
--------
$ 241,500
--------
--------
</TABLE>
(c) Capitalized Leases:
Of the Company and its Subsidiaries outstanding at November 18, 1989.
Includes the current portion of $835,235.
<TABLE>
Real Property
-------------------------------------
<S> <C>
5425 Dixie Highway, Bridgeport, Michigan $10,420,279
8291 Chancellor Drive, Orlando, Florida 10,441,480
County Route 130, Bellefontaine, Ohio 1,080,000
Personal Property
------------------------------------
Cessna Citation I Jet Airplane 38,008
Retail Stores
-----------------------------------
All Stores (9) 2,620,674
---------
$24,600,441
-----------
-----------
</TABLE>
- ------------------------
(1) Short term note classified as long-term debt
(2) Paid since 11/18/89
ANNEX B
(to Closing Certificate)
<PAGE>
<TABLE>
<CAPTION>
3. Long-Term Leases of the Company and is Subsidiaries outstanding on November 18, 1989 were as follows:
I. Liens
---------
Amount
Designation Property Subject to Lien Lienholder of Lien
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real Property County Route 130, Bellefontaine, OH Logan County, OH $5,600,000
Personal Property Hawker Siddeley HS-125 Jet Airplane Fifth-Third Bank, N.A. 44,960
<CAPTION>
II. Leases(1)
----------
Annual
Designation Property Subject to Lease Lessor Rent
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Leases
--------------
Real Property 5425 Dixie Highway, Bridgeport, MI American Real Estate Holdings $1,261,850
Limited Partnership
Real Property 8201 Chancellor Drive, Orlando, FL Pacific Mutual Life Insurance 1,159,296
Co.
Real Property County Route 130, Bellefontaine, OH Logan County, OH 247,375
Operating Leases
----------------
Real Property 555 E. Huron Ave., Vassar, MI Sidney Starkman and Irving 101,424
Rothbart
Real Property 212 E. Columbus St., Bellefontaine, OH Bellefontaine Investors 50,000
Real Property 100 West Pineloch Avenue, Orlando, FL Southwestern Warehousing Ltd. 58,740
Real Property 2002 Directors Row, Orlando, FL Northwestern Mutual Life 337,217
Insurance Co.
Real Property 6205 Centre Park Drive, Cincinnati, OH Schumacher-Dugan Construction, 34,392
Inc.
Real Property 520 Nichols Avenue, Muncie, IN Timothy J. Foley 4,800
Real Property 1322 Sander Circle, Indianapolis, IN F.C. Tucker Company 5,100
(1) The Company also leases 84 retail supermarket locations, most of which are subleased
to its affiliated retail customers, which have been omitted from the above schedule.
None of these individual retail subleases is material to the operations of the Company.
</TABLE>
ANNEX B
(to Closing Certificate)
<PAGE>
<TABLE>
<CAPTION>
Annual
Designation Property Subject to Lease Lessor Rent
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real Property 901 Henry Street Bellefontaine, OH Discon Services, Inc. 246,252
Real Property 6000 Creek Road, Blue Ash, OH Tricon Properties, Inc. 132,380
Real Property Corunna Road, Flint, MI Lansing Wholesale Grocery Co. 122,699
Capital Leases
- --------------
Personal Property Cessna Citation I Jet Airplane Bank One, Indianapolis, NA 97,730
Operating Leases
- ----------------
Personal Property Highway Tractors, Bridgeport, MI First Federal Savings and Loan 417,184
Assoc.
Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 269,100
Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 372,600
Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 248,400
Personal Property Highway Tractors, Orlando, FL Hertz-Penske Leasing, Inc. 248,400
Personal Property Rapistan System(A), Bridgeport, MI Security-Pacific Leasing Corp. 233,052
Personal Property Rapistan System(B), Bridgeport, MI Security-Pacific Leasing Corp. 74,520
Personal Property Rapistan System(E), Bridgeport, MI Security-Pacific Leasing Corp. 82,032
Personal Property Automobiles Various 357,954
</TABLE>
ANNEX B
(to Closing Certificate)
<PAGE>
DESCRIPTION OF CLOSING OPINION OF SPECIAL COUNSEL
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by -section-4.2 of the Note Agreement, shall be dated
the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:
(1) The Company is a corporation, duly incorporated, legally
existing and in good standing under the laws of the State of Delaware,
has corporate power and authority and is duly authorized to enter into
and perform the Note Agreements and to issue the Notes and incur the
Indebtedness to be evidenced thereby;
(2) The Note Agreements have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding
contracts and agreements of the Company enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally, and subject, as to
enforceability, to general principals of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(3) The Notes have been duly authorized by proper corporate
action on the part of the Company, have been duly executed by
authorized officers of the Company and delivered and constitute the
legal, valid and binding obligations of the Company enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally,
and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law);
(4) No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with, any Federal
governmental body is necessary in connection with the execution and
delivery of the Note Agreements or the Notes; and
(5) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements is an exempt
transaction under the Securities Act of 1933, as amended, and does
not under existing law require the registration of the Notes under
the Securities Act of 1933, as amended, or the qualification of an
indenture in respect thereof under the Trust Identure Act of 1939,
as amended.
The opinion of Chapman and Cutler shall also state that the
opinion of John Demos, Vice Chairman of the Board, Secretary and General
Counsel, is satisfactory in scope and form to Chapman and Cutler and that, in
their opinion, the Purchasers are justified in relying thereon and shall
cover such other matters relating to the sale of the Notes as the Purchasers
may reasonably request. With respect to matters of fact upon which such
opinion is based, Chapman and Cutler may rely on appropriate certificates of
public officials and officers of the Company.
EXHIBIT C
(to Note Agreement)
<PAGE>
DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY
The closing opinion of John Demos, Vice Chairman of the Board,
SEcretary and General Counsel of the Company, which is called for by
- -section-4.2 of the Note Agreement, shall be dated the Closing Date and
addressed to the Purchasers, shall be satisfactory in scope and form to the
Purchasers and shall cover the matters referred to in paragraphs 1 through 5
of Exhibit C (except that in the case of paragraph 4, said opinion shall also
cover Ohio law) and shall also be to the effect that:
(1) The Company has full power and authority and is duly
authorized to conduct the activities in which it is now engaged and is
duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
transacted by it makes such licensing or qualification necessary;
(2) Each Subsidiary is a corporation duly organized, legally
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly licensed or qualified and is in good standing
in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary and all of the issued and
outstanding shares of capital stock of each such Subsidiary have been
duly issued, are fully paid and non-assessable and are owned by the
Company, by one or more Subsidiaries, or by the Company and one or
more Subsidiaries; and
(3) The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Note Agreements do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition of
any lien or encumbrance upon any of the property of the Company
pursuant to the provisions of any charter document or By-laws of the
Company or any agreement or other instrument known to such counsel to
which the Company is a party or by which the Company may be bound.
The opinion of John Demos, Vice Chairman of the Board, Secretary
and General Counsel of the Company shall cover such other matters relating to
the sale of the Notes as the Purchasers may reasonably request. With the
respect to matters of fact on which such opinion is based, such counsel shall
be entitled to rely on appropriate certificates of public officials and
officers of the Company.
<PAGE>
NASH-FINCH COMPANY
FIRST AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank PNC Bank, N.A.
Chicago, Illinois Chicago, Illinois
Bank of Montreal
Chicago, Illinois
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of October 8, 1996 (such Credit
Agreement being hereinafter referred to as the "CREDIT AGREEMENT") and currently
in effect between you and us. Capitalized terms used without definition below
shall have the same meanings herein as they have in the Credit Agreement.
The Borrower hereby applies to you (the "BANKS") to amend the requirements
contained in the Credit Agreement for Subsidiary Guarantee Agreements.
Accordingly, upon satisfaction of the conditions precedent to effectiveness
set forth below, this letter shall serve as an agreement between the Banks and
the Borrower amending the Credit Agreement as hereinafter set forth.
1. ADDITION OF DEFINED TERMS TO SECTION 6.1.
The following definitions shall be, and hereby are, added to Section 6.1 of
the Credit Agreement, as alphabetically appropriate:
"MATERIAL SUBSIDIARY" shall mean (a) each Subsidiary (other than a
Super Food Joint Venture) (i) which has (itself or in any of its
subsidiaries) any ongoing business operations or (ii) which has
(together with its subsidiaries) consolidated total assets with an
aggregate book value as determined in accordance with GAAP of more than
$50,000 as of the close of any quarterly accounting period ending on or
after October 5, 1996, or (iii) which is obligated, or which has a
subsidiary which is obligated, as of any time after the date hereof on
any Debt and (b) each Subsidiary which is a Super Food Joint Venture if
at any time (i) such Super Food Joint Venture (together with its
subsidiaries) has consolidated gross revenues as determined in
accordance with GAAP in excess of $10,000,000 during any four (4)
consecutive quarterly accounting periods ending on or after October 5,
1996, or
<PAGE>
(ii) such Super Food Joint Venture (together with its subsidiaries) has
a consolidated tangible net worth (calculated for such Super Food Joint
Venture and its subsidiaries in a manner consistent with determinations
of Tangible Net Worth) in excess of $1,000,000 as of the end of any
quarterly accounting period ending on or after October 5, 1996, or (iii)
such Super Food Joint Venture (together with its subsidiaries) has
outstanding Debt owed to the Borrower or any Subsidiary in excess of
$500,000 in the aggregate as of any time on or after October 5, 1996, or
(iv) the Borrower makes any new Investment in such Super Food Joint
Venture or any of its subsidiaries for the benefit of such Super Food
Joint Venture or subsidiary thereof except in the ordinary course of
business to provide such Super Food Joint Venture or subsidiary thereof
with ordinary and necessary working capital.
"SUPER FOOD JOINT VENTURES" shall mean (i) Whitten Enterprises, Inc.,
an Ohio corporation, if and so long as such corporation is a Subsidiary
but not a Wholly-Owned Subsidiary and (ii) New Castle Foods, Inc., an
Indiana corporation, if and so long as such corporation is a Subsidiary
but not a Wholly-Owned Subsidiary.
2. AMENDMENT TO SECTION 7.2.
The following sentence shall be added to the end of Section 7.2 of the
Credit Agreement:
Each Material Subsidiary is a Guarantor and has executed a Subsidiary
Guaranty Agreement pursuant to Section 9.1 hereof.
3. ADDITION OF NEW SECTION 8.7.
A new Section 8.7 shall be added to the Credit Agreement to be and to read
as follows:
SECTION 8.7. SUBSIDIARIES OTHER THAN MATERIAL SUBSIDIARIES.
Notwithstanding anything in Section 8 to the contrary, any Subsidiary
which is not a Material Subsidiary shall not be required to execute a
Subsidiary Guaranty Agreement.
4. AMENDMENT TO SECTION 9.1.
The second sentence of Section 9.1 shall be deleted in its entirety and
replaced with the following:
As a condition to establishing or acquiring any Subsidiary, unless
the Required Banks otherwise agree, the Borrower shall deliver an
updated Schedule 7.2 reflect the new Subsidiary. In addition to
the foregoing, as a
-2-
<PAGE>
condition to establishing or acquiring a Subsidiary which is a
Material Subsidiary, unless the Required Banks otherwise agree, the
Borrower shall, within thirty (30) days after such establishment or
acquisition, (i) cause such Material Subsidiary to execute a
Subsidiary Guarantee Agreement and (ii) cause such Material
Subsidiary to deliver documentation (including a legal opinion)
similar to that described in Section 8.1(a) through (c) relating to
the authorization for, execution and delivery of, and validity of
such Material Subsidiary's obligations as a Guarantor hereunder and
under the Subsidiary Guarantee Agreement in form and substance
satisfactory to the Required Banks.
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject
to the satisfaction of all of the following conditions precedent:
(a) The Borrower and the Banks shall have executed this Amendment.
(b) Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Banks and their counsel.
Upon satisfaction of such conditions precedent, this Amendment shall take effect
as of October 8, 1996.
6. REPRESENTATIONS REAFFIRMED. In order to induce the Banks to execute
and deliver this Agreement, the Borrower hereby represents to the Banks that as
of the date hereof and as of the time that this Amendment becomes effective,
each of the representations and warranties set forth in Section 7 of the Credit
Agreement, after giving effect to the amendments made hereby, are and shall be
true and correct (except that the representations contained in Section 7.4 shall
be deemed to refer to the most recent financial statements of the Borrower
delivered to the Banks).
7. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each
of which when so executed shall be an original but all of which shall
constitute one and the same instrument. Except as specifically amended and
modified hereby, all of the terms and conditions of the Credit Agreement
shall stand and remain unchanged and in full force and effect. No reference
to this Amendment need be made in any note, instrument or other document
making reference to the Credit Agreement, any reference to the Credit
Agreement in any such note, instrument or other document to be deemed to be a
reference to the Credit Agreement as amended hereby. The Borrower confirms
its agreement to pay the reasonable fees and disbursements of Messrs. Chapman
and Cutler, counsel to the Administrative Agent, in connection with the
preparation,
-3-
<PAGE>
execution and delivery of this Amendment and the transactions and documents
contemplated hereby. This instrument shall be construed and governed by and
in accordance with the laws of the State of Illinois (without regard to
principles of conflicts of laws).
-4-
<PAGE>
Dated as of this ___ day of December, 1996 but effective (as set forth
above) as of October 8, 1996.
NASH-FINCH COMPANY
By
Name:
------------------------------
Title:
------------------------------
Accepted and agreed to as of the date last above written.
HARRIS TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as
Administrative Agent
By
Its Vice President
BANK OF MONTREAL, in its individual
capacity as a Bank and as Syndication
Agent
By
Its
--------------------------------
PNC BANK, NATIONAL ASSOCIATION, in its
individual capacity as a Bank and as
Syndication Agent
-5-
<PAGE>
By
Its
--------------------------------
-6-
<PAGE>
EXCERPTS FROM MINUTES OF
BOARD OF DIRECTORS MEETING OF
NASH FINCH COMPANY ON
APRIL 9, 1996
RESOLVED, that effective May 1, 1996, the director elected to serve as Board
Chair, if such director is not a present full time employee of Nash Finch
Company or its subsidiaries, shall, in addition to and not in lieu of any other
compensation paid to such director as an outside member of this Board of
Directors, be compensated with a monthly retainer equal to two times the amount
of the monthly retainer paid to outside members of this Board of Directors
generally; and that, upon becoming effective, this resolution shall supercede
any resolution heretofore adopted by this Board of Directors pertaining to
compensation of the Board Chair.
<PAGE>
EXCERPTS FROM MINUTES OF
BOARD OF DIRECTORS MEETING OF
NASH FINCH COMPANY ON
NOVEMBER 19, 1996
RESOLVED, that effective as of January 1, 1997, outside members of the Board of
Directors of the Company be compensated at a rate of $1,500 plus reasonable
expenses incurred for each meeting of the Board of Directors attended, $750 plus
reasonable expenses incurred for attendance at meetings of committees of the
Board, $1,250 per month ($15,000 per year) retainer for serving as a director,
$125 per month ($1,500 per year) retainer for serving as a member of a committee
of the Board, and $125 per month ($1,500 per year) retainer for serving as Chair
of a committee of the Board. For the purposes of this resolution, an outside
director is defined as any director who is not a present full time employee of
Nash Finch Company or its subsidiaries.
RESOLVED FURTHER, that the directer elected to serve as Board Chair, if such
director is not a present full time employee of Nash Finch Company or its
subsidiaries, shall, in addition to and not in lieu of any other compensation
paid to such director as an outside member of the Board of Directors, be
compensated with a monthly retainer equal to two times the amount of the monthly
retainer paid to outside members of this Board of Directors generally.
RESOLVED FURTHER, that upon becoming effective, the foregoing resolutions shall
supercede any resolution heretofore adopted by this Board of Directors
pertaining to compensation of outside directors including, without limitation,
the Board Chair.
<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.
RESULTS OF OPERATIONS
1996 1995 1994
- ------------------------------------------------------------------------------
Total Revenues. . . . . . . . . . . . . 100.0% 100.0% 100.0%
------ ------ ------
Gross Margin. . . . . . . . . . . . . . 13.1 14.5 14.9
Operating Expense . . . . . . . . . . . 10.7 12.1 12.5
Depreciation and Amortization . . . . . 1.0 1.0 1.1
Interest Expense. . . . . . . . . . . . .4 .4 .4
Earnings before Income Taxes. . . . . . 1.0 1.0 .9
Income Taxes. . . . . . . . . . . . . . .4 .4 .4
------ ------ ------
Net Earnings. . . . . . . . . . . . . . .6 .6 .5
------ ------ ------
REVENUES
Total revenues increased 16.8% during fiscal 1996 to $3.375 billion compared
to $2.889 billion in 1995 and $2.832 billion in 1994. The increase in 1996 is
largely attributed to the acquisitions which have taken place during the year;
(see Note (2) of Notes to Consolidated Financial Statements), and the addition
of new independent retail accounts.
Wholesale segment revenues increased 25.4% to $2.469 billion from $1.969
billion in 1995, primarily due to the acquisitions of Military Distributors
of Virginia, Inc., ("MDV"), T. J. Morris Company ("T. J. Morris") and Super
Food Services, Inc. ("Super Food") which reported combined 1996 revenues of
$718.4 million, from their respective dates of acquisition. Prior year
revenues include volume of Thomas & Howard Company of Hickory, Inc. ("T&H"),
the Company's convenience store distribution operation which was sold in
December 1995. Also, the volume of several new independent retailer accounts
were added in 1996; in particular, Sunshine Food Markets, a seven-store chain
based in Sioux Falls, South Dakota which was acquired by the Company under a
joint ownership arrangement with an existing customer. Fiscal 1995 wholesale
revenues increased 6.2% over 1994 due to growth of the military wholesale
business and the addition of several new customers.
Retail segment revenues declined 1.1% from $860.0 million in fiscal 1995 to
$850.0 million in 1996. The decline reflects the sale of three stores to an
existing customer, and the closing of eight unprofitable stores, partially
offset by the acquisition of four other stores in three separate
transactions. Same store sales during 1996 increased 1.1% compared to a year
ago. Retail revenue during 1995 decreased from 1994 levels by 7.1% due to the
sale of several stores to existing wholesale accounts and the closing of
unprofitable stores.
GROSS MARGINS
Gross margins were 13.1% in 1996 compared to 14.5% in 1995 and 14.9% in 1994.
The decline over the three-year period resulted from a growing proportion of
wholesale revenues which achieve lower margins than retail. Wholesale operations
accounted for 73.3% of consolidated revenues in 1996, compared to 68.4% and
65.7% in 1995 and 1994, respectively. Overall margins were also negatively
impacted by the sale of T&H, a higher margin general merchandise and convenience
store distribution business, and the acquisition of the lower margin military
and conventional wholesale volume of MDV and T. J. Morris. On a wholesale level,
the Company has continued to regionalize procurement functions among warehouse
groups to improve operating efficiency and lower product costs, which may
favorably impact margins. Retail segment margins improved as a result of an
increased distribution of sales from higher margin perishable and specialty
department products and the availability and recognition of greater vendor
promotional allowances at the store level. Margins were also affected by a LIFO
charge for the year of $1.6 million compared to $.1 million and $1.4 million for
1995 and 1994, respectively. The prior year charge is net of a $1.5 million
credit related to a reduction of inventory levels by T&H preceding the sale of
the subsidiary.
OPERATING EXPENSES
Selling, general and administrative expenses as a percent of total revenues
were 10.7% in 1996 compared to 12.1% in 1995 and 12.5% in 1994. Expense levels
declined as a percent of total revenues due to the growing proportion of
wholesale business which operates at lower expense levels than retail. In
addition, operating expenses of the newly acquired MDV and T. J. Morris
wholesale businesses are lower, as a percent of total revenues, than those of
the divested T&H operations. Productivity gains and tighter cost controls at the
wholesale level also contributed to a reduction in overall expenses compared to
last year.
Operating expenses were negatively affected by increased expenses of
approximately $1.0 million related to the closing of a distribution center in
Macon, Georgia; and the systematic transfer of a substantial portion of its
business to the newly acquired T. J. Morris operation. In addition,
information system costs increased on a pretax basis by $1.8 million over
1995 as a result of the Company's project to redesign its information systems
to client/server-based technology. The upward trend in management information
systems costs is expected to continue through fiscal 1997 as the design
process progresses to encompass more facets of the Company's operations.
Also, the Company recorded a fourth quarter pretax charge of $1.6 million
representing a valuation allowance related to its minority interest in an
unconsolidated company.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased 18.2% from 1995 expense
levels. The increase was primarily due to amortization of goodwill and
depreciation of property, plant and equipment acquired since the beginning of
1996. Partially offsetting these costs were lower depreciation expenses
resulting from the sale or closing of several retail stores and divestiture
of T&H. The decrease in 1995 compared to 1994 reflected a reduction in the
number of corporate owned stores and lower capital expenditures.
INTEREST EXPENSE
Interest expense in 1996 increased by 38% compared to 1995. The increase is
attributed to higher debt levels required to fund the acquisitions of both
MDV and Super Food. Interest expense as a percent of revenues was .44%, .37%
and .40% for 1996, 1995 and 1994, respectively. Interest expense in 1995 was
favorably impacted by cash proceeds from the sales of T&H and customer notes
receivable which favorably reduced borrowing requirements in the second half
of the year.
EARNINGS BEFORE TAXES
Earnings before income taxes increased 17.7% from $28.6 million in 1995 to
$33.7 million in 1996. The earnings improvement is attributed to each segment of
the Company's operations; in particular, wholesale operations benefited from the
acquisitions in 1996 as well as new independent retail volume which has been
added since last year. Retail operations also showed improvement for the year as
a result of expense control and better gross margin management. Nash DeCamp, the
Company's produce marketing subsidiary, was plagued by weak market conditions
for South American product at mid-year, but was favorably affected by strong
market conditions for its domestically-grown products in the second half of
1996.
14
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
INCOME TAXES
The effective income tax rate increased to 40.5% in 1996 from 39.1% in 1995
and 40.0% in 1994. The 1995 reduction was due to utilization of available
capital loss carry forwards to partially offset the taxable gain from the
sale of T&H capital stock to an unrelated third party. The 1996 and future
year effective tax rate increased as the result of non-tax deductible
goodwill amortization resulting from the acquisitions of T. J. Morris and
Super Food. The effective tax rate is not expected to decline in future years.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its capital needs through a
combination of internal and external sources. These sources include cash flow
from operations, short-term bank borrowings, various types of long-term debt,
leasing and equity financing. During 1996, the Company utilized long-term
debt to finance the acquisitions of MDV and Super Food as well as for capital
projects.
Cash provided from operating activities was $32.9 million in 1996, compared
to $85.8 million last year. The decline results from the sale of T&H for cash
in the fourth quarter last year compounded by the additional working capital
requirements needed to service the increased revenue base in 1996. Working
capital at December 28, 1996 was $228.5 million compared to $104.0 million in
1995.
At December 28, 1996, the Company had $16.2 million in short-term debt,
compared to no outstanding borrowing at the same time last year. The Company
has committed lines of credit totaling $7.0 million and uncommitted lines of
credit of $35.0 million with a number of banks.
On October 8, 1996, the Company entered into a 5-year, $500.0 million
revolving credit facility with several participating banks. This financing
was placed to provide sufficient funding for acquisitions, capital projects
and working capital requirements. Management believes the Company will
continue to have adequate access to short-term and long-term credit to meet
its needs in the foreseeable future.
Capital projects designed to maintain operating capacity, expand operations or
improve efficiency totaled $51.3 million in 1996 compared to $33.3 and $34.9 in
1995 and 1994, respectively. These projects have typically been funded through
operating cash flows. For 1997, capital spending is projected to be $46.9
million, consisting of warehouse and delivery equipment replacements, several
retail store replacements, expansions and remodeling, and expenditures related
to the redesign of information systems.
During 1996, the Company provided financial assistance in the form of secured
loans totaling $3.9 million to new or existing independent retailers (exclusive
of any such loans made by Super Food and T. J. Morris prior to their being
acquired by the Company). These loans are generally used to maintain and grow
their businesses.
Dividend payments in 1996 were $.75 per share, up from $.74 in 1995. These
amounts represented 41% and 46% of net earnings in each year, respectively.
Return on average stockholders' equity was 8.9% in 1996, up from 8.3% in 1995.
PRICE RANGE OF COMMON STOCK
AND DIVIDENDS
Nash Finch Company Common Stock is traded on the Nasdaq National Market tier
of The Nasdaq Stock Market under the symbol NAFC. The following table sets
forth, for each of the calendar periods indicated, the range of high and low
closing sales prices for the Common Stock as reported by the Nasdaq National
Market, and the cash dividends paid per share of Common Stock. Prices do not
include adjustments for retail mark-ups, mark-downs or commissions. At
December 28, 1996 there were 2,225 stockholders of record.
Dividends
1996 1995 Per Share
---------------- ---------------- ----------------
High Low High Low 1996 1995
- ---------------------------------------------------------------------------
First Quarter 18 1/2 16 3/8 16 3/4 15 1/4 .18 .18
Second Quarter 18 1/4 15 3/4 16 3/4 15 5/8 .18 .18
Third Quarter 16 3/4 15 1/2 20 1/2 16 3/8 .18 .18
Fourth Quarter 21 5/8 16 1/4 19 15/16 17 1/4 .21 .20
- ---------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
A summary of quarterly financial First Quarter Second Quarter Third Quarter Fourth Quarter
information is presented. 12 Weeks 12 Weeks 16 Weeks 12 Weeks
-------------------- -------------------- -------------------- --------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales and other revenue. . . . . . $684,494 623,598 735,242 676,514 1,003,867 918,825 951,882 669,899
Cost of sales. . . . . . . . . . . . . 593,145 534,312 635,315 575,582 869,669 785,623 834,580 574,324
Earnings before income taxes . . . . . 4,699 4,519 10,253 9,835 11,421 8,491 7,294 5,750
Income taxes . . . . . . . . . . . . . 1,903 1,830 4,153 3,983 4,625 3,439 2,954 1,929
Net earnings . . . . . . . . . . . . . 2,796 2,689 6,100 5,852 6,796 5,052 4,340 3,821
Percent to sales and revenues. . . . . .41 .43 .82 .86 .68 .55 .46 .57
Net earnings per share . . . . . . . . $ .26 .25 .56 .54 .61 .46 .38 .35
Average number of
shares outstanding. . . . . . . . . . . 10,890 10,874 10,921 10,875 11,121 10,875 11,265 10,877
- -------------------------------------------------------------------------------------------------------------------------------
15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994 1996 1995 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME:
Net sales . . . . . . . . . . . . . . . . . . . . . $3,322,666 2,831,114 2,779,330
Other revenues. . . . . . . . . . . . . . . . . . . 52,819 57,722 52,670
---------- ----------- -----------
Total revenues. . . . . . . . . . . . . . . . . . 3,375,485 2,888,836 2,832,000
COST AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . 2,932,709 2,469,841 2,410,292
Selling, general and administrative,
and other operating expenses. . . . . . . . . . . 359,456 350,201 352,683
Depreciation and amortization . . . . . . . . . . . 34,759 29,406 31,831
Interest expense. . . . . . . . . . . . . . . . . . 14,894 10,793 11,384
---------- ----------- -----------
Total costs and expenses. . . . . . . . . . . . . 3,341,818 2,860,241 2,806,190
Earnings before income taxes. . . . . . . . . . . 33,667 28,595 25,810
Income taxes . . . . . . . . . . . . . . . . . . . . 13,635 11,181 10,330
---------- ----------- -----------
Net earnings. . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480
---------- ----------- -----------
Weighted average number of common shares outstanding 11,055 10,875 10,873
---------- ----------- -----------
Earnings per share . . . . . . . . . . . . . . . . . $ 1.81 1.60 1.42
---------- ----------- -----------
- -----------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Nash Finch Company:
We have audited the accompanying consolidated balance sheets of Nash Finch
Company and subsidiaries as of December 28, 1996 and December 30, 1995, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Nash Finch Company for the year ended December 31, 1994 were
audited by other auditors whose report dated March 3, 1995, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1996 and 1995 financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Nash Finch Company and subsidiaries at December 28, 1996 and December 30, 1995,
and the consolidated results of their operations and their cash flows, for each
of the years then ended in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
Minneapolis, Minnesota
February 19, 1997
16
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal years ended December 28, 1996,
December 30, 1995, and December 30, 1994 1996 1995 1994
(IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 34,759 29,406 31,831
Provision for bad debts . . . . . . . . . . . . . . . . . . . . 1,893 3,997 2,187
Provision for (recovery from) losses on closed lease locations. (458) 1,361 366
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (2,278) (4,187) 2,874
Deferred compensation . . . . . . . . . . . . . . . . . . . . . (149) (901) (539)
Loss (earnings) of equity investments . . . . . . . . . . . . . 616 (501) (902)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326 (157) (545)
Changes in operating assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . . . . . (12,544) 8,115 (9,418)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 14,021 14,680 (6,880)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . (349) (3,441) (1,087)
Accounts payable and outstanding checks . . . . . . . . . . . . (24,245) 15,339 6,979
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 2,219 2,160 2,553
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . (967) 2,508 (2,172)
-------- -------- --------
Net cash provided by operating activities . . . . . . . . . . 32,876 85,793 40,727
-------- -------- --------
INVESTING ACTIVITIES:
Dividends received. . . . . . . . . . . . . . . . . . . . . . . . -- 890 618
Disposals of property, plant and equipment, net . . . . . . . . . 9,169 14,858 12,501
Additions to property, plant and equipment
excluding capital leases. . . . . . . . . . . . . . . . . . . . (51,333) (33,264) (34,965)
Businesses acquired, net of cash acquired . . . . . . . . . . . . (257,868) -- (8,614)
Investment in an affiliate. . . . . . . . . . . . . . . . . . . . (2,500) (1,379) --
Loans to customers. . . . . . . . . . . . . . . . . . . . . . . . (4,997) (9,199) (7,958)
Payments from customers on loans. . . . . . . . . . . . . . . . . 4,713 8,788 8,093
Loans sold including current portion. . . . . . . . . . . . . . . 3,402 13,744 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,896) (137) (902)
-------- -------- --------
Net cash used for investing activities. . . . . . . . . . . . (302,310) (5,699) (31,227)
-------- -------- --------
FINANCING ACTIVITIES:
Proceeds from long-term debt. . . . . . . . . . . . . . . . . . . 30,000 352 --
Proceeds from revolving debt. . . . . . . . . . . . . . . . . . . 244,000 -- --
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . (8,288) (8,048) (7,938)
Payments of short-term debt . . . . . . . . . . . . . . . . . . . 1,171 (41,400) 3,100
Payments of long-term debt. . . . . . . . . . . . . . . . . . . . (21,946) (5,568) (2,933)
Payments of capitalized lease obligations . . . . . . . . . . . . (717) (540) (1,576)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 56 35
-------- -------- --------
Net cash provided by (used in) financing activities . . . . . 244,331 (55,148) (9,312)
-------- -------- --------
Net (decrease) increase in cash . . . . . . . . . . . . . . . $(25,103) 24,946 188
-------- -------- --------
- -----------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
17
</TABLE>
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 28, 1996 and December 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Assets 1996 1995
- -------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 921 26,024
Accounts and notes receivable, net. . . . . . . . . . 206,062 85,968
Inventories . . . . . . . . . . . . . . . . . . . . . 293,458 183,957
Prepaid expenses. . . . . . . . . . . . . . . . . . . 20,492 12,067
Deferred tax assets . . . . . . . . . . . . . . . . . 4,663 3,674
-------- --------
Total current assets. . . . . . . . . . . . . . . 525,596 311,690
Investments in affiliates. . . . . . . . . . . . . . . 10,300 8,421
Notes receivable, noncurrent . . . . . . . . . . . . . 21,652 4,595
PROPERTY, PLANT AND EQUIPMENT:
Land. . . . . . . . . . . . . . . . . . . . . . . . . 33,753 28,638
Buildings and improvements. . . . . . . . . . . . . . 148,227 110,887
Furniture, fixtures, and equipment. . . . . . . . . . 295,147 204,054
Leasehold improvements. . . . . . . . . . . . . . . . 54,925 25,786
Construction in progress. . . . . . . . . . . . . . . 7,543 6,538
Assets under capitalized leases . . . . . . . . . . . 26,105 12,923
-------- --------
565,700 388,826
Less accumulated depreciation and amortization. . . . (293,845) (210,787)
-------- --------
Net property, plant and equipment . . . . . . . . 271,855 178,039
Intangible assets, net . . . . . . . . . . . . . . . . 80,312 6,282
Investment in direct financing leases. . . . . . . . . 22,011 456
Deferred tax asset -- net. . . . . . . . . . . . . . . 4,076 2,835
Other assets . . . . . . . . . . . . . . . . . . . . . 9,675 1,942
-------- --------
Total assets. . . . . . . . . . . . . . . . . . $945,477 514,260
-------- --------
-------- --------
- -------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
18
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Outstanding checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,492 28,998
Short-term debt payable to banks. . . . . . . . . . . . . . . . . . . . . . . 16,171 --
Current maturities of long-term debt and capitalized lease obligations. . . . 7,795 14,701
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,501 127,592
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,130 31,745
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,999 4,652
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 297,088 207,688
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,819 71,030
Capitalized lease obligations. . . . . . . . . . . . . . . . . . . . . . . . . 41,832 10,158
Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,476 7,625
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,401 2,446
STOCKHOLDERS' EQUITY:
Preferred stock - no par value
Authorized 500 shares; none issued. . . . . . . . . . . . . . . . . . . . . -- --
Common stock of $1.66 2/3 par value
Authorized 25,000 shares; 11,574 shares
issued in 1996 and 11,224 in 1995 . . . . . . . . . . . . . . . . . . . . . 19,290 18,706
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . 16,816 12,013
Foreign currency translation adjustment -
net of a $633 deferred tax benefit. . . . . . . . . . . . . . . . . . . . . (950) (950)
Restricted stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (500) --
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,322 188,578
-------- --------
234,978 218,347
Less cost of 307 shares and 346 shares of
common stock in treasury, respectively. . . . . . . . . . . . . . . . . . . (2,117) (3,034)
-------- --------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 232,861 215,313
-------- --------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . $945,477 514,260
-------- --------
-------- --------
- -----------------------------------------------------------------------------------------------------
19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Foreign
Common stock Additional currency
------------ paid-in Retained translation
Shares Amount capital earnings adjustment
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994 . . . . . . 11,224 $18,706 11,954 171,670 --
Net earnings . . . . . . . . . . . . . -- -- -- 15,480 --
Dividend declared of $.73 per share. . -- -- -- (7,938) --
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- -- 23 -- --
Foreign currency translation adjustment
- net of a $381 deferred tax benefit. -- -- -- -- (572)
------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 1994 . . . . . 11,224 18,706 11,977 179,212 (572)
Net earnings . . . . . . . . . . . . . -- -- -- 17,414 --
Dividend declared of $.74 per share. . -- -- -- (8,048) --
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- -- 36 -- --
Foreign currency translation adjustment
- net of a $252 deferred tax benefit. -- -- -- -- (378)
------- ------- ------- ------- -------
BALANCE AT DECEMBER 30, 1995 . . . . . 11,224 18,706 12,013 188,578 (950)
Net earnings . . . . . . . . . . . . . -- -- -- 20,032 --
Dividend declared of $.75 per share. . -- -- -- (8,288) --
Shares issued in connection with
acquisition of a business . . . . . . 350 584 5,064 -- --
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- -- 47 -- --
Issuance of restricted stock . . . . . -- -- (308) -- --
Amortized compensation under
restricted stock plan . . . . . . . . -- -- -- -- --
Treasury stock purchased . . . . . . . -- -- -- -- --
------- ------- ------- ------- -------
BALANCE AT DECEMBER 28, 1996 . . . . . 11,574 $19,290 16,816 200,322 (950)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock Total
Restricted -------------- stockholders
Stock Shares Amount equity
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994 . . . . . . -- (351) $(3,066) 199,264
Net earnings . . . . . . . . . . . . . -- -- -- 15,480
Dividend declared of $.73 per share. . -- -- -- (7,938)
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- 2 12 35
Foreign currency translation adjustment
- net of a $381 deferred tax benefit. -- -- -- (572)
------- ------- ------- -------
BALANCE AT DECEMBER 31, 1994 . . . . . -- (349) (3,054) 206,269
Net earnings . . . . . . . . . . . . . -- -- -- 17,414
Dividend declared of $.74 per share. . -- -- -- (8,048)
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- 3 20 56
Foreign currency translation adjustment
- net of a $252 deferred tax benefit. -- -- -- (378)
------- ------- ------- -------
BALANCE AT DECEMBER 30, 1995 . . . . . -- (346) (3,034) 215,313
Net earnings . . . . . . . . . . . . . -- -- -- 20,032
Dividend declared of $.75 per share. . -- -- -- (8,288)
Shares issued in connection with
acquisition of a business . . . . . . -- -- 5,648
Treasury stock issued upon exercise
of options. . . . . . . . . . . . . . -- 6 42 89
Issuance of restricted stock . . . . . (524) 40 995 163
Amortized compensation under
restricted stock plan . . . . . . . . 24 -- -- 24
Treasury stock purchased . . . . . . . -- (7) (120) (120)
------- ------- ------- -------
BALANCE AT DECEMBER 28, 1996 . . . . . (500) (307) $(2,117) 232,861
------- ------- ------- -------
------- ------- ------- -------
- -----------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1) ACCOUNTING POLICIES
FISCAL YEAR
Nash Finch Company's fiscal year ends on the Saturday nearest to December 31.
Fiscal years 1996, 1995 and 1994 consisted of 52 weeks.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of Nash Finch
Company (the Company), its majority-owned subsidiaries and the Company's share
of net earnings or losses of 50% or less owned companies. All material
intercompany accounts and transactions have been eliminated in the consolidated
financial statements. Certain reclassifications were made to prior year amounts
to conform with 1996 presentation.
CASH AND CASH EQUIVALENTS
In the accompanying financial statements, and for purposes of the statements
of cash flows, cash and cash equivalents include cash on hand and short-term
investments with original maturities of three months or less.
INVENTORIES
Inventories are stated at the lower of cost or market. At both December 28,
1996 and December 30, 1995, approximately 86% of the Company's inventories are
valued on the last-in, first-out (LIFO) method. During fiscal 1996 the Company
recorded a LIFO charge of $1.6 million compared to $.1 million in 1995. The
remaining inventories are valued on the first-in, first-out (FIFO) method. If
the FIFO method of accounting for inventories had been used, inventories would
have been $41.6 million and $40.0 million higher at December 28, 1996 and
December 30, 1995, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Assets under capitalized
leases are recorded at the present value of future lease payments or fair market
value, whichever is lower. Expenditures which improve or extend the life of the
respective assets are capitalized while maintenance and repairs are expensed as
incurred.
20
<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 2-25 years.
Amortization expense charged to operations for fiscal years ended December 28,
1996, December 30, 1995 and December 31, 1994 was $5.2 million, $1.8 million and
$2.2 million, respectively. The accumulated amortization of intangible assets
was $10.1 million and $5.1 million at December 28, 1996 and December 30, 1995.
DEPRECIATION AND AMORTIZATION
Property, plant and equipment are depreciated on a straight-line basis over
the estimated useful lives of the assets which generally range from 10 to 40
years for building and improvements and 3 to 10 years
for furniture, fixtures and equipment. Leasehold improvements and
capitalized leases are amortized to expense on a straight-line basis
over the term of the lease.
INCOME TAXES
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.
EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding during each year. Options granted
under the Company's stock option plans are considered common stock equivalents
but have been excluded from the computation since the effect is not material.
STOCK OPTION PLANS
In accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the Company
has chosen to continue to apply Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related interpretations in
accounting for its stock option plans, and, accordingly, does not recognize
compensation costs, if option price equals or exceeds market price at date of
grant. Note (6) to the Consolidated Financial Statements contains a summary of
the pro forma effects to reported net income and earnings per share had the
Company elected to recognize compensation costs as encouraged by SFAS No. 123.
FOREIGN CURRENCY TRANSLATION
Adjustments resulting from the translation of assets and liabilities
of a foreign investment are included in stockholders' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
(2) ACQUISITIONS
During fiscal 1996, the Company completed three acquisitions.
These acquisitions have been accounted for by the purchase method
of accounting and accordingly, the operating results of the newly acquired
businesses have been included in the consolidated operating results of the
Company since their respective dates of acquisition.
On November 7, 1996, the Company completed a tender offer to purchase the
outstanding shares of common stock of Super Food Services, Inc. ("Super Food")
for $15.50 per share in cash, with 10.6 million shares tendered, representing
approximately 96 percent of the outstanding common stock of Super Food. Super
Food is a wholesale grocery distributor based in Dayton, Ohio with annual
revenues of approximately $1.2 billion. The fair value of the assets acquired,
including goodwill, was $321.9 million, and liabilities assumed totaled $150.0
million. Goodwill of $29.8 million and other intangibles of $7.1 million are
being amortized over 25 years on a straight-line basis.
On August 5, 1996, the Company acquired all of the outstanding stock of T. J.
Morris Company ("T. J. Morris"), a full line food wholesaler located in
Statesboro, Georgia, with annual revenues of $110.0 million. In exchange for the
T. J. Morris stock, the Company issued 350,261 shares of its common stock,
valued at approximately $5.7 million, of which 75,000 shares are held in escrow.
The excess of purchase price over fair value of the assets acquired resulted in
goodwill of approximately $3.1 million which is being amortized on a straight
line basis over a
15-year period.
On January 2, 1996, the Company acquired substantially all of the business
and assets of Military Distributors of Virginia, Inc., ("MDV") located in
Norfolk, Virginia for approximately $56.0 million in cash and the assumption
of certain liabilities totaling approximately $54.0 million. MDV, with
revenues of approximately $350.0 million, is a major distributor of grocery
products to military commissaries in the eastern United States and Europe.
The purchase price exceeded the fair value of the net assets acquired by
approximately $43 million. The resulting goodwill is being amortized on a
straight line basis over 15 years.
The following summary, prepared on a pro forma basis, combines the
consolidated results of operations as if Super Food, T. J. Morris and MDV had
been acquired as of the beginning of the periods presented, after including the
impact of certain adjustments such as amortization of intangibles, increased
interest expense on acquisition debt and related income tax effects:
PRO FORMA INFORMATION (UNAUDITED)
- ---------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------
Net revenues . . . . . . . . . . . . . . . . . .$4,507,600 4,589,362
Earnings before income taxes . . . . . . . . . . 23,192 32,291
Net income . . . . . . . . . . . . . . . . . . . 13,761 19,060
Earnings per share . . . . . . . . . . . . . . . $1.24 1.70
---------- ----------
The pro forma information is provided for informational purposes only. It is
based on historical information and does not necessarily reflect results that
would have occurred had the acquisitions been made as of those dates or results
which may occur in the future.
(3) ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable at the end of fiscal years 1996 and 1995 are
comprised of the following components (in thousands):
- ---------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------
Customer notes receivable - current portion. . . $ 8,090 2,232
Customer accounts receivable . . . . . . . . . . 197,336 73,153
Other receivables. . . . . . . . . . . . . . . . 21,158 11,992
Allowance for doubtful accounts. . . . . . . . . (20,522) (1,409)
---------- ----------
Net current accounts and notes receivable. . . . 206,062 85,968
---------- ----------
Noncurrent customer notes receivable . . . . . . 29,223 8,066
Allowance for doubtful accounts. . . . . . . . . (7,571) (3,471)
---------- ----------
Net noncurrent notes receivable. . . . . . . . . $ 21,652 4,595
---------- ----------
---------- ----------
Operating results include bad debt expense totaling $1.9 million, $4.0 million
and $2.2 million during fiscal years 1996, 1995 and 1994, respectively.
21
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
On September 8, 1995, the Company entered into an agreement with a financial
institution which allowed the Company to sell on a revolving basis customer
notes receivable. Although the agreement lapsed on December 28, 1996, the notes,
which have maturities through the year 2002, were sold at face value with
recourse. As a result, the Company continues to be responsible for collection of
the notes and remits the principal plus a floating rate of interest to the
purchaser on a monthly basis. Proceeds from the sale of the notes receivable
were used to fund working capital requirements.
The remaining balances of such sold notes receivable totaled
$14.0 million and $15.0 million at December 28, 1996 and December 30, 1995,
respectively. The Company is contingently liable should these notes become
uncollectible.
Substantially all notes receivable are based on floating interest rates which
adjust to changes in market rates. As a result, the carrying value of notes
receivable approximates market value.
(4) LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt at the end of the fiscal years 1996 and 1995 is summarized as
follows (in thousands):
- ---------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------
Variable Rate -- revolving credit agreement . . . $244,000 --
Industrial development bonds,
5.4% to 7.8% due in various
installments through 2009 . . . . . . . . . . . 4,885 5,385
Term loans, 7.5% to 9.9% due in various
installments through 2008 . . . . . . . . . . . 112,250 71,167
Notes payable and mortgage notes,
9.3% to 12.0% due in various
installments through 2003 . . . . . . . . . . . 6,747 8,666
-------- ------
367,882 85,218
Less current maturities . . . . . . . . . . . . . 6,063 14,188
-------- ------
$361,819 71,030
-------- ------
-------- ------
On October 8, 1996, the Company entered into a $500 million senior
unsecured revolving credit facility ("the credit facility") with two lead
banks. The agreement calls for a scheduled reduction of the facility within
two years, to $400 million, with the remaining balance maturing five years
from closing. Borrowings under this agreement will bear interest at variable
rates equal to London Interbank Office Rate (LIBOR) plus .30%. In addition,
the Company pays commitment fees of .175% on the entire facility both used
and unused. The average borrowing rate during the period was 5.9%.
The credit facility contains covenants which, among other matters, limits the
Company's ability to incur indebtedness, buy and sell assets, and requires
compliance to predetermined ratios related to net worth, debt to equity and
interest coverage.
At December 28, 1996, land, buildings, and other assets pledged to secure
outstanding mortgage notes and obligations under issues of industrial
development bonds have a depreciated cost of approximately $5.3 million and $4.5
million, respectively.
Aggregate annual maturities of long-term debt for the five fiscal years after
December 28, 1996 are as follows (in thousands):
- ---------------------------------------------------------------------------
1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,063
1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,641
1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,277
2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,834
2001 and thereafter . . . . . . . . . . . . . . . . . . . . . . 304,067
- ---------------------------------------------------------------------------
Interest paid was $14.9 million, $10.8 million and $11.4 million, for the
fiscal years 1996, 1995 and 1994, respectively.
In addition, the Company maintains formal and informal lines of credit at
various banks. Generally banks are compensated through fees on used and
unused lines of credit. At December 28, 1996 unused formal lines of credit
amounted to $7.0 million.
Based on borrowing rates currently available to the Company for long-term
financing with similar terms and average maturities, the fair value of long-term
debt including current maturities, utilizing discounted cash flows, is $365.4
million.
(5) INCOME TAXES
Income tax expense for fiscal years 1996, 1995 and 1994 is made up of the
following components (in thousands):
- ---------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------
Current:
Federal. . . . . . . . . . . . . $12,125 12,244 5,779
State. . . . . . . . . . . . . . 2,354 2,872 1,296
Deferred:
Federal. . . . . . . . . . . . . (576) (3,145) 2,691
State. . . . . . . . . . . . . . (268) (790) 564
------- ------ ------
Total. . . . . . . . . . . . . $13,635 11,181 10,330
------- ------ ------
------- ------ ------
Total income tax expense represents effective tax rates of 40.5%, 39.1% and
40.0%, for the fiscal years 1996, 1995, and 1994, respectively. The reasons for
differences compared with the U.S. federal statutory tax rate (expressed as a
percentage of pretax income) are as follows:
- ---------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------
Federal statutory tax rate. . . . 35.0% 35.0% 35.0%
Items affecting federal income tax rate:
State taxes, net of federal income
tax benefit. . . . . . . . . 4.3 4.9 4.7
Other, net . . . . . . . . . . 1.2 (.8) .3
----- ----- -----
Effective tax rate . . . . . 40.5% 39.1% 40.0%
----- ----- -----
----- ----- -----
Income taxes paid were $12.4 million, $10.8 million and $9.2 million during
fiscal years 1996, 1995 and 1994, respectively.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 28,
1996, December 30, 1995, and December 31, 1994, are presented below (in
thousands):
- ---------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------
Deferred tax assets:
Accounts and notes receivable,
principally due to allowance
for doubtful accounts . . . . . . . $ 7,625 1,964 1,412
Inventories, principally due
to additional cost inventoried
for tax purposes pursuant to the
Tax Reform Act of 1986. . . . . . . . 2,956 1,654 1,745
Health care claims, principally
due to accrual for financial
reporting purposes. . . . . . . . . 2,991 1,073 684
Deferred compensation, principally
due to accrual for financial
reporting purposes. . . . . . . . . 2,376 3,173 3,329
Compensated absences, principally
due to accrual for financial
reporting purposes. . . . . . . . . 2,286 1,379 1,263
Compensation and casualty loss,
principally due to accrual for
financial reporting purposes. . . . 1,959 2,135 1,842
Purchased intangibles . . . . . . . . -- 1,958 846
Closed locations. . . . . . . . . . . 3,126 1,110 500
Other . . . . . . . . . . . . . . . . 2,236 1,193 757
------ ------ ------
Total gross deferred tax assets. . . 25,555 15,639 12,378
Less valuation allowance . . . . . -- -- --
------ ------ ------
Net deferred tax assets. . . . . . 25,555 15,639 12,378
------ ------ ------
------ ------ ------
22
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Deferred tax liabilities:
Purchased intangibles . . . . . . . . . 1,055 -- --
Plant and equipment, principally
due to differences in depreciation. . 6,511 5,978 6,402
Inventories, principally due
to differences in LIFO basis. . . . . 7,230 2,070 2,661
Other . . . . . . . . . . . . . . . . . 2,020 1,082 993
------- ------ ------
Total gross deferred tax liabilities. . 16,816 9,130 10,056
------- ------ ------
Net deferred tax asset. . . . . . . . $ 8,739 6,509 2,322
------- ------ ------
------- ------ ------
Since it is more likely than not that the deferred tax asset of $25,555,
$15,639 and $12,378 at December 28, 1996, December 30, 1995 and December 31,
1994, respectively, will be realized through carry back to taxable income in
prior years, future reversals of existing taxable temporary differences, future
taxable income and tax planning strategies, the Company has determined that
there is no need to establish a valuation allowance for the deferred tax asset
at December 28, 1996, December 30, 1995 and December 31, 1994, as required by
SFAS No. 109, ACCOUNTING FOR INCOME TAXES.
(6) STOCK RIGHTS AND OPTIONS
Under the Company's 1996 Stockholder Rights Plan, one right is attached to
each outstanding share of common stock. Each right entitles the holder to
purchase, under certain conditions, one-half share of common stock at a price of
$30.00 ($60.00 per full share). The rights are not yet exercisable and no
separate rights certificates have been distributed. All rights expire on March
31, 2006.
The rights become exercisable 20 days after a "flip-in event" has occurred or
10 business days (subject to extension) after a person or group makes a tender
offer for 15% or more of the Company's outstanding common stock. A flip-in event
would occur if a person or group acquires (1) 15% of the Company's outstanding
common stock, or (2) an ownership level set by the Board of Directors at less
than 15% if the person or group is deemed by the Board of Directors to have
interests adverse to those of the Company and its stockholders. The rights may
be redeemed by the Company at any time prior to the occurrence of a flip-in
event at $.01 per right. The power to redeem may be reinstated within 20 days
after a flip-in event occurs if the cause of the occurrence is removed.
Upon the rights becoming exercisable, subject to certain adjustments or
alternatives, each right would entitle the holder (other than the acquiring
person or group, whose rights become void) to purchase a number of shares of the
Company's common stock having a market value of twice the exercise price of the
right. If the Company is involved in a merger or other business combination, or
certain other events occur, each right would entitle the holder to purchase
common shares of the acquiring company having a market value of twice the
exercise price of the right. Within 30 days after the rights become exercisable
following a flip-in event, the Board of Directors may exchange shares of Company
common stock or cash or other property for exercisable rights.
The Company follows APB 25 and related interpretations in accounting for
its employee stock options. Under APB 25, when the exercise price of employee
stock options equals the market price of the underlying stock on the date of
the grant, no compensation expense is recognized.
On May 10, 1994, the stockholders approved a new stock incentive plan for
officers and key employees ("the 1994 Plan"). As a result of this action, a
previous plan was terminated. For purposes of the 1994 Plan, a total of 645,296
shares (including 245,296 shares remaining from the previous plan) were reserved
for the granting of stock options, restricted stock awards and performance unit
awards. Stock options are granted at not less than 100% of fair market value at
date of grant and are exercisable over a term which may not exceed 10 years from
date of grant. Restricted stock awards are subject to restrictions on
transferability and such conditions for vesting, including continuous employment
for specified periods of time, as may be determined at the date of grant.
Performance unit awards are grants of rights to receive shares of stock if
certain performance goals or criteria, determined at the time of grant, are
achieved in accordance with the terms of the grants.
On May 9, 1995 the stockholders approved a stock option plan for non-employee
directors ("the Director Plan"). Under this plan, for which a total of 40,000
shares were reserved, annual grants of options to purchase 500 shares are made
automatically to each eligible director following each annual meeting of
stockholders. The stock options are granted at 100% of fair market value at date
of grant, become exercisable six months following the date of grant and may be
exercised over a term of five years from the date of grant.
At December 28, 1996 under the 1994 Plan, options to purchase 341,110 shares
of common stock of the Company at an average price of $17.19 per share and
exercisable over terms of five to seven years from the dates of grant, have been
granted and are outstanding. In February 1996, certain members of management
exercised rights to purchase restricted stock from the Company at a 25% discount
to fair market value pursuant to grants awarded in January 1996 under the terms
of the 1994 Plan. The purchase required a minimum of 10% payment in cash with
the remaining balance evidenced by a 5-year promissory note to the Company.
Unearned compensation equivalent to the excess of market value of the shares
purchased over the price paid by the recipient at the date of grant, and the
unpaid balance of the promissory note have been charged to stockholders' equity;
amortization of compensation expense was not significant. At December 28, 1996,
32,832 shares of restricted stock have been issued and are outstanding.
Performance unit awards having a maximum potential payout of 190,046 shares have
also been granted and are outstanding. Reserved for the granting of future stock
options, restricted stock awards and performance unit awards are 67,136 shares.
At December 28, 1996 under the Director Plan, options to purchase 8,000
shares of common stock of the Company, at an average price of $16.80 per
share and exercisable over a term of five years from the dates of grant, have
been granted and are outstanding. Reserved for the granting of future stock
options are 32,000 shares.
Changes in outstanding options during the three fiscal years ended December
28, 1996 are summarized as follows (in thousands):
Weighted Average
Shares Option Price
Per Share
- -------------------------------------------------------------------------------
Options outstanding January 1, 1994 . . . . . . . . . 1 23.00
Exercised. . . . . . . . . . . . . . . . . . . . . (1) 16.88
Forfeited. . . . . . . . . . . . . . . . . . . . . (7) 18.19
Granted. . . . . . . . . . . . . . . . . . . . . . 298 16.86
- -------------------------------------------------------------------------------
Options outstanding December 31, 1994 . . . . . . . . 291 16.86
Exercised. . . . . . . . . . . . . . . . . . . . . (3) 16.72
Forfeited. . . . . . . . . . . . . . . . . . . . . (36) 16.88
Granted. . . . . . . . . . . . . . . . . . . . . . 4 16.06
- -------------------------------------------------------------------------------
Options outstanding December 30, 1995 . . . . . . . . 256 16.85
Exercised. . . . . . . . . . . . . . . . . . . . . (4) 16.77
Forfeited. . . . . . . . . . . . . . . . . . . . . (45) 17.05
Granted. . . . . . . . . . . . . . . . . . . . . . 142 17.72
- -------------------------------------------------------------------------------
Options outstanding December 28, 1996. . . . . . . . 349(a) 17.18
- -------------------------------------------------------------------------------
(a) Remaining average contractual life of options outstanding at December 28,
1996 was 2.5 years.
Options exercisable at:
December 28, 1996 . . . . . . . . . . . . . . . . . 147 16.95
December 30, 1995 . . . . . . . . . . . . . . . . . 105 16.83
The weighted average fair value of options granted during 1996 is $2.40. The
fair value of each option grant is estimated as of the date of grant using the
Black-Scholes single option-pricing model assuming a
23
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
weighted average risk-free interest rate of 6.0%, an expected dividend yield of
3.83%, expected lives of two and one-half years and volatility of 18.7%. Had
compensation expense for stock options been determined based on the fair value
method (instead of intrinsic value method) at the grant dates for awards, the
Company's 1996 and 1995 net income and earnings per share would have decreased
by less than 1%. The effects of applying the fair value method of measuring
compensation expense for 1996 is likely not representative of the effects for
future years in part because the fair value method was applied only to stock
options granted after December 31, 1994.
(7) LEASE AND OTHER COMMITMENTS
A substantial portion of the store and warehouse properties of the Company are
leased. The following table summarizes assets under capitalized leases (in
thousands):
- -------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------
Buildings and improvements. . . . . . . . . . . . . . $26,105 12,923
Less accumulated amortization . . . . . . . . . . . . (10,147) (4,011)
------- -------
Net assets under capitalized leases. . . . . . . . $15,958 8,912
------- -------
------- -------
At December 28, 1996, future minimum rental payments under noncancelable
leases and subleases are as follows (in thousands):
- -------------------------------------------------------------------------------
Operating Capital
leases leases
- -------------------------------------------------------------------------------
1997 . . . . . . . . . . . . . . . . . . . . . . . . $ 27,366 6,217
1998 . . . . . . . . . . . . . . . . . . . . . . . . 24,289 6,129
1999 . . . . . . . . . . . . . . . . . . . . . . . . 21,095 6,052
2000 . . . . . . . . . . . . . . . . . . . . . . . . 18,767 5,927
2001 and thereafter . . . . . . . . . . . . . . . . 100,374 65,357
-------- --------
Total minimum lease payments(a). . . . . . . . . . . $191,891 89,682
Less imputed interest (rates
ranging from 7.9% to 11.5%). . . . . . . . . . . . (46,118)
--------
Present value of net minimum
lease payments . . . . . . . . . . . . . . . . . . 43,564
Less current maturities . . . . . . . . . . . . . . (1,732)
--------
Capitalized lease obligations. . . . . . . . . . . . 41,832
--------
--------
(a) Future minimum payments for operating and capital leases have not been
reduced by minimum sublease rentals receivable under noncancelable
subleases. Total future minimum sublease rentals related to operating and
capital lease obligations as of December 28, 1996 are $84.0 million and
$49.3 million, respectively.
Total rental expense under operating leases for fiscal years 1996, 1995 and
1994 is as follows (in thousands):
- -------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
Total rentals . . . . . . . . . . . . . $33,316 27,533 28,978
Less real estate taxes,
insurance and other
occupancy costs . . . . . . . . . . . (2,070) (2,095) (2,429)
------ ------ ------
Minimum rentals . . . . . . . . . . . . 31,246 25,438 26,549
Contingent rentals. . . . . . . . . . . 183 312 148
Sublease rentals. . . . . . . . . . . . (9,449) (7,964) (7,716)
------ ------ ------
$21,980 17,786 18,981
------ ------ ------
------ ------ ------
Most of the Company's leases provide that the Company pay real estate taxes,
insurance and other occupancy costs applicable to the leased premises.
Contingent rentals are determined on the basis of a percentage of sales in
excess of stipulated minimums for certain store facilities. Operating leases
often contain renewal options. Management expects that, in the normal course of
business, leases that expire will be renewed or replaced by other leases.
The Company has guaranteed certain lease and promissory note obligations of
customers aggregating approximately $23.7 million.
(8) CONCENTRATION OF CREDIT RISK
The Company provides financial assistance in the form of secured loans to some
of its independent retailers for inventories, store fixtures and equipment,
working capital and store improvements. Loans are secured by liens on inventory
or equipment or both, by personal guarantees and by other types of collateral.
In addition, the Company may guarantee lease and promissory note obligations of
customers.
As of December 28, 1996, the Company has guaranteed outstanding promissory
note obligations of one customer in the amount of $8.3 million and of another
customer in the amount of $3.8 million.
In the normal course of business, the Company's produce marketing operation in
California makes cash advances to produce growers during various product growing
seasons, to fund production costs. Such advances are repayable at the end of the
respective growing seasons. Unpaid advances are generally secured by liens on
real estate and, in certain instances, on crops yet to be harvested. At December
28, 1996, $8.1 million in notes and growers advances were outstanding.
The Company establishes allowances for doubtful accounts based upon the credit
risk of specific customers, historical trends and other information. Management
believes that adequate provisions have been made for any doubtful accounts.
(9) PROFIT SHARING PLAN
The Company has a profit sharing plan covering substantially all employees
meeting specified requirements. Contributions, determined by the Board of
Directors, are made to a noncontributory profit sharing trust based on profit
performances. Profit sharing expense for 1996, 1995 and 1994 was $4.1 million,
$3.8 million and $3.5 million, respectively.
Certain officers and key employees are participants in a deferred compensation
plan providing fixed benefits payable in equal monthly installments upon
retirement. Annual increments to the deferred compensation plan are charged to
earnings.
(10) PENSION
Super Food has a qualified non-contributory retirement plan to provide
retirement income for eligible full-time employees who are not covered by union
retirement plans. Pension benefits under the plans are based on length of
service and compensation. The Company contributes amounts necessary to meet
minimum funding requirements.
The plans' funded status at December 28, 1996 was:
- -------------------------------------------------------------------------------
1996
- -------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefits . . . . . . . . . . . . . . . . . . . . . . . . . . $28,979
Nonvested benefits. . . . . . . . . . . . . . . . . . . . . . . . . 388
------
Accumulated benefit obligation . . . . . . . . . . . . . . . . . $29,367
Additional benefits based on future salary levels . . . . . . . . . . 3,193
------
Projected benefit obligation. . . . . . . . . . . . . . . . . . . . $32,560
Plan assets at fair value, principally listed securities. . . . . . . (34,274)
------
Plan assets (over) under projected benefit obligation . . . . . . . (1,714)
Unrecognized net gain . . . . . . . . . . . . . . . . . . . . . . . . 911
------
Net Prepaid Pension Cost . . . . . . . . . . . . . . . . . . . . . $ (803)
------
------
Assumptions used in the determination of the above amounts, in conjunction
with the recording of the Super Food acquisition, include the following:
- -------------------------------------------------------------------------------
1996
- -------------------------------------------------------------------------------
Discount rate for determining estimated
obligations and interest cost. . . . . . . . . . . . . . . . . . . 8.5%
Expected aggregate average long-term change in compensation. . . . . 4.5%
Expected long-term return on assets. . . . . . . . . . . . . . . . . 8.5%
24
<PAGE>
NASH FINCH COMPANY AND SUBSIDIARIES
Approximately 49% of Super Food employees are covered by
collectively-bargained, multi-employer pension plans. Contributions
are determined in accordance with the provisions of negotiated union contracts
and generally are based on the number of hours worked. The Company does not have
the information available to determine its share of the accumulated plan
benefits or net assets available for benefits under the multi-employer plans.
Aggregate cost for the Company's retirement plans includes the following
components:
------
1996
------
Defined Benefit Plan:
Service cost benefits earned during the year. . . . . . . . . . . . . $ 237
Interest cost on projected benefit obligation . . . . . . . . . . . . 882
Return on assets. . . . . . . . . . . . . . . . . . . . . . . . . . . (1,855)
Net amortization and deferral . . . . . . . . . . . . . . . . . . . . 931
------
Net pension expense . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Mult-employer plans . . . . . . . . . . . . . . . . . . . . . . . . . . 370
------
Total Pension and Retirement Plan Expense. . . . . . . . . . . . $ 565
------
------
(11) POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides certain health care benefits for retired employees.
Substantially all of the Company's employees not subject to collective
bargaining agreements, become eligible for those benefits when they reach normal
retirement age and have a minimum of 15 years of service with the Company.
The Company adopted SFAS No. 106, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS which requires accrual of the estimated future cost
of providing postretirement health costs over the active service life of the
employee.
The periodic postretirement benefit costs under Statement 106 were as follows
(in thousands):
- -------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
Service costs . . . . . . . . . . . . . . . . . . $260 273 235
Interest costs. . . . . . . . . . . . . . . . . . 403 382 361
Amortization of unrecognized
transition obligation . . . . . . . . . . . . . 248 249 248
---- --- ---
Net postretirement costs. . . . . . . . . . . . . $911 904 844
---- --- ---
---- --- ---
The actuarial present value of benefit obligations at December 30, 1995 and
December 31, 1994 are as follows (in thousands):
- -------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
Retirees eligible for benefits . . . . . . . . . $1,969 1,903 1,612
Active employees fully eligible. . . . . . . . . 428 493 466
Active employees not fully eligible. . . . . . . 3,204 3,147 3,191
------ ----- -----
$5,601 5,543 5,269
------ ----- -----
------ ----- -----
The assumed annual rate of future increases in per capita cost of health care
benefits was 11.0% in fiscal 1996 declining at a rate of .5% per year to 6.5% in
2005 and thereafter. Increasing the health care cost trend by 1% in each year
would increase the accumulated benefit obligation by $282,000 at December 28,
1996 and the service and interest costs by $47,000 for fiscal 1996. The discount
rate used in determining the accumulated benefit obligation was 7.5%.
(12) SEGMENT INFORMATION
The Company and its subsidiaries sell and distribute food and nonfood products
that are typically found in supermarkets.
The Company's wholesale distribution segment sells to independently owned
retail food stores and institutional customers while the retail distribution
segment sells directly to the consumer. Produce marketing includes farming,
packing and marketing operations. The Company's market areas are in the Midwest,
West, Mid-Atlantic and Southeastern United States.
Operating profit is net sales and revenues, less operating expenses. In
computing operating profit, none of the following items have been added or
deducted: general corporate expenses, interest expense, interest income, income
taxes and earnings from equity investments. Wholesale distribution operating
profits on sales through company-owned stores have been allocated to the retail
segment.
Identifiable assets are those used exclusively by that industry segment or an
allocated portion of assets used jointly by two industry segments. Corporate
assets are principally cash and cash equivalents, notes receivable, corporate
office facilities and equipment.
MAJOR SEGMENTS OF BUSINESS (IN THOUSANDS)
- -------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
Net sales and other
operating revenues:
Wholesale distribution . . . . . . . . . $2,468,695 1,968,982 1,854,629
Retail distribution. . . . . . . . . . . 850,404 859,956 925,772
Produce marketing
and other. . . . . . . . . . . . . . . 50,410 48,154 41,861
---------- --------- ---------
Total net sales and
other operating
revenues . . . . . . . . . . . . . $3,369,509 2,877,092 2,822,262
---------- --------- ---------
---------- --------- ---------
Operating profit:
Wholesale distribution . . . . . . . . . $ 37,115 30,047 24,593
Retail distribution. . . . . . . . . . . 7,709 4,143 8,804
Produce marketing
and other. . . . . . . . . . . . . . . 2,124 2,439 1,122
---------- --------- ---------
Total operating profit . . . . . . . 46,948 36,629 34,519
---------- --------- ---------
Interest income. . . . . . . . . . . . . 1,613 2,759 2,675
Interest expense . . . . . . . . . . . . (14,894) (10,793) (11,384)
---------- --------- ---------
Earnings before
income taxes . . . . . . . . . . . $ 33,667 28,595 25,810
---------- --------- ---------
---------- --------- ---------
Identifiable assets:
Wholesale distribution . . . . . . . . . $ 649,470 205,288 240,415
Retail distribution. . . . . . . . . . . 203,217 201,493 203,317
Produce marketing
and other. . . . . . . . . . . . . . . 41,948 45,662 42,597
Corporate. . . . . . . . . . . . . . . . 50,842 61,817 45,275
---------- --------- ---------
$ 945,477 514,260 531,604
---------- --------- ---------
---------- --------- ---------
Capital expenditures:
Wholesale distribution . . . . . . . . . $ 15,511 8,704 8,372
Retail distribution. . . . . . . . . . . 19,795 15,517 25,821
Produce marketing
and other. . . . . . . . . . . . . . . 2,234 5,259 2,072
Corporate. . . . . . . . . . . . . . . . . 13,793 3,784 1,913
---------- --------- ---------
$ 51,333 33,264 38,178
---------- --------- ---------
---------- --------- ---------
Depreciation and amortization:
Wholesale distribution . . . . . . . . . $ 14,996 11,121 11,660
Retail distribution. . . . . . . . . . . 15,791 14,454 16,600
Produce marketing
and other. . . . . . . . . . . . . . . 1,511 1,597 1,513
Corporate . . . . . . . . . . . . . . . 2,461 2,234 2,058
---------- --------- ---------
$ 34,759 29,406 31,831
---------- --------- ---------
---------- --------- ---------
(13) SALE OF SUBSIDIARY
On December 2, 1995, the Company sold the outstanding stock of Thomas &
Howard Company of Hickory, Inc., a wholly-owned subsidiary located in Newton,
North Carolina, and T&H Service Merchandisers, Inc., a wholly-owned
subsidiary of Thomas & Howard, to H. T. Hackney Co. of Knoxville, Tennessee.
The sale, which netted proceeds of approximately $22.3 million in cash
resulted in the recognition of a pretax gain of $1.8 million.
25
<PAGE>
<TABLE>
<CAPTION>
NASH FINCH COMPANY AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
Eleven years ended December 28, 1996
(not covered by Independent Auditors' Report)
1996 1995 1994 1993 1992 1991
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales and revenues. . . . . . . . . . . . . . . . $3,369,509 2,877,092 2,822,262 2,715,787 2,509,464 2,337,560
Other income. . . . . . . . . . . . . . . . . . . 5,976 11,744 9,738 7,748 5,974 5,718
---------- ---------- ---------- ---------- ---------- ----------
Total sales, revenues and other income. . . . . . 3,375,485 2,888,836 2,832,000 2,723,535 2,515,438 2,343,278
Cost of sales . . . . . . . . . . . . . . . . . . 2,932,709 2,469,841 2,410,292 2,325,249 2,147,845 1,997,462
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . 355,364 346,442 349,190 328,703 294,700 276,144
Interest expense. . . . . . . . . . . . . . . . . 14,894 10,793 11,384 10,114 9,294 8,966
Depreciation and amortization . . . . . . . . . . 34,759 29,406 31,831 29,145 27,038 26,124
Profit sharing contribution . . . . . . . . . . . 4,092 3,759 3,493 3,646 3,963 3,789
Provision for income taxes. . . . . . . . . . . . 13,635 11,181 10,330 10,804 12,530 11,738
---------- ---------- ---------- ---------- ---------- ----------
Net earnings. . . . . . . . . . . . . . . . . . . $ 20,032 17,414 15,480 15,874 20,068 19,055
---------- ---------- ---------- ---------- ---------- ----------
Earnings per share. . . . . . . . . . . . . . . . $ 1.81 1.60 1.42 1.46 1.85 1.75
---------- ---------- ---------- ---------- ---------- ----------
Cash dividends declared
per common share(2). . . . . . . . . . . . . . . $ .75 .74 .73 .72 .71 .70
---------- ---------- ---------- ---------- ---------- ----------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . 11,055 10,875 10,873 10,872 10,872 10,871
---------- ---------- ---------- ---------- ---------- ----------
Pre-tax earnings as a percent of
sales and revenues . . . . . . . . . . . . . . . 1.00 .99 .91 .98 1.30 1.31
Net earnings as a percent of
sales and revenues . . . . . . . . . . . . . . . .59 .60 .55 .58 .80 .81
Effective income tax rate . . . . . . . . . . . . 40.5 39.1 40.0 40.5 38.4 38.1
Current assets. . . . . . . . . . . . . . . . . . $ 525,596 311,690 309,522 294,925 310,170 239,850
Current liabilities . . . . . . . . . . . . . . . $ 297,088 207,688 220,065 215,021 213,691 154,993
Net working capital . . . . . . . . . . . . . . . $ 228,508 104,002 89,457 79,904 96,479 84,857
Ratio of current assets
to current liabilities . . . . . . . . . . . . . 1.77 1.50 1.41 1.37 1.45 1.55
Total assets. . . . . . . . . . . . . . . . . . . $ 945,477 514,260 531,604 521,654 513,615 429,648
Capital expenditures. . . . . . . . . . . . . . . $ 51,333 33,264 34,965 36,382 42,991 36,836
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . $ 403,651 81,188 95,960 97,887 94,145 82,532
Stockholders' equity. . . . . . . . . . . . . . . $ 232,861 215,313 206,269 199,264 191,204 178,846
Stockholders' equity per share(1), (2). . . . . . $ 21.06 19.80 18.97 18.33 17.59 16.45
Return on average stockholders' equity. . . . . . % 8.94 8.26 7.63 8.13 10.85 11.01
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . 2,230 1,940 2,074 2,074 2,087 2,122
Common stock high price(2), (3) . . . . . . . . . 21 5/8 20 1/2 18 1/4 23 1/4 19 3/4 20 1/4
Common stock low price(2), (3). . . . . . . . . . 15 3/4 15 3/4 15 3/8 17 16 1/4 16 1/2
</TABLE>
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales and revenues. . . . . . . . . . . . . . . . 2,369,054 2,219,451 2,091,822 1,938,758 1,573,717
Other income. . . . . . . . . . . . . . . . . . . 5,799 4,312 6,012 4,590 3,640
---------- ---------- ---------- ---------- ----------
Total sales, revenues and other income. . . . . . 2,374,853 2,223,763 2,097,834 1,943,348 1,577,357
Cost of sales . . . . . . . . . . . . . . . . . . 2,036,335 1,904,041 1,807,448 1,682,667 1,360,537
Selling, general, administrative,
and other operating expenses,
including warehousing and
transportation expenses. . . . . . . . . . . . . 271,735 264,024 230,221 198,553 165,713
Interest expense. . . . . . . . . . . . . . . . . 8,670 8,277 8,106 8,087 6,497
Depreciation and amortization . . . . . . . . . . 25,551 23,170 20,193 18,389 16,249
Profit sharing contribution . . . . . . . . . . . 3,603 3,089 2,832 2,734 2,349
Provision for income taxes. . . . . . . . . . . . 11,129 8,010 10,859 14,416 12,178
---------- ---------- ---------- ---------- ----------
Net earnings. . . . . . . . . . . . . . . . . . . 17,830 13,152 18,175 18,502 13,834
---------- ---------- ---------- ---------- ----------
Earnings per share. . . . . . . . . . . . . . . . 1.64 1.21 1.67 1.75 1.35
---------- ---------- ---------- ---------- ----------
Cash dividends declared
per common share(2). . . . . . . . . . . . . . . .69 .67 .65 .57 .52
---------- ---------- ---------- ---------- ----------
Average number of common
shares outstanding during period
(in thousands)(2). . . . . . . . . . . . . . . . 10,870 10,868 10,881 10,576 10,244
---------- ---------- ---------- ---------- ----------
Pre-tax earnings as a percent of
sales and revenues . . . . . . . . . . . . . . . 1.22 .95 1.38 1.69 1.65
Net earnings as a percent of
sales and revenues . . . . . . . . . . . . . . . .75 .59 .87 .95 .88
Effective income tax rate . . . . . . . . . . . . 38.4 37.9 37.4 43.8 46.8
Current assets. . . . . . . . . . . . . . . . . . 234,121 212,264 219,956 209,305 182,676
Current liabilities . . . . . . . . . . . . . . . 159,439 128,159 153,068 127,608 120,687
Net working capital . . . . . . . . . . . . . . . 74,682 84,105 66,888 81,697 61,989
Ratio of current assets
to current liabilitie. . . . . . . . . . . . . . 1.47 1.66 1.44 1.64 1.51 s
Total assets. . . . . . . . . . . . . . . . . . . 416,233 380,771 388,269 352,187 313,908
Capital expenditures. . . . . . . . . . . . . . . 36,129 34,635 52,019 29,680 26,969
Long-term obligations (long-term debt
and capitalized lease obligations) . . . . . . . 74,333 77,950 66,216 66,988 61,588
Stockholders' equity. . . . . . . . . . . . . . . 167,388 157,024 151,043 140,850 116,416
Stockholders' equity per share(1), (2). . . . . . 15.40 14.45 13.90 12.97 11.34
Return on average stockholders' equity. . . . . . 10.99 8.54 12.45 14.38 12.36
Number of common stockholders
of record at year-end. . . . . . . . . . . . . . 2,138 2,146 2,227 2,234 1,829
Common stock high price(2), (3) . . . . . . . . . 25 1/4 25 3/4 27 1/2 26 1/2 19 1/8
Common stock low price(2), (3). . . . . . . . . . 16 1/4 21 1/4 18 14 3/4 14 3/4
</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.
[CHART] [CHART]
[CHART]
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):
Subsidiary State of
Corporation Incorporation
------------ -------------
GTL Truck Lines, Inc. Nebraska
Norfolk, Nebraska
Nash De-Camp Company
Visalia, California California
Piggly Wiggly Northland Corporation
Edina, Minnesota Minnesota
Super Food Services, Inc.
Dayton, Ohio Delaware
T.J. Morris Company
Statesboro, Georgia Georgia
B. Direct subsidiaries of Nash Finch Company (the voting stock of which is
owned, with respect to each subisidiary, 66.6 percent by Nash Finch Company):
Subsidiary State of
Corporation Incorporation
----------- -------------
Gillette Dairy of the Black Hills, Inc.
Rapid City, South Dakota South Dakota
Nebraska Dairies, Inc.
Norfolk, Nebraska Nebraska
<PAGE>
C. Subsidiaries of Nash-DeCamp Company (the voting stock of which is owned,
with respect to each subsidiary other than Agricola Nadco Limitada, 100 percent
by Nash-DeCamp Company):
Subsidiary State of
Corporation Incorporation
----------- --------------
Forrest Transportation Service, Inc.
Visalia, California California
Agricola Nadco Limitada (*) Chile
* Ninety-nine percent (99%) is owned by Nash-DeCamp Company.
D. Subsidiaries of Super Food Services, Inc. (the voting stock of which is
owned, with respect to each subsidiary 100 percent by Super Food Services,
Inc.):
Subsidiary State of
Corporation Incorporation
----------- -------------
Gray Bear, Inc.
Bridgeport, Michigan Michigan
Kentucky Food Stores, Inc.
Lexington, Kentucky Kentucky
Management Incentives, Corp.
Dayton, Ohio Delaware
Super Foods, Inc.
Dayton, Ohio Ohio
<PAGE>
[LETTERHEAD]
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Nash Finch Company and subsidiaries of our report dated February 19, 1997,
included in the 1996 Annual Report to Shareholders of Nash Finch Company and
subsidiaries.
Our audits also included the financial statement schedule of Nash Finch
Company and subsidiaries listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
We also consent to the incorporation by reference in Registration Statement
Number 33-64313 and Registration Statement Number 33-54478 on Form S-8 of
Nash Finch Company and subsidiaries and in the related Prospectuses of our
report dated February 19, 1997, with respect to the consolidated financial
statements incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement schedule included
in this Annual Report (Form 10-K) of Nash Finch Company and subsidiaries.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
March 28, 1997
<PAGE>
[LETTERHEAD]
Independent Auditors' Consent
The Board of Directors
Nash Finch Company
We consent to incorporation by reference in the Registration Statements (Nos.
33-54487 and 33-64313) on Form S-8 of Nash Finch Company of our reports dated
March 3, 1995, relating to the consolidated statements of earnings,
stockholders' equity and cash flows of Nash Finch Company and subsidiaries
and related consolidated financial statement schedule for the fiscal year
ended December 31, 1994, which reports are included or incorporated by
reference in the Decmeber 28, 1996 annual report on Form 10-K of Nash
Finch Company.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 28, 1997
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