SPARTAN STORES INC, S-1/A, 1998-07-10

SPARTAN STORES INC
S-1/A, 1998-07-10
GROCERIES, GENERAL LINE

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<PAGE>
As filed with the Securities and Exchange Commission on July 10, 1998
REGISTRATION NO. 33-94496
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
POST-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPARTAN STORES, INC.
(Exact Name of Registrant as Specified in Its Charter)
_______________

MICHIGAN 5140 38-0593940
(State or Other Juris- (Primary Standard (I.R.S. Employer
diction of Incorpora- Industrial Classifi- Identification
tion or Organization) cation Code Number) Number)

850 76TH STREET, S.W.
P.O. BOX 8700
GRAND RAPIDS, MICHIGAN 49518
(616) 878-2000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

CHARLES B. FOSNAUGH Copies to: ALEX J. DEYONKER
VICE PRESIDENT DEVELOPMENT WARNER NORCROSS & JUDD LLP
850 76TH STREET, S.W. 900 OLD KENT BUILDING
P.O. BOX 8700 111 LYON STREET, N.W.
GRAND RAPIDS, MICHIGAN 49518 GRAND RAPIDS, MICHIGAN 49503
(616) 878-2000 (616) 752-2000

(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)

Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THIS POST-EFFECTIVE AMENDMENT NO. 4 TO
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE.

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: [X]

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
_________________________

<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ] ________________________

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

<PAGE>
PROSPECTUS

3,500,000 CLASS A SHARES

SPARTAN STORES, INC.

CLASS A COMMON STOCK
$2 PAR VALUE

Spartan Stores, Inc. ("Spartan"), hereby offers for sale 3,500,000
shares of Class A Common Stock, $2 par value (the "Class A Shares"). At
June 20, 1998, 1,879,321 Class A Shares, remained unsold and were
available for sale pursuant to this Prospectus. Spartan hereby offers the
Class A Shares to its retail customers who are required to purchase and
maintain a minimum investment in the Class A Shares ("Shareholder-
Customers"), to persons who apply to become retail customers of Spartan, to
employees of Spartan ("Associates"), to persons designated from time to
time by the Board of Directors of Spartan ("Approved Holders"), and to
certain other qualified holders. Spartan offers the Class A Shares at a
price the Board establishes from time to time. For information regarding
the factors considered in determining the price of the Class A Shares, see
"THE COMPANY."

Spartan has not established any minimum number of Class A Shares that
it must sell in this offering. Therefore, there can be no assurance that
Spartan will receive all of the proceeds described in this offering. In
addition, Spartan will not place any offering proceeds received in any
escrow, trust, or other arrangement pending the receipt of a minimum amount
of proceeds. See "PLAN OF DISTRIBUTION."

Prior to this offering, there has been no public market for the Class
A Shares. As a result of the restrictions on the transferability of the
Class A Shares, a public market will not likely develop after the sale of
all or any of the Class A Shares.

SEE "RISK FACTORS" FOR A SUMMARY OF CERTAIN FACTORS THAT PROSPECTIVE
INVESTORS SHOULD CONSIDER.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<PAGE>

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC<F1> AND COMMISSIONS<F2> SPARTAN<F3>
<S> <C> <C> <C>
Per Share . . . . . $12.30 0 $12.30

Total . . . . . . . $23,115,648.30 0 $23,115,648.30
<FN>
<F1> Spartan offers the Class A Shares at the price established from time
to time by the Board of Directors. As of the date of this Prospectus,
the price was $12.30 per share. The Board of Directors from time to
time, and at least annually, considers whether to change the price.
The total price to public and proceeds to Spartan are based on the
number of Class A Shares remaining unsold in this offering as of June
20, 1998.

<F2> Spartan offers the Class A Shares on a best-efforts basis directly for
its own account without paying any selling commission.

<F3> Before deducting expenses payable by Spartan estimated at $98,569.
</FN>
</TABLE>

THE DATE OF THIS PROSPECTUS IS JULY __, 1998

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Spartan offers the Class A Shares when, as and if issued, and subject
to prior sale, withdrawal, cancellation or modification of this offering
without notice. The Board of Directors may reject any subscription for any
Class A Shares in whole or in part. Spartan expects to deliver stock
certificates within 30 days after payment by a subscriber.

Spartan will sell the Class A Shares directly. Spartan has not
engaged any broker or selling agent to offer and sell the Class A Shares.
No person has been authorized to give information or make any
representation in connection with this offering other than those contained
in this Prospectus. Spartan will not pay any commission to any person for
soliciting or otherwise obtaining investors. This is a best-efforts,
continuous offering to Shareholder-Customers, persons who apply to become
retail customers of Spartan, Associates of Spartan, Approved Holders and
certain other persons qualified to hold the Class A Shares.

AVAILABLE INFORMATION

Spartan has filed with the Securities and Exchange Commission ("SEC")
a registration statement under the Securities Act of 1933, as amended (the
"1933 Act"), with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto as permitted
by the rules and regulations of the SEC. For further information on
Spartan and the securities offered hereby, reference is made to the
registration statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the registration statement, each such statement
being qualified in all respects by such reference. Spartan is also subject
to the informational requirements of the Securities Exchange Act of 1934
and, in accordance therewith, files reports and other information with the
SEC. The registration statement, reports, and other information filed by
Spartan (including the exhibits and schedules filed therewith) may be
inspected without charge at the SEC's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices located at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of this material can
also be obtained from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC also
maintains a Web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding Spartan.

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<PAGE>
Spartan intends to furnish to its shareholders, after the close of
each year, an annual report relating to the operations of Spartan
containing financial statements audited and reported on by independent
public accountants, including an opinion expressed by such independent
public accountants. In addition, Spartan may furnish to its shareholders
such other reports as the Board of Directors may authorize from time to
time.

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<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS
PROSPECTUS.

THE COMPANY

Spartan Stores, Inc. and its subsidiaries distribute grocery and
related products to retail stores located in Michigan, Georgia, Illinois,
Indiana, Kentucky, Ohio, Pennsylvania, Tennessee, and West Virginia. As
used in this Prospectus, the term "Spartan" refers to Spartan Stores, Inc.
without its subsidiaries, and the term "Company" refers to Spartan and its
subsidiaries. The principal executive offices of Spartan are located at
850 76th Street, S.W., P.O. Box 8700, Grand Rapids, Michigan 49518.
Spartan's telephone number is (616) 878-2000.

The Company's business is concentrated in Michigan. The Company is
the ninth largest wholesaler of grocery and related products in the United
States.

Initially, Spartan was formed as a cooperative. In 1973, Spartan
converted to a Michigan business corporation. As of June 20, 1998,
approximately 80 percent of Spartan's outstanding shares of common stock
were owned by persons actively engaged in the retail grocery business.
Spartan's customers are required by a customer agreement to purchase
and maintain an investment in Class A Shares and are referred to in
this Prospectus as "Shareholder-Customers."

In addition to a wide variety of grocery and related products, the
Company also offers its customers an array of services, including new store
site selection; market analysis; store planning and development; financing
programs for store development and remodeling; marketing, promotion and
advertising assistance; insurance; data processing; accounting and tax
preparation; human resources; coupon redemption; and product reclamation.

THE OFFERING

Common Stock Offered. . . . . . . . . . . 3,500,000 Shares of Class A Common
Stock, $2 par value per share.

Offering Price. . . . . . . . . . . . . The offering price in effect at the
time of purchase. At the date of
this Prospectus, the offering price
is $12.30 per share. The Board of
Directors may from time to time
change the offering price.

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<PAGE>
Eligible Subscribers. . . . . . . . . . . Shareholder-Customers, persons who
apply to become retail customers of
Spartan, Associates of Spartan,
Approved Holders, or certain
qualified holders.

Investment Considerations . . . . . . . . Each prospective investor should
carefully consider the summary of
certain factors set forth in "RISK
FACTORS."

Use of Net Proceeds . . . . . . . . . . . To increase working capital and for
other general corporate purposes.

SUMMARY OF SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated financial information presented below as of
and for the years ended March 28, 1998, March 29, 1997, March 30, 1996,
March 25, 1995, and March 26, 1994, has been derived from consolidated
financial statements, and should be read in conjunction with the
consolidated financial statements and related notes, for each of the three
years in the period ended March 28, 1998, audited by Deloitte & Touche LLP,
independent certified public accountants, attached to this Prospectus. The
following data also should be read in conjunction with "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
All amounts set forth below are in thousands, except per share data.

<TABLE>
<CAPTION>
INCOME STATEMENT DATA: FOR THE YEAR ENDED
--------------------------------------------------------------------------
MARCH 28, MARCH 29, MARCH 30, MARCH 25, MARCH 26,
1998 1997 1996 1995 1994<F1>
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $2,489,249 $2,475,025 $2,554,688 $2,526,128 $2,194,754

Volume Incentive
Rebates<F2> $ 0 0 $ 15,577 $ 17,584 $ 17,626

Costs and Expenses $2,467,006 $2,459,641 $2,571,279 $2,494,446 $2,165,938

Earnings (Loss) Before
Taxes on Income<F3> $ 22,243 $ 15,384 $ (32,168) $ 14,098 $ 11,190

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<PAGE>
Net Earnings (Loss)<F3> $ 14,234 $ 9,703 $ (21,668) $ 9,030 $ 7,105

Basic and Diluted
Net Earnings (Loss)
Per Share<F3><F4> $ 1.21 $ .80 $ (1.74) $ .74 $ .61
</TABLE>

<TABLE>
<CAPTION>
BALANCE SHEET DATA: AS OF
--------------------------------------------------------------------------
MARCH 28, MARCH 29, MARCH 30, MARCH 25, MARCH 26,
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Working Capital $ 61,682 $ 59,669 $ 69,284 $ 64,381 $ 50,439

Total Assets $ 406,133 $ 403,731 $ 387,451 $ 386,141 $ 373,286

Long-Term Debt and
Capital Lease
Obligations $ 107,666 $ 125,776 $ 124,372 $ 106,794 $ 69,468

Shareholders' Equity $ 114,192 $ 107,258 $ 102,587 $ 125,801 $ 113,176

Book Value Per
Class A Share<F3><F4> $ 9.98 $ 8.91 $ 8.23 $ 10.03 $ 9.36

Return on Average
Shareholders' Equity<F3> 12.86% 9.26% (17.66%) 7.52% 6.41%

Cash Dividends $ 587 $ 606 $ 623 $ 613 $ 591

Dividends Paid Per
Share<F4> $ .05 $ .05 $ .05 $ .05 $ .05

Shares Outstanding<F4> 11,444 12,033 12,460 12,544 12,093
<FN>
(footnotes on next page)

<F1> On November 8, 1993, the Company acquired all of the issued and
outstanding stock of J.F. Walker. The consolidated financial
information includes the operations of J.F. Walker from the date of
acquisition.

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<PAGE>
<F2> Until February 1996, Spartan's policy was to pay volume incentive
rebates to its Shareholder-Customers based upon each store's order
size from Spartan. Prior to June 14, 1995, volume incentive rebates
were paid approximately 50 percent in cash on a quarterly basis. At
Spartan's fiscal year end, the Shareholder-Customers would receive
Class A Shares at the Trading Value then in effect in exchange for the
remaining approximately 50 percent of the volume incentive rebate. On
June 14, 1995, the Board of Directors changed the rebate policy to pay
volume incentive rebates on a quarterly basis approximately 75 percent
in cash, and at the fiscal year end, the Shareholder-Customer received
Class A Shares at the Trading Value then in effect in exchange for the
remaining 25 percent of the rebate. As of February 1996, Spartan no
longer pays any volume incentive rebates.

<F3> During the year ended March 30, 1996, the Company incurred
restructuring, reorganization, and other charges amounting to
$46,439,743.

<F4> Per share amounts have been restated to reflect a ten-for-one stock
split pursuant to a share dividend paid to shareholders on July 15,
1997.
</FN>
</TABLE>

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

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<PAGE>
THE COMPANY

The Company distributes grocery and related products to retail stores
located in Michigan, Georgia, Illinois, Indiana, Kentucky, Ohio,
Pennsylvania, Tennessee, and West Virginia (the owners or operators of
these stores are referred to herein as "Customers"). Grocery store
Customers served by the Company range from single stores to supermarket
chains with as many as 25 stores. In addition, Spartan's subsidiaries
distribute candy, tobacco and other grocery products to approximately 9,600
convenience stores and other retail locations. The Company conducts a
predominant portion of its business with retail stores located in Michigan.
According to U.S. DISTRIBUTION JOURNAL, the Company is the ninth largest
wholesaler of grocery and related products in the United States.

In addition to its principal business segment of grocery product
distribution, the Company operates in two other reportable business
segments: insurance sales and underwriting; and real estate and finance.

In 1917, a group of independent food retailers incorporated the Grand
Rapids Wholesale Grocery Company. The retailers sought to gain lower food
prices and other economies of scale by purchasing together on a cooperative
basis. In 1957, the name was changed to Spartan Stores, Inc., to take
advantage of the "Spartan" brand name, which is widely recognized in
Michigan. Spartan was incorporated as a cooperative, but in 1973 converted
to a Michigan, for-profit business corporation. The Company expanded its
presence in convenience store wholesaling through its acquisitions of L
&L/Jiroch Distributing Company ("L & L/Jiroch") in 1987 and J.F. Walker
Company, Inc. ("J.F. Walker") in 1993.

On June 20, 1998, Spartan had approximately 464 record shareholders
of Class A Shares, of whom 239 were Shareholder-Customers. In the
aggregate, Shareholder-Customers owned 9,219,371 Class A Shares, or
approximately 80 percent of the total outstanding. The remaining
shareholders of Spartan are former retail grocery customers, persons
who were issued shares of common stock in certain business acquisitions,
the Spartan Stores, Inc. Pension Plan, and Associates of the Company.

Spartan is authorized to sell its shares of common stock to Customers
of Spartan, Associates, and Approved Holders. In addition, pursuant to the
Bylaws, Spartan may issue Class A Shares in connection with the acquisition
of businesses, assets, or capital stock of another corporation (the persons
to whom such shares are issued are referred to as "Qualified Holders"). The
Board of Directors has designated as Approved Holders (i) any shareholder
or other equity owner of any Shareholder-Customer who owns 5 percent or
more of the equity interests in the Shareholder-Customer; (ii) any member
of the Board of Directors of Spartan; or (iii) any spouse of an Associate,
any biological or adopted child of an Associate, if the child is

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21 years of age or younger, or any trust created by the Associate or his or
her spouse which is established for the benefit of the Associate or the
spouse or any such child of the Associate.

Certain subsidiaries of Spartan distribute grocery products to
convenience stores or independent grocers or operate cash and carry
outlets. These subsidiaries do not require their respective customers to
maintain an investment in the capital stock of Spartan or the respective
subsidiary. See "BUSINESS-General."

The Board of Directors of Spartan has adopted a policy which requires
Shareholder-Customers to purchase and hold a minimum investment (the
"Required Investment") in the Class A Shares. From time to time, the Board
may change the minimum investment and other terms of the Required
Investment policy.

To become a Shareholder-Customer, a retail grocer must agree to make
the Required Investment. To satisfy the Required Investment policy in
effect as of the date of this Prospectus, each Shareholder-Customer must
purchase 1,000 Class A Shares at the current Trading Value (see discussion
below) for each corporation, partnership or other entity which is
affiliated with the retail grocer and which owns one or more Approved
Stores (defined below).

In addition, to satisfy the Required Investment, on or before the date
five years from the date that Spartan accepts a store as an approved
location for the sale of Spartan products (an "Approved Store"), each
Shareholder-Customer also must own Class A Shares (including the 1,000
Class A Shares described above) with an aggregate Trading Value equal to
$10,000 plus one-and-one-half times the Shareholder-Customer's average
weekly purchases from Spartan during Spartan's prior fiscal year
attributable to each Approved Store, up to a maximum Required Investment
for each Approved Store of $125,000.

The price at which Shareholder-Customers must acquire Class A Shares
from Spartan is the "Trading Value." The Board of Directors from time to
time, usually on an annual basis, establishes the Trading Value for the
Class A Shares. The Board determines the Trading Value, in its sole and
absolute discretion, based on the Company's financial condition, results of
operations, operating trends, market conditions, the state of the economy,
and such other factors as the Board deems appropriate. During the fiscal
year ending March 28, 1998, the Trading Value was $11.30 per share.
Effective June 21, 1998, the Trading Value was established at $12.30 per
share.

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<PAGE>
of Class A Shares then held by the Shareholder-Customer with an aggregate
Trading Value which equals the Shareholder-Customer's Required Investment
as of the date the Shareholder-Customer ceased purchasing from Spartan.
Payment for such redeemed Class A Shares is made in six equal installments
over a five-year period.

A Shareholder-Customer may elect to accumulate stock in excess of the
Required Investment. As of June 20, 1998, Shareholder-Customers owned in
the aggregate 6,346,779 Class A Shares in excess of their aggregate
Required Investments. It is Spartan's policy (but not a contractual
obligation) also to redeem for cash at the current Trading Value any Class
A Shares owned by a Shareholder-Customer with an aggregate Trading Value in
excess of the Shareholder-Customer's Required Investment, or, if the
Shareholder-Customer no longer purchases grocery and related products from
Spartan, in excess of the Shareholder-Customer's Required Investment as of
the date the Shareholder-Customer ceased purchasing products from Spartan.
See "RISK FACTORS--Redemption Policy" and "DESCRIPTION OF CAPITAL STOCK--
Redemption Policy."

In addition to Class A Shares sold to satisfy the applicable Required
Investment, Spartan offers all Shareholder-Customers, Associates, Approved
Holders and Qualified Holders the opportunity to purchase Class A Shares at
any time and from time to time. Spartan sells the Class A Shares at the
Trading Value in effect at the time of the purchase.

The Company operates on a 52-53 week fiscal year, with the fiscal year
ending on the last Saturday in March. The principal executive offices of
Spartan are located at 850 76th Street, S.W., P.O. Box 8700, Grand Rapids,
Michigan 49518. Spartan's telephone number is (616) 878-2000.

RISK FACTORS

In addition to general risks of investments and economic conditions,
prospective investors should carefully consider the following factors
before purchasing any Class A Shares offered hereby.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

The matters discussed in this Prospectus include forward-looking
statements that describe the Company's plans, strategies, objectives,
goals, expectations or projections. Reference is made in particular to
the description of the Company's plans and objectives for future
operations, assumptions underlying such plans and objectives and other
forward-looking statements included in "PROSPECTUS SUMMARY," "USE OF
PROCEEDS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" and "BUSINESS" in this Prospectus. These
forward-looking statements are identifiable by words or phrases indicating
that the Company or management "expects," "anticipates," "projects,"

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"plans" or "believes" that a particular occurrence "may result" or "will
likely result" or that a particular event "may occur" or "will likely
occur" in the future, or similarly stated expectations. Such statements
are based on management's current expectations and are subject to a number
of factors and uncertainties which could cause actual results to differ
materially from those described in the forward-looking statements.

In addition to other risks and uncertainties described in connection
with the forward-looking statements contained in this Prospectus, there
are many important factors that could cause actual results to be materially
different from the Company's current expectations. Factors which could
cause such results to differ materially from those described in the
forward-looking statements include those set forth in the risk factors
below, in addition to economic, competitive, governmental and
technological factors affecting the Company's operations, markets,
products, services and prices, and other factors discussed in the Company's
filings with the SEC.

Anticipated future sales are subject to competitive pressures from
many sources. The Company's Distribution segment competes with numerous
warehouse discount stores, supermarkets, pharmacies and product
manufacturers. The Company's Insurance segment is subject to intense
competition from numerous insurance agents and insurance companies,
especially in the property and casualty insurance markets. Competitive
pressures in these and other business segments may result in unexpected
reductions in sales volumes, product prices or service fees.

Operating and administrative expenses may be adversely affected by
unexpected costs associated with, among other factors: improvement
initiatives related to BASE (Business Automation Support Environment);
software modifications and upgrades to address Year 2000 issues;
unanticipated labor shortages, stoppages or disputes; business acquisitions
or divestitures; and the defense, settlement or adverse judgments in
connection with current or future legal or administrative proceedings. The
Company's future interest expense and income also may differ from current
expectations, depending upon: cigarette inventory reductions; retail
property sales; the volume of notes receivable; and the amount of fees
received on delinquent accounts, among other factors.

The foregoing is intended to provide meaningful cautionary statements
for purposes of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The foregoing should not be construed as an
exhaustive list of all economic, competitive, governmental and
technological factors that could adversely affect the Company's expected
consolidated financial position, results of operations or liquidity. The
Company disclaims any obligation to update its forward-looking statements
to reflect subsequent events or circumstances.

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<PAGE>
COMPETITION

The grocery and convenience store industries are characterized by
intense competition and low profit margins. The Company competes with a
number of grocery and convenience store wholesalers and with a number of
other businesses that market their products directly to food retailers,
including companies having greater assets and larger sales volume than the
Company. Customers compete with other retailers and with several large
chain stores which have integrated wholesale and retail operations.
Customers also compete with mass merchandisers, wholesale membership clubs,
convenience stores, shop-at-home services, restaurants and fast food
businesses. In addition, the Company considers competitors of its
Customers to be competitors of the Company, since the Company's long term
success depends upon the success of its Customers. There can be no
assurance that the Company or its Customers will be able to compete
successfully in the future. See "BUSINESS--Competition."

The Company operates an insurance agency and insurance company. The
insurance industry also is highly competitive. Many competitors may have
far greater financial and other resources than those of the Company. There
can be no assurance that the Company will be able to compete effectively in
the insurance industry.

STATE ECONOMIC CONDITIONS

The Company's business operations are dependent upon the sale of
groceries and related products to its Customers. Most of these Customers
are located in Michigan, Georgia, Illinois, Indiana, Kentucky, Ohio,
Pennsylvania, Tennessee, and West Virginia. Adverse economic conditions, a
reduction in the populations or the loss of purchasing power by residents
in these states could correspondingly reduce the amount of groceries
purchased in these states, which could adversely affect the Company's net
sales and profitability.

ENERGY MATTERS

The Company's trucking operations are extensive. A shortage or
substantial increase in the cost of diesel fuel could materially and
adversely affect deliveries of grocery and related products and, thus,
materially and adversely affect the Company's net sales and profitability.

PROFITS AND SHAREHOLDERS' EQUITY

There can be no assurance that the Company will consistently earn
profits and increase its shareholders' equity. The value of the Class A
Shares may be adversely affected by poor operating results due, in part, to
circumstances beyond the Company's control, the loss of Customers and other
problems associated with the Company's business operations.

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DIVIDENDS

For at least 20 years, the Board of Directors has declared, and
Spartan has paid, a regular quarterly dividend. There can be no assurance
that Spartan's profitability or general business conditions will enable the
Board to continue to declare, and Spartan to continue to pay, dividends on
such a regular basis or at historical levels.

REDEMPTION POLICY

The Board of Directors has adopted a policy to redeem, if possible,
upon a Shareholder-Customer's request the shares of Class A Common Stock
held by a Shareholder-Customer that are in excess of the Shareholder-
Customer's Required Investment, and to redeem shares held by a former
Shareholder-Customer, upon certain terms and conditions. See "DESCRIPTION
OF CAPITAL STOCK--Redemption Policy." The policy does not create or
evidence any obligation on Spartan's behalf. The Board of Directors may at
any time, without notice, revise or terminate the policy based on Spartan's
financial condition, general market conditions, any requirement of or
limitation imposed by law or any agreement by which Spartan is bound, or
for any other reason deemed sufficient by the Board.

Spartan may at any time, in its sole discretion, call for redemption
any Class A Shares which are beneficially owned by any person who is not at
the time of the redemption either: (i) a Shareholder-Customer who continues
to purchase from Spartan grocery and grocery related products, (ii) an
Associate who continues to be employed by the Company, (iii) an Approved
Holder, or (iv) a Qualified Holder.

VALUE OF CLASS A SHARES

The Board of Directors from time to time, usually on an annual basis,
establishes the Trading Value for the Class A Shares. The Board determines
the Trading Value, in its sole and absolute discretion, based on the
Company's financial condition, results of operations, operating trends,
market conditions, the state of the economy, and such other factors as the
Board deems appropriate. During the fiscal year ending March 28, 1998, the
Trading Value was $11.30 per share. However, effective June 21, 1998, the
Trading Value was established at $12.30 per share.

The price for each Class A Share is the Trading Value in effect on the
date of the purchase. In addition, the Trading Value is the price at which
Spartan will acquire Class A Shares from a Shareholder-Customer pursuant to
Spartan's options to purchase or redeem or its redemption policy. See
"DESCRIPTION OF CAPITAL STOCK." Although the Board has annually increased
the Trading Value in recent years, there can be no assurance that such
increases will continue or that the Trading Value will not decrease.

-14-
<PAGE>
RESTRICTIONS ON TRANSFER

A holder may transfer Class A Shares only to an Approved Holder or a
Shareholder-Customer who continues to purchase from Spartan grocery and
related products. As of the date of this Prospectus, the Board has
designated as Approved Holders (i) any shareholder or other equity owners
of any Shareholder-Customer who owns 5 percent or more of the equity
interests in the Shareholder-Customer; (ii) a member of the Board of
Directors of Spartan; and (iii) any spouse of an Associate, any biological
or adopted child of an Associates, if the child is 21 years of age or
younger, and any trust created by an Associate or his or her spouse which
is established for the benefit of the Associate or the spouse or any such
child of the Associate. In addition, upon any proposed transfer of Class A
Shares, Spartan has an option to purchase the Class A Shares that are
subject to the proposed transfer. See "DESCRIPTION OF CAPITAL STOCK."

NO MINIMUM OFFERING

Spartan offers the Class A Shares on a "best efforts," continuous
basis. Spartan has not established a minimum number of Class A Shares that
must be subscribed before effecting any sales. There is no assurance that
Spartan will sell all of the Class A Shares that are the subject of this
offering.

ABSENCE OF A PUBLIC TRADING MARKET

Prior to this Offering, there has been no public market for Spartan's
securities, including the Class A Shares. Spartan does not expect an
active market for the Class A Shares to develop. In addition, although
Spartan has a policy to redeem Class A Shares under certain circumstances,
Spartan is not obligated to do so. Furthermore, only limited classes of
persons are eligible to hold Class A Shares. Thus, any purchaser of Class
A Shares who desires to sell the shares may not be able to do so.

CONFLICTS OF INTEREST

Except for Messrs. Buick, Carton, and Meyer, the members of the Board
of Directors of Spartan have ownership interests in businesses which are
Shareholder-Customers. The various relationships between Spartan and its
shareholders and Customers create conflicts of interest for such members of
the Board. Each such member owes fiduciary obligations to Spartan and all
its shareholders in his capacity as a director. The interests of Spartan
may differ from the interests of Shareholder-Customers. Affiliates of
directors purchase products and services at prices and on terms, including
certain discounts and rebates, offered to other Shareholder-Customers. See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

-15-
<PAGE>
CLASS B SHARES ELIGIBLE FOR FUTURE SALE

Spartan is authorized to issue 5,000,000 shares of Class B Common
Stock ("Class B Shares") with such preferences, limitations, and voting,
distribution, dividend, liquidation, conversion, participation, redemption
and other rights as the Board may determine before issuance of the shares.
The Board of Directors may authorize and issue one or more series of
Class B Shares with preferences and rights superior to the rights of the
holders of the Class A Shares. As of the date of this Prospectus, no Class
B Shares are outstanding. However, the Board of Directors without
shareholders' approval could issue Class B Shares with voting or conversion
rights that could adversely affect the voting power of the holders of Class
A Common Stock.

USE OF PROCEEDS

Spartan expects to use the proceeds from the sale of Class A Shares
for general working capital purposes and from time to time to redeem from
shareholders their Class A Shares.

DIVIDEND POLICY

For at least 20 years, the Board of Directors has declared, and
Spartan has paid, a regular quarterly dividend. The amount of such
quarterly dividends for each of the three fiscal years in the period ended
March 28, 1998, was $0.0125 per share, as adjusted for the ten-for-one
stock split pursuant to a share dividend paid on July 15, 1997 (the
"Stock Split"). While the Board of Directors expects to continue to
declare dividends quarterly, future dividends will depend on earnings,
capital requirements, financial conditions and other relevant factors.
Certain loan agreements to which Spartan is a party contain covenants
which restrict the payment of dividends or other distributions to
shareholders in the event of a default of the agreement or in excess
of permitted amounts. As of March 28, 1998, under the most restrictive
of these agreements, Spartan had approximately $19,100,000 available
for the payment of dividends.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The selected consolidated financial information presented below
as of and for the years ended March 28, 1998, March 29, 1997, March 30,
1996, March 25, 1995, and March 26, 1994, has been derived from
consolidated financial statements, and should be read in conjunction with
the consolidated financial statements and related notes, for each of the
three years in the period ended March 28, 1998, audited by Deloitte &
Touche LLP, independent certified public accountants, attached to this
Prospectus. The following data also should be read in conjunction with
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" appearing elsewhere in this Prospectus.

-16-
<PAGE>

<TABLE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
INCOME STATEMENT DATA: FOR THE YEAR ENDED
--------------------------------------------------------------------------
MARCH 28, MARCH 29, MARCH 30, MARCH 25, MARCH 26,
1998 1997 1996 1995 1994<F1>
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales $2,489,249 $2,475,025 $2,554,688 $2,526,128 $2,194,754

Volume Incentive
Rebates<F2> $ 0 0 $ 15,577 $ 17,584 $ 17,626

Costs and Expenses $2,467,006 $2,459,641 $2,571,279 $2,494,446 $2,165,938

Earnings (Loss) Before
Taxes on Income<F3> $ 22,243 $ 15,384 $ (32,168) $ 14,098 $ 11,190

Net Earnings (Loss)<F3> $ 14,234 $ 9,703 $ (21,668) $ 9,030 $ 7,105

Basic and Diluted
Net Earnings (Loss)
Per Share<F3><F4> $ 1.21 $ .80 $ (1.74) $ .74 $ .61
</TABLE>

Total Assets $ 406,133 $ 403,731 $ 387,451 $ 386,141 $ 373,286

Long-Term Debt and
Capital Lease
Obligations $ 107,666 $ 125,776 $ 124,372 $ 106,794 $ 69,468

Shareholders' Equity $ 114,192 $ 107,258 $ 102,587 $ 125,801 $ 113,176

-17-
<PAGE>
Book Value Per
Class A Share<F3><F4> $ 9.98 $ 8.91 $ 8.23 $ 10.03 $ 9.36

Return on Average
Shareholders' Equity<F3> 12.86% 9.26% (17.66%) 7.52% 6.41%

Cash Dividends $ 587 $ 606 $ 623 $ 613 $ 591

Dividends Paid Per
Share<F4> $ .05 $ .05 $ .05 $ .05 $ .05

Shares Outstanding<F4> 11,444 12,033 12,460 12,544 12,093
<FN>
_____________________
<F1> On November 8, 1993, the Company acquired all of the issued and
outstanding stock of J.F. Walker. The consolidated financial
information includes the operations of J.F. Walker from the date of
acquisition.
(footnotes continued on next page)

<F2> Until February 1996, Spartan's policy was to pay volume incentive
rebates to its Shareholder-Customers based upon each store's order
size from Spartan. Prior to June 14, 1995, volume incentive rebates
were paid approximately 50 percent in cash on a quarterly basis. At
Spartan's fiscal year end, the Shareholder-Customers would receive
Class A Shares at the Trading Value then in effect in exchange for the
remaining approximately 50 percent of the volume incentive rebate. On
June 14, 1995, the Board of Directors changed the rebate policy to pay
volume incentive rebates on a quarterly basis approximately 75 percent
in cash, and at the fiscal year end, the Shareholder-Customer received
Class A Shares at the Trading Value then in effect in exchange for the
remaining 25 percent of the rebate. As of February 1996, Spartan no
longer pays any volume incentive rebates.

<F3> During the year ended March 30, 1996, the Company incurred
restructuring, reorganization, and other charges amounting to
$46,439,743.

<F4> Per share amounts have been restated to reflect a ten-for-one stock
split pursuant to a share dividend paid to shareholders on July 15,
1997.
</FN>
</TABLE>

-18-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table sets forth items from the Company's Consolidated
Statements of Operations as percentages of net sales, less any volume
incentive rebates:

<TABLE>
<CAPTION>
----------------------------------------
YEAR ENDED
----------------------------------------
MARCH 28, MARCH 29, MARCH 30,
1998 1997 1996
(52 WEEKS) (52 WEEKS) (53 WEEKS)
----------------------------------------
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0%
Gross profit 10.2 9.6 9.6
Less:
Operating and administrative expenses 9.2 8.8 8.8
Restructuring, reorganization and
other charges 1.8
Interest expense .4 .4 .4
Interest income (.1) (.1) (.1)
Gain on sale of property and equipment (.2) (.1) -
- ----------------------------------------------------------------------------------------------
Total 9.3 9.0 10.9
- ----------------------------------------------------------------------------------------------
Earnings (loss) before income taxes .9 .6 (1.3)
Income taxes (benefit) .3 .2 (.4)
- ----------------------------------------------------------------------------------------------
Net earnings (loss) .6% .4% (.9%)
- ----------------------------------------------------------------------------------------------
</TABLE>

NET SALES

Net sales for the fiscal year ended March 28, 1998 increased $14.2
million compared to the fiscal year ended March 29, 1997. Net sales for

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<PAGE>
the fiscal year ended March 29, 1997 decreased $64.1 million compared to
the fiscal year ended March 30, 1996. However, after adjustment for the
closing of the Company's Capistar facility and for fiscal 1996 having 53
weeks of operations compared to 52 weeks in 1997, net sales were slightly
higher in 1997 compared to 1996.

Sales in the Distribution segment for the fiscal year ended March 28,
1998 increased approximately $15.0 million, with $5.1 million of this
increase resulting from sales to grocery store retailers and $9.9 million
resulting from sales to convenience store retailers. The increase in sales
to grocery store retailers is due primarily to increases in sales of
pharmacy products and in services provided to customers, offset by declines
in sales of groceries and related products, excluding produce. Sales of
groceries and related products have declined due to highly competitive
market conditions, primarily in the Eastern Michigan region, as
competitors' supermarkets continue to increase square footage.
Additionally, some of the Company's customers have increased purchases of
these types of products directly from manufacturers and have reduced
existing shelf space due to the continued success of discount stores that
carry these products. Like unit sales of grocery and other related products
to grocery store retailers declined by approximately 2% in 1998 compared to
1997. Offsetting this decline somewhat were increases in sales of produce
to new customers as well as existing customers as grocery retailers attempt
to differentiate themselves from larger competitor supermarkets and
discount stores with larger selections of fresh produce. Management
anticipates that in the fiscal year ended March 27, 1999 the Company will
experience a continued decline of approximately 1% in sales to grocery
store retailers.

The increase in sales to convenience store retailers is primarily the
result of the acquisition by a subsidiary of the Company in November 1997,
of certain inventory, accounts receivable and customer lists of another
convenience store distribution company. Also, the Company has experienced
general increases in convenience store purchases and increases in the
prices of cigarettes. These increases were partially offset by the loss of
two customers and intense pricing pressures from member-only warehouse
discount stores.

Distribution segment sales decreased 3.3% in fiscal 1997 due primarily
to the factors mentioned above, the loss of one customer in the convenience
store market, and the decision to cease business with certain low-margin
customers in connection with the consolidation of certain distribution
centers at one of the Company's subsidiaries.

Sales in the Insurance segment for the fiscal year ended March 28,
1998 declined approximately $.7 million or 4.1% from levels experienced in
the fiscal year ended March 29, 1997. The decline reflects increased
competitive pressures in the property and casualty insurance markets.

-20-
<PAGE>
While the Company has been successful in retaining existing accounts, it
has reduced premiums and accepted lower commissions to accomplish the
retention. Insurance segment sales increased 3.0% in the fiscal year ended
March 29, 1997, primarily as a result of increased volume.

Sales in the Real Estate and Finance segment during the fiscal year
ended March 28, 1998, which excludes the gains on the sales of real
property, were comparable to sales experienced during the fiscal year ended
March 29, 1997. Sales during the fiscal year ended March 29, 1997
increased by $3.6 million over sales experienced during the fiscal year
ended March 30, 1996, due primarily to an increase in property rentals.

GROSS PROFIT

Gross profit as a percentage of net sales for the fiscal year ended
March 28, 1998 increased to 10.2% from 9.6% in fiscal years ended March 29,
1997 and March 30, 1996. The improvement in gross profit for the fiscal
year ended March 28, 1998 can be attributed to several factors, including
enhanced inventory procurement practices as the Company purchases
inventories in excess of current needs to take advantage of promotions
offered by vendors. Also, the Company has experienced some improvements in
gross profit from the sale of cigarette inventories purchased prior to
recent price increases. Finally, during the third quarter, the Company
revised the methodology in which it administers its Cost-Plus pricing
policy to compute amounts billed based on acquisition cost before
considering any promotional allowance. Management expects gross profit
during fiscal year 1999 to continue to be positively impacted by rising
cigarette prices as the Company sells cigarette inventories purchased at
lower costs.

OPERATING AND ADMINISTRATIVE EXPENSES

Operating and administrative expenses as a percentage of net sales for
the fiscal years ended March 28, 1998, March 29, 1997, and March 30, 1996
were 9.2%, 8.8% and 8.8%, respectively. Several factors contributed to the
increase in operating and administrative expenses during fiscal 1998.

The Company has incurred significant Information Technology costs to
address Year 2000 issues. The Company is upgrading and replacing existing
software. Additionally, the Company is currently communicating with its
customers, suppliers and financial institutions to assess their plans for
Year 2000 and how they may impact the Company. The Company has spent
approximately $2.5 million during the past two fiscal years and expects to
incur an additional $3.5 million over the next two fiscal years to address
the Year 2000 issues. The Company believes that due to its current efforts
and future plans to upgrade and replace existing software, the Year 2000
problem will not pose significant operational problems for the Company's
computer systems. If such modifications and conversions to software are

-21-
<PAGE>
not completed timely, however, or if the Company's customers, suppliers or
financial institutions should fail to adequately modify their computer
systems, the Year 2000 problem could have a material adverse impact on the
Company's ability to order and distribute product efficiently.

Software amortization expense increased by approximately $1.4 million
when comparing the fiscal year ended March 28, 1998 to the fiscal year
ended March 29, 1997, primarily as a result of the capitalization of
several projects associated with BASE (Business Automation Support
Environment). Management has committed significant funds to process
improvement initiatives primarily in the technology area in an attempt to
increase the overall efficiency of operations and to enhance the level of
service that the Company provides to its retail customers.

Late in the second quarter of fiscal 1998, the Company discontinued
the use of labor standards in the grocery and related product distribution
warehouses in accordance with a renegotiated labor contract. As a result
of this discontinuance, warehouse efficiency declined initially. However,
management has seen improvements and expects further improvements through
the use of an incentive program for union employees and discussions with
union representatives. During January 1998, the Company paid approximately
$1.3 million in settlement of certain employee claims of alleged racial
harassment in one of the Company's warehouses.

During the fiscal year ended March 28, 1998, the Company implemented
an incentive compensation program for management Associates, resulting in a
charge of approximately $1.2 million compared to approximately $.3 million
in the prior fiscal year. The amount to be paid under this management
incentive program is determined based on consolidated earnings, customer
satisfaction survey results and individual performance evaluations.
Payments are made on an annual basis and require the achievement of a
targeted level of consolidated earnings.

Operating and administrative expenses remained unchanged as a
percentage of sales comparing 1997 to 1996.

RESTRUCTURING, REORGANIZATION AND OTHER CHARGES IN 1996

In fiscal 1996, the Company incurred restructuring, reorganization and
other charges amounting to approximately $46.4 million, all of which
related to the Distribution segment.

In fiscal 1993, the Company commenced a reengineering project, known
as BASE. In fiscal 1996, the Company conducted an in-depth review of the
BASE project and determined that the project was not meeting all
anticipated objectives. Accordingly, in February 1996, the Company and the
BASE project manager agreed to terminate the project management and related
contracts. Company personnel assumed project management responsibilities.

-22-
<PAGE>
The Company segmented the BASE project into individual projects and
evaluated them separately. Certain projects with no expected return were
terminated and the associated costs written off. Certain other costs
associated with the continuing projects were also written off if they were
deemed to be of no value to the continuing project. The restructuring
charges included $35.4 million of such costs. During fiscal 1996, the
Company closed and combined certain of its distribution facilities.
Restructuring, reorganization and other charges include a provision of $1.8
million for property and lease discontinuance at closed facilities, $4.1
million for costs related to transferring the Capistar business and closing
its facilities, and $1.6 million for severance and termination of
employment agreements.

The Company also provided $3.5 million for the impairment of long-
lived assets, inasmuch as the projected future undiscounted cash flows were
not sufficient to recover their carrying value.

GAIN ON SALE OF PROPERTY AND EQUIPMENT

The gain on sale of property and equipment of $3.9 million for the
fiscal year ended March 28, 1998 was due primarily to the sale of nine
retail properties. The sales of retail properties were completed in
conjunction with a plan to reduce the Company's debt and real estate
portfolio to prior historical levels. The gain on sale of property and
equipment of $1.7 million reported for the fiscal year ended March 29, 1997
was due primarily to the sale of retail properties and the sale of a
distribution facility. There were no significant transactions in 1996.
Management expects to complete the sale of additional retail properties
during the fiscal year ended March 27, 1999.

OPERATING EARNINGS (LOSS)

The Company's pretax operating earnings exclude interest in the
Distribution segment whereas it is included in the other business segments.
Operating earnings for the fiscal year ended March 28, 1998 were $28.0
million, increasing by $7.9 million or 39.3% compared to the previous year.
Operating earnings for the fiscal year ended March 29, 1997 were $20.1
million, compared with an operating loss for fiscal 1996 of $27.6 million.
Excluding the restructuring charge in fiscal 1996, operating earnings in
fiscal 1997 increased by 6.6 percent.

Distribution segment operating earnings for the fiscal year ended
March 28, 1998 were $18.8 million, increasing by $4.6 million or 32.4
percent, due primarily to improvements in gross profit. Distribution
segment operating earnings, before the restructuring, reorganization and
other charges reported in 1996, decreased $.8 million in fiscal 1997 due
primarily to the 1997 fiscal year comprising 52 weeks compared to 53 weeks
in fiscal 1996 and the closing of the Capistar facility.

-23-
<PAGE>
Insurance segment operating earnings for the fiscal year ended March
28, 1998 were $3.6 million, decreasing by $.3 million or 8.3%. The
reduction in net earnings was primarily the result of the decline in sales
due to competitive market conditions in the property and casualty insurance
industry. Management anticipates a further decrease in earnings in the
Insurance segment continuing into the next fiscal year as the Company
continues to respond to competitive pressures through the reduction in
premiums. Insurance segment operating earnings for the fiscal year ended
March 29, 1997 increased by $1.0 million or 34.5%, due primarily to a
reduction in incurred losses and loss reserves.

Real Estate and Finance segment operating earnings for the fiscal year
ended March 28, 1998 were $5.7 million, increasing by $3.7 million or
185.0%, due primarily to gains from the sales of real estate holdings. Real
Estate and Finance segment operating earnings for the fiscal year ended
March 29, 1997 were $2.0 million, increasing by $1.0 million or 100.0%, due
to the sale of retail and wholesale properties. Sales of real estate
during the fiscal years ended March 28, 1998 and March 29, 1997 have
reduced the Company's real estate portfolio to historical levels.
Accordingly, management expects Real Estate and Finance segment operating
earnings to return to historical levels in fiscal 1999.

INTEREST EXPENSE AND INCOME

Interest expense for the fiscal year ended March 28, 1998 increased by
approximately $1.2 million over the fiscal year ended March 29, 1997.
Interest expense for fiscal 1997 was relatively stable when compared to the
fiscal year ended March 30, 1996. The increase in interest expense during
1998 was caused by additional borrowings under the Company's bank credit
agreement, due primarily to higher cigarette inventories and, to a lesser
extent, the development of retail properties. During fiscal 1997 a major
construction effort related to the development of retail properties in the
Eastern Michigan region required interest incurred during the construction
period to be capitalized as part of the cost of the projects rather than
expensed. Management expects interest expense to decline as a percentage
of sales in future periods due to the anticipated reduction in certain
cigarette inventories and the sale of additional real property.

Interest income declined by approximately $.3 million in the fiscal
year ended March 28, 1998 and declined by approximately $.5 million in the
fiscal year ended March 29, 1997. The reduction in interest income in both
periods was due primarily to a decrease in notes receivable. In addition,
finance fees earned on past due accounts decreased as a result of a
reduction in past due accounts.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity are cash flows from
operating activities and borrowings under a bank credit agreement. At March

-24-
<PAGE>
28, 1998, the Company had approximately $30.2 million in additional bank
borrowings available. Also, the Company is permitted to sell unsecured
notes under a note offering with a total principal amount of $100,000,000.
As of March 28, 1998, approximately $14.1 million of these notes were
outstanding and the Company had approximately $50.1 million in availability
under this offering. Management believes that cash flows from operating
activities and the Company's ability to issue notes under the note offering
and to borrow under the bank credit agreement will be adequate in the next
fiscal year for the Company's operating, investing and financing
activities.

Cash provided by operations was $29.6 million in fiscal 1998, fueled
by strong operating earnings, increased trade payables and the refund of
income taxes of approximately $3.5 million, offset by the increase in
cigarette inventories. Cash provided by operations was $16.4 million in
fiscal 1997 and $42.9 million in fiscal 1996. The decrease in cash
provided by operations in fiscal 1997 compared to fiscal 1996 was due
primarily to an increase in inventory levels to take advantage of
promotions offered by vendors.

Cash used in investing activities was $3.2 million in fiscal 1998,
compared to $35.8 million in fiscal 1997 and $49.5 million in fiscal 1996.
During fiscal 1998 approximately nine retail properties were sold
generating $14.9 million in cash proceeds. Total purchases of property
and equipment have declined over the three year period and are expected to
continue to decline in future periods due to the completion of many of the
BASE projects. Management expects that total capital expenditures in the
fiscal year ended March 27, 1999 will be approximately $21.0 million.

Cash used in financing activities was $23.6 million in fiscal 1998,
compared to cash provided by financing activities of $13.8 million in
fiscal 1997 and $21.3 million in fiscal 1996. Proceeds from the sale of
retail properties coupled with strong cash flows from operations allowed
the Company to reduce its reliance on long-term borrowings, resulting in an
improved long-term debt-to-equity ratio of .94:1 at March 28, 1998 compared
to 1.17:1 at March 29, 1997.

CAPITAL STRUCTURE

The following table summarizes the Company's capital structure for the
last two fiscal years:

-25-
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average short-term borrowing during the year $ 29,800,000 10.5% $ 19,965,799 7.1%
Long-term debt at year-end 112,444,327 39.7 130,609,321 46.4
Present value at year-end:
Capital leases 1,765,995 .6 2,359,074 .8
Operating leases:
Used in operations 8,885,000 3.1 5,321,587 1.9
Subleased to others 16,281,652 5.8 15,936,923 5.7
- ------------------------------------------------------------------------------------------------------------
Total debt capital 169,176,974 59.7 174,192,704 61.9
Shareholders' equity 114,192,251 40.3 107,257,574 38.1
- ------------------------------------------------------------------------------------------------------------
Total capitalization $283,369,225 100.0% $281,450,278 100.0%
- ------------------------------------------------------------------------------------------------------------
</TABLE>

The Trading Value of the Class A Shares customarily is established
annually by the Board of Directors during the first quarter of the fiscal
year. Any change adopted by the Board becomes effective upon acceptance of
the Trading Value by the Michigan Corporation, Securities and Land
Development Bureau (the "Bureau"). The Trading Value of the Class A Shares
was $11.30 per share at March 28, 1998. On June 17, 1998, the Company
received notice from the Bureau that $12.30 per share had been accepted as
the new Trading Value effective June 21, 1998.

The Company paid quarterly dividends of $.0125 per share for each of
the past three fiscal years. Dividends were $587,071 for the fiscal year
ended March 28, 1998. Certain loan agreements to which Spartan is a party
contain covenants that, pursuant to financial ratios or formulas, restrict
the incurrence of additional indebtedness, the payment of dividends or
other distributions to shareholders, the payment of rebates or the
redemption of shares of common stock in the event of a default of the
agreement or in excess of permitted amounts.

On July 15, 1997, the Articles of Incorporation of the Company were
amended to increase the authorized capital stock from 2,000,000 to
20,000,000 shares of Class A common stock and from 500,000 to 5,000,000
shares of Class B common stock. The amendment also reduced the par value
of the Class A common stock from $20 per share to $2 per share. On July 15,
1997, the Company also consummated a ten-for-one stock split pursuant to a
share dividend payable to shareholders of record on May 31, 1997.

-26-
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The SOP is
effective for the Company on March 28, 1999, however, early adoption is
permitted. The SOP will require the capitalization of certain costs
incurred after the date of adoption in connection with developing or
obtaining software for internal use. This SOP will be adopted on a
prospective basis and its effect on future operations has not been
determined.

BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

The Company and its subsidiaries distribute grocery and related
products to retail stores located in Michigan, Georgia, Illinois, Indiana,
Kentucky, Ohio, Pennsylvania, Tennessee, and West Virginia. As used in this
Prospectus, the term "Spartan" refers to Spartan Stores, Inc., without its
subsidiaries, and the term "Company" refers to Spartan and its
subsidiaries. The owners or operators of the retail stores served by the
Company are referred to as "Customers."

Grocery store Customers served by the Company range from single stores
to supermarket chains with as many as 25 stores. In addition, Spartan's
subsidiaries distribute candy, tobacco, and other grocery products to
approximately 9,600 convenience stores and other retail locations. The
Company conducts a predominant portion of its business with retail stores
located in Michigan. According to U.S. DISTRIBUTION JOURNAL, the Company
is the ninth largest wholesaler of grocery and related products in the
United States.

Spartan is authorized to sell shares of its common stock to Customers
of Spartan, Associates of the Company, and other Approved Holders. In
addition, pursuant to the Bylaws, Spartan may issue Class A Shares in
connection with the acquisition of businesses, assets, or capital stock of
another corporation. The Board of Directors has designated as Approved
Holders (i) any shareholder or other equity owner of any Shareholder-

-27-
<PAGE>
Customer who owns 5 percent or more of the equity interests in the
Shareholder-Customer; (ii) any member of the Board of Directors of Spartan;
or (iii) any spouse of an Associate, any biological or adopted child of an
Associate, if the child is 21 years of age or younger, or any trust created
by the Associate or his or her spouse which is established for the benefit
of the Associate or the spouse or any such child of the Associate.

DESCRIPTION OF BUSINESS

GENERAL

The Company operates in three reportable business segments:
distribution; insurance sales and underwriting; and real estate and
finance. The Company's largest business segment, distribution, includes
the distribution of grocery and related products. The distribution
operations include product sales to independently owned and operated food
stores and convenience stores as well as services directly related to the
operation of those stores. Insurance sales and underwriting includes
commission and premium income generated by sales to Customers and others.
Real estate and finance represents revenues from financing and real estate
activities with Customers and others. Spartan's seven subsidiaries
distribute products or provide support, insurance, and services to
Customers and fulfill other functions for the Company.

Financial information on the business segments is set forth under the
caption "Business Segment Information" in the notes to the Consolidated
Financial Statements of the Company included with this Prospectus.

BUSINESS STRATEGY

The Company's current business strategy is to remain exclusively a
full-service wholesaler of grocery and related products. The Company
recognizes that many food wholesalers, including several companies that are
direct competitors of the Company, have developed and own "corporate
stores." The Company's present plans do not anticipate any significant
presence in retailing. Instead, the Company plans to concentrate on
wholesaling to avoid competing with its Customers. The Company may,
however, from time to time determine to purchase one or more retail store
locations.

The Company's business strategy emphasizes a philosophy of service to
its Customers. Management of the Company believes that by providing
grocery retailers with a broad array of products and services, those

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retailers should be better able to grow and compete at the retail level.
This growth and success of its Customers at the retail level should, in
turn, enable the Company to grow and prosper as well.

In addition, Spartan believes that Shareholder-Customers gain an
important competitive advantage by access to the "Spartan" name and image.
The "Spartan" name and logo are widely recognized by consumers in Michigan
and other parts of the Midwest who have come to associate the "Spartan"
name with service, selection, and quality in their grocery shopping. A
majority of all stores supplied by Spartan display the "Spartan" name and
logo.

DISTRIBUTION

GENERAL

Spartan is a full-service distributor of grocery and related products,
and provides its Customers with a selection of over 40,000 items, including
dry grocery, produce, dairy products, meat, frozen food, seafood, floral,
general merchandise, tobacco, and health and beauty care items. Spartan
supplies its Customers with both nationally advertised products and with
over 2,000 highly recognized "Spartan" brand private label items. Spartan
ships the products from its main warehouse and distribution center in Grand
Rapids, Michigan, and from a warehouse in Plymouth, Michigan. To supply
its Customers, Spartan operates a fleet of approximately 167 tractors, 273
conventional trailers, and 154 refrigerated trailers, substantially all of
which are leased by the Company. Deliveries by Spartan can occur as often
as daily for large stores, or as infrequently as weekly for smaller stores.

Several subsidiaries of the Company operate and are included in the
distribution business segment. L & L/Jiroch and J.F. Walker are wholesale
distributors of confections, tobacco products, specialty foods, and other
grocery products to approximately 4,900 convenience stores and other retail
locations in Michigan, Georgia, Illinois, Indiana, Kentucky, Ohio, Pennsyl-
vania, Tennessee, and West Virginia. United Wholesale Grocery Company
("United Wholesale") operates 13 cash and carry outlets in Michigan and
Ohio serving approximately 4,700 convenience stores. In 1996, Capistar,
Inc., a subsidiary wholesale distributor of grocery and other products,
closed its wholesale operation and sold its warehouse located in Lansing,
Michigan.

In February 1996, Spartan introduced a cost-plus pricing program for
its products. The cost-plus pricing program marks a substantial departure
from the variable markup pricing with rebate program that Spartan used
previously. Through the cost-plus pricing program, Spartan prices
products, services, and transportation as separate elements. Spartan
intends that the program will reflect accurately the different costs in
warehousing and distributing various commodities and to assist Spartan and
its Customers to work together to reduce costs.

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Cost-plus pricing consists of two parts. The first part is the
"cost," which is generally the cost that the manufacturer charges Spartan,
subject to definitions and exceptions in the program. The second part is
the "plus," which is a charge generally consisting of: (i) a fixed amount
per case times the number of cases on the invoice; (ii) a percentage of the
total invoice product billing; and (iii) a transportation charge based on a
transportation pricing schedule that reflects Spartan's general
transportation expenses.

Spartan, itself and through its subsidiaries, provides Customers with
a broad spectrum of additional services that the Company believes make it
possible for its Customers to compete with large competitors, such as the
integrated supermarket chains. Customers decide individually which
services to use and are charged fees for the services used. Substantially
all of the Company's Customers use one or more of the value-added services.

SITE IDENTIFICATION AND MARKET ANALYSIS. The Company assists
Customers in identifying potential new store locations. Once the
Company or a Customer has identified a potential site, the
Company will undertake or commission an independent site
feasibility analysis of the location, which includes a study of
the demographics of the general area, the supermarket competitors
located in the primary and secondary trading areas, and the
volume a new store should expect to achieve at the location, as
well as the creation of financial projections.

STORE PLANNING AND DEVELOPMENT. The Company assists Customers in
new store development, from site planning through construction,
including financing and lease negotiations, store layout, space
management, and product display. In addition, services available
from the Company include engineering support, contracting
assistance, layout strategy, design, equipment procurement, and
assistance in leasing space to other commercial tenants. Similar
services are available to Customers who desire to remodel
existing stores. Other services include consulting services on
financial projections, business valuations, and store
divestitures and acquisitions.

MARKETING, PROMOTION, AND ADVERTISING ASSISTANCE. The Company
offers its Customers the services of its in-house advertising
department, which include developing marketing strategies,
designing and producing signs and flyers, and coordinating print
and media advertising campaigns. Customers may use the Company's
print shop to print signs, flyers, and other items. In addition,
the Company offers Customers the opportunity to participate in
printed, radio, and television advertising programs conducted in
the Company's distribution area.

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<PAGE>
TECHNOLOGY AND INFORMATION SERVICES. The Company provides
information services and customized software programs to
Customers using a direct computer link to many of its Customers'
stores. The Company can provide Customers with a product and
price file for products. In addition, Customers may order
inventory directly from the Company using their store-to-
warehouse computer link-up and order entry system. Other than
the core ordering tools, virtually all products are provided as
optional services. Products and services provided include
administrative systems; information technology; consulting,
support, and training; hardware and software resale; marketing
and database services; networking and communications
implementation and support; office automation tools; and point-
of-sale systems.

ACCOUNTING AND TAX PREPARATION SERVICES. The Company provides a
wide array of accounting services to Customers ranging from
preparing monthly and annual financial reports to preparing tax
returns.

HUMAN RESOURCE SERVICES. The Company offers an extensive variety
of human resource services to its Customers. The services
include: recruiting; interviewing and staffing assistance;
benefit program planning; handbook preparation, design, and
printing; labor relations assistance; personnel record keeping;
training; and employee development. The services listed above,
as well as many others, are provided on an individual basis and
are tailored to meet the needs of each Customer.

COUPON REDEMPTION AND PRODUCT RECLAMATION. The Company provides
coupon redemption services, making it possible for retailers to
send all consumer value coupons directly to the Company for
processing of refunds from manufacturers. In addition, the
Company operates a 20,300 square-foot product reclamation center
in Charlotte, Michigan to handle all damaged products that
Customers may return. Damaged products are returned to
manufacturers, where appropriate, and credits received from
manufacturers are then passed along to the Customers.

INSURANCE SERVICES

Through its subsidiaries, the Company offers insurance for Customers
and their employees, and employees of the Company. Customers are offered
coverage for fire and other casualties, liability, automobile, fidelity,
theft, bonds, workers' compensation, business interruption, and group
health plans. In addition, individuals are offered automobile and
homeowners coverage. Shield Insurance Services, Inc. ("Shield"), and
Shield Benefit Administrators, Inc., a wholly owned subsidiary of Shield,

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<PAGE>
provide insurance brokerage services and third-party claims administration
and services, respectively. Spartan Insurance Company Ltd. ("Spartan
Insurance") provides insurance underwriting for Customers. Spartan
Insurance, which is incorporated and licensed in Bermuda, issues policies
of another carrier through a fronting agreement. Under this agreement,
Spartan Insurance insures some of the coverage limits and reinsures with
reinsurance companies the balance of the coverage limit. Shield services
the insurance programs offered by Spartan Insurance.

REAL ESTATE AND FINANCE

The Company may loan funds to Shareholder-Customers to be used to
develop new stores or expand or remodel existing stores. For qualified
Shareholder-Customers, the management of Spartan may approve loans of up to
$100,000. Loans in excess of $100,000 are recommended by management and
approved by the Board of Directors of Spartan.

As of March 28, 1998, the Company had 50 loans outstanding to
Shareholder-Customers. Loans are collateralized by the inventory,
facilities, or equipment financed, and some loans may be collateralized by
Class A Shares or other additional assets or personal assets or guaranties
of equity owners of the Shareholder-Customer.

Loans currently are made only on a floating rate basis, based on the
prime rate. Most loans to retailers from the Company carry interest rates
from prime plus 1/2 percent to prime plus 2 percent. Maturity dates on the
loans range from 1998 to 2005. As of the fiscal years ended March 1998,
1997, and 1996, the Company had outstanding loans to Shareholder-Customers
totaling $8,009,167, $9,771,108 and $11,663,457, respectively. Over the
last 15 years, the Company has not experienced significant aggregate losses
on loans to Shareholder-Customers. Impaired loans totaled approximately
$480,000 at March 28, 1998, including the current portion, with related
allowances of $290,000. The estimated fair market value of the loans
approximates the net carrying value at March 28, 1998.

Market Development Corporation ("Market Development"), a subsidiary of
Spartan, owns 21 retail grocery store facilities that are leased to
Customers and other retailers and owns one vacant retail grocery store
facility that is on the market for sale. Market Development also owns four
vacant sites of which it intends to sell two and to develop two. Market
Development leases 11 other sites that are subleased to Customers.

Spartan has guaranteed payment of indebtedness to financial
institutions aggregating $19,200,000 at March 28, 1998, on behalf of
certain Customers. Market Development also has guaranteed three leases by
Customers, two of which expire in 2012 with combined annual rental payments
of $444,500 and one of which expires in 2017 with annual rental payments of
$217,500. The Company charges an annual fee for each loan guarantee and
lease guarantee and requires each Customer receiving a guarantee to commit
to minimum purchase requirements.
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The Company finances its direct investment in shopping centers or new
retail food stores through internally generated capital and borrowed funds.

COMPETITION

The grocery and convenience store industries are characterized by
intense competition and low profit margins. The principal methods of
competition in the grocery industry are price, product quality and variety,
and service. The principal methods of competition in the convenience store
industry are price and product quality, and to a lesser extent, service.
The Company believes that the Company and its Customers are competitive in
their markets. However, the Company competes with a number of grocery and
convenience store wholesalers and with a number of other businesses that
market their products directly to food retailers, including companies
having greater assets and larger sales volume than the Company. Customers
compete with other retailers and with several large chain stores which have
integrated wholesale and retail operations. Customers also compete with
mass merchandisers, limited assortment stores, wholesale membership clubs,
convenience stores, shop-at-home services, restaurants, and fast food
businesses. The Company's success is in large part dependent upon the
ability of its Customers to compete with the larger grocery store and
convenience store chains. Competition in Michigan and the other states
served by the Company has been, and continues to be, aggressive.

In its nine-state market area of Michigan, Georgia, Illinois, Indiana,
Kentucky, Ohio, Pennsylvania, Tennessee, and West Virginia, the Company
competes at the wholesale level with a number of larger and smaller food
wholesalers, including SUPERVALU, INC., Fleming Companies, Inc., Roundy's,
Inc., and Nash Finch Company, and convenience store wholesalers including
EBY Brown Company, McLane Company, Inc., and S. Abraham and Sons, Inc.

In addition, Customers compete with supermarket chains, including
Meijer, Inc.; The Great Atlantic and Pacific Tea Company (A&P); Super K
(Kmart Corporation); and The Kroger Company. Customers also compete with
members-only shopping and discount clubs. Among the largest such clubs
that compete with Customers are Sam's Club (a unit of Wal*Mart Stores,
Inc.) and Costco Companies, Inc.

According to industry sources, the market share of groceries sold by
Shareholder-Customers is approximately 24 percent in Michigan, consisting
of approximately 49 percent in Western Michigan (a 26 county market area),
13 percent in Eastern and Southern Michigan (a 24 county market area), and
65 percent in Northern Michigan (an 18 county market area).

The insurance industry also is highly competitive. The Company
believes that it is competitive, but many competitors may have far greater
financial and other resources than those of the Company.

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SUPPLIERS

The Company purchases its products from a large number of national,
regional, and local suppliers of name brand and private label merchandise.
The Company is dependent upon these suppliers for brand name products.
However, the Company has not encountered difficulty in procuring or
maintaining an adequate level of products to serve its Customers.

REGULATION

The Company is subject to federal, state, and local laws and
regulations covering the purchase, handling, sale, and transportation of
its products, and is subject to the jurisdiction of the federal Food and
Drug Administration ("FDA"). Management believes that the Company is in
material compliance with all FDA and other federal, state and local laws
and regulations governing its businesses.

SHAREHOLDER-CUSTOMERS

At March 28, 1998, Spartan was the primary supplier to 450 retail food
stores operated by 236 Shareholder-Customers. The average purchases per
store was $3,876,414 during fiscal year 1998. The following table reflects
the number of shareholders who were Shareholder-Customers ("active"
Shareholder-Customers), the number of stores owned by the active
Shareholder-Customers, and the average purchases per store served during
the past five years:

<TABLE>
<CAPTION>
END OF NUMBER OF NUMBER OF SHAREHOLDER- AVERAGE ANNUAL PURCHASES
FISCAL ACTIVE SHAREHOLDER- CUSTOMER STORES PER SHAREHOLDER-
YEAR CUSTOMERS AT YEAR END SERVED AT YEAR END CUSTOMER STORE
------ --------------------- ------------------ --------------
<S> <C> <C> <C> <C>
1998 236 450 $3,876,414
1997 232 444 3,910,170
1996 259 465 3,767,745
1995 273 450 3,363,538
1994 277 465 3,271,400
</TABLE>

As the above illustrates, the number of active Shareholder-Customers
and the number of stores supplied by Spartan over the last five years has
remained relatively stable. However, a large number of Shareholder-
Customers have expanded or remodeled existing stores or built new stores.

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According to industry sources, the trend by Shareholder-Customers to
expand the size of stores, or to build larger stores to replace smaller
stores, follows a national trend in food retailing toward larger store
sizes. While the number of stores supplied by Spartan has not changed
significantly during the past several years, the average weekly purchases
by Shareholder-Customers has increased. In addition, Spartan's largest
Shareholder-Customers grew substantially. The Company has assisted its top
ten Customers in increasing net store space by 629,000 square feet since
the beginning of fiscal 1996.

The following table reflects the diversity in the Shareholder-Customer
base of Spartan as of March 28, 1998:

<TABLE>
<CAPTION>
NUMBER OF SHAREHOLDER-
NUMBER OF CUSTOMERS OPERATING
STORES OPERATED THE NUMBER OF STORES PERCENT OF SALES
--------------- -------------------- ----------------
<S> <C> <C> <C>
1 187 23.0%
2 23 10.8
3 6 4.4
4 or more 20 61.8
</TABLE>

Spartan supplies a diverse group of independent store operators,
ranging from single stores to supermarket chains with as many as 25 stores.
Management believes that the diverse nature of the Customers it now
supplies helps to insulate Spartan from any potential significant adverse
effects of losing a single large Shareholder-Customer or from potential
adverse economic conditions. Spartan does not believe that its success is
dependent upon maintaining the supply business of any one Shareholder-
Customer. Spartan's 10 largest Shareholder-Customers accounted for
approximately 48 percent of its total net sales for fiscal year 1998, but
no single Shareholder-Customer accounted for more than 8 percent
of Spartan's total net sales. In the last five years, no Shareholder-
Customer who was among the 10 largest Shareholder-Customers has terminated
all of its business with Spartan to associate with another distributor.

CUSTOMER AGREEMENTS

To become a Shareholder-Customer, a retail store must submit to
Spartan, among other documents, a completed Stock Subscription Agreement,
together with the initial payment for Class A Shares to satisfy the
Required Investment, and a Customer Agreement. The following summarizes

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only the Stock Subscription Agreement and Customer Agreement. The summary
is qualified in its entirety by reference to the Stock Subscription
Agreement and the Customer Agreement, copies of which are available from
Spartan. Spartan encourages each applicant to review the Stock
Subscription and Customer Agreements carefully before applying, and to
obtain the advice of counsel.

In the Stock Subscription Agreement, the Shareholder-Customer agrees
to acquire from time to time and hold an investment in Class A Shares
sufficient to comply with the Required Investment. In addition, the
Shareholder-Customer agrees to be bound by the transfer restrictions and
the options to purchase the Class A Shares granted to Spartan as set forth
in Spartan's Bylaws. The terms of the Stock Subscription Agreement apply
to all Class A Shares held by the Shareholder-Customer, whenever acquired.

In the Customer Agreement, Spartan agrees to use its best efforts to
supply the Shareholder-Customer with the Shareholder-Customer's
requirements for resale at Approved Stores. A Shareholder-Customer may
sell grocery and related products supplied by Spartan only at Approved
Stores. A Shareholder-Customer may add a new retail store location as an
Approved Store only upon Spartan's approval.

The Shareholder-Customer agrees to comply with the rules, regulations
and policies applicable to Spartan's Customers as may be established from
time to time by Spartan (the "Policy Manual"). Among other matters, the
Policy Manual contains Spartan's policies on the Required Investment,
Trading Value, Volume Incentive Rebates, and stock redemptions. In its
discretion, Spartan may revise or terminate any portion of the Policy
Manual at any time, provided that Spartan must give the Shareholder-
Customer reasonable notice of any revision which imposes any new or changed
obligation on the Shareholder-Customer.

The Shareholder-Customer agrees that its purchases of the grocery and
related products and services will be in accordance with Spartan's Standard
Terms and Conditions of Sale, which Spartan may amend from time to time.
Among other matters, the Standard Terms and Conditions of Sale set forth
the terms of payment, order procedures, procedures for price and rebate
changes, delivery terms, inspection and acceptance practices and warranties
and limitations on warranties.

The Customer Agreement grants to the Shareholder-Customer the
nonexclusive, nontransferable right to use all Spartan trademarks, trade
names, designs, logos, slogans, trade dress, product configurations,
container configurations and other identifications (the "Trademarks"). The
Shareholder-Customer may use the Trademarks to advertise and promote the
sale of products at Approved Stores.

Either Spartan or the Shareholder-Customer may terminate the Customer
Agreement at any time with or without cause by giving the other party not

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less than 30 days prior written notice. Upon a default by a Shareholder-
Customer, as described below, Spartan may terminate the Customer Agreement
upon written notice to the Shareholder-Customer. In addition, the Customer
Agreement will automatically terminate, without notice, if: (i) the
Shareholder-Customer for a continuous 30-day period fails to order any
merchandise from Spartan, unless the failure to order for the period
results from a cause beyond the Shareholder-Customer's control; (ii) the
Shareholder-Customer is adjudicated bankrupt, or a petition is filed by or
against the Shareholder-Customer under any federal or state bankruptcy laws
relating to the relief of debtors for reorganization, arrangement or other
similar relief permitted thereby, or the Shareholder-Customer makes a
general assignment for the benefit of creditors; (iii) a receiver, trustee,
or similar officer is appointed with respect to any of the Shareholder-
Customer's properties or businesses, or the Shareholder-Customer's interest
in the Customer Agreement is attached, executed or levied upon, seized,
garnished, or appropriated by a legal process, unless the appointment of
the officer is vacated or discharged, or the effect of the legal process is
otherwise released, within 10 days; or (iv) any act or event of the type
described in the above subsection occurs which relates to, involves, or
affects the interest of one or more persons having a 50 percent or greater
ownership interest in a Shareholder-Customer which is a corporation,
partnership or other legal entity.

The Shareholder-Customer will be in default under the Customer
Agreement if the Shareholder-Customer fails to pay when due any amount owed
Spartan or to perform any obligation, default of which cannot be cured,
under the Customer Agreement, Spartan's Bylaws, the Policy Manual, or the
Stock Subscription Agreement. The Shareholder-Customer will also be in
default if it fails to perform any other obligation under the Customer
Agreement or under Spartan's Bylaws, the Policy Manual, or the Stock
Subscription Agreement, and the failure continues for 10 days following
receipt of notice from Spartan specifying the failure.

REQUIRED INVESTMENT POLICY

The Board of Directors of Spartan has adopted a policy which requires
Shareholder-Customers to purchase and hold a Required Investment in the
Class A Shares. From time to time, the Board may change the Required
Investment and other terms of the Required Investment policy.

If a Shareholder-Customer no longer purchases grocery and related
products from Spartan, it is Spartan's policy (but not a contractual
obligation) to redeem, at the Shareholder-Customer's request, that number
of Class A Shares then held by the Shareholder-Customer with an aggregate
Trading Value which equals the Shareholder-Customer's Required Investment
as of the date the Shareholder-Customer ceased purchasing from Spartan.
Payment for such redeemed Class A Shares is made in six equal
installments over a five-year period.

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In addition to Class A Shares sold to Shareholder-Customers to satisfy
the applicable Required Investment, Spartan offers all Shareholder-Customers
the opportunity to purchase Class A Shares at any time and from
time to time. Spartan sells Class A Shares at the Trading Value in effect
at the time of the sale .

TRADING VALUE

The price at which Shareholder-Customers must acquire Class A Shares
from Spartan is the Trading Value. The Board of Directors customarily
establishes the Trading Value once a year in its sole and absolute
discretion, based on the Company's financial condition, the results of its
operations, operating trends, market conditions, the state of the economy,
and such other factors as the Board deems appropriate. No specific formula
is used to set the Trading Value. Any change adopted by the Board becomes
effective upon acceptance of the Trading Value by the Michigan Corporation,
Securities and Land Development Bureau. Effective June 21, 1998, the
Trading Value was established at $12.30 per share. During the fiscal years
ended March 1998, 1997 and 1996, the Trading Value was $11.30, $10.50 and
$10.00 per share, respectively, as adjusted for the Stock Split.

TERMS OF SALE AND BAD DEBT EXPERIENCE

The Company furnishes to its Customers in the distribution segment
weekly statements of accounts. Statements include deliveries through and
including the date of the statement. Payment is due within seven days from
date of the statement, and those not paid within seven days are considered
delinquent. Additional deliveries occur during this time which are billed
on a subsequent statement. The timing of payments varies among Customers,
but the Company generally may have receivables outstanding at any given
time which average up to two weeks' sales. The Company believes that it
adequately monitors its outstanding receivables. Bad debt expenses have
not been material to the Company's operations.

PROPERTIES

Spartan owns approximately 1,307,000 square feet of warehouse,
distribution, and office space located on 211 acres in Grand Rapids,
Michigan. Spartan supplies primarily its Western Michigan Customers from
this main warehouse and distribution center. The center is located within
one mile of U.S. 131, a main artery that links Grand Rapids with Kalamazoo
on the south and connects with Interstate 96, one of the major east-west
arteries serving Western Michigan and leading east into the Detroit area.
Approximately 72 acres of the 211-acre complex in Grand Rapids are
presently vacant land.

The main warehouse and distribution center in Grand Rapids includes a
general merchandise warehouse of approximately 233,000 square feet;
refrigerated space of approximately 327,000 square feet; dry grocery space

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of approximately 585,000 square feet; general office space, including a
print shop, of approximately 107,000 square feet; and transportation and
salvage buildings of approximately 55,000 square feet. Spartan leases a
403,000 square-foot warehouse, garage, and office complex in Plymouth,
Michigan, a western suburb of Detroit. This warehouse is used to supply
its Customers located in the greater Detroit area and in Eastern Michigan.

Spartan also owns a Reclamation Center/Support Services complex in
Charlotte, Michigan consisting of an approximately 11 acre site containing
two warehouses totaling 80,000 square feet. In addition, Spartan leases
for various purposes 80,000 square feet of warehouse space in Grand Rapids,
Michigan and a trailer relay station in Kalkaska, Michigan that consists of
four trailer parking stations in a secured area.

L & L/Jiroch owns approximately 180,000 square feet of warehouse and
office space located in Wyoming, Michigan, to service its Customers. L &
L/Jiroch leases approximately 107,700 square feet of space also located in
Wyoming, Michigan. The lease on this facility expires December 31, 1998,
and L & L/Jiroch has no plans to extend the lease. In 1998, L & L/Jiroch
subleased approximately 56,000 square feet of this leased space to an
unaffiliated third party. The remainder of the space was subleased to
Spartan.

Market Development owns approximately 688,000 square feet in 10
shopping centers and an additional 484,000 square feet in 11 free-standing
locations, all of which it leases to Customers and other retailers. This
leased space consists of approximately 913,200 square feet of grocery
retail space and approximately 258,800 square feet of other retail space.
The 10 leased shopping centers (the "Shopping Centers") are located in
Brighton, Michigan (78,000 square feet of retail space); Cascade Township,
Michigan (90,000 square feet of retail space); Fenton, Michigan (77,300
square feet of retail space); Fremont, Michigan (41,000 square feet of
retail space); Huntington, Indiana (54,000 square feet of retail space);
Kentwood, Michigan (78,000 square feet of retail space); Ludington,
Michigan (43,000 square feet of retail space); Sterling Heights, Michigan
(98,700 square feet of retail space); Stevensville, Michigan (62,000 square
feet of retail space); and Three Rivers, Michigan (67,000 square feet of
retail space). All Shopping Centers are substantially full and each
Shopping Center is anchored by a lease with a retail grocery store, all but
one of which is a Shareholder-Customer. In addition, Market Development
owns vacant land in Plymouth, Indiana, and in Jackson, Milford Township and
Macomb Township, Michigan. Market Development plans to sell the vacant
land in Plymouth, Indiana, and Jackson, Michigan. The vacant land in
Milford and Macomb Townships will be co-developed with outside developers
to build a supermarket at each location for a Shareholder-Customer.

Market Development owns 21 retail grocery store facilities (including
those leased in the Shopping Centers) that are leased to Customers and
other retailers, with terms expiring from 1998 to 2016. Aggregate lease

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<PAGE>
rental income received for the grocery stores was $6,959,000, $6,496,000
and $6,599,000 in fiscal years 1998, 1997 and 1996, respectively. Market
Development owns one vacant retail grocery store facility located in
Goshen, Indiana, which is on the market to be sold.

In addition, Market Development leases 11 sites for sublease to
Customers. Under this program, Market Development has leased approximately
418,000 square feet of real estate with lease terms expiring from 1998 to
2016. Aggregate lease rental income received pursuant to the subleases was
$2,697,000, $2,471,000 and $1,765,000 in fiscal years 1998, 1997 and 1996,
respectively. Site lease rental expenses were $2,524,000, $2,361,000 and
$1,644,000 for fiscal years 1998, 1997 and 1996, respectively. All stores
that are leased or subleased to Customers are in all material respects
operating according to required lease terms.

J.F. Walker leases 11 locations totaling approximately 68,500 square
feet of warehouse and distribution space at its locations in Michigan,
Indiana, Kentucky, Ohio, Pennsylvania, and Tennessee to service its
Customers. J.F. Walker also owns three locations totaling approximately
172,500 square feet of warehouse and distribution space. During fiscal
year 1998, J.F. Walker purchased the formerly leased Louisville, Kentucky
distribution center, which resulted in an increase of approximately 75,000
square feet of owned space, and eliminated another leased site.

United Wholesale operates 13 "cash and carry" wholesale grocery
facilities, 12 of which are located in Michigan, and one of which is
located in Ohio. United Wholesale owns 12 and leases one of these retail
outlets, which have a total of approximately 236,000 square feet.

ASSOCIATES

As of March 28, 1998, the Company employed approximately 2,900
Associates, of which approximately 1,030 were represented by several
unions. Spartan's warehouse and transportation Associates are represented
by different Teamsters Union locals, with contracts expiring in 2000 and
2001. A majority of United Wholesale's Associates also are represented by
various unions, with contract expirations varying by location. Associates
of L & L/Jiroch and J.F. Walker are not represented by a union. The
Company considers its relations with all Associates to be satisfactory, and
has not had any work stoppages in the last five years.

LEGAL PROCEEDINGS

On December 12, 1997, the Company agreed to accept a mediation award
to settle a lawsuit involving alleged racial harassment incidents that took
place several years ago in one of the Company's warehouses. Under the
mediation decision, the Company agreed to pay $1.3 million in damages,
which was paid January 8, 1998.

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On August 21, 1996, the Attorney General for the State of Michigan
filed an action in Michigan circuit court against the leading cigarette
manufacturers operating in the United States, twelve wholesalers and
distributors of tobacco products in Michigan (including three Company
subsidiaries) and others seeking certain injunctive relief, the
reimbursement of $4 billion in Medicaid and other expenditures incurred or
to be incurred by the State of Michigan to treat diseases allegedly caused
by cigarette smoking and punitive damages of $10 billion. During fiscal
year 1998, three actions were filed in state courts in Tennessee and
twenty-two actions were filed in state courts in Pennsylvania against the
leading cigarette manufacturers operating in the United States and certain
wholesalers and distributors, including a subsidiary of the Company. In
fiscal 1999, one additional action has been filed in Pennsylvania. In the
three Tennessee actions, one action was filed as a class action on behalf
of the individual plaintiffs, one action was filed on behalf of the State
of Tennessee and its taxpayers, and one action was filed by an individual
plaintiff. All of the Pennsylvania actions were filed by individual
plaintiffs. In these separate cases, the plaintiffs are seeking
compensatory, punitive and other damages, reimbursement of medical and
other expenditures and equitable relief. The Company believes that its
subsidiaries have valid defenses to these legal actions. These actions are
being vigorously defended. The Tennessee class action and individual
plaintiff action already have been dismissed and a dismissal order is
pending with respect to the action on behalf of the State of Tennessee and
its taxpayers. All but one of the Pennsylvania actions have been dismissed
without prejudice pursuant to a Dismissal and Tolling Agreement under which
the defendants have agreed not to raise the defenses of statute of
limitations or laches if an action is filed by a plaintiff before April 1,
1999. One of the cigarette manufacturers named as a defendant in each
action has agreed to indemnify the Company's subsidiaries from damages
arising out of these actions. Management believes that the ultimate
outcome of these actions should not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.

Spartan and its subsidiaries are parties, as plaintiff or defendant,
to various other legal proceedings incidental to their businesses. In the
opinion of management, such matters are not, individually or in the
aggregate, material to the Company's financial condition or results of
operations. All such legal proceedings arose in the ordinary course of the
Company's operations.

MANAGEMENT

The names, ages, and principal occupations of directors, nominees
for director, and executive officers of Spartan as of June 13, 1998, are
set forth below.

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<PAGE>
POSITION AND PRINCIPAL
NAME AND AGE OCCUPATION FOR LAST FIVE YEARS

Donald J. Koop (61) Chairman of the Board since 1989
and director since 1985;
Chairman of the Board, Family
Fare Inc. (retail grocery
chain)

Russell H. VanGilder, Jr. (64) Vice Chairman of the Board since
1992 and director since 1970;
Chairman of the Board, V.G.'s
Food Center, Inc. (retail
grocery chain)

Roger L. Boyd (51) Secretary of the Board since 1993
and director since 1992;
President and General Manager,
Bob's Market House, Inc.
(retail grocery store);
President and General Manager,
Hillsdale Market House, Inc.
(retail grocery store)

James G. Buick (65) Director since 1995; Retired;
Former President and Chief
Executive Officer, The
Zondervan Corporation (1984 to
1993) (producer and distributor
of Christian books and gifts)

John S. Carton (57) Director since 1995; Chairman of
the Board, Pine View Golf Club,
Inc., and Turfside, Inc. (golf
course and restaurant)

Glen A. Catt (50) Director since 1988; President and
Chief Executive Officer, Glen's
Markets, Inc. (retail grocery
chain)

Ronald A. DeYoung (64) Director since 1974; President,
Great Day, Inc. (retail grocery
chain)

Parker T. Feldpausch (66) Director since 1990; President,
G & R Felpausch Co. (retail
grocery chain)

-42-
<PAGE>
POSITION AND PRINCIPAL
NAME AND AGE OCCUPATION FOR LAST FIVE YEARS

Martin P. Hill (53) Director since 1996; President,
Harding & Hill, Inc. (retail
grocery chain); Director,
Secretary and Treasurer,
Harding's Markets - West, Inc.
(retail grocery chain)

Dan R. Prevo (48) Director since 1996; President,
Prevo's Family Market, Inc.
(retail grocery chain)

James B. Meyer (52) Chief Executive Officer since July
1997; President and director
since August 1996; Chief
Operating Officer from August
1996 to July 1997; Treasurer
since 1994; Senior Vice
President Corporate Support
Services from June 1994 to
August 1996; Chief Financial
Officer and Assistant Secretary
from October 1990 to August
1996; Senior Vice President
from 1981 to 1994

Charles B. Fosnaugh (48) Vice President Development since
April 1998; Senior Vice
President Business Development
and Finance from September
1996 to April 1998; Senior Vice
President Business Development
from July 1994 to September
1996; Vice President Business
Development from 1990 to 1994;
President, Market Development
Corporation since 1990;
President, Valuland Inc. since
1992

David deS. Couch (47) Vice President Information
Technology since May 1996;
Director of Management
Information Services from
December 1991 to May 1996

-43-
<PAGE>
POSITION AND PRINCIPAL
NAME AND AGE OCCUPATION FOR LAST FIVE YEARS

Michael D. Frank (46) Vice President Logistics since
July 1997; Vice President
Distribution, Associated
Wholesale Grocers, Inc. from
1987 to July 1997 (supermarket
cooperative)

J. Kevin Schlosser (48) Vice President Sales since
September 1997; Director of
Team Sales, RJR Nabisco Food
Groups, Inc. from
September 1985 to September
1997 (tobacco and food company)

Alex J. DeYonker (48) General Counsel and Assistant
Secretary since May 1995;
partner of Warner Norcross &
Judd LLP since 1988 (law firm)

Directors are elected at annual meetings of shareholders and hold
office for a term of three years and until their successors are elected and
qualified. Annual elections of directors are held to elect approximately
one-third of the members of the Board. Ms. Dorothy A. Johnson resigned
from the Board of Directors on February 26, 1998. The terms of Messrs.
Boyd, Carton, DeYoung, and Koop expire in 1998; Messrs. Buick, Hill, Prevo,
and VanGilder expire in 1999; and Messrs. Catt, Feldpausch and Meyer expire
in 2000. Nominees for election in 1998 to the Board of Directors are
Messrs. Boyd, Carton, DeYoung, and Koop. Executive officers are appointed
by the Board of Directors at its organizational meeting following each
annual meeting of shareholders and serve until their successors are
appointed.

Because the Company's capital stock is not registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, the
directors, officers, and persons owning greater than 10 percent of any
class of the Company's equity securities are not subject to Section 16 of
that act.

EXECUTIVE COMPENSATION AND OTHER BENEFITS

The following table sets forth the cash and non-cash compensation
earned during the fiscal years ended March 28, 1998 (52 weeks), March 29,

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<PAGE>
1997 (52 weeks) and March 30, 1996 (53 weeks) by the persons who served as
the Chief Executive Officer of Spartan during the last completed fiscal
year, and the four most highly compensated executive officers (other than
the Chief Executive Officer) of Spartan at the end of the last completed
fiscal year.

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
SECURITIES ALL OTHER
NAME AND ANNUAL COMPENSATION UNDERLYING COMPEN-
PRINCIPAL FISCAL ------------------- OPTIONS SATION
POSITION YEAR SALARY BONUS<F1> <F2> <F3>
--------- ------ ------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
James B. Meyer 1998 $350,494 $106,712 4,000 $6,348
(President and Chief 1997 308,250 24,500 2,000 6,348
Executive Officer) 1996 231,995 37,375 2,000 4,832

Patrick M. Quinn <F4> 1998 $206,910 $0 4,000 $40,905
(Former Chief Executive 1997 373,150 37,497 4,000 108,833
Officer) 1996 353,658 75,000 4,000 107,317

Charles B. Fosnaugh 1998 $195,330 $52,555 2,000 $5,921
(Vice President 1997 190,640 18,688 2,000 5,921
Development) 1996 182,940 37,375 2,000 4,405

Dennis J. Otto <F5> 1998 $142,410 $0 1,000 $149,134
(Former Vice President 1997 132,000 9,000 1,000 6,478
Sales and Marketing) 1996 113,375 19,350 1,000 4,052

David deS. Couch 1998 $127,214 $35,602 1,000 $6,027
(Vice President 1997 120,330 7,500 100 6,824
Information Technology) 1996 101,975 15,000 0 3,934

Michael D. Frank 1998 $88,920 $35,847 0 $3,009
(Vice President Logistics) 1997 N/A N/A N/A N/A
1996 N/A N/A N/A N/A
<FN>
__________________

-45-
<PAGE>
<F1> The amounts listed in this column include bonus amounts elected
under the 1991 Stock Bonus Plan, as amended, plus an amount equal
to 30 percent of such bonus amounts to be received in Class A
Shares. The amounts listed in this column also include cash
bonuses accrued in fiscal year 1998 and paid in the following
year pursuant to the Company's Annual Incentive Plan.

<F2> All reported awards were under the 1991 Stock Option Plan, as
amended (the "1991 Stock Option Plan"), and have been adjusted to
reflect the results of the Stock Split. These awards have vested
and are exercisable at the date of grant.

<F3> The compensation listed in this column for fiscal year 1998
consists of: (i) amounts paid by Spartan for split dollar and
term life insurance; (ii) Spartan's matching contributions under
its Savings Plus Plan; and (iii) amounts paid or accrued in
connection with retirement or termination of employment.
Supplemental Executive Retirement Plan. The amounts included for
each such factor for fiscal year 1998 are:

(i) (ii) (iii)
------ ------ -------
Mr. Meyer $1,598 $4,750 $0
Mr. Quinn 2,611 4,250 34,044
Mr. Fosnaugh 1,171 4,750 0
Mr. Otto 1,808 4,256 143,070
Mr. Couch 2,074 3,953 0
Mr. Frank 3,009 0 0

<F4> Mr. Quinn retired from Spartan on July 15, 1998.

<F5> Mr. Otto resigned from Spartan on May 25, 1998.
</FN>
</TABLE>

STOCK OPTIONS

Under the 1991 Stock Option Plan, options to purchase Class A Shares
may be granted to officers of Spartan. The following tables set forth
information concerning stock options granted under the 1991 Stock Option
Plan during the fiscal year ended March 28, 1998, to the named executive
officers and the unexercised options held by them as of the end of the
fiscal year.

-46-
<PAGE>

<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR <F1>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------
PERCENT POTENTIAL
NUMBER OF TOTAL REALIZABLE VALUE AT
OF OPTIONS ASSUMED ANNUAL
SECURITIES GRANTED TO RATES OF STOCK PRICE
UNDERLYING EMPLOYEES EXERCISE EXPIRA- APPRECIATION
OPTIONS IN FISCAL PRICE PER TION FOR OPTION TERM
NAME GRANTED YEAR SHARE DATE 5% 10%
---- ------- --------- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
James B. Meyer 4,000 33.33% $11.30 5/2007 $28,428 $72,036
Patrick M. Quinn 4,000 33.33 11.30 5/2007 28,428 72,036
Charles B. Fosnaugh 2,000 16.66 11.30 5/2007 14,214 36,018
Dennis J. Otto 1,000 8.33 11.30 5/2007 7,107 18,009
David deS. Couch 1,000 8.33 11.30 5/2007 7,107 18,009
Michael D. Frank 0 N/A N/A N/A N/A N/A
<FN>
__________________
<F1> The per share exercise price of each option equals the Trading Value
of the Class A Shares effective as of June 22, 1997, as adjusted for
the Stock Split. All options were granted for a term of 10 years.
Options terminate, subject to limited exercise provisions, in the
event of death, retirement, or other termination of employment. All
options are exercisable at the date of grant. The exercise price of
the options may be paid in cash, by delivering Class A Shares which
are already owned by the option holder, or any combination thereof.
</FN>
</TABLE>

-47-
<PAGE>

<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NUMBER OF SHARES FISCAL YEAR-END FISCAL YEAR-END <F1>
ACQUIRED VALUE --------------- --------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James B. Meyer 0 $ 0 14,000 0 $ 19,000 $ 0
Patrick M. Quinn 20,000 38,000 0 0 0 0
Charles B. Fosnaugh 0 0 9,000 0 11,600 0
Dennis J. Otto <F2> 0 0 3,000 0 2,100 0
David deS. Couch 0 0 1,000 0 0 0
Michael D. Frank 0 0 0 0 0 0
<FN>
________________

<F1> Represents the difference between the exercise price of the options
for the Class A Shares and the Trading Value of $11.30 per share at
fiscal year-end.

<F2> All options held by Mr. Otto were exercised upon his resignation from
Spartan on May 25, 1998.
</FN>
</TABLE>

EMPLOYMENT AGREEMENTS

The officers of Spartan are appointed annually by and serve at the
pleasure of the Board of Directors or the Chief Executive Officer. Except
for Mr. Meyer, Spartan has not entered into any employment agreement with
any officer.

On August 14, 1996, Mr. Meyer entered into an employment agreement
with Spartan. Under the employment agreement, Mr. Meyer's annual base
salary is to be and has been revised upon mutual agreement of Spartan and
Mr. Meyer on a year-to-year basis. Under the employment agreement, Spartan
provides Mr. Meyer with an automobile and certain other fringe benefits.

-48-
<PAGE>
The employment agreement may be terminated upon mutual agreement, upon Mr.
Meyer's death or disability, by either party at its option upon 90 days'
written notice to the other, for cause, or upon certain other events.
Upon termination by Spartan for any reason other than for cause or Mr.
Meyer's death or disability, or upon termination by Mr. Meyer for good
reason, Mr. Meyer will receive life, health, accident, and dental insurance
benefits and an amount equal to his current salary for one year after the
date of severance. In addition, all options held by Mr. Meyer to acquire
Class A Shares will immediately vest and become exercisable for 90 days
after the date of severance, all risks of forfeiture applicable to any
restricted stock granted to Mr. Meyer will lapse and no longer apply, and
Spartan will purchase and transfer to Mr. Meyer the automobile then
furnished to him.

PENSION PLAN

Prior to April 1, 1998, the noncontributory, defined benefit plans of
Spartan (the "Pension Plan") provided benefits to Associates upon
retirement determined primarily by average final compensation. Effective
as of April 1, 1998, the benefit formula was redesigned, utilizing a cash
balance approach which does not provide benefits determined primarily by
average final compensation.

PENSION PLAN BEFORE APRIL 1, 1998

The following table illustrates estimated annual benefits payable
under the Pension Plan to Associates upon retirement, assuming retirement
at age 65, including the amounts attributable to the Supplemental Executive
Retirement Plan of Spartan which provides nonqualified deferred
compensation to participants, including benefits that would otherwise be
denied participants by reason of certain limitations on qualified defined
benefit plans and the Internal Revenue Code of 1986, as amended.

<TABLE>
PENSION PLAN TABLE
<CAPTION>
AVERAGE
REMUNERATION YEARS OF BENEFIT SERVICE
- ---------------- ---------------------------------------------------------------------------------
5 10 15 20 25 30
- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000 $ 8,300 $16,600 $ 24,890 $ 33,190 $ 41,400 $ 49,790
200,000 17,550 35,100 52,640 70,190 87,740 105,290
300,000 26,800 53,600 80,390 107,190 133,990 160,790
400,000 36,050 72,100 108,140 144,190 180,240 216,290
500,000 45,300 90,600 135,890 181,190 226,490 271,790
</TABLE>

-49-
<PAGE>
The compensation shown under the heading "Annual Compensation" in the
Summary Compensation Table on page 35 is representative of the most
recent calendar year compensation used in calculating average remuneration
for the Spartan Pension Plan. Credited years of service of the named
executive officers under the Spartan Pension Plan as of March 28, 1998,
are:

<TABLE>
<CAPTION>
CREDITED YEARS OF SERVICE
-------------------------
<S> <C> <C>
James B. Meyer 25
Patrick M. Quinn 13
Charles B. Fosnaugh 8
Dennis J. Otto 8
David deS. Couch 12
Michael D. Frank 0
</TABLE>

Benefits under the Pension Plan become vested after five years of
service. Upon reaching the normal retirement age of 65, a covered employee
is entitled to retirement benefits computed using the average annual
compensation (including salary, hourly wages, overtime, incentive pay,
bonuses, and commissions) from the plan employers during the five
consecutive calendar years in the last 10 calendar years during which
the participant's compensation was greatest.

The basic pension benefit is an annual benefit, paid in equal monthly
installments. For benefits accrued as of March 31, 1998, the annual
benefit is equal to the sum of (i) 1.2 percent of the participant's annual
compensation plus 0.65 percent of the participant's average compensation in
excess of the amount which would be used to compute Social Security
benefits, multiplied by the participant's years of benefit service (up to
30 years of benefit service), plus (ii) 0.5 percent of the participant's
average compensation, multiplied by the participant's years of benefit
service in excess of 30 years of benefit service. For persons who were
participants prior to April 1, 1989, the Pension Plan provides that their
retirement benefit will not be less than the benefit accrued as of
March 31, 1989. (In general, the Pension Plan provisions in effect prior
to April 1, 1989, provided higher retirement benefits for highly
compensated employees, and lower benefits for less highly compensated
employees than the current provisions of the Pension Plan.)

-50-
<PAGE>
PENSION PLAN AS OF APRIL 1, 1998

Effective as of April 1, 1998, the Pension Plan benefit formula was
redesigned, utilizing a cash balance approach. Under the new cash balance
formula, principal credits are added annually to a participant's "account."
There are two types of principal credits--basic credits and transition
credits. The basic credit equals a percentage of the participant's
compensation based upon a participant's years of vested service at the
beginning of each calendar year in accordance with the following table:

<TABLE>
<CAPTION>
YEARS OF VESTED SERVICE
AS OF JANUARY 1 PERCENTAGE OF PARTICIPANT'S COMPENSATION
--------------- ----------------------------------------
<S> <C> <C>
0 - 5 4%
6 - 10 5
11 - 15 6
16 - 20 7
21 - 25 8
26 or more 9
</TABLE>

In addition to the basic credit, a participant may be eligible to
receive a transition credit equal to a percentage of the participant's
compensation based upon the participant's age on the first day of the
calendar year as follows:

<TABLE>
<CAPTION>
PARTICIPANT'S AGE AS OF
JANUARY 1 PERCENTAGE OF PARTICIPANT'S COMPENSATION
--------- ----------------------------------------
<S> <C> <C>
Under 35 0%
35 - 39 2
40 - 44 4
45 - 49 6
50 - 54 8
55 and over 10
</TABLE>

Transition credits will be available for the 1998 - 2007 calendar
years. However, if a participant has fewer than ten years of benefit

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<PAGE>
service as of December 31, 1997, the participant is eligible for transition
credits only for the number of calendar years equal to the participant's
complete years of benefit service as of December 31, 1997.

In addition to the principal credits, interest credits are also added
annually to a participant's "account" based upon the participant's account
balance as of the last day of the immediately preceding calendar year. The
interest rate used for this purpose is the average of 30-year Treasury
constant maturities yields over the 12 months ending in November of the
prior calendar year.

Upon termination of employment, a participant will be entitled to his
or her vested accrued benefit which can be distributed either in a monthly
annuity or in a lump sum. If distributed in a lump sum, the participant's
benefit generally will be equal to the participant's account balance. For
persons who are participants prior to April 1, 1998, the Pension Plan
provides that the retirement benefit will not be less than the benefit
accrued as of March 31, 1998.

As of March 28, 1998, the estimated benefit payable upon retirement at
normal retirement age (age 65) for Messrs. Meyer, Fosnaugh, and Couch is
expected to be approximately $3,250,000, $1,050,000, and $870,000,
respectively. Messrs. Quinn and Otto terminated employment with Spartan
either before or shortly after the April 1, 1998 effective date of the cash
balance redesign of the Pension Plan. As a result, they do not have a new
cash balance benefit. However, Messrs. Quinn and Otto remain eligible for
benefits under the Pension Plan in accordance with the formula in effect
prior to April 1, 1998. Mr. Frank is not yet a participant in the Pension
Plan.

COMPENSATION OF DIRECTORS

Each director receives a base compensation of $10,000 per year and
$1,000 per day for attendance at each meeting of the Board or a committee
of the Board. Directors also are reimbursed for travel expenses for
meetings attended.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee are Messrs. Buick, Catt, and
Hill. Each member of the Compensation Committee, except Mr. Buick, has an
ownership interest in a business which is a Shareholder-Customer of the
Company and purchases groceries, perishables, general merchandise, and
other products and services from the Company on an ongoing basis. For a
discussion of transactions with entities related to directors and the
Board's policy with respect to transactions in which a director has an
interest, see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

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<PAGE>
LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION

Spartan's Restated Articles of Incorporation (the "Articles") provide
that a director of Spartan will not be personally liable to the Company for
monetary damages for a breach of fiduciary duty as a director, with the
exception of: liability for a breach of a director's duty of loyalty to
the Company or its shareholders; liability for acts or omissions not in
good faith or that involved intentional misconduct or knowing violation of
law; liability for certain unlawful dividends, distributions or loans;
liability in connection with a transaction from which the director derived
an improper personal benefit; and liability in connection with an action or
omission occurring prior to the date the limitation of liability provision
became effective.

Michigan law permits, and Spartan's Articles require, indemnification
of Spartan's directors and executive officers in a variety of
circumstances, which may include liabilities under the Federal Securities
Act of 1933, as amended. The Articles require Spartan to indemnify any
director or executive officer who is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that he or she is or was a director or executive
officer, or is or was serving at the request of Spartan in another
capacity, to the fullest extent permitted by law. Spartan may further
indemnify any director or executive officer, and may indemnify any person
who is not a director or an executive officer, as authorized by any Bylaw,
resolution of the Board, or contractual agreement authorized by the Board.
Pursuant to this authority, Spartan's Bylaws provide that Spartan will
indemnify directors, executive officers, and other officers of Spartan to
the extent that an indemnified person is successful on the merits or
otherwise in the defense of the action. Spartan will indemnify the
indemnified party against actual and reasonable expenses (including
attorneys' fees) incurred in connection with the action. Prior to a final
determination of a proceeding, Spartan may reimburse an indemnified party
for reasonable expenses incurred by the indemnified party, if certain
procedures are followed. In addition, upon request, a court may order
Spartan to indemnify a director, officer, employee or agent if it
determines that the person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not
the applicable standard of conduct set forth in the Bylaws has been met.

In addition, the Bylaws permit Spartan to grant other rights to a
person seeking indemnification or advancement of expenses. Further,
Spartan may purchase and maintain insurance for a director, officer,
employee or agent of Spartan against any liability asserted against the
individual.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Spartan's directors (except Messrs. Buick, Carton and Meyer) have
ownership interests in businesses which are Shareholder-Customers and
purchase groceries, perishables, general merchandise, and other products
and services from the Company on an ongoing basis. To the extent that the
Company engages in transactions and offers services that benefit its
Customers, the businesses in which such directors have ownership interests
may benefit. Consequently, a director may have a conflict of interest
between the best interests of the Company and the business or businesses in
which the director has an ownership interest.

For any transaction involving a sale in the ordinary course of
business of groceries, perishables, general merchandise, insurance, or
other products or services of the Company to a Customer of the Company in
which the director owns an equity interest or is an officer, director, or
employee or otherwise has an interest (a "Related Entity"), it is the
Company's policy and practice that the sale is deemed fair to the Company,
and Board approval is not specifically required, if the sale is made at
prices and on terms, including discounts and rebates, no less favorable
than those offered generally to Customers that are not affiliated with any
director.

For any other transaction in which a director has an interest
(including, without limitation, the Company's leasing, purchasing, or
selling any property involving any loan or guarantee of an obligation by
the Company in a transaction involving a Related Entity), it is the
Company's policy and practice that the director shall proceed with the
transaction only if the material facts of the transaction and the
director's interest in the transaction have been disclosed to the Board,
the Board determines that it is fair to the Company, and the transaction is
approved by the affirmative vote of a majority of the Board of Directors
who have no interest in the transaction. Each such transaction is made on
terms no less favorable to the Company than those offered generally to
Customers that are not affiliated with any director.

During the fiscal year ended March 28, 1998, in the aggregate, Related
Entities paid to the Company approximately $595,197,000 for grocery and
related products (23.9 percent of the Company's total net sales for fiscal
year 1998). No single Related Entity accounted for more than 5.2 percent
of the Company's total net sales in fiscal year 1998. In connection with
the purchases of such products, the Company paid to the Related Entities,
discounts, and allowances on purchases at the same rates and on the same
terms as applicable to all Customers. For the name of the entity related
to each director, see "MANAGEMENT."

In addition, in the aggregate, Related Entities:

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<PAGE>
(a) in the fiscal year ended March 28, 1998, paid to the
Company insurance premiums and commissions equal to approximately
$3,700,000, or 23 percent of all premiums and commissions paid
(no single Related Entity accounted for more than five percent of
the total insurance premiums and commissions paid); and

(b) in the fiscal year ended March 28, 1998, made lease
payments to the Company in the amount of approximately
$4,146,000, or 35 percent of all lease payments made (no single
Related Entity accounted for more than 17 percent of lease
payments made).

Management believes all such leases have been made in the ordinary
course, on fair and reasonable terms and on an arm's-length basis. All
such leases are current on all required payments, and none of these leases
were delinquent in payment or in default as of March 28, 1998.

At March 28, 1998, the Company has an outstanding loan of $100,000 to
Mr. Kevin Schlosser, Vice President Sales, which was paid in full on May 1,
1998. As of the end of fiscal year 1998, no other loans were outstanding
between the Company and any director, executive officer, or Related Entity.
The Company had guaranteed payment of indebtedness to financial
institutions aggregating $6,600,000 at March 28, 1998, on behalf of Related
Entities. In the fiscal year ended March 28, 1998, the Company incurred
construction costs of approximately $3,813,000 on a project to construct a
retail store that is being leased to a Related Entity.

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of the Class A Shares as of May 23, 1998 of (i) each of the
directors and nominees for director of Spartan, (ii) each of the named
executive officers of Spartan, and (iii) all directors and executive
officers of Spartan as a group. As of May 23, 1998, Family Fare Inc. is
the only person known to the Company to be the beneficial owner of more
than five percent of the Class A Shares. Mr. Donald J. Koop, Chairman of
the Board of Spartan, also serves as Chairman of the Board of Family Fare
Inc.

-55-
<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP <F1> PERCENT OF CLASS
- ------------------------ ------------------------- ----------------
<S> <C> <C>
Donald J. Koop 592,890 5.17%
Parker T. Feldpausch 508,390 4.44
Russell H. VanGilder, Jr. 507,410 4.43
Martin P. Hill 330,090 2.88
Dan R. Prevo 259,104 2.26
Ronald A. DeYoung 224,130 1.96
Glen A. Catt 188,190 1.64
Roger L. Boyd 169,310 1.48
James B. Meyer <F2> 36,395 <F*>
Patrick M. Quinn <F3> 30,500 <F*>
Charles B. Fosnaugh <F2> 19,161 <F*>
Dennis J. Otto <F4> 4,000 <F*>
David deS. Couch <F2> 2,755 <F*>
Michael D. Frank <F2> 2,042 <F*>
James G. Buick 1,000 <F*>
John S. Carton 1,000 <F*>
All Directors and Executive
Officers as a group <F2> 2,878,736 25.12%

<FN>
____________________
<F*> Less than one percent.

<F1> Except for Messrs. Buick, Carton and Meyer, the Class A Shares
reported as beneficially owned by each director are directly owned by
a corporation that is a Customer of the Company and with whom the
director is affiliated. Thus, each such director indirectly owns the
Class A Shares through the corporation which he controls either
individually or with others. The Class A Shares owned by each such
corporation are included in the amount reported for the appropriate
director. For the name of each such entity related to each director,
see "MANAGEMENT" above. Mr. Meyer and the named executive officers
directly own the Class A Shares reported to be owned by each and hold
the sole voting and dispositive power with respect to those shares.

<F2> Includes shares that may be acquired through the exercise of stock
options that are exercisable within 60 days. The number of shares
subject to such stock options for each person is shown below. The
reported shares include the shares subject to options granted on May
13, 1998.

-56-
<PAGE>
Mr. Meyer 18,000
Mr. Fosnaugh 10,000
Mr. Couch 2,000
Mr. Frank 1,000
All Executive Officers as a group 32,000

<F3> Mr. Quinn retired from Spartan on July 15, 1997.

<F4> Mr. Otto resigned from Spartan on May 25, 1998.
</FN>
</TABLE>

DESCRIPTION OF CAPITAL STOCK

As of the date of this Prospectus, the authorized capital stock of
Spartan consisted of 20,000,000 Class A Shares and 5,000,000 Class B
Shares.

The following description of Spartan's capital stock is qualified by
reference to Spartan's Articles and Bylaws, copies of which are included as
exhibits to the Registration Statement of which this Prospectus is a part.

As of June 20, 1998, Spartan had outstanding 11,464,143 Class A
Shares, held by approximately 464 record holders of the Company's Class A
shares. As of the date of this Prospectus, Spartan has not issued any
Class B Shares. The Board of Directors may at any time, and from time to
time, provide for the issuance of Class B Shares in one or more series,
each with such a designation and, relative to the Class A Shares and to
other series of the Class B Shares, such voting, distribution, dividend
liquidation, conversion, participation, redemption and other rights,
preferences, limitations and restrictions, if any, as will be stated in the
resolution or resolutions providing for the issuance of the Class B Shares.
Except as provided in the resolution or resolutions providing for the
issuance of shares, all Class B Shares and any series thereof will be
identical. Class A Shares, or Class B Shares or any series thereof, may be
issued as a share dividend in respect of shares of another class or series
as the Board of Directors may determine from time to time, or as otherwise
permitted by statute.

VOTING

Each outstanding Class A Share entitles its holder to one vote.
Except as otherwise required by law, or pursuant to the resolution or
resolutions providing for the issuance of Class B Shares, Class A Shares
and Class B Shares vote together as a single class and, except for the
election of directors and certain extraordinary matters, the vote required
to approve any corporate action is a majority of the votes cast at a

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<PAGE>
meeting at which a quorum is present. Directors will be elected by a
plurality of the votes cast at a meeting at which a quorum is present.
Extraordinary matters, such as amendments to the Articles, mergers, share
exchanges, sales of assets, and dissolution, must be approved by the
holders of a majority of the Class A Shares and all other voting groups
entitled to vote thereon.

The Articles divide the Board of Directors into three classes, each
class serving a three-year term, so that each year the terms of
approximately one-third of the directors expire and approximately one-third
of the directors are elected for a new three-year term.

Under Michigan law, Class A Shares and Class B Shares will vote as
separate voting groups on any amendment to the Articles or any merger or
share exchange to which Spartan is a party if the resolution or resolutions
providing for the issuance of the Class B Shares provides for such a vote
or if the amendment, merger or share exchange (i) would change the
aggregate number of authorized shares of the class, (ii) would alter or
change the powers, preferences, or special rights of the shares of the
class or other classes so as to affect the class adversely, or (iii) in the
case of a share exchange, if the class or series thereof is included in the
exchange.

There are no preemptive rights to subscribe to shares of Spartan's
capital stock.

DIVIDENDS AND OTHER DISTRIBUTIONS

The holders of Class A Shares will be entitled to receive, to the
extent permitted by law, such dividends and distributions as may be
declared from time to time by the Board of Directors, but subject to any
preferential, participation and other rights of holders of Class B Shares
provided in the resolution or resolutions providing for the issuance of
such Class B Shares. Certain loan agreements that Spartan has signed
contain covenants which restrict the payment of dividends or other
distributions to shareholders in the event of a default of the agreement or
in excess of permitted amounts.

In the event of the voluntary or involuntary liquidation, dissolution
or winding up of Spartan, the holders of the Class A Shares will be
entitled to receive all of the remaining assets of Spartan ratably in
proportion to the number of Class A Shares held by them, but subject to any
preferential, participation or other rights of holders of Class B Shares
provided in the resolution or resolutions providing for the issuance of
Class B Shares.

-58-
<PAGE>
RESTRICTIONS ON ORIGINAL ISSUE AND TRANSFER; OPTIONS TO PURCHASE

Prior to June 1990, Spartan's Bylaws permitted Spartan to issue shares
of Common Stock only to retail food dealers and to the owner or owners of
any type of business in payment of all or part of the purchase price in
connection with the acquisition of the business. In June 1990, the
shareholders approved an amendment to the Bylaws to authorize Spartan to
issue its shares of capital stock only to: (i) Shareholder-Customers;
(ii) Associates; (iii) Qualified Holders; or (iv) Approved Holders. The
Board may not revoke the authorization as an Approved Holder of any person
who owns any shares of capital stock of Spartan at the time of the
attempted revocation. The Board of Directors has designated as Approved
Holders: (i) any shareholder or other equity owner of any Shareholder-
Customer who owns 5 percent or more of the equity interests in the
Shareholder-Customer; (ii) any member of the Board of Directors of
Spartan; or (iii) any spouse of an Associate, any biological or adopted
child of an Associate, if the child is 21 years of age or younger, or any
trust created by the Associate or his or her spouse which is established
for the benefit of the Associate or the spouse or any such child of the
Associate.

No sale, gift or other transfer by a shareholder of any Class A Shares
of Spartan's capital stock, or any transfer of any such Class A Shares by
operation of law, will be permitted by, or be effective with respect to,
Spartan if the transferee would be at the time of transfer any person other
than (i) a Shareholder-Customer who continues to purchase from Spartan
grocery and other related products or (ii) an Approved Holder.

Spartan has the option to purchase any Class A Shares which a
shareholder proposes to sell, give or otherwise transfer or which are to be
transferred by operation of law. Any shareholder proposing to effect a
transfer is required to notify Spartan of the proposed transfer, the
proposed terms and conditions thereof and the identity of the person to
receive an interest in the Class A Shares. The option is exercisable for
60 days following Spartan's receipt of notice of the transfer. If Spartan
does not exercise its option to purchase any of the Class A Shares which
are the subject of a proposed transfer, then for a period of 90 days
following the expiration of Spartan's option, the transferring shareholder
may transfer the Class A Shares to the person or persons identified in the
written notice required to be given to Spartan, if: (i) after the transfer,
the selling shareholder complies with any applicable Required Investment,
(ii) the transferee agrees in a writing acceptable to Spartan to be bound
by the Bylaws, and (iii) the transferee is a Shareholder-Customer who
continues to purchase from Spartan grocery and other related products or is
an Approved Holder.

In its discretion, Spartan will have the option at any time to redeem
any Class A Shares of its capital stock which are beneficially owned by any

-59-
<PAGE>
person who is not at the time of the redemption: (i) a Shareholder-Customer
who continues to purchase from Spartan grocery and related products,
(ii) an Associate who continues to be employed by the Company, (iii) an
Approved Holder, or (iv) a Qualified Holder.

REDEMPTION POLICY

Spartan's policy is to redeem, if possible, upon a shareholder's
request, any Class A Shares held by the shareholder on the terms described
below. Spartan's policy does not create or evidence any obligation on
behalf of Spartan. Moreover, Spartan's Board of Directors, at its sole
discretion, may at any time and from time to time revise or terminate the
policy based on Spartan's financial condition, general market conditions,
any requirement of or limitation imposed by law or any agreement by which
Spartan is bound, or for any other reason deemed appropriate by the Board.

PURCHASE PRICE AND TERMS

The following describes the price and terms that will apply to
Spartan's purchase of any Class A Shares pursuant to its options to
purchase and redeem the Shares and its redemption policy (subject to
revision or termination of the policy) described above:

(i) If at the time of the purchase the shareholder is a
Shareholder-Customer, Spartan will purchase for cash at the
Trading Value in effect on the date of the purchase, no later
than 60 days following the date Spartan elects to purchase the
Class A Shares or the date the shareholder requests Spartan to
redeem the stock, any Class A Shares beneficially owned by the
shareholder in excess of the Required Investment which is
applicable to the Shareholder-Customer or, if the Shareholder-
Customer no longer purchases grocery and related products from
Spartan, the Required Investment which was applicable to the
Shareholder-Customer at the time the Shareholder-Customer ceased
purchasing the products from Spartan;

(ii) If at the time of the purchase the shareholder is a
Shareholder-Customer, Spartan will purchase the Class A Shares
which constitute the Required Investment which is applicable to
the Shareholder-Customer, or if the Shareholder-Customer no
longer purchases grocery and related products from Spartan, the
Required Investment which was applicable to the Shareholder-
Customer at the time the Shareholder-Customer ceased purchasing
the products from Spartan in the six equal installments described
in paragraph (iv) below ("Installments");

(iii) For any shareholder who at the time of the purchase is
not and has not been subject to any Required Investment, the

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<PAGE>
Company will purchase the shareholder's Class A Shares in
Installments, unless the shareholder and Spartan agree to other
terms;

(iv) The closing on the first Installment will occur at the
date and time as to which Spartan and the selling shareholder
mutually agree, but no later than 60 days following the date
Spartan exercises its option to purchase the stock from the
shareholder or the date the shareholder requests Spartan to
redeem the stock. The closing on the second Installment will
occur on the anniversary date following the closing of the first
Installment. The closing on each subsequent Installment will
occur on each corresponding anniversary date thereafter. The
price for each Share to be acquired in each Installment will be
the Trading Value in effect at the date of the closing on the
Installment; and

(v) For the redemption of a Shareholder-Customer's Required
Investment, no later than 30 days after the Shareholder-Customer's
request to redeem, the Shareholder-Customer may elect
to require Spartan to redeem at the Trading Value in effect at
the date of redemption all of the Class A Shares with an
aggregate Trading Value which equals the Shareholder-Customer's
Required Investment on the following terms. Spartan will pay in
cash to the Shareholder-Customer an amount equal to one-sixth of
the purchase price for the Class A Shares. In addition, Spartan
will execute and deliver to the Shareholder-Customer an unsecured
promissory note for the balance of the redemption price. The
note will be payable in no more than five equal annual
Installments of principal, commencing one year from the date of
the note. Interest will accrue thereon at the rate of interest 1
percent below the prime rate from time to time in effect until
maturity as announced by Michigan National Bank, or such other
lending institution as Spartan may select from time to time, and
will be payable quarterly. Spartan may prepay the note at any
time, in whole or in part, without penalty.

CERTAIN PROVISIONS OF THE MICHIGAN BUSINESS CORPORATION ACT

Chapter 7A of the Michigan Business Corporation Act (the "Fair Price
Act") establishes supermajority and fair price provisions for certain
"business combinations." The provisions of the Fair Price Act apply to any
Michigan corporation that: (i) has one hundred or more beneficial owners
of its common stock; and (ii) did not have any beneficial owner of 10
percent or more of a class of common stock at the time the Fair Price Act
became effective. Spartan satisfies these requirements. Thus, the Fair
Price Act applies to Spartan.

-61-
<PAGE>
The Fair Price Act provides that a supermajority vote of 90 percent of
the shareholders and no less than two-thirds of the votes of noninterested
shareholders must approve a "business combination." The Fair Price Act
defines a "business combination" to encompass any merger, consolidation,
share exchange, sale of assets, stock issue, liquidation or
reclassification of securities involving an "interested shareholder" or
certain "affiliates." An "interested shareholder" is generally any person
who beneficially owns 10 percent or more of the outstanding voting shares
of the corporation. An "affiliate" is a person who directly or indirectly
controls, is controlled by, or is under common control with a specified
person.

The supermajority vote required by the Fair Price Act does not apply
to "business combinations" that satisfy certain conditions. These
conditions include, among others, that: (i) the purchase price to be paid
for the shares of the corporation is at least equal to the highest of
either (a) the market value of the shares or (b) the highest per share
price paid by the interested shareholder within the preceding two-year
period or in the transaction in which the shareholder became an interested
shareholder, whichever is higher; (ii) once becoming an interested
shareholder, the person does not become the beneficial owner of any
additional shares of the corporation except as part of the transaction
which resulted in the interested shareholder becoming an interested
shareholder or by virtue of proportionate stock splits or stock dividends;
(iii) once becoming an interested shareholder, the person does not receive
the benefit, directly or indirectly, except proportionately as a
shareholder, of any loans, advances, guarantees, pledges or other financial
assistance provided by the corporation or any of its subsidiaries; and
(iv) there has been at least five years between the date the person became
an "interested shareholder" and the date the business combination is
consummated.

The requirements of the Fair Price Act do not apply to "business
combinations" with an interested shareholder that the board of directors
has approved or exempted, specifically, generally or generally by types,
from the requirements of the Fair Price Act by resolution prior to the time
that the interested shareholder first became an interested shareholder.

The Fair Price Act would cease to apply to Spartan if its Articles
were amended to elect not to be covered by Chapter 7A. Such an amendment
would require the same votes for approval as the Fair Price Act requires
for approval of a business combination with an interested shareholder.

Chapter 7B of the Michigan Business Corporation Act regulates the
acquisition of "control shares" of Michigan corporations (the "Control
Share Act"). The Control Share Act applies to Michigan corporations having
one hundred or more shareholders of record, more than 10 percent of whom
are residents of Michigan. Spartan also satisfies these requirements.
Thus, the Control Share Act applies to Spartan.

-62-
<PAGE>
The Control Share Act establishes procedures governing "control share
acquisitions." A control share acquisition is defined as an acquisition of
shares by a person or entity which, when combined with other shares held by
that person or entity, would give the acquiror voting power at or above any
of the following thresholds: 20 percent, 33 1/3 percent, or a majority.
Under the Control Share Act, an acquiror may not vote shares acquired in a
"control share acquisition" unless a majority of both the corporation's
shareholders and the corporation's disinterested shareholders vote to
confer voting rights on the "control shares." The acquiring person,
officers of the target corporation, and directors of the target corporation
who are also employees of the corporation are precluded from voting on
whether the control shares shall be accorded voting rights. The Control
Share Act does not affect the voting rights of shares owned by an acquiring
person prior to the control share acquisition. In some cases, if control
shares are accorded full voting rights as prescribed in Chapter 7B, the
Control Share Act confers dissenters' rights upon all of a corporation's
shareholders except the acquiring person.

By an amendment to its Articles of Incorporation or Bylaws electing
not to be covered, either Spartan's Board of Directors or its shareholders
could "opt out" of Chapter 7B and cause the Control Share Act to be
inapplicable to "control share acquisitions" occurring thereafter, for as
long as the amendment continued in effect. The Board currently has no
plans to effect such an amendment, nor is it aware of any other plans or
proposals to do so.

The foregoing discussion concerning the provisions of the Michigan
Business Corporation Act is qualified in its entirety by reference to such
Michigan Business Corporation Act provisions.

OTHER MATTERS

The Articles authorize Spartan's Board to determine the preferences,
limitations, and voting, dividend, distribution, liquidation, conversion,
participation, redemption and other rights of any series of Class B Shares
before issuance of the shares. The potential to issue shares pursuant to
the authorization, together with the restrictions on transfer of the
Class A Shares, may discourage or preclude certain transactions, whether or
not beneficial to shareholders, and could discourage certain types of
tactics that involve an actual or threatened acquisition or change in
control of Spartan.

Spartan has no present intention to issue any of its authorized
Class B Shares. However, any issuance of Class B Shares in the future
could adversely affect the rights of the holders of Class A Shares.

-63-
<PAGE>
PLAN OF DISTRIBUTION

Spartan offers the Class A Shares through its own efforts using
salaried employees without payment of any commission. The offering price
of the Class A Shares is the Trading Value established from time to time by
the Board of Directors. At the date of this Prospectus, the Trading Value
was $12.30 per Class A Share. Each new Shareholder-Customer must purchase
at least 1,000 Class A Shares. See "RISK FACTORS--Value of Class A
Shares."

There is no minimum number of Class A Shares that must be sold to
complete this offering. Spartan offers the Class A Shares on a "best
efforts," continuous basis to Shareholder-Customers, persons who apply to
become Customers of Spartan, Associates of Spartan, Approved Holders, and
Qualified Holders. Thus, Spartan will not place any offering proceeds
received in any escrow, trust or other arrangement pending the receipt of a
minimum amount of proceeds. There is no assurance that all Class A Shares
will be sold.

LEGAL MATTERS

The validity of the Class A Shares offered hereby is being passed upon
for Spartan by Warner Norcross & Judd LLP, 900 Old Kent Building, 111 Lyon
Street, N.W., Grand Rapids, Michigan 49503-2489. Alex J. DeYonker, General
Counsel and Assistant Secretary of the Company, is a partner of Warner
Norcross & Judd LLP.

EXPERTS

The Consolidated Financial Statements of the Company as of March 28,
1998 and March 29, 1997, and for each of the three years in the period
ended March 28, 1998, included in this Prospectus and the related financial
statement schedule included elsewhere in the Registration Statement have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports appearing herein and elsewhere in the Registration Statement,
and are included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

-64-
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF SPARTAN

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . F-1

Consolidated Balance Sheets as of March 28, 1998 and March 29,
1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Statements of Operations for each of the three
years in the period ended March 28, 1998. . . . . . . . . . . . F-4

Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended March 28, 1998. . . . . . . . . F-5

Consolidated Statements of Cash Flows for each of the three
years in the period ended March 28, 1998. . . . . . . . . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . F-7

-65-
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Spartan Stores, Inc.
Grand Rapids, Michigan

We have audited the accompanying consolidated balance sheets of Spartan
Stores, Inc. and subsidiaries as of March 28, 1998 and March 29, 1997, and
the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended March 28, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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, such financial statements present fairly, in all material
respects, the consolidated financial position of Spartan Stores, Inc. and
subsidiaries as of March 28, 1998, and March 29, 1997, and the results of
their operations and their cash flows for each of the three years in the
period ended March 28, 1998, in conformity with generally accepted
accounting principles.

/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
June 10, 1998

F-1

<PAGE>

<TABLE>
CONSOLIDATED BALANCE SHEETS

SPARTAN STORES, INC. AND SUBSIDIARIES
<CAPTION>
MARCH 28, MARCH 29,
ASSETS 1998 1997
- ------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 37,026,640 $ 34,198,752
Marketable securities 18,333,323 17,605,880
Accounts receivable 70,083,223 67,045,013
Refundable taxes on income 4,466,297 6,127,753
Inventories 92,706,414 85,209,192
Prepaid expenses 6,885,828 6,863,225
Deferred taxes on income 7,277,000 5,751,000
------------ ------------

TOTAL CURRENT ASSETS 236,778,725 222,800,815

OTHER ASSETS
Notes receivable 6,539,412 6,353,405
Other 1,703,110 1,568,893
------------ ------------

TOTAL OTHER ASSETS 8,242,522 7,922,298

PROPERTY AND EQUIPMENT
Land and improvements 33,098,220 36,391,244
Buildings 136,496,867 138,569,686
Equipment 138,663,310 134,035,643
------------ ------------

TOTAL PROPERTY AND EQUIPMENT 308,258,397 308,996,573

Less accumulated depreciation and amortization 147,146,529 135,988,572
------------ ------------

NET PROPERTY AND EQUIPMENT 161,111,868 173,008,001
------------ ------------

TOTAL ASSETS $406,133,115 $403,731,114
============ ============
</TABLE>

See notes to consolidated financial statements.

F-2
<PAGE>

<TABLE>
CONSOLIDATED BALANCE SHEETS (CONTINUED)

SPARTAN STORES, INC. AND SUBSIDIARIES
<CAPTION>
MARCH 28, MARCH 29,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ ------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 38,500,000 $ 33,500,000
Accounts payable 81,690,574 78,130,484
Rebates due to customers 215,025 2,581,674
Accrued payroll and benefits 13,447,559 11,815,711
Insurance reserves 15,799,160 17,172,342
Other accrued expenses 18,899,635 12,739,253
Current maturities of long-term debt 5,890,177 6,598,927
Current obligation under capital lease 654,600 593,078
------------ ------------

TOTAL CURRENT LIABILITIES 175,096,730 163,131,469

DEFERRED GAINS ON SALES OF PROPERTY AND EQUIPMENT 644,389 213,198

DEFERRED TAXES ON INCOME 3,750,000 2,807,000

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 4,784,200 4,545,483

LONG-TERM DEBT 106,554,150 124,010,394

LONG-TERM OBLIGATION UNDER CAPITAL LEASE 1,111,395 1,765,996

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Class A common stock, voting, par value $2 a share;
authorized 20,000,000 shares; outstanding 11,443,985
and 12,032,850 22,887,970 24,065,700
Additional paid-in capital 16,431,937 18,406,969
Retained earnings 74,872,344 64,784,905
------------ ------------

TOTAL SHAREHOLDERS' EQUITY 114,192,251 107,257,574
------------ ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $406,133,115 $403,731,114
============ ============
</TABLE>

F-3
<PAGE>

<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS

SPARTAN STORES, INC. AND SUBSIDIARIES
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
MARCH 28, MARCH 29, MARCH 30,
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
NET SALES $2,489,249,469 $2,475,025,242 $2,554,687,929

LESS VOLUME INCENTIVE REBATES 15,576,939
-------------- -------------- --------------

2,489,249,469 2,475,025,242 2,539,110,990

COSTS AND EXPENSES
Cost of sales 2,234,164,773 2,238,364,428 2,295,129,609
Operating and administrative 229,137,439 216,890,506 223,817,233
Restructuring, reorganization and
other charges 46,439,743
Interest expense 10,934,034 9,700,440 9,600,177
Interest income (3,324,089) (3,609,410) (4,111,032)
(Gain) loss on sale of
property and equipment (3,905,669) (1,704,447) 402,855
-------------- -------------- --------------

TOTAL COSTS AND EXPENSES 2,467,006,488 2,459,641,517 2,571,278,585
-------------- -------------- --------------

EARNINGS (LOSS) BEFORE INCOME
TAXES (BENEFIT) 22,242,981 15,383,725 (32,167,595)

INCOME TAXES (BENEFIT) 8,009,000 5,681,000 (10,500,000)
-------------- -------------- --------------

NET EARNINGS (LOSS) $ 14,233,981 $ 9,702,725 $ (21,667,595)
============== ============== ==============

BASIC AND DILUTED
NET EARNINGS (LOSS)
PER CLASS A SHARE $ 1.21 $ .80 $ (1.74)
============== ============== ==============

F-4
<PAGE>
BASIC WEIGHTED AVERAGE
CLASS A SHARES 11,785,263 12,136,708 12,438,659
============== ============== ==============

DILUTED WEIGHTED AVERAGE
CLASS A SHARES 11,788,723 12,140,470 12,442,159
============== ============== ==============
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

SPARTAN STORES, INC. AND SUBSIDIARIES
<CAPTION>
CLASS A ADDITIONAL RETAINED
COMMON STOCK PAID-IN CAPITAL EARNINGS
------------ --------------- --------
<S> <C> <C> <C> <C>
Balance March 26, 1995 $25,088,980 $17,473,010 $83,238,742

Class A common
stock transactions 760,460 shares purchased (1,520,920) (3,165,335) (2,904,751)

676,450 shares issued 1,352,900 5,314,797

Net loss (21,667,595)

Cash dividends $.05 per share (623,117)

- ---------------------------------------------------------------------------------------------------------------

Balance March 30, 1996 24,920,960 19,622,472 58,043,279

Class A common
stock transactions 801,410 shares purchased (1,602,820) (4,367,053) (2,355,162)

373,780 shares issued 747,560 3,151,550

Net earnings 9,702,725

Cash dividends $.05 per share (605,937)

- ---------------------------------------------------------------------------------------------------------------

Balance March 29, 1997 24,065,700 18,406,969 64,784,905

Class A common
stock transactions 895,256 shares purchased (1,790,512) (4,769,484) (3,559,471)

306,391 shares issued 612,782 2,794,452

Net earnings 14,233,981

Cash dividends $.05 per share (587,071)

- ---------------------------------------------------------------------------------------------------------------

F-6
<PAGE>
Balance March 28, 1998 $22,887,970 $16,431,937 $74,872,344
=========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

SPARTAN STORES, INC. AND SUBSIDIARIES
<CAPTION>
YEAR ENDED
----------------------------------------------------
MARCH 28, MARCH 29, MARCH 30,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 14,233,981 $ 9,702,725 $(21,667,595)
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation and amortization 21,639,466 20,175,210 19,224,433
Rebates paid in common stock 4,000,121
Restructuring, reorganization and other charges 41,344,222
Postretirement benefits other than pensions 238,717 444,000 107,306
Deferred taxes on income (583,000) 4,035,000 1,194,000
(Gain) loss on sale of property and equipment (3,905,669) (1,704,447) 402,855
Change in assets and liabilities:
Marketable securities (727,443) (1,554,272) (2,806,890)
Accounts receivable (3,038,210) 1,399,563 6,358,071
Refundable taxes on income 1,661,456 4,147,084 (10,173,305)
Inventories (7,497,222) (6,549,385) 10,330,922
Prepaid expenses (22,603) (3,795,069) 99,410
Accounts payable 3,560,090 (6,738,104) (6,146,663)
Rebates due to customers (2,366,649) 1,215,900 (570,867)
Accrued payroll and benefits 1,631,848 1,138,090 183,184
Insurance reserves (1,373,182) (1,312,318) (635,043)
Other accrued expenses 6,160,382 (4,196,900) 1,633,999
------------ ------------ ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES 29,611,962 16,407,077 42,878,160
------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (23,997,384) (46,237,512) (47,968,624)
Proceeds from the sale of property and
equipment 20,743,170 7,805,730 2,083,122
Other (27,517) 2,624,384 (3,610,725)
------------ ------------ ------------

NET CASH USED IN INVESTING ACTIVITIES (3,226,697) (35,807,398) (49,496,227)
------------ ------------ ------------

F-8
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in notes payable 5,000,000 18,500,000 10,056,580
Proceeds from long-term borrowings 9,212,619 37,274,127 34,871,387
Repayment of long-term debt (29,877,613) (36,357,074) (17,587,293)
Reduction of obligation under capital lease (593,079) (582,136) (541,235)
Proceeds from sale of common stock 3,407,234 3,899,110 2,667,576
Common stock purchased (10,119,467) (8,325,035) (7,591,006)
Dividends paid (587,071) (605,937) (623,117)
------------ ------------ ------------

NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (23,557,377) 13,803,055 21,252,892
------------ ------------ ------------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,827,888 (5,597,266) 14,634,825
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR 34,198,752 39,796,018 25,161,193
------------ ------------ ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 37,026,640 $ 34,198,752 $ 39,796,018
============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

COMPANY OWNERSHIP

The Company's common stock is substantially owned by its customers and a
majority of the Company's sales are to its shareholder-customers. A
description of the Company's transactions with its customers is included in
the Business Segment Information note to the consolidated financial
statements.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany profits, transactions
and balances have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Due to the inherent
uncertainty involved in making estimates, actual results reported in future
periods may be based upon amounts which differ from those estimates.

FISCAL YEAR

The fiscal year of the Company ends on the last Saturday of March. The
fiscal years ended March 28, 1998 and March 29, 1997 were comprised of
fifty-two weeks. The fiscal year ended March 30, 1996 was comprised of
fifty-three weeks.

FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

Financial instruments include cash and cash equivalents, marketable
securities, accounts and notes receivable, accounts payable, notes payable and
long-term debt reported in the Consolidated Balance Sheets. The carrying
amounts for cash and cash equivalents, accounts receivable, accounts payable
and notes receivable approximate fair value at March 28, 1998 and March 29,
1997 because of the short-term nature of these financial instruments.

At March 28, 1998, the estimated fair value of marketable securities
exceeded cost by $24,235. As of March 29, 1997, cost of marketable
securities exceeded fair value by $103,956.

F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

At March 28, 1998 and March 29, 1997 the estimated fair value of the
Company's long-term debt (including current maturities) exceeded the carrying
value by approximately $763,000 and $860,000, respectively. The estimated
fair value was based on anticipated rates available to the Company for debt
with similar terms and maturities. The estimated fair value of notes
payable included in current liabilities as of March 28, 1998 and March 29,
1997 approximated the carrying value.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and highly-liquid investments
with an original maturity of three months or less at the date of purchase.

ACCOUNTS RECEIVABLE

Accounts receivable include the current portion of notes receivable of
$2,709,152 in 1998 and $3,772,303 in 1997 and are shown net of allowances
for credit losses of $1,810,000 in 1998 and $3,160,000 in 1997.

INVENTORIES

Inventories are stated at the lower of cost or market using the LIFO (last-
in, first-out) method. If replacement cost had been used, inventories
would have been $45,400,000 and $45,000,000 higher at March 28, 1998 and
March 29, 1997, respectively. During 1998, 1997 and 1996, certain
inventory quantities were reduced. These reductions resulted in
liquidations of LIFO inventory carried at lower costs prevailing in prior
years as compared with the costs of purchases in these years, the effect of
which increased income before taxes in 1998 and 1997 by $51,000 and
$441,000, respectively and decreased the loss before tax benefit in 1996 by
$480,000.

RECOGNITION OF LOAN IMPAIRMENT

The Company records allowances for loan impairment when it is determined
that the Company will be unable to collect all amounts due according to the
terms of the underlying agreement. Interest income on impaired loans is
recognized only when interest payments are received.

LONG-LIVED ASSETS

The carrying values of long-lived assets are analyzed using undiscounted
future cash flows of the assets. Any adjustment to its carrying value is
recognized on a current basis.

F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated over the
shorter of the estimated useful lives or lease periods of the assets.
Expenditures for normal repairs and maintenance are charged to operations
as incurred. Depreciation is computed using the straight-line and
declining balance methods as follows:

<TABLE>
<CAPTION>
<S> <C> <C>
Land improvements 15 to 40 years
Buildings and improvements 15 to 40 years
Machinery and equipment 5 to 20 years
Furniture and fixtures 3 to 10 years
</TABLE>

Capital leases are initially stated at the present value of future lease
payments and are amortized using the straight-line and declining balance
methods over the related lease terms.

Software engineering costs are capitalized, and amortization over a five
year period commences as each system is implemented.

ACCOUNTS PAYABLE

Accounts payable include $18,267,488 and $15,522,845 at March 28, 1998 and
March 29, 1997, respectively, of checks which have been issued and have not
cleared the Company's controlled disbursing bank accounts.

INSURANCE RESERVES

Insurance reserves represent a provision for reported losses and incurred
but not reported losses. Losses are recorded when reported and consist of
individual case basis estimates. Incurred but not reported losses are
estimated based on available historical information.

DEFERRED GAIN

Gain on sales and leaseback of certain real property and transportation
equipment have been deferred and are being amortized as a reduction of rent
expense over the lives of the leases.

F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

TAXES ON INCOME

Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future. Such
deferred income tax asset and liability computations are based on enacted
tax laws and rates applicable to periods in which the differences are
expected to affect taxable income. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets
and liabilities.

EARNINGS PER SHARE

Basic Earnings Per Share ("EPS") excludes dilution and is computed by
dividing net earnings by the weighted-average number of common shares
outstanding for the period. Diluted EPS assumes the issuance of common
stock for options outstanding under the Company's stock option plan.

NEW ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS NO. 130 establishes standards
for the reporting and presentation of comprehensive income and its
components. SFAS No. 131 establishes standards for defining operating
segments and the reporting of certain information regarding operating
segments. Because these statements only impact how financial information
is disclosed in interim and annual reports, the adoption will have no
impact on the Company's financial condition or results of operations. Both
accounting standards are effective for the Company's fiscal year ended
March 27, 1999.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." The SOP is effective for
the Company on March 28, 1999, however, early adoption is permitted. The
SOP will require the capitalization of certain costs incurred after the
date of adoption in connection with developing or obtaining software for
internal use. This SOP will be adopted on a prospective basis and its
effect on future operations has not been determined.

F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

RECLASSIFICATIONS

Certain reclassifications have been made to the 1997 presentation in order
to conform to the 1998 presentation.

RESTRUCTURING, REORGANIZATION AND OTHER CHARGES

During the fiscal year ended March 30, 1996, the Company incurred
restructuring, reorganization and other charges amounting to approximately
$46,400,000 relating to the Distribution segment. The aggregate charge
includes $35,400,000 which represents certain costs which were incurred as
part of the Company's program to design and implement its business
automation and support environment (BASE). The Company decided to
terminate certain projects and wrote off costs incurred as there was no
estimated future benefit. In addition, certain other costs associated with
the continuing projects were also written off if they were deemed to be of
no value to the continuing project.

To improve the effectiveness and efficiency of its distribution systems,
various distribution facilities were closed in 1996. Restructuring,
reorganization and other charges included $7,500,000 in 1996 for costs
associated with the closing of these facilities. As of March 30, 1996,
other accrued expenses included $2,600,000 related to the aforementioned
costs. Amounts paid in 1997 did not materially differ from the amounts
accrued in 1996.

The Company also provided $3,500,000 for the impairment of long-lived
assets, inasmuch as the projected future undiscounted cash flows were not
sufficient to recover their carrying value.

MARKETABLE SECURITIES

The amortized cost and estimated fair values of marketable securities
available-for-sale as of March 28, 1998 and March 29, 1997 are shown below.
Unrealized gains and losses as of March 28, 1998 and March 29, 1997 were
not material.

F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
1998
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Securities available-for-sale:
U.S. Treasury securities and obligations
of U.S. government corporations
and agencies $ 7,158,325 $ 7,173,804
Debt securities issued by
foreign governments,
corporations and agencies 11,150,763 11,159,519
----------- -----------

$18,309,088 $18,333,323
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
1997
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Securities available-for-sale:
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 4,057,217 $ 3,840,157
Debt securities issued by foreign
governments, corporations and
agencies 13,652,619 13,765,723
----------- -----------

$17,709,836 $17,605,880
=========== ===========
</TABLE>
The amortized cost and estimated fair values of investments as of March 28,
1998, by contractual maturity, are shown below:

F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less $ 5,454,812 $ 5,451,764
Due after one year
through five years 9,062,186 9,049,219
Due after five years
through ten years 3,792,090 3,832,340
----------- -----------

$18,309,088 $18,333,323
=========== ===========
</TABLE>

NOTES RECEIVABLE

Notes receivable relate to loans to shareholder-customers used to develop
new stores or expand or remodel existing stores. Loans are collateralized
by the inventory, facilities or equipment financed and in some instances by
the Company's Class A shares held by the shareholder-customer. Loans are
made on a floating rate basis, based on the prime rate. Most loans carry
interest rates from prime plus one-half percent to prime plus two percent.
Maturity dates range to 2004 at March 28, 1998. Impaired notes total
approximately $480,000 at March 28, 1998 and $2,400,000 at March 29, 1997,
including the current portion. The allowance for credit losses on accounts
receivable at March 28, 1998 and March 29, 1997 includes $290,000 and
$1,600,000, respectively, relating to impaired notes.

NOTES PAYABLE AND LONG-TERM DEBT

The Company has an unsecured $150 million credit agreement. This agreement
is segregated into a short-term $70 million line of credit, a long-term $60
million revolving loan and a long-term $20 million single facility loan.
The short-term $70 million line of credit provides for the issuance of
letters of credit of which approximately $18,500,000 were outstanding and
unused as of March 28, 1998. Notes payable included in current liabilities
represent borrowings under the short-term line of credit. The line of

F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

credit agreement requires the payment of interest at a negotiated rate at
the date of the borrowing. The weighted average rates for 1998 and 1997
were 6.25% and 6.04%, respectively. The unused portion of the available
lines of credit aggregates $30,199,500 at March 28, 1998.

The Company's long-term debt consists of the following:

<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
------------ ------------
<S> <C> <C>
9.3% Senior notes, unsecured, due
December, 2004, annual principal
payments of $2,000,000 due
December 1 $ 14,000,000 $ 16,000,000

9.11% Senior notes, unsecured, due
December, 1999, annual principal
payments of $1,500,000 due
December 1 3,000,000 4,500,000

7.27% Senior notes, unsecured, due
February, 2003, annual principal
payments of $2,000,000 due
February 1 10,000,000 12,000,000

Bank credit agreement, unsecured, interest
rate negotiated daily, monthly and
quarterly. Due December 23, 1999 62,800,000 79,000,000

Variable Rate Promissory Notes, unsecured,
due March 31, 1999, interest payable
quarterly at 1% below the prime rate 14,056,389 12,599,410

Other 8,587,938 6,509,911
------------ ------------
112,444,327 130,609,321
Less current portion 5,890,177 6,598,927
------------ ------------

Total long-term debt $106,554,150 $124,010,394
============ ============
</TABLE>

F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

At March 28, 1998, long-term debt is due as follows:

<TABLE>
<CAPTION>
YEAR ENDING MARCH,
------------------
<S> <C> <C>
1999 $ 5,890,177
2000 86,754,985
2001 4,249,357
2002 4,270,023
2003 4,290,995
Later 6,988,790
------------
$112,444,327
============
</TABLE>

Certain loan agreements contain covenants which include restrictions on
additional indebtedness, payment of cash dividends (restricted to an
additional $19,143,542 at March 28, 1998) and payment of cash rebates.

The Variable Rate Promissory Notes are issued under a note offering which
permits the Company to sell notes with a total principal amount of
$100,000,000. The notes are offered in minimum denominations of $1,000 and
may be issued by the Company at any time. Issues will be redeemed on March
31 of every other calendar year after March 31, 1993. As of March 28,
1998, the Company may still issue $50,155,025 of the notes.

COMMITMENTS AND CONTINGENCIES

The Company has guaranteed payment of indebtedness to financial
institutions aggregating $19.2 million at March 28, 1998 on behalf of
certain customers. Additionally, the Company has guaranteed three leases
by customers, two of which expire in 2012 with combined annual rentals of
$444,500, and one of which expires in 2017 with an annual rental of
$217,500.

F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

On August 21, 1996, the Attorney General for the State of Michigan
filed an action in Michigan circuit court against the leading cigarette
manufacturers operating in the United States, twelve wholesalers and
distributors of tobacco products in Michigan (including three Company
subsidiaries) and others seeking certain injunctive relief, the
reimbursement of $4 billion in Medicaid and other expenditures incurred or
to be incurred by the State of Michigan to treat diseases allegedly caused
by cigarette smoking and punitive damages of $10 billion. During fiscal
year 1998, three actions were filed in state courts in Tennessee and
twenty-two actions were filed in state courts in Pennsylvania against the
leading cigarette manufacturers operating in the United States and certain
wholesalers and distributors, including a subsidiary of the Company. In
the three Tennessee actions, one action was filed as a class action on
behalf of the individual plaintiffs, one action was filed on behalf of the
State of Tennessee and its taxpayers, and one action was filed by an
individual plaintiff. All of the Pennsylvania actions were filed by
individual plaintiffs. In these separate cases, the plaintiffs are seeking
compensatory, punitive and other damages, reimbursement of medical and
other expenditures and equitable relief. The Company believes that its
subsidiaries have valid defenses to these legal actions. These actions are
being vigorously defended. The Tennessee class action and individual
plaintiff action already have been dismissed and a dismissal order is
pending with respect to the action on behalf of the State of Tennessee and
its taxpayers. All but one of the Pennsylvania actions have been dismissed
without prejudice pursuant to a Dismissal and Tolling Agreement under which
the defendants have agreed not to raise the defense of statute of
limitations or laches if an action is filed by a plaintiff before April 1,
1999. One of the cigarette manufacturers named as a defendant in each
action has agreed to indemnify the Company's subsidiaries from damages
arising out of these actions. Management believes that the ultimate
outcome of these actions should not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.

Various other lawsuits and claims, arising in the ordinary course of
business, are pending or have been asserted against the Company. While the
ultimate effect of such actions cannot be predicted with certainty,
management believes that their outcome will not result in a material
adverse effect on the consolidated financial position, operating results or
liquidity of the Company.

F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES
LEASES

The Company and certain subsidiaries lease equipment and warehouse and
store facilities. Many of these leases include renewal options. The
following represents property which is leased under a capital lease and
included in property and equipment:

<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
---------- ----------
<S> <C> <C> <C>
Buildings $7,300,000 $7,300,000
Less accumulated amortization 6,563,456 6,268,838
---------- ----------

Net buildings $ 736,544 $1,031,162
========== ==========
</TABLE>

Amortization of property under the capital lease was $294,618, in 1998,
1997, and 1996.

Future minimum obligations under the capital lease in effect at March 28,
1998 are as follows:

<TABLE>
<CAPTION>
USED IN
YEAR ENDING MARCH, OPERATIONS
------------------ ----------
<S> <C> <C>
1999 $ 793,872
2000 793,872
2001 396,937
----------
Total future minimum obligations 1,984,681
Less interest 218,686
----------
Present value of net future minimum obligations 1,765,995
Less current portion 654,600
----------
Long-term obligations $1,111,395
==========
</TABLE>

F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

Future minimum obligations under operating leases in effect at March 28,
1998 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING USED IN SUBLEASED
MARCH, OPERATIONS TO OTHERS TOTAL
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
1999 $4,240,778 $ 2,302,432 $ 6,543,210
2000 3,180,687 2,302,432 5,483,119
2001 1,640,042 2,240,752 3,880,794
2002 476,062 2,164,462 2,640,524
2003 157,276 1,927,381 2,084,657
Later 13,236 12,800,852 12,814,088
---------- ----------- -----------
Total future minimum
obligations $9,708,081 $23,738,311 $33,446,392
========== =========== ===========
</TABLE>

Rental expense under those leases which are classified as operating leases
amounted to $8,400,000, $9,690,000 and $11,030,000 in 1998, 1997 and 1996,
respectively.

One of the Company's subsidiaries leases retail store facilities to non-related
entities. Of the stores leased, several are owned and others were
obtained through leasing arrangements and are accounted for as operating
leases. Substantially all of the leases provide for minimum and contingent
rentals.

Owned assets, included in property and equipment, which are leased to
others are as follows:

F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
----------- -----------
<S> <C> <C> <C>
Land and improvements $15,100,926 $18,618,760
Buildings 58,116,191 57,836,784
----------- -----------

73,217,117 76,455,544

Less accumulated depreciation 15,341,306 16,100,102
----------- -----------

Net land and buildings $57,875,811 $60,355,442
=========== ===========
</TABLE>

Future minimum rentals under operating leases in effect at March 28,
1998 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING OWNED LEASED
MARCH, PROPERTY PROPERTY TOTAL
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
1999 $ 7,809,742 $ 2,414,519 $ 10,224,261
2000 7,457,199 2,414,519 9,871,718
2001 7,295,041 2,347,868 9,642,909
2002 7,038,908 2,268,747 9,307,655
2003 6,833,393 2,022,037 8,855,430
Later 65,843,717 13,465,411 79,309,128
------------ ----------- ------------

Total future minimum
rentals $102,278,000 $24,933,101 $127,211,101
============ =========== ============
</TABLE>

F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

ASSOCIATE RETIREMENT PLANS

The Company's retirement programs include pension plans providing non-
contributory benefits and contributory benefits. Substantially all of the
Company's associates not covered by collective bargaining agreements are
covered by either a non-contributory defined benefit pension plan (Company
Plan), a defined contribution plan or both. Associates covered by
collective bargaining agreements are included in multi-employer pension
plans.

The benefits in the Company Plan are based on years of service and the
associate's compensation. Annual payments to the pension trust fund are
determined in compliance with the Employee Retirement Income Security Act
(ERISA), except that prior years' contributions in excess of the minimum
are being amortized over the period ending March 31, 2016. Plan assets
consist principally of common stocks and U.S. Government and corporate
obligations.

The following information sets forth the Company's defined benefit pension
plans' significant actuarial assumptions:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 7.00% 7.50% 7.00%
Rate of increase in future compensation levels 4.75% 4.75% 4.75%
Long-term rate of return on assets 9.00% 9.00% 8.75%
</TABLE>

The following table sets forth the Company's defined benefit pension plans'
funded status and the amounts recognized in the Company's financial
statements:

F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
------------ ------------
<S> <C> <C>
Date of actuarial valuation March 30, 1997 March 31, 1996
Actuarial present value of accumulated
benefit obligations:
Vested $ 36,177,656 $ 30,832,302
Total 37,688,772 32,077,675
------------ ------------

Projected benefit obligation (52,553,318) (44,707,977)
Plan assets at fair value 50,929,661 38,952,059
------------ ------------

Projected benefit obligation in excess of
plan assets (1,623,657) (5,755,918)
Unrecognized net (gain) loss (3,152,866) 1,324,133
Unrecognized prior service cost 1,827,109 1,954,044
Initial net credit at April 1, 1987 being
amortized over 19 years 42,373 47,670
------------ ------------

Pension liability ($ 2,907,041) $ (2,430,071)
============ ============
</TABLE>

Net pension expense included the following components:

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Service cost $ 2,014,359 $ 2,214,766 $ 1,644,379
Interest cost 3,335,534 3,121,058 2,747,457
Actual return on plan assets (11,785,386) (3,579,463) (5,583,071)
Net amortization and deferral 8,642,024 1,011,568 3,132,667
----------- ----------- -----------

Net pension expense $ 2,206,531 $ 2,767,929 $ 1,941,432
=========== =========== ===========
</TABLE>

F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

Subsequent to March 28, 1998, the Company's non-contributory defined
benefit pension plan was amended to become a cash-balance non-contributory
defined benefit pension plan.

Matching contributions made by the Company to salary reduction defined
contribution pension plans aggregated $1,600,000, $1,371,000 and $1,188,000
in 1998, 1997 and 1996, respectively.

In addition to the plans described above, the Company participates in
several multi-employer and other defined contribution plans for
substantially all associates covered by collective bargaining agreements.
The expense for these plans aggregated approximately $4,932,000 in 1998,
$4,740,000 in 1997 and $5,025,000 in 1996.

The Multi-Employer Pension Plan Amendments Act of 1980 amended ERISA to
establish funding requirements and obligations for employers participating
in multi-employer plans, principally related to employer withdrawal from or
termination of such plans. Separate actuarial calculations of the
Company's position are not available with respect to the multi-employer
plans.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Spartan Stores, Inc. and certain subsidiaries provide health care bene-
fits to retired associates who have at least ten years of service and have
attained age fifty-five, and who are not covered by collective bargaining
arrangements during their employment (covered associates). Qualified
covered associates retiring prior to April 1, 1992, receive major medical
insurance with deductible and coinsurance provisions until age sixty-five
and medicare supplemental benefits thereafter. Covered associates retiring
after April 1, 1992, are eligible for monthly postretirement health care
benefits of five dollars multiplied by the associate's years of service.
This benefit is in the form of a credit against the monthly insurance premium.
The balance of the premium is paid by the retiree. From April 1, 1992 through
December 31, 1997 the Company supplemented the retiree portion of the premium
which was reflected in the computation of the postretirement benefit
liability. Effective January 1, 1998, the Company began charging retirees for
100% of the retiree portion of the medical cost resulting in the prior service
cost adjustment.

The Company accrues the estimated cost of retiree benefit payments, other
than pensions, during the employee's active service period.

The accumulated postretirement benefit obligation is as follows:
F-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
----------- ----------
<S> <C> <C>
Retired participants $ 2,153,593 $2,215,302
Other fully eligible participants 862,913 994,641
Other active participants 1,822,379 2,585,826
----------- ----------

Accumulated postretirement benefit
obligation 4,838,885 5,795,769
Prior service cost 1,383,039
Unrecognized (gain) loss (1,437,724) 1,250,286
----------- ----------

Postretirement benefit liability $ 4,784,200 $4,545,483
=========== ==========
</TABLE>

Postretirement health care expense consisted of the following components:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Service cost-benefits earned during the period $170,911 $294,630
Interest cost on the accumulated postretirement
benefit obligation 311,168 393,971
Net amortization and deferral (30,766) 50,532
-------- --------

Periodic postretirement benefit cost $451,313 $739,133
======== ========
</TABLE>

The Company continues to fund these benefits as incurred. Payment of
these benefits was $212,596, $295,133 and $463,194 in 1998, 1997 and 1996,
respectively.

F-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 5% for the fiscal year ended March
28, 1998 and remains at that level thereafter. A 1% increase in the
assumed health care cost trend rate would increase the accumulated
postretirement benefit obligation by 2% and the periodic postretirement
benefit cost by 1.3%.

The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 7.0% in 1998 and 1997,
respectively.

TAXES ON INCOME

The income tax provision (benefit) is summarized as follows:

<TABLE>
<CAPTION>
MARCH 28, MARCH 29, MARCH 30,
1998 1997 1996
---------- ---------- ------------
<S> <C> <C> <C>
Currently payable (refundable) $8,592,000 $1,646,000 $(11,694,000)
Net deferred (583,000) 4,035,000 1,194,000
---------- ---------- ------------
$8,009,000 $5,681,000 $(10,500,000)
========== ========== ============
</TABLE>

The effective income tax rates are different from the statutory federal
income tax rates for the following reasons:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory income tax rate 35.0% 35.0% (34.0)%
Amortization of goodwill .1 2.4 4.5
Research and development credit (2.5)
Other .9 (.5) (.6)
---- ---- -----

Effective income tax rate 36.0% 36.9% (32.6)%
==== ==== =====
</TABLE>

F-27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

Deferred tax assets and liabilities resulting from temporary differences
and carry forwards as of March 28, 1998 and March 29, 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Employee benefits $ 5,598,245 $ 5,159,341
Depreciation 1,119,330 2,618,504
Inventory 1,231,200 1,485,413
Accounts receivable 630,000 962,500
Lease transactions 494,000 637,000
Insurance reserves 557,165 787,266
Research & development credit 2,729,909
All other 441,710 1,108,098
----------- -----------
Total deferred tax assets 12,801,559 12,758,122
----------- -----------
Deferred tax liabilities:
Depreciation 7,053,895 8,217,630
Inventory 1,040,199 415,577
All other 1,180,465 1,180,915
----------- -----------

Total deferred tax liabilities 9,274,559 9,814,122
----------- -----------

Net deferred tax asset $ 3,527,000 $ 2,944,000
=========== ===========
</TABLE>

SUPPLEMENTAL CASH FLOW INFORMATION

Payments for interest and income taxes were as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- -----------
<S> <C> <C> <C> <C>
Interest $11,264,484 $8,916,115 $10,085,527
Income taxes 3,618,017 2,185,507 4,755,049
</TABLE>

F-28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

During 1998, the Company entered into a $2,500,000 note payable for the
purchase of a distribution center.

SHAREHOLDERS' EQUITY

The Company's Articles of Incorporation provide that the Board of Directors
may at any time, and from time to time, provide for the issuance of up to
5,000,000 shares of Class B common stock in one or more series, each with
such designations, and, relative to the Class A common stock and to other
series of Class B common stock, such voting, distribution, dividend and
other rights and restrictions as shall be stated in the resolution(s)
providing for the issuance thereof. At March 28, 1998, there were no Class
B shares outstanding.

Under the Company's Bylaws the Board of Directors establishes the price
at which the Company issues and purchases its Class A common stock (the
"Trading Value").

The Company's shareholder-customers are required to own Class A common
stock of the Company in an amount relative to their purchases up to a
maximum of $125,000 of common stock per store. Spartan Stores, Inc.
sells its common stock to new customers and prior to February 4, 1996
issued common stock in partial payment of volume incentive rebates. The
current Company policy is to redeem, at the request of the shareholder,
stock held in excess of the required investment. This policy does not
create or evidence any obligation on the Company's behalf and the Board of
Directors may revise or terminate the policy at any time. At March 28,
1998, there were 8,362,000 shares outstanding in excess of the required
investment.

The Company has a shareholder approved stock option plan covering 500,000
shares of the Company's Class A common stock. The plan provides for
the granting of incentive stock options as well as non-qualified stock
options to corporate officers. The Company accounts for stock option grants
in accordance with Accounting Principles Bulletin Opinion No. 25 and related
interpretations. Accordingly, no compensation cost has been recognized for
stock option grants since the options have exercise prices equal to the
Trading Value. Options must be exercised within ten years of the date of
grant. The authorization to grant options under the plan terminates on
October 31, 2001.

F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

The Company's stock option grants vest immediately. If compensation cost
for stock option grants had been determined based on the fair value at the
grant dates consistent with the method prescribed by SFAS No. 123, the
Company's net earnings (loss) and earnings per share would have been adjusted
to the pro forma amounts indicated as follows:

1998 1997 1996
----------- ---------- ------------
<S> <C> <C> <C>
Net earnings (loss) as reported $14,233,981 $9,702,725 $(21,667,595)
Net earnings (loss)
Pro forma 14,111,065 9,622,161 (21,705,869)

Basic & diluted earnings (loss) per share -
as reported $ 1.21 $ .80 $ (1.74)
Basic & diluted earnings (loss)
Per share - Pro forma $ 1.20 $ .79 $ (1.75)
</TABLE>

Under SFAS No. 123, the fair value of each option grant is estimated on the
date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Dividend yield .11% .12% .13%
Expected volatility 7.60% 5.04% 7.51%
Risk-free interest rate 6.88% 6.82% 6.36%
Expected life of option 10 yrs. 10 yrs. 10 yrs.
</TABLE>

F-30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
WEIGHTED FAIR VALUE
SHARES AVERAGE OF OPTIONS
UNDER OPTION EXERCISE PRICE GRANTED
------------ -------------- ----------
<S> <C> <C> <C>
OPTIONS OUTSTANDING AT MARCH 25, 1995 30,000 $ 8.83
Granted 13,000 10.00 $4.53
------- ------ -----

OPTIONS OUTSTANDING AT MARCH 30, 1996 43,000 $ 9.19
Granted 13,000 10.50 $5.00
Terminated (17,000) 9.50
------- ------ -----

OPTIONS OUTSTANDING AT MARCH 29, 1997 39,000 $ 9.49
Granted 12,000 11.30 $5.43
Exercised (24,000) 9.72
------- ------ -----

OPTIONS OUTSTANDING AT MARCH 28, 1998 27,000 $10.09
------- ------

OPTIONS EXERCISABLE AT MARCH 28, 1998 27,000 $10.09
------- ------
</TABLE>

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE (YRS.)
--------------- ----------- -----------------------
<S> <C> <C> <C>
$ 8.40 3,000 4.1
8.80 3,000 5.2
9.30 3,000 6.1
10.00 5,000 7.1
10.50 5,000 8.1
11.30 8,000 9.2
------------ ------ ---
$8.40-$11.30 27,000 7.26
</TABLE>

F-31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

The Company has a shareholder-approved stock bonus plan covering 500,000
shares of the Company's Class A common stock. Under the provisions of this
plan, officers and certain key employees of the Company may elect to
receive a portion of their annual bonus in Class A shares rather than cash
and will be granted additional shares of stock worth thirty percent of the
portion of the bonus they elect to receive in stock. The value of shares
issued under the plan is the Trading Value. At March 28, 1998, 410,690
shares remained unissued under the plan.

An associate stock purchase plan approved by the shareholders covers
500,000 shares of the Company's Class A common stock. The plan provides
that associates of the Company and its subsidiaries may purchase shares at
the Trading Value. At March 28, 1998, 479,157 shares remained unissued
under the plan.

On May 28, 1997, the Board of Directors approved an Amendment to the
Articles of Incorporation to increase the authorized capital stock from
2,000,000 to 20,000,000 shares of Class A common stock and 500,000 to
5,000,000 shares of Class B common stock and authorized a ten-for-one stock
split for shareholders of record on May 31, 1997. The amendment also
reduced the par value of the Class A common stock from $20 per share to $2
per share. Accordingly, share and per share amounts have been restated
throughout the consolidated financial statements.

BUSINESS SEGMENT INFORMATION

The Company's distribution operations include product sales to
independently owned and operated food stores and convenience stores as well
as services directly related to the operation of these stores. Revenue is
recognized when the product is shipped.

The Insurance segment includes operations as a general line insurance
agency, third party claims administration (TPA) and insurance underwriting.
Commissions are recognized as of the policy billing dates, which
approximate effective dates of the applicable policies. TPA revenues are
recognized as services are performed and underwriting revenues are
recognized over the life of the policies.

Real estate and finance represents revenues from financing and real estate
activities with retail food stores and non-food related businesses.
Revenue is recognized according to the terms of the lease or loan.

F-32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

Business segment operating earnings were computed as net sales less related
operating expenses. In the Distribution segment interest is excluded from
operating expenses whereas it is included in the other segments.

Identifiable assets represent total assets directly associated with the
various business segments. Eliminations in assets identified to segments
include intercompany receivables, payables and investments.

The following table sets forth, for each of the last three fiscal years,
information required by Financial Accounting Standards Board, Statement No.
14, "Financial Reporting for Segments of a Business Enterprise":

<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
NET SALES

Distribution $2,461,405,939 $2,446,409,470 $2,530,111,284
98.88% 98.84% 99.04%
Insurance 15,943,559 16,620,923 16,135,365
.64% .67% .63%
Real estate and finance 11,899,971 11,994,849 8,441,280
.48% .49% .33%
Total $2,489,249,469 $2,475,025,242 $2,554,687,929
============== ============== ==============
100.0% 100.0% 100.0%
============== ============== ==============

OPERATING EARNINGS (LOSS)

Distribution $ 18,758,166 $ 14,205,200 $ (31,464,572)
Insurance 3,592,234 3,881,823 2,890,739
Real estate and finance 5,678,637 2,005,782 984,581
-------------- -------------- --------------
Total operating earnings (loss) 28,029,037 20,092,805 (27,589,252)

Interest (net) (5,786,056) (4,709,080) (4,578,343)
-------------- -------------- --------------
Earnings (loss) before taxes
on income $ 22,242,981 $ 15,383,725 $ (32,167,595)
============== ============== ==============
</TABLE>

F-33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SPARTAN STORES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS IDENTIFIED TO SEGMENTS

Distribution $338,042,665 $323,743,990 $345,649,449
Insurance 29,832,607 28,723,527 26,405,013
Real estate and finance 66,320,011 74,302,366 55,128,402
Less eliminations (28,062,168) (23,038,769) (39,731,451)
------------ ------------ ------------

Total $406,133,115 $403,731,114 $387,451,413
============ ============ ============

DEPRECIATION AND AMORTIZATION

Distribution $ 18,902,042 $ 17,722,415 $ 17,182,016
Insurance 153,137 181,905 258,686
Real estate and finance 2,584,287 2,270,890 1,783,731
------------ ------------ ------------

Total $ 21,639,466 $ 20,175,210 $ 19,224,433
============ ============ ============

CAPITAL EXPENDITURES

Distribution $ 20,482,773 $ 22,478,047 $ 38,858,158
Insurance 425,136 126,596 201,677
Real estate and finance 3,089,475 23,632,869 8,908,789
------------ ------------ ------------

Total $ 23,997,384 $ 46,237,512 $ 47,968,624
============ ============ ============
</TABLE>

F-34
<PAGE>
===========================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OR PROJECTIONS OF FUTURE PERFORMANCE OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND ANY SUCH OTHER INFORMATION, PROJECTIONS,
OR REPRESENTATIONS IF GIVEN OR MADE MUST NOT BE RELIED UPON AS HAVING BEEN
SO AUTHORIZED.

THE DELIVERY OF THIS PROSPECTUS OR ANY SALE HEREUNDER AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
_______________________________

TABLE OF CONTENTS
PAGE

THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . 12

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 14

BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

EXECUTIVE COMPENSATION AND
OTHER BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . 35

CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . 42

PRINCIPAL SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . 43

DESCRIPTION OF CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . 45

PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . 50

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

<PAGE>
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . 51
===========================================================================

<PAGE>
===========================================================================

3,500,000 Shares
Class A Common Stock

_______

PROSPECTUS
_______

SPARTAN STORES, INC.

July ____, 1998

===========================================================================

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Spartan has paid or will pay the expenses of this offering, which are
estimated as follows:

Registration Fee--Securities and Exchange Commission. . $12,069
Printing and Engraving Expenses . . . . . . . . . . . . 10,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . 45,000
Accounting Fees and Expenses. . . . . . . . . . . . . . 20,000
Blue Sky Filing Fees and Expenses . . . . . . . . . . . 6,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 5,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,569
=======

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 209 of the Michigan Business Corporation Act, as amended (the
"MBCA"), sets forth that a corporation's articles of incorporation may
provide that, except for certain liabilities, a director will not be
personally liable to the corporation or its shareholders for monetary
damages for a breach of the director's fiduciary duty. In addition,
Sections 561 to 571 of the MBCA set forth circumstances under which
directors, officers, employees or agents of a corporation may be
indemnified or insured against any liability that they may incur in such
capacities.

Article VIII of Spartan's Articles provides that a director of Spartan
will not be personally liable to the Company or its shareholders for
monetary damages for a breach of fiduciary duty as a director, except
liability for: (i) breach of a director's duty of loyalty to the Company or
its shareholders; (ii) acts or omissions not in good faith or that involved
intentional misconduct or knowing violation of law; (iii) certain unlawful
dividends, distributions or loans; (iv) a transaction from which the
director derived an improper personal benefit; and (v) an action or
omission occurring prior to the date the limitation of liability provision
became effective.

Michigan law permits, and Article VII of the Articles requires,
indemnification of Spartan's directors and executive officers in a variety
of circumstances, which may include liabilities under the Securities Act of
1933, as amended. The Articles require Spartan to indemnify any director
or executive officer who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by

<PAGE>
reason of the fact that he or she is or was a director or executive
officer, or is or was serving at the request of Spartan in another
capacity, to the fullest extent permitted by law. Spartan may further
indemnify any director or executive officer, and may indemnify any person
who is not a director or an executive officer, as authorized by any Bylaw,
resolution of the Board, or contractual agreement authorized by the Board.

Pursuant to this authority, Spartan's Bylaws provide that Spartan will
indemnify directors, executive officers, and other persons to the extent
that an indemnified person is successful on the merits or otherwise in
defense of an action. Spartan will indemnify the indemnified party against
actual and reasonable expenses (including attorneys' fees) incurred in
connection with the action and any action brought to enforce the mandatory
indemnification provisions. Prior to a final determination of an action,
Spartan may reimburse an indemnified party for reasonable expenses incurred
by the indemnified party, if certain procedures are followed. In addition,
upon request, a court may order Spartan to indemnify a director, officer,
employee, or agent if it determines that the person is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the applicable standard of conduct set forth
in the Bylaws was met or the indemnified party was adjudged liable to
Spartan or its shareholders.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

For the fiscal years ending March 28, 1998, March 29, 1997, and
March 30, 1996, Spartan sold $21,900,898, $5,490,656, and $12,314,000,
respectively, in principal amount of Variable Rate Promissory Notes (the
"Notes") to Customers and other persons who are residents of the State of
Michigan. From time to time each year, Spartan issued the Notes for cash.
Spartan claims the intrastate exemption under Section 3(a)(11) of the 1933
Act to exempt the sale of the Notes from the registration provisions of the
1933 Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS

EXHIBIT
NUMBER DOCUMENT

4.1<F*> Articles III, V, VI and IX of the Restated
Articles of Incorporation--Included in Exhibit 3.1
and incorporated herein by reference.
4.2<F*> Articles II, III, IV, VII, VIII and IX
of the Bylaws--Included in Exhibit 3.3
and incorporated herein by reference.
4.3(a)<F*> Form of Spartan Stores, Inc. Stock Subscription
Agreement--Shareholder Customers.
4.3(b) Form of Spartan Stores, Inc. Stock Subscription
Agreement--Capistar Customers. Previously filed
as an exhibit to the Registrant's Amendment No. 2
to the Registration Statement on Form S-1 filed
January 23, 1992. Here incorporated by reference.
4.4<F*> Form of Spartan Stores, Inc. Customer Agreement.
4.5<F*> Note Purchase Agreement between Spartan Stores,
Inc. and Teachers Insurance and Annuity
Association of America, Nationwide Life
Insurance Company and West Coast Life Insurance
Company.
4.6<F*> Note Agreement between Spartan Stores, Inc. and
The Ohio National Life Insurance Company and
United of Omaha Life Insurance Company.
4.7<F*> Note Agreement between Spartan Stores, Inc. and
Massachusetts Mutual Life Insurance Company, The
Franklin Life Insurance Company and The Columbus
Mutual Life Insurance Company.
4.8<F*> Form of Spartan Stores, Inc. Class A Common Stock
Certificate.
4.9 Note Agreement between Spartan Stores, Inc.
and United of Omaha Life Insurance Company,
United World Life Insurance Company,
Companion Life Insurance Company, Principal
Mutual Life Insurance Company and Nippon Life
Insurance Company, dated as of January 15,
1993.
4.10 First Amendment to Note Purchase Agreement
between Spartan Stores, Inc. and Teachers
Insurance and Annuity Association of America,
Nationwide Life Insurance Company and West
Coast Life Insurance Company, dated as of
March 29, 1996. Previously filed as an
exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 30,
1996. Here incorporated by reference.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

4.11 First Amendment and Waiver to Note Agreements
between Spartan Stores, Inc. and Principal
Mutual Life Insurance Company, Nippon Life
Insurance Company of America, United of Omaha
Life Insurance Company, Companion Life
Insurance Company and United World Life
Insurance Company, dated as of June 20, 1996.
Previously filed as an exhibit to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 30, 1996. Here
incorporated by reference.
4.12 Credit Agreement among Spartan Stores,
Inc., Michigan National Bank, and
Michigan National Bank and Old Kent
Bank, NBD Bank, Harris Trust and Savings
Bank and National City Bank of Columbus,
dated December 23, 1996. Previously
filed as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended January 4, 1997. Here
incorporated by reference.
5 Opinion and Consent of Warner Norcross &
Judd LLP. Previously filed as an
exhibit to the Registrant's Registration
Statement on Form S-1 filed July 12,
1995. Here incorporated by reference.
10.1<F*> Note Purchase Agreement--Included as Exhibit 4.5
and incorporated herein by reference.
10.2<F*> Note Agreement--Included as Exhibit 4.6 and
incorporated herein by reference.
10.3<F*> Note Agreement--Included as Exhibit 4.7 and
incorporated herein by reference.
10.4<F*> Warehouse Lease Agreement, dated October 6, 1988,
between Warehouse Systems Co. and Spartan Stores,
Inc.
10.5<F*> Warehouse Lease Agreement, dated October 14, 1975,
between Connecticut Mutual Life Insurance Company
and Spartan Stores, Inc.
10.6<F*> Warehouse Lease Agreement, dated November 11,
1988, between Norman J. Leven and L & L/Jiroch
Distributing Company
10.7<F*> Computer Lease Agreement, dated May 30, 1989,
between Atlantic Computer Systems, Inc. and
Spartan Stores, Inc.
10.8<F*> Equipment Lease Agreement, dated March 3, 1988,
between PHH Financial Services, Inc. and Spartan
Stores, Inc.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

10.9<F**> Employment Agreement dated June 1, 1987,
between Spartan Stores, Inc. and Patrick M.
Quinn. Previously filed as an exhibit to the
Registrant's Form S-1 Registration Statement
filed July 18, 1991. Here incorporated by
reference.
10.10<F**> Spartan Stores, Inc. 1991 Stock Bonus
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 29,
1997. Here incorporated by reference.
10.11<F**> Spartan Stores, Inc. 1991 Stock Option
Plan as amended. Previously filed as an
exhibit to the Registrant's Form S-1
Registration Statement filed July 23,
1993. Here incorporated by reference.
10.12<F**> Spartan Stores, Inc. 1991 Associate
Stock Purchase Plan. Previously filed
as an exhibit to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 29, 1997. Here incorporated
by reference.
10.13<F**> Spartan Stores, Inc. Supplemental
Executive Retirement Plan. Previously
filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended March 29, 1997. Here
incorporated by reference.
10.14 Note Agreement--Included as Exhibit 4.9.
10.15 Warehouse Lease Agreement, dated
November 8, 1993, between Walker Realty
Co. and J.F. Walker Company, Inc.
Previously filed as an exhibit to the
Registrant's Post-Effective Amendment
No. 1 to the Registration Statement on
Form S-1 filed March 16, 1994. Here
incorporated by reference.
10.16 First Amendment to Note Purchase
Agreement--Included as Exhibit 4.10.
Here incorporated by reference.
10.17 First Amendment and Waiver to Note
Agreements--Included as Exhibit 4.11.
Here incorporated by reference.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

10.18<F**> Employment Agreement, dated August 14,
1996, between Spartan Stores, Inc. and
James B. Meyer. Previously filed as an
exhibit to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 29, 1997. Here incorporated
by reference.
10.19<F**> Spartan Stores, Inc. Long-Term Incentive
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 28,
1998. Here incorporated by reference.
10.20<F**> Spartan Stores, Inc. Annual Incentive
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 28,
1998. Here incorporated by reference.
21 Subsidiaries of Registrant. Previously
filed as an exhibit to the Registrant's
Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 filed
March 16, 1994. Here incorporated by
reference.
23.1 Consent of Warner Norcross & Judd LLP.
The Opinion and Consent is included in
Exhibit 5 and here incorporated by
reference.
23.2 Consent and Report on Schedule of Deloitte
and Touche LLP.
24 Powers of Attorney.

(B) FINANCIAL STATEMENT SCHEDULES. Previously filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
March 28, 1998. Here incorporated by reference.

SCHEDULE DOCUMENT

II Valuation and Qualifying Accounts

____________________________

<F*> Previously filed as an exhibit to the Registrant's Form S-1
Registration Statement filed July 18, 1991. Here incorporated by
reference.

<PAGE>
<F**> These documents are management contracts or compensation plans or
arrangements required to be filed as exhibits to this Registration
Statement.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:

(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;

(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling

<PAGE>
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Grand Rapids,
State of Michigan, on July 3, 1998.

SPARTAN STORES, INC.
(Registrant)

BY/S/JAMES B. MEYER
James B. Meyer
President and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

SIGNATURE TITLE DATE

*/S/ROGER L. BOYD Director July 3, 1998
Roger L. Boyd

*/S/JAMES G. BUICK Director July 3, 1998
James G. Buick

*/S/JOHN S. CARTON Director July 3, 1998
John S. Carton

_______________________ Director July 3, 1998
Glen A. Catt

*/S/RONALD A. DEYOUNG Director July 3, 1998
Ronald A. DeYoung

*/S/PARKER T. FELDPAUSCH Director July 3, 1998
Parker T. Feldpausch

*/S/MARTIN P. HILL Director July 3, 1998
Martin P. Hill

<PAGE>
SIGNATURE TITLE DATE

*/S/DONALD J. KOOP Chairman of the Board July 3, 1998
Donald J. Koop and Director

/S/JAMES B. MEYER Director July 3, 1998
James B. Meyer

*/S/DAN R. PREVO Director July 3, 1998
Dan R. Prevo

*/S/RUSSELL H. VANGILDER, JR. Vice Chairman of the July 3, 1998
Russell H. VanGilder, Jr. Board and Director

/S/CHARLES B. FOSNAUGH Vice President Development July 3, 1998
Charles B. Fosnaugh (Principal Financial and
Accounting Officer)

*By/S/JAMES B. MEYER July 3, 1998
James B. Meyer, Attorney-in Fact

<PAGE>
EXHIBIT INDEX

EXHIBIT
NUMBER DOCUMENT

3.1<F*> Restated Articles of Incorporation of
Spartan Stores, Inc.
3.2 Certificate of Amendment to Articles of
Incorporation of Spartan Stores, Inc.
Previously filed as an exhibit to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 28,
1998. Here incorporated by reference.
3.3<F*> Bylaws of Spartan Stores, Inc.
4.1<F*> Articles III, V, VI and IX of the Restated
Articles of Incorporation--Included in Exhibit 3.1
and incorporated herein by reference.
4.2<F*> Articles II, III, IV, VII, VIII and IX
of the Bylaws--Included in Exhibit 3.3
and incorporated herein by reference.
4.3(a)<F*> Form of Spartan Stores, Inc. Stock Subscription
Agreement--Shareholder Customers.
4.3(b) Form of Spartan Stores, Inc. Stock Subscription
Agreement--Capistar Customers. Previously filed
as an exhibit to the Registrant's Amendment No. 2
to the Registration Statement on Form S-1 filed
January 23, 1992. Here incorporated by reference.
4.4<F*> Form of Spartan Stores, Inc. Customer Agreement.
4.5<F*> Note Purchase Agreement between Spartan Stores,
Inc. and Teachers Insurance and Annuity
Association of America, Nationwide Life
Insurance Company and West Coast Life Insurance
Company.
4.6<F*> Note Agreement between Spartan Stores, Inc. and
The Ohio National Life Insurance Company and
United of Omaha Life Insurance Company.
4.7<F*> Note Agreement between Spartan Stores, Inc. and
Massachusetts Mutual Life Insurance Company, The
Franklin Life Insurance Company and The Columbus
Mutual Life Insurance Company.
4.8<F*> Form of Spartan Stores, Inc. Class A Common Stock
Certificate.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

4.9 Note Agreement between Spartan Stores, Inc.
and United of Omaha Life Insurance Company,
United World Life Insurance Company,
Companion Life Insurance Company, Principal
Mutual Life Insurance Company and Nippon Life
Insurance Company, dated as of January 15,
1993.
4.10 First Amendment to Note Purchase Agreement
between Spartan Stores, Inc. and Teachers
Insurance and Annuity Association of America,
Nationwide Life Insurance Company and West
Coast Life Insurance Company, dated as of
March 29, 1996. Previously filed as an
exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 30,
1996. Here incorporated by reference.
4.11 First Amendment and Waiver to Note Agreements
between Spartan Stores, Inc. and Principal
Mutual Life Insurance Company, Nippon Life
Insurance Company of America, United of Omaha
Life Insurance Company, Companion Life
Insurance Company and United World Life
Insurance Company, dated as of June 20, 1996.
Previously filed as an exhibit to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 30, 1996. Here
incorporated by reference.
4.12 Credit Agreement among Spartan Stores,
Inc., Michigan National Bank, and
Michigan National Bank and Old Kent
Bank, NBD Bank, Harris Trust and Savings
Bank and National City Bank of Columbus,
dated December 23, 1996. Previously
filed as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the
quarter ended January 4, 1997. Here
incorporated by reference.
5 Opinion and Consent of Warner Norcross &
Judd LLP. Previously filed as an
exhibit to the Registrant's Registration
Statement on Form S-1 filed July 12,
1995. Here incorporated by reference.
10.1<F*> Note Purchase Agreement--Included as Exhibit 4.5
and incorporated herein by reference.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

10.2<F*> Note Agreement--Included as Exhibit 4.6 and
incorporated herein by reference.
10.3<F*> Note Agreement--Included as Exhibit 4.7 and
incorporated herein by reference.
10.4<F*> Warehouse Lease Agreement, dated October 6, 1988,
between Warehouse Systems Co. and Spartan Stores,
Inc.
10.5<F*> Warehouse Lease Agreement, dated October 14, 1975,
between Connecticut Mutual Life Insurance Company
and Spartan Stores, Inc.
10.6<F*> Warehouse Lease Agreement, dated November 11,
1988, between Norman J. Leven and L & L/Jiroch
Distributing Company
10.7<F*> Computer Lease Agreement, dated May 30, 1989,
between Atlantic Computer Systems, Inc. and
Spartan Stores, Inc.
10.8<F*> Equipment Lease Agreement, dated March 3, 1988,
between PHH Financial Services, Inc. and Spartan
Stores, Inc.
10.9<F**> Employment Agreement dated June 1, 1987,
between Spartan Stores, Inc. and Patrick M.
Quinn. Previously filed as an exhibit to the
Registrant's Form S-1 Registration Statement
filed July 18, 1991. Here incorporated by
reference.
10.10<F**> Spartan Stores, Inc. 1991 Stock Bonus
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 29,
1997. Here incorporated by reference.
10.11<F**> Spartan Stores, Inc. 1991 Stock Option
Plan as amended. Previously filed as an
exhibit to the Registrant's Form S-1
Registration Statement filed July 23,
1993. Here incorporated by reference.
10.12<F**> Spartan Stores, Inc. 1991 Associate
Stock Purchase Plan. Previously filed
as an exhibit to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 29, 1997. Here incorporated
by reference.
10.13<F**> Spartan Stores, Inc. Supplemental
Executive Retirement Plan. Previously
filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended March 29, 1997. Here
incorporated by reference.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

10.14 Note Agreement--Included as Exhibit 4.9.
10.15 Warehouse Lease Agreement, dated
November 8, 1993, between Walker Realty
Co. and J.F. Walker Company, Inc.
Previously filed as an exhibit to the
Registrant's Post-Effective Amendment
No. 1 to the Registration Statement on
Form S-1 filed March 16, 1994. Here
incorporated by reference.
10.16 First Amendment to Note Purchase
Agreement--Included as Exhibit 4.10.
Here incorporated by reference.
10.17 First Amendment and Waiver to Note
Agreements--Included as Exhibit 4.11.
Here incorporated by reference.
10.18<F**> Employment Agreement, dated August 14,
1996, between Spartan Stores, Inc. and
James B. Meyer. Previously filed as an
exhibit to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 29, 1997. Here incorporated
by reference.
10.19<F**> Spartan Stores, Inc. Long-Term Incentive
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 28,
1998. Here incorporated by reference.
10.20<F**> Spartan Stores, Inc. Annual Incentive
Plan. Previously filed as an exhibit to
the Registrant's Annual Report on Form
10-K for the fiscal year ended March 28,
1998. Here incorporated by reference.
21 Subsidiaries of Registrant. Previously
filed as an exhibit to the Registrant's
Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 filed
March 16, 1994. Here incorporated by
reference.
23.1 Consent of Warner Norcross & Judd LLP.
The Opinion and Consent is included in
Exhibit 5 and here incorporated by
reference.

<PAGE>
EXHIBIT
NUMBER DOCUMENT

23.2 Consent and Report on Schedule of Deloitte
and Touche LLP.
24 Powers of Attorney.

(B) FINANCIAL STATEMENT SCHEDULES. Previously filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
March 28, 1998. Here incorporated by reference.

SCHEDULE DOCUMENT

II Valuation and Qualifying Accounts

____________________________

<F*> Previously filed as an exhibit to the Registrant's Form S-1
Registration Statement filed July 18, 1991. Here incorporated by
reference.

<F**> These documents are management contracts or compensation plans or
arrangements required to be filed as exhibits to this Registration
Statement.

<PAGE>
EXHIBIT 4.9

<PAGE>
EXECUTION COPY

===========================================================================

SPARTAN STORES, INC.

NOTE AGREEMENT

Dated as of January 15, 1993

Re:
$20,000,000 7.27% Senior Notes
Due February 1, 2003

===========================================================================

<PAGE>
TABLE OF CONTENTS

(Not a part of the Agreement)

SECTION HEADING PAGE

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT. . . . . . . . . . . . . .1

Section 1.1. Description of Notes . . . . . . . . . . . . . . . . .1
Section 1.2. Commitment; Closing Date . . . . . . . . . . . . . . .1
Section 1.3. Other Agreements . . . . . . . . . . . . . . . . . . .2

SECTION 2. PREPAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . . . .2

Section 2.1. Required Prepayments . . . . . . . . . . . . . . . . .2
Section 2.2. Optional Prepayments . . . . . . . . . . . . . . . . .3
Section 2.3. Notice of Optional Prepayments . . . . . . . . . . . .3
Section 2.4. Allocation of Prepayments. . . . . . . . . . . . . . .3
Section 2.5. Direct Payment . . . . . . . . . . . . . . . . . . . .3

SECTION 3. REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . .4

Section 3.1. Representations of the Company . . . . . . . . . . . .4
Section 3.2. Representations of the Purchaser . . . . . . . . . . .4

SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . .4

Section 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

SECTION 5. COMPANY COVENANTS. . . . . . . . . . . . . . . . . . . . . . .6

Section 5.1. Maintenance of Certain Financial Conditions;
Limitations on Certain Debt. . . . . . . . . . . . . .8
Section 5.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . .7
Section 5.3. Transactions with Affiliates . . . . . . . . . . . . .9
Section 5.4. Subsidiary Stock and Indebtedness. . . . . . . . . . .9
Section 5.5. Consolidation, Merger, Sale of Assets, etc.. . . . . 10
Section 5.6. Investments, etc.. . . . . . . . . . . . . . . . . . 12
Section 5.7. Restricted Payments. . . . . . . . . . . . . . . . . 13
Section 5.8. Nature of Business . . . . . . . . . . . . . . . . . 14
Section 5.9. Payment of Notes; Maintenance of Books and Office. . 14
Section 5.10. Corporate Existence; Payment of Taxes;
Maintenance of Properties; Insurance; Compliance
with Laws; Maintenance of Patents, etc.. . . . . . . 15
Section 5.11. Repurchase of Notes. . . . . . . . . . . . . . . . . 16
Section 5.12. Financial Statements; Information. . . . . . . . . . 16
Section 5.13. Inspection Rights. . . . . . . . . . . . . . . . . . 19

-i-
<PAGE>
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR. . . . . . . . . . . 20

Section 6.1. Events of Default. . . . . . . . . . . . . . . . . . 20
Section 6.2. Notice to Holders. . . . . . . . . . . . . . . . . . 21
Section 6.3. Acceleration of Maturities . . . . . . . . . . . . . 22
Section 6.4. Rescission of Acceleration . . . . . . . . . . . . . 22

SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . 23

Section 7.1. Consent Required . . . . . . . . . . . . . . . . . . 23
Section 7.2. Solicitation of Noteholders. . . . . . . . . . . . . 23
Section 7.3. Effect of Amendment or Waiver; Scope of Consent. . . 24

SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . 24

Section 8.1. Definitions. . . . . . . . . . . . . . . . . . . . . 24
Section 8.2. Accounting Principles. . . . . . . . . . . . . . . . 35
Section 8.3. Directly or Indirectly . . . . . . . . . . . . . . . 35

SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 35

Section 9.1. Note Register. . . . . . . . . . . . . . . . . . . . 35
Section 9.2. Exchange of Notes. . . . . . . . . . . . . . . . . . 35
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . . 36
Section 9.4. Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 36
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. . 36
Section 9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.7. Reproduction of Documents. . . . . . . . . . . . . . 37
Section 9.8. Successors and Assigns . . . . . . . . . . . . . . . 37
Section 9.9. Survival of Covenants and Representations. . . . . . 37
Section 9.10. Severability . . . . . . . . . . . . . . . . . . . . 38
Section 9.11. Governing Law. . . . . . . . . . . . . . . . . . . . 38
Section 9.12. Captions . . . . . . . . . . . . . . . . . . . . . . 38

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

-ii-
<PAGE>
ATTACHMENTS TO NOTE AGREEMENTS:

Schedule I - Names and Addresses of Purchasers and Amounts of
Commitments
Schedule II - Information Relating to Subsidiaries
Schedule III - Debt of the Company and its Subsidiaries; Liens and
Investments
Exhibit A - Form of 7.27% Senior Note Due February 1, 2003
Exhibit B - Closing Certificate of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of Counsel to the
Company
Exhibit C -

-iii-
<PAGE>
SPARTAN STORES, INC.
850 76TH STREET S.W.
GRAND RAPIDS, MICHIGAN 49518

NOTE AGREEMENT

Re: $20,000,000 7.27% Senior Notes
Due February 1, 2003

Dated as of
January 15, 1993
To the Purchaser named in
Schedule I hereto which is
a signatory to this Agreement

Gentlemen:

The undersigned, SPARTAN STORES, INC., a Michigan corporation (the
"COMPANY"), agrees with you as follows:

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.

SECTION 1.1. DESCRIPTION OF NOTES. The Company will authorize the
issue and sale of $20,000,000 aggregate principal amount of its 7.27%
Senior Notes (the "NOTES") to be dated the date of issue, to bear interest
from such date at the rate of 7.27% per annum, payable semiannually on the
first day of each February and August in each year (commencing on the first
such day after the date of issue) 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 9.27% per annum after
the due date thereof, whether by acceleration or otherwise, until paid, to
be expressed to mature on February 1, 2003, 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. If any amount of
principal, premium, if any, or interest on or in respect of the Notes
becomes due and payable on any date which is not a Business Day (as defined
in <Section>8.1), such amount shall be payable on the immediately preceding
Business Day. The Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity date except on the
terms and conditions and in the amounts and with the premium, if any, set
forth in <Section>2 of this Agreement. The term "NOTES" as used herein
shall include each Note delivered pursuant to this Agreement and the
separate agreements with the other purchasers named in Schedule I hereto.
You and the other Purchasers named in Schedule I hereto are hereinafter
sometimes referred to as the "PURCHASERS". The terms which are capitalized
herein shall have the meanings set forth in <Section>8.1 hereof unless the
context shall otherwise require.

<PAGE>
SECTION 1.2. COMMITMENT; CLOSING DATE. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name in Schedule I hereto 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 Warner, Norcross
& Judd, 900 Old Kent Building, 111 Lyon Street, N.W., Grand Rapids,
Michigan 49503-2489, against payment therefore in Federal Reserve or other
funds current and immediately available at the principal office of Michigan
National Bank in the amount of the purchase price at 10:00 a.m., Grand
Rapids, Michigan time, on January 29, 1993 or such later date (not later
than February 1, 1993) as shall mutually be agreed upon by the Company and
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 set opposite your name in Schedule I (unless different
denominations are specified by you), registered in your name or in the name
of such nominee as may be specified in Schedule I and in substantially the
form attached hereto as Exhibit A.

SECTION 1.3. OTHER AGREEMENTS. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar
agreements with the other Purchasers under which such other Purchasers
agree to purchase from the Company the principal amount of Notes set
opposite such Purchasers' names in Schedule I, and your obligation and the
obligations of the Company hereunder are subject to the execution and
delivery of the similar agreements by the other Purchasers. This Agreement
and said similar agreements with the other Purchasers are herein
collectively referred to as the "AGREEMENTS". 'Me 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.

No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement.

SECTION 2.1. REQUIRED PREPAYMENTS. In addition to paying the entire
outstanding principal amount and the interest due on the Notes on the
maturity date thereof, the Company agrees that on the first day of February
in each year, commencing February 1, 1994 and ending February 1, 2002, both
inclusive (herein called "FIXED PAYMENT DATES"), IT will prepay and apply
and there shall become due and payable the sum of $2,000,000 on the
principal indebtedness evidenced by the Notes. No premium shall be payable
in connection with any required prepayment made pursuant to this
<Section>2.1.

-2-
<PAGE>
In the event that the Company shall prepay less than all of the Notes
pursuant to <Section>2.2 hereof, the amounts of the prepayments required by
this <Section>2.1 shall be reduced by an amount which is the same
percentage of such required prepayment as the percentage that the principal
amount of Notes prepaid pursuant to <Section>2.2 is of the aggregate
principal amount of outstanding Notes immediately prior to the prepayment
pursuant to <Section>2.2.

SECTION 2.2. OPTIONAL PREPAYMENTS. In addition to the payments
required by <Section>2.1, upon compliance with the terms of <Section>2.3,
the Company shall have the privilege, at any time and from time to time, of
prepaying the outstanding Notes either in whole or in part (but if in part
in units of $1,000,000 or an integral multiple of $10,000 in excess
thereof), by payment of the principal amount of the Notes to be prepaid 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 Amount
determined as of two Business Days prior to the date of such prepayment
pursuant to this <Section>2.2.

SECTION 2.3. NOTICE OF OPTIONAL PREPAYMENTS. The Company will give
notice of any prepayment of the Notes pursuant to <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 (a) such date, (b) the
principal amount of the holder's Notes to be prepaid on such date, (c) that
a premium may be payable, (d) the date when such premium will be
calculated, (e) the estimated premium accompanied by a reasonably detailed
computation thereof, and (f) the 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 specified in
said notice. Not later than two Business Days prior to the prepayment date
specified in such notice, the Company shall provide each holder of a Note
written notice of the premium, if any, payable in connection with such
prepayment and, whether or not any premium is payable, a reasonably
detailed computation of the Make-Whole Amount.

SECTION 2.4. ALLOCATION OF PREPAYMENTS. All partial prepayments
shall be applied on all outstanding Notes ratably in accordance with the
unpaid principal amounts thereof.

SECTION 2.5. DIRECT PAYMENT. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by
any Purchaser or its nominee or owned by any other Institutional Holder of
5% or more in aggregate outstanding principal amount of the Notes or which
has acquired 100% of the outstanding Notes originally issued to an Initial
Holder which has given written notice to the Company requesting that the

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<PAGE>
provisions of this <Section>2.5 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 Institutional Holder at the address of such
Purchaser set forth in Schedule I or at such other address as such
Purchaser or such subsequent Institutional 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 Institutional 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 such Purchaser or any such subsequent Institutional Holder
may from time to time direct in writing. With respect to Notes to which
this <Section>2.5 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 (1) the Company shall have received notice
of the transfer of such Notes, and the name and address of the transferee,
or (2) such Notes shall have been presented to the Company as evidence of
the transfer.

SECTION 3. REPRESENTATIONS.

SECTION 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.

SECTION 3.2. REPRESENTATIONS OF THE PURCHASER. (a) You represent,
and in entering into this Agreement the Company understands, that you are
acquiring the Notes for the purpose of investment and not with a view to
the distribution thereof, and that you have no present intention of
selling, negotiating or otherwise disposing of the Notes; PROVIDED that the
disposition of your property shall at all times be and remain within your
control. Without limiting the foregoing, you agree that you will only
reoffer or resell the Notes received by you under this Agreement in
accordance with any available exemption from the requirements of Section 5
of the Securities Act of 1933, as amended, and in any event, in accordance
with any applicable state securities laws.

(b) 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. As used in this <Section>3.2(B), the terms "SEPARATE ACCOUNT"
and "EMPLOYEE BENEFIT PLAN" shall have the respective meanings assigned to
them in ERISA.

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<PAGE>
SECTION 4. CLOSING CONDITIONS.

SECTION 4.1. 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:

(a) 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 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.

(b) 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 Warner, Norcross & Judd, counsel for 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.

(c) COMPANY'S EXISTENCE AND AUTHORITY. On or prior to the
Closing Date, you shall have received, in form and substance
reasonably satisfactory to you and your special counsel, such
documents and evidence with respect to the Company as you may
reasonably request in order to establish the existence and good
standing of the Company and the authorization of the transactions
contemplated by this Agreement.

(d) CONSENT OF HOLDERS OF OTHER SECURITIES. Any consents or
approvals required to be obtained from any holder or holders of any
outstanding Security of the Company and any amendments of agreements
pursuant to which any Security may have been issued which shall be
necessary to permit the consummation of the transactions contemplated
hereby on the Closing Date shall have been obtained and all such
consents or approvals shall be reasonably satisfactory in form and
substance to you and your special counsel.

(e) RELATED TRANSACTIONS. Concurrently with the issuance and
delivery of the Notes to you on the Closing Date, the Company shall
have consummated the issuance and delivery of Notes scheduled to be
issued and delivered to the other Purchasers on such Closing Date.

(f) PRIVATE PLACEMENT NUMBER. On or prior to the Closing Date,
special counsel to the Purchasers of the Notes shall have duly made
the appropriate filings with Standard & Poor's CUSIP Service Bureau,

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<PAGE>
as agent for the National Association of Insurance Commissioners, in
order to obtain a private placement number for the Notes.

(g) FUNDING INSTRUCTIONS. At least three Business Days prior to
the Closing Date, you shall have received written instructions
executed by a Responsible Officer of the Company directing the manner
of the payment of funds and setting forth (1) the name of the
transferee bank, (2) such transferee bank's ABA number, (3) the
account name and number into which the purchase price for the Notes is
to be deposited, and (4) the name and telephone number of the account
representative responsible for verifying receipt of such funds.

(h) LEGALITY OF INVESTMENT. The Notes to be purchased by you
shall be a legal investment for you under the laws of each
jurisdiction to which you may be subject (without resort to any so-
called "BASKET PROVISIONS" to such laws).

(i) SATISFACTORY PROCEEDINGS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and
all documents necessary to the consummation thereof, shall be
reasonably satisfactory in form and substance to you and your 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.

(j) 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>4.1(J) 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:

SECTION 5.1. MAINTENANCE OF CERTAIN FINANCIAL CONDITIONS;
LIMITATIONS ON CERTAIN DEBT. (a) The Company will not on any date permit:

(1) Stockholders' Equity to be less than $80,000,000;

(2) the ratio of Consolidated Funded Debt to Stockholders'
Equity to be greater than 1.25 to 1.00;

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<PAGE>
(3) the ratio of Consolidated Current Assets to Consolidated
Current Liabilities to be less than 1.25 to 1.00; or

(4) the ratio of Net Income Available for Fixed Charges to Fixed
Charges for the immediately preceding four consecutive fiscal quarter
period to be less than 1.50 to 1.0 for such four fiscal quarter
period.

(b) The Company will not permit any Subsidiary to create, incur,
assume or otherwise become or be, directly or indirectly, liable in respect
of any Debt (other than Debt of a Subsidiary to the Company or to another
Subsidiary), unless on the date on which such Subsidiary proposes to incur
such Debt and after giving effect to such incurrence and to the
substantially concurrent incurrence by the Company and all other
Subsidiaries of any Debt and to the substantially concurrent retirement by
the Company and any Subsidiary of any Debt, and to the application of the
proceeds of all such Debt, the sum of:

(1) the aggregate principal amount of outstanding Debt of all
Subsidiaries (other than (i) Debt of a Subsidiary to the Company or
another Subsidiary and (ii) Debt of Spartan Insurance Co., Ltd., a
Bermuda corporation ("SPARTAN INSURANCE"), secured by Liens permitted
by and granted in compliance with <Section>5.2J)) PLUS (without
duplication);

(2) the aggregate principal amount of all outstanding Debt of
the Company and its Subsidiaries secured by Liens permitted by
paragraphs (g), (h), (i) and (k) of <Section>5.2 (such sum, as
determined on any date, being hereinafter referred to as the "PRIORITY
DEBT AMOUNT");

shall not exceed 15% of Consolidated Tangible Assets as of the end of the
fiscal quarter of the Company which shall have ended most recently prior to
such date of incurrence.

SECTION 5.2. LIENS. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any asset of any character of the
Company or any Subsidiary (whether held on the date hereof or hereafter
acquired) or any interest therein or any income or profits therefrom,
except:

(a) Liens for taxes, assessments or governmental charges or
levies either not yet due or the payment of which is not at the time
required by <Section>5.10(B);

(b) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons incurred in the ordinary course

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of business for sums either not yet due or the payment of which is not
at the time required by <Section>5.10(B);

(c) Liens (other than any Lien created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
letters of credit, tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-
money bonds and other similar obligations (exclusive in any case of
obligations incurred in connection with the borrowing of money or the
obtaining of advances or credit);

(d) any attachment, judgment or other similar Lien arising in
connection with court proceedings, PROVIDED that (1) the execution or
other enforcement of such Lien is effectively stayed and the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings diligently conducted and effective to delay or
prevent the forfeiture or sale of any property of the Company or any
Subsidiary or any material interference with the use thereof by the
Company or any Subsidiary, and (2) such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor (or, if no such reserve or other provision is required, the
Company shall have set aside on its books reserves deemed by it to be
adequate therefor);

(e) easements, licenses, rights-of-way and other rights and
privileges in the nature of easements and similar Liens incidental to
the ownership of property and not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which
do not, individually or in the aggregate, materially interfere with
the ordinary conduct of the business of the Company or any Subsidiary
or materially detract from the value of the properties subject to any
such Liens;

(f) Liens on property of any Subsidiary securing Debt or other
obligations of such Subsidiary owing to the Company or to a Wholly-
owned Subsidiary;

(g) Liens specified on Schedule III attached hereto existing on
January 2, 1993 and securing the Debt specified on such Schedule III,
PROVIDED, HOWEVER, that no such Lien shall be extended to any other
property or asset of the Company or any Subsidiary;

(h) any Lien (including a Capital Lease) created solely to
secure the deferred purchase price of property consisting of fixed
assets acquired by the Company or any Subsidiary after the date
hereof, or created to secure Debt, incurred solely for the purpose of

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<PAGE>
financing the acquisition of such property (if such Debt is incurred
at the time of or within 90 days after such acquisition), or existing
on property acquired at the time of acquisition thereof, or, in the
case of any Person which hereafter becomes a Subsidiary, any Lien in
respect of its property existing at the time such Person becomes a
Subsidiary, PROVIDED, HOWEVER, that

(1) no such Lien shall at any time extend to or cover any
property of the Company or any Subsidiary other than the acquired
property on which it was originally imposed and improvements
thereto and proceeds thereof; and

(2) the principal amount of all Debt secured by all such
Liens on any such property shall at no time exceed an amount
equal to the lesser of (i) the cost to the Company or such
Subsidiary (including the principal amount of any pre-existing
Debt secured by such Liens, whether or not the Company or such
Subsidiary has any personal liability with respect thereto) of
such property and (ii) the fair market value of such property at
the time of acquisition thereof (or, in the case of a Lien in
respect of property existing at the time of a Person becoming a
Subsidiary after the date hereof, the fair market value of such
property at such time);

(i) Liens not otherwise permitted by the foregoing paragraphs
(a) through (h) of this <Section>5.2 securing Funded Debt (or any
Current Debt which would, except for the parenthetical exclusion in
the definition of Funded Debt set forth in <Section>8.1, be Funded
Debt) of the Company or any Subsidiary; PROVIDED that all such Debt
shall have been incurred within the limitations provided in
<Section>5.1(B);

(j) Liens granted by Spartan Insurance from time to time on
property owned by it to secure any reimbursement obligation of Spartan
Insurance in respect of letters of credit issued by commercial banks
for the account of Spartan Insurance; and

(k) Liens extending, renewing or replacing any Lien permitted by
clause (g), (h) or (i) of this <Section>5.2, PROVIDED that, the
principal amount of the Debt secured by such Lien is not increased and
such Lien is not extended to other property.

It shall be a further condition to the creation or incurrence of any
Lien permitted by paragraph (h), (i) or (k) of this <Section>5.2 that, on
the date on which the Company or any Subsidiary proposes to create or incur
such Lien and immediately after giving effect to such action, to the
substantially concurrent incurrence of any Debt and to the substantially
concurrent retirement of any other Debt, the Priority Debt Amount shall not

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<PAGE>
exceed 15% of Consolidated Tangible Assets as at the end of the fiscal
quarter of the Company which shall have ended most recently prior to such
date. For all purposes of this <Section>5.2, any Person becoming a
Subsidiary after the date of this Agreement shall be deemed to have
incurred all of its then existing Liens at the time it becomes a
Subsidiary, and any extension, renewal or refinancing of any Lien by the
Company or any Subsidiary shall be deemed to be an incurrence of such Lien
at the time of such extension, renewal or refinancing, and any Lien
existing on any property or assets at the time it is acquired by the
Company or any Subsidiary shall be deemed to have been created at the time
of such acquisition.

SECTION 5.3. TRANSACTIONS WITH AFFILIATES. Except for transactions
between the Company and a Subsidiary or between Subsidiaries, the Company
will not, and will not permit any Subsidiary to, directly or indirectly,
engage in any transaction with any Affiliate of the Company, other than
transactions entered into in the ordinary course of business upon terms
that are fair and reasonable and not less favorable to the Company or such
Subsidiary, as the case may be (as determined in good faith by the
Company), than those which might be obtained at the time on an arm's-length
basis from any Person which is not such an Affiliate.

SECTION 5.4. SUBSIDIARY STOCK AND INDEBTEDNESS. The Company will
not:

(a) directly or indirectly, sell, assign, pledge or otherwise
dispose of any Debt of, or claim against, or any shares of stock or
similar interests or other Securities (or warrants, rights or options
to acquire stock or similar interests) of any Subsidiary, except to a
Wholly-owned Subsidiary or except as to directors' qualifying shares
if required by applicable law; or

(b) permit any Subsidiary to, directly or indirectly, sell,
assign, pledge or otherwise dispose of any Debt of, or claim against,
or any shares of stock or similar interests or other Securities (or
warrants, rights or options to acquire stock or similar interests) of
any other Subsidiary, except to the Company or a Wholly-owned
Subsidiary or except as to directors' qualifying shares if required by
applicable law;

(c) permit any Subsidiary to, directly or indirectly, issue or
sell any shares of its stock or similar interests or other Securities
(or warrants, rights or options to acquire any stock or similar
interests) of such Subsidiary except to the Company or a Wholly-owned
Subsidiary or except as to directors' qualifying shares or to satisfy
preemptive rights if required by applicable law; or

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<PAGE>
(d) permit any Subsidiary to have outstanding any shares of
preferred stock, except shares of preferred stock owned by the Company
or a Wholly-owned Subsidiary;

PROVIDED, HOWEVER, that all Debt and shares of stock and similar interests
of any Subsidiary owned by the Company and its other Subsidiaries may be
sold as an entirety to any Person for a consideration determined in good
faith by the Company to be fair, or any part of the shares of common stock
and similar interests (but not preferred stock) of any Subsidiary owned by
the Company and its other Subsidiaries may be sold to any Person for a
consideration determined in good faith by the Company to be fair, if in
each such case (1) such sale would then be permitted pursuant to
<Section>5.5(E) and (2) at the time of and immediately after the
consummation of such transaction and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing and a
Subsidiary shall at such time be permitted to incur $1.00 of additional
Debt (to a Person other than the Company or a Subsidiary) pursuant to
<Section>5.1(B).

SECTION 5.5. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The
Company will not, and will not permit any Subsidiary to, voluntarily
liquidate or dissolve, or consolidate or merge with any other Person, or
permit any other Person to consolidate or merge with it, or sell, lease,
transfer or otherwise dispose of any of its assets to any other Person
(other than in the ordinary course of business), except that:

(a) any Subsidiary may consolidate into or merge with (1) the
Company or any Subsidiary (if the Company or such Subsidiary shall be
the continuing or surviving corporation) or (2) any other corporation
(if such Subsidiary shall be the continuing or surviving corporation);

(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of its assets in their entirety to the Company or any
Subsidiary, and may thereafter liquidate and dissolve;

(c) the Company may merge with any other corporation provided
that the Company shall be the continuing or surviving corporation;

(d) the Company may consolidate with or merge into, or sell,
lease, or otherwise dispose of its assets as an entirety or
substantially as an entirety to, any solvent corporation which shall
be duly organized and validly existing in good standing under the laws
of the United States of America or a state thereof, which shall be
engaged in a line of business which is substantially the same or
similar to the business in which the Company and its Subsidiaries are
primarily engaged on the date of this Agreement and which shall
expressly assume, pursuant to a written agreement satisfactory in
form, scope and substance to the holders of the Notes, the due and

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<PAGE>
punctual payment of the principal of, premium, if any, and interest on
the Notes according to their tenor, and the due and punctual
performance and observance of the obligations of the Company under the
Agreements and the Notes, an executed counterpart of which assumption
agreement shall have been furnished to each holder of a Note together
with a favorable opinion of counsel satisfactory to each such holder
covering such matters relating to such assumption and such assumption
agreement as such holder may reasonably request; and

(e) the Company or any Subsidiary, in addition to making any
sale, lease or other disposition permitted by the foregoing provisions
of this <Section>5.5, may sell or otherwise dispose of any of its
assets for a consideration at least equal to the fair value of such
assets (as determined in good faith by the Company) at the time of
such sale or other disposition, PROVIDED, HOWEVER, that, (1) if such
sale, lease or other disposition shall relate to the assets of a
Subsidiary, the requirements of <Section>5.4 with respect to the
disposition of the stock of such Subsidiary shall be complied with,
and (2) the assets so sold, leased or otherwise disposed of on any
date, when taken together with all other assets theretofore sold,
leased or otherwise disposed of by the Company and its Subsidiaries in
accordance with this subsection (e) (including all dispositions of
Debt and stock and similar interests of Subsidiaries pursuant to
<Section>5.4), during the period of twelve months ending on (and
including) the date of such disposition, shall not have an aggregate
book value which shall exceed 10% of the book value of the
consolidated assets of the Company and its Subsidiaries as at the end
of the quarterly fiscal period of the Company which shall have ended
most recently prior to such date.

It shall be a further condition to any consolidation, merger, sale,
lease or other disposition under subsection (a), (c), (d) or (e) of this
<Section>5.5, that, on the date of such consolidation, merger, sale, lease
or other disposition and immediately after giving effect to such action, no
Default or Event of Default shall have occurred and be continuing and a
Subsidiary shall at such time be permitted to incur $1.00 of additional
Debt (to a Person other than the Company or a Subsidiary) pursuant to
<Section>5.1(B). Nothing contained in this <Section>5.5 shall permit the
disposition of assets consisting of Debt, stock or similar interests in any
Subsidiary unless such disposition is also in compliance with <Section>5.4.

SECTION 5.6. INVESTMENTS, ETC. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, through a Subsidiary or
otherwise, make or own any Investment, except:

(a) the Company and its Subsidiaries may make and own
Investments in (1) marketable direct obligations issued by the United
States of America or by any agency thereof which in the case of the

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<PAGE>
latter are supported by the full faith and credit of the United States
of America, in each case having a maturity not in excess of one year
from the date of acquisition thereof; (2) commercial paper maturing
not later than one year from the date of creation thereof and rated in
the highest rating classification by any rating service recognized
nationally in the United States; (3) certificates of deposit maturing
within one year from the date of acquisition thereof issued by
commercial banks or trust companies and rated in one of the two
highest rating classifications by any rating service recognized
nationally in the United States; (4) mutual funds substantially all of
the assets of which consist of cash and Securities of the types
specified in clause (1) through (3) above; and (5) readily marketable
Eurodollar obligations having a maturity not in excess of one year
from the date of acquisition thereof issued by commercial banks or
trust companies and rated in the highest rating classification by any
rating service recognized nationally in the United States;

(b) the Company and its Subsidiaries may make and own (1)
Investments in any Subsidiary or any Person which is or simultaneously
therewith becomes a Subsidiary (PROVIDED that, no Investments shall be
permitted to be made by the Company or any Subsidiary pursuant to this
clause (b)(1) in Spartan Insurance or any Insurance Subsidiary
referred to in clause (2) of this <Section>5.6(B)), and (2)
Investments consisting of common stock of Spartan Insurance or common
stock of any other Subsidiary organized to conduct or engaged in the
business of insurance underwriting (any such Subsidiary, an "INSURANCE
SUBSIDIARY"); PROVIDED that the amount of all such Investments by the
Company and its Subsidiaries permitted by this clause (2) in Spartan
Insurance and in Insurance Subsidiaries shall not, in the aggregate
for all such Investments exceed $5,000,000;

(c) Spartan Insurance may make and own any Investments required
or permitted to be owned by it under the insurance laws and
regulations of its jurisdiction of incorporation;

(d) the Company and its Subsidiaries may make and own (1)
Investments in Country Fresh, Inc. and Oven Fresh, Inc., each a
Michigan corporation, and in any other similar entity (each a
"SUPPLIER ENTITY") which is owned in whole or in part by the Company,
a Subsidiary or another Person (a "MEMBER RETAILER") which is both an
owner of common stock of the Company and a retail customer of the
Company, if a significant portion of the business of such Supplier
Entity is supplying grocery merchandise to the Company or to Member
Retailers, and (2) Investments in Member Retailers consisting of loans
or other Investments similar in character to comparable loans and
Investments made in Member Retailers prior to the date hereof for the
purpose of new store development or store expansion or remodeling by
such Member Retailers;

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<PAGE>
(e) Investments as of January 2, 1993 and specified on Schedule
III attached hereto; and

(f) the Company may make and own Investments not otherwise
permitted by this <Section>5.6, PROVIDED, HOWEVER, that on the date of
and after giving effect to any such other Investment, (1) no Default
or Event of Default shall have occurred and be continuing, (2) a
Subsidiary would at such time be permitted to incur $1.00 of
additional Debt (to a Person other than the Company or a Subsidiary)
pursuant to Section 5.1(b), and (3) the aggregate amount of all such
other Investments permitted by this paragraph (f) shall not exceed an
amount equal to 10% of Consolidated Tangible Assets as at the end of
the fiscal quarter of the Company which shall have ended most recently
prior to such date.

For all purposes of this <Section>5.6, Investments owned by any Person
at the time it becomes a Subsidiary shall be deemed to be made at such
time.

SECTION 5.7. RESTRICTED PAYMENTS. (a) The Company will not directly
or indirectly, through a Subsidiary or otherwise, declare, order, pay, make
or set apart any sum or property for any Restricted Payment, unless, at the
time of such proposed action and immediately after giving effect thereto
and to any other substantially concurrent action:

(1) no condition or event shall exist which constitutes a
Default or Event of Default;

(2) a Subsidiary would at such time be permitted to incur $1.00
of additional Debt (to a Person other the Company or a Subsidiary)
pursuant to Section 5.1(b); and

(3) the aggregate amount of all sums and property included in
all Restricted Payments directly or indirectly declared, ordered,
paid, made or set apart by the Company during the period (taken as one
accounting period), from and including March 29, 1992 to and including
the date of such proposed action (the "COMPUTATION PERIOD") shall not
exceed the sum of (i) $7,500,000 PLUS (ii) Consolidated Net Income for
the Computation Period (or if such Consolidated Net Income is a
negative figure, then minus 100% of such figure) PLUS (iii) an amount
equal to 50% of the value, as shown on the books of the Company on the
date of distribution, of the common stock of the Company distributed
in payment of Volume Incentive Rebates during the Computation Period.

For the purposes of this <Section>5.7(A), the amount involved in any
Restricted Payment directly or indirectly declared, ordered, paid or made
or set apart in property shall be the greater of (A) the fair market value
of such property (as determined in good faith by a resolution of the Board

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of Directors) and (B) the net book value thereof on the books of the
Company (determined in accordance with GAAP), in each case as determined on
the date such Restricted Payment is declared, ordered, paid or made or set
apart.

(b) The Company will not declare any dividend (other than
dividends payable solely in shares of its own common stock) on any
shares of any class of its stock which is payable more than 60 days
after the date of declaration thereof.

(c) Except pursuant to mandatory provisions of applicable law
restricting the payment of dividends, the Company will not and will
not permit any Subsidiary to enter into or otherwise become subject to
any charter provision, contract or agreement which limits the amount,
or otherwise imposes restrictions on the payment, of dividends by any
Subsidiary.

SECTION 5.8. NATURE OF BUSINESS. The Company will not, and will not
permit any Subsidiary to, engage in any line of business in which it is not
currently engaged if as a result thereof the business of the Company and
its Subsidiaries taken as a whole would be substantially different from
what it was at the date of this Agreement.

SECTION 5.9. PAYMENT OF NOTES; MAINTENANCE OF BOOKS AND OFFICE. (a)
The Company will duly and punctually pay the principal of, premium, if any,
and interest on the Notes in accordance with the terms of the Notes and the
Agreements. The Company will maintain its principal office at a location
in the United States of America where notices, presentations and demands in
respect of this Agreement and the Notes may be made upon it and will
notify, in writing, each holder of a Note of any change of location of such
office; and such office shall be maintained at 850 76th Street S.W., Grand
Rapids, Michigan 49518 until such time as the Company shall so notify the
holders of the Notes of any such change.

(b) The Company will, and will cause each of its Subsidiaries
to, maintain a system of accounting established and administered in
accordance with GAAP, keep proper books of record and account in which
full, true and correct entries are made of its business transactions,
and set aside appropriate reserves, all in accordance with GAAP.

SECTION 5.10. CORPORATE EXISTENCE; PAYMENT OF TAXES; MAINTENANCE OF
PROPERTIES; INSURANCE; COMPLIANCE WITH LAWS; MAINTENANCE OF PATENTS, ETC.
The Company will, and will cause each of its Subsidiaries to:

(a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence (except as
otherwise permitted by <Section>5.5) and its licenses, rights (charter
and statutory) and franchises, except that, subject to compliance

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with <Sections>5.4 and 5.5, the licenses, rights and franchises of
the Company or any Subsidiary may be abandoned, modified, or
terminated if in the good faith judgment of the Company such
abandonment, modification or termination is in the best interest of
the Company;

(b) pay and discharge or cause to be paid and discharged when
due (1) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of its
property (real, personal or mixed), or upon any part thereof, and (2)
all lawful claims of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons for labor, materials, supplies
and Rentals which, if unpaid, might by law become a Lien upon any of
its property; PROVIDED, HOWEVER, that the failure of the Company or
any Subsidiary to pay any such tax, assessment, charge, levy or claim
shall not constitute a Default hereunder (i) if and for so long as the
amount, applicability or validity thereof shall concurrently be
contested in good faith by appropriate and timely actions or
proceedings diligently pursued and effective to delay or 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) if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor (or, if no such reserve or other provision is required, the
Company shall have set aside on its books reserves deemed by it to be
adequate therefor);

(c) maintain and keep, or cause to be maintained and kept, in
good repair and working order (ordinary wear and tear excepted) all
material properties used or useful in the business of the Company and
its Subsidiaries, and from time to time make or cause to be made all
needful and proper repairs, renewals, replacements and improvements
thereof so that the business carried on in connection therewith may
continue to be conducted consistent with industry standards;

(d) keep adequately insured, by financially sound and reputable
insurers, all of its property of a character usually insured against
by prudent corporations engaged in the same or a similar business and
similarly situated against loss or damage of the kinds and in amounts
customarily insured against by such corporations and with deductibles
or co-insurance no greater than is customary, and carry, with such
insurers in customary amounts and with deductibles or coinsurance no
greater than is customary, such other insurance, including public
liability insurance and liability insurance against claims for any
violation of applicable law, as is usually carried by prudent
corporations of established reputation engaged in the same or a
similar business and similarly situated;

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<PAGE>
(e) comply in all material respects with all applicable lawful
statutes, including, without limitation ERISA, regulations and orders
of, and all applicable lawful restrictions imposed by, any court,
arbitrator or Governmental Body, in respect of the conduct of its
business and the ownership of its properties (including, without
limitation, applicable statutes, regulations and orders relating to
equal employment opportunities and all Environmental Legal
Requirements), except (1) such as are being contested in good faith by
appropriate and timely actions or proceedings diligently conducted and
effective to delay or prevent the forfeiture or sale of any property
of the Company or a Subsidiary, and for which such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made (or, if no such reserve or other provision is required, for
which the Company shall have set aside on its books reserves deemed by
it to be adequate therefor) or (2) such as non-compliance with which
would not reasonably be expected to have a Material Adverse Effect;
and

(f) maintain the validity of all patents, trademarks, service
marks, trade names, copyrights and the -like necessary in any material
respect for the conduct of its business as now conducted and as
proposed to be conducted.

SECTION 5.11. REPURCHASE OF NOTES. Neither the Company nor any of
its Affiliates, 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 canceled and no Notes shall be issued in substitution
therefor. Without limiting the foregoing, upon the purchase or other
acquisition of any Notes by the Company or any of its Affiliates, such
Notes shall no longer be outstanding for purposes of any section of this
Agreement relating to the taking by the holders of the Notes of any actions
with respect thereto, including, without limitation, <Sections>6.3, 6.4
and 7.1.

SECTION 5.12. FINANCIAL STATEMENTS; INFORMATION. The Company will
furnish (in duplicate) to you, so long as you or your nominee shall be
obligated to purchase or shall hold any of the Notes and to each other
Institutional Holder of 5% or more of the aggregate outstanding principal
amount of the Notes or which has acquired 100% of the outstanding Notes
originally issued to an Initial Holder:

(a) as soon as practicable and in any event within 60 days after
the end of each of the first three quarterly fiscal periods in each
fiscal year of the Company, consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such
quarterly period and the related consolidated and consolidating

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statements of earnings, stockholders' equity and cash flows of the
Company and its Subsidiaries for such period and (in the case of the
second and third such quarterly periods) for the portion of the fiscal
year ended with the last day of such quarterly period, setting forth,
in the case of such consolidated statements, in comparative form the
figures for the corresponding periods of the previous fiscal year, all
in reasonable detail and certified as complete and correct in all
material respects (subject to changes resulting from year-end audit
adjustments) by the principal financial officer of the Company;

(b) as soon as practicable and in any event within 90 days after
the end of each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of
the end of such year and the related consolidated and consolidating
statements of earnings, stockholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the
respective figures for the previous fiscal year, all in reasonable
detail and (1) in the case of such consolidated financial statements,
accompanied by a report thereon of Deloitte & Touche or other
independent certified public accountants of recognized national
standing selected by the Company, which report (i) shall not be made
in reliance upon the opinion of any other accountant; (ii) shall be
made without qualifications or modifications within the meaning of
Statement on Auditing Standards No. 58 (except for such qualifications
and modifications resulting from changes in accounting principles and
methods agreed to by such accountants); (iii) shall state that the
financial statements are the responsibility of the Company's
management and the independent auditor's responsibility is to express
an opinion on the financial statements based on the audits; (iv) shall
state that the audits are conducted in accordance with generally
accepted auditing standards, which require the planning and
performance of the audit to obtain reasonable assurance as to whether
the financial statements are free of material misstatement, including
the examination, on a test basis, of evidence supporting the amounts
and disclosures in the financial statements and the assessment of the
accounting principles used and of significant estimates by management,
as well as an evaluation of the overall financial statement
presentation; and (v) shall state that such financial statements
present fairly, in all material respects, the financial position of
the companies being reported upon as of the dates indicated and the
results of their operations and their cash flows for the periods
indicated in conformity with GAAP, and (2) in the case of such
consolidating financial statements, certified as complete and correct
in all material respects by the principal financial officer of the
Company;

(c) concurrently with each delivery of financial statements
pursuant to clause (a) or (b) of this <Section>5.12, an Officers'
Certificate:

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<PAGE>
(1) stating that the signatories thereto have reviewed the
terms of the Agreements and of the Notes and have made, or caused
to have been made under their supervision, a review in reasonable
detail of the transactions and conditions of the Company and its
Subsidiaries during the accounting period covered by such
financial statements, and that such review has not disclosed the
existence during or at the end of such accounting period, and
that such signatories do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or
event which constitutes a Default or an Event of Default, or, if
any such condition or event existed or exists, the nature and
period of existence thereof and what action the Company has taken
or is taking or proposes to take with respect thereto,

(2) setting forth, as of the date of such balance sheet for
such period, (i) the respective amounts of Stockholders' Equity,
Consolidated Net Income, Consolidated Current Assets,
Consolidated Current Liabilities, Consolidated Tangible Assets,
Consolidated Funded Debt, Net Income Available for Fixed Charges
and Fixed Charges, (ii) the aggregate amount of Volume Incentive
Rebates for which the Company or any Subsidiary shall have become
obligated during such period and the respective portions thereof
which shall have been paid in common stock and cash, and (iii)
the aggregate principal amount of outstanding Funded Debt and
Current Debt of all Subsidiaries and outstanding Debt secured by
Liens permitted by <Section>5.2, and

(3) setting forth facts or computations in reasonable
detail demonstrating compliance with the restrictions contained
in <Sections>5.1, 5.2, 5.5(E), 5.6(B), 5.6(F) and 5.7;

(d) together with each delivery of annual financial statements
pursuant to clause (b) of this <Section>5.12, a written statement by
the independent public accountants referred to in said clause (b):

(1) stating that (i) they have read the Officers'
Certificate delivered in connection with the annual financial
statements pursuant to clause (c) of this <Section>5.12 for such
fiscal year, and (ii) based upon their annual audit examination
of the consolidated financial statements delivered pursuant to
clause (b) of this <Section>5.12 nothing has come to their
attention which causes them to believe that the matters set forth
in such Officers' Certificate pursuant to clauses (2) and (3) of
such clause (c) have not been properly stated in accordance with
the terms of the Agreements, and

(2) stating that, although their audit was not directed
toward obtaining knowledge of noncompliance, nothing came to

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their attention in connection with their audit which caused them
to believe that the Company was not in compliance with the
provisions of <Sections>5.1 through 5.10 of this Agreement,
insofar as such provisions relate to accounting matters;

(e) promptly upon receipt thereof (and in any event within five
Business Days thereafter), copies of all reports submitted to the
Company or any Subsidiaries by independent public accountants in
connection with any annual, interim or special audit of the Company or
any Subsidiaries made by such accountants;

(f) promptly upon their becoming available (and in any event
within five Business Days thereafter), copies of (1) all financial
statements, reports, notices, proxy statements and other information
sent or made available generally by the Company to any class of its
Security holders (other than promotional and other materials furnished
to holders of common stock of the Company solely by reason of their
status as customers of the Company or a Subsidiary), and (2) all
regular and periodic reports (including reports on Form 8-K) and any
registration statements and prospectuses filed by the Company or any
of its Subsidiaries with any securities exchange or with the
Commission;

(g) promptly upon any Responsible Officer obtaining knowledge of
any condition or event which constitutes a Default or an Event of
Default, or becoming aware that the holder of any Note has given any
notice or taken any other action with respect to a claimed Default or
Event of Default or that any Person has given any notice to the
Company or any Subsidiary or taken any other action with respect to a
claimed default under or in respect of any Debt or lease referred to
in <Section>6.1(F) or (G) or with respect to the occurrence or
existence of any event or condition of the type referred to in
<Section>6.1(J), (K) or (1), an Officers' Certificate specifying the
nature and period of existence thereof and what action the Company has
taken or is taking or proposes to take with respect thereto;

(h) promptly upon any Responsible Officer becoming aware of the
occurrence of any (1) Reportable Event or (2) non-exempt "PROHIBITED
TRANSACTION," as such term is defined in Section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written
notice specifying the nature thereof, what action the Company has
taken, is taking and proposes to take with respect thereto, and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto; and

(i) promptly upon request therefor (and in any event within five
Business Days thereafter), such other information as to the business,
properties, operations or condition (financial or otherwise) of the

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Company or any of its Subsidiaries as may from time to time be
reasonably requested by any holder of the Notes.

SECTION 5.13. INSPECTION RIGHTS. So long as you or your nominee
holds any Note, or any other Institutional Holder holds 5% in aggregate
outstanding principal amount of the Notes or has acquired 100% of the
outstanding Notes originally issued to an Initial Holder, your or such
other Institutional Holder's representative or representatives may visit
and inspect any of the properties of the Company and its Subsidiaries,
including their respective books of account, records, reports and other
papers, make copies and extracts therefrom, and discuss their affairs,
finances and accounts with their respective officers and independent public
accountants (and the Company hereby authorizes and directs each such
officer and independent public accountant to engage in such discussion),
all at such reasonable times during normal business hours upon reasonable
prior notice to the President or a Vice President of the Company and as
often as may be reasonably requested. Any visitation shall be at the sole
expense of you or such Institutional Holder unless a Default or Event of
Default shall have occurred and be continuing or if the holder of any Note
or of any other evidence of Indebtedness of the Company or any Subsidiary
gives any written notice or takes any other action with respect to claimed
default (unless, with respect to a claimed default, the Company is
contesting the existence thereof in good faith by appropriate actions or
proceedings), in which case the Company will be obligated to pay for the
reasonable expenses of any such visitation or inspection.

SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.

SECTION 6.1. EVENTS OF DEFAULT. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:

(a) Default shall occur in the payment of interest on any Note
when the same shall have become due and such default shall continue
for more than five Business Days; or

(b) Default shall occur in the making of any required prepayment
on any of the Notes as provided in <Section>2.1; or

(c) Default shall occur in the making of any other payment of
the principal of any Note or the premium thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment; or

(d) Default shall occur in the observance or performance of any
covenant or agreement contained in <Section>5.L through <Section>5.8,
inclusive, or <Section>5.12(G) hereof; or

(e) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days

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after the earlier of (1) the day on which a Responsible Officer of the
Company first obtains knowledge of such Default and (2) the day on
which written notice thereof is given to the Company by the holder of
any Note; or

(f) Default shall be made in the payment of the principal of or
interest on any Debt of the Company or any Subsidiary for borrowed
money aggregating in excess of $250,000, 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

(g) Default or the happening of any event under any indenture,
agreement, or other instrument under which any Debt of the Company or
any Subsidiary for borrowed money aggregating in excess of $250,000
may be issued and such default, event or condition shall continue for
a period of time sufficient to permit the acceleration of the maturity
of any Debt of the Company or any Subsidiary outstanding thereunder;
or

(h) Any representation or warranty made by the Company herein,
or made by the Company in any statement or certificate furnished by or
on behalf of 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

(i) Final judgment or judgments for the payment of money
aggregating in excess of $250,000 is or are outstanding against the
Company or any Subsidiary or against any property or assets of either
and any one of such judgments in excess of $250,000 has, or an
aggregate of such judgments for more than $250,000 have, remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period of 30 days from the date of its entry; or

(j) A custodian, liquidator, 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 60 days after such
appointment; or

(k) 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,
liquidator, trustee or receiver for the Company or such Subsidiary or
for the major part of the property of either; or

(1) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or

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<PAGE>
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.

SECTION 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 Debt 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 or
certified mail or by telegram.

SECTION 6.3. ACCELERATION OF MATURITIES. When any Event of Default
described in paragraph (a), (b) or (c) of <Section>6.1 has happened and is
continuing, any holder of any Note as to which such Event of Default has
occurred may, by notice in writing sent in the manner provided in Section
9.6 hereof to the Company, declare the entire principal and interest
accrued on such Note to be, and such Note shall thereupon become forthwith
due and payable, without any presentment, demand, protest or other notice
of any kind, all of which is hereby expressly waived. When any Event of
Default described in paragraphs (a) through (i), inclusive, of said
<Section>6.1 has happened and is continuing, the holder or holders of 35%
or more of the principal amount of Notes at the time outstanding may, by
notice in writing sent in the manner provided in <Section>9.6 hereof 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), (k) or (1) 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 unpaid principal
balance of the Notes then outstanding, together with all accrued and unpaid
interest thereon and, to the extent not prohibited by applicable law, an
amount as liquidated damages for the loss of the bargain evidenced hereby
(and not as a penalty) equal to the Make-Whole Amount, determined as of the
day on which the Notes shall so become due and payable. No course of
dealing on the part of any holder of the Notes nor any delay or failure on
the part of any holder of the Notes to exercise any right shall operate as
a waiver of such right or otherwise prejudice such holder's rights, powers
and remedies. The Company further agrees, to the extent permitted by law,
to pay to the holder or holders of the Notes all costs and expenses
incurred by them in the 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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SECTION 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 delivered to 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 been duly paid; and

(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to <Section>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.

SECTION 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 (a) 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 thereon, or (b) which will change any of the provisions with
respect to optional prepayments, or (c) 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 <Section>6 or this <Section>7.

SECTION 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

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it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company
with sufficient information to enable it to make an informed decision with
respect thereto. Executed or true and correct copies of any waiver
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 cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or otherwise, to
any holder of the Notes as consideration for or as an inducement to the
entering into by 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 then outstanding.

SECTION 7.3. EFFECT OF AMENDMENT OR WAIVER; SCOPE OF CONSENT. (a)
Any amendment or waiver approved in accordance with <Section>7.1 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 waived or impair any right consequent thereon.

(b) Any consent to an amendment or waiver given pursuant to
<Section>7.1 by a holder of a Note which has (1) transferred or agreed to
transfer all or a portion of its Notes to the Company or any of its
Affiliates and (2) provided such consent as a condition to such transfer,
shall be valid and binding only upon such holder. Any amendment or waiver
which becomes effective only with such consent (and the consents of all
other holders of the Notes which were acquired under the same or similar
conditions) shall be valid and binding only upon such holder or holders.

SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.

SECTION 8.1. DEFINITIONS. Unless the context otherwise requires,
the terms hereinafter set forth when used in this Agreement and in any
schedule or exhibit attached hereto shall have the following meanings, and
the following definitions shall be equally applicable to both the singular
and plural forms of any of the herein defined:

"AFFILIATE" with respect to any designated Person, shall mean any
other Person (a) directly or indirectly controlling or controlled by or
under direct or indirect common control with such designated Person, (b)
which beneficially owns or holds 5% or more of the shares of any class of
Voting Stock of such designated Person or (c) 5% or more of any class of
the Voting Stock of which is beneficially owned or held by such designated
Person. For purposes of this definition, "CONTROL" (including, with

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correlative meanings, the terms "CONTROLLED BY" AND "UNDER COMMON CONTROL
WITH"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Stock or by contract or otherwise.

"AGREEMENTS" is defined in <Section>1.2.

"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company
or a duly authorized committee of directors lawfully exercising the
relevant powers of such Board.

"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which commercial banks are authorized by law to be closed in
Michigan.

"CAPITAL LEASE" as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with GAAP, be required to be classified and accounted
for as a capital lease of such Person, other than, in the case of the
Company or a Subsidiary, any such lease under which the Company or a
Subsidiary is the lessor.

"CAPITAL LEASE OBLIGATION" with respect to any Capital Lease, shall
mean the amount of the obligation of the lessee thereunder, determined in
accordance with GAAP, in respect of such Capital Lease.

"CLOSING DATE" is defined in <Section>1.2.

"CODE" shall mean the Internal Revenue Code of 1986, as amended.

"COMMISSION" shall mean the Securities and Exchange Commission and any
other similar or successor agency of the Federal government administering
the Securities Act.

"COMPANY" is defined in the introductory paragraph hereof.

"COMPUTATION PERIOD" is defined in <Section>5.7(A).

"CONSOLIDATED CURRENT ASSETS" as at any date of determination, shall
mean the amount at which the current assets of the Company and its
Subsidiaries would be shown on a consolidated balance sheet of the Company
and its Subsidiaries prepared in accordance with GAAP as at such date.

"CONSOLIDATED CURRENT LIABILITIES" as at any date of determination,
shall mean the amount at which the current liabilities of the Company and
its Subsidiaries would be shown on a consolidated balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP as at such
date.

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"CONSOLIDATED FUNDED DEBT" as at any date of determination, shall mean
the aggregate principal amount of all Funded Debt of the Company and its
Subsidiaries outstanding on such date, determined in accordance with GAAP
on a consolidated basis, after eliminating all intercompany items.

"CONSOLIDATED NET INCOME" for any period, shall mean the net earnings
(or net deficit) of the Company and its Subsidiaries for such period (taken
as a cumulative whole) after deducting, without duplication, all operating
expenses, interest expenses, rentals, provisions for all taxes and reserves
(including reserves for deferred income taxes), an Volume Incentive Rebates
(whether or not paid out), and all other proper deductions, all determined
in accordance with GAAP on a consolidated basis after eliminating all
intercompany items and deducting portions of income properly attributable
to outside minority interests, if any, in any Subsidiary; PROVIDED,
HOWEVER, that there shall be excluded:

(a) the proceeds of any life insurance policy;

(b) any gain arising from (1) the sale or other disposition not
in the ordinary course of business of any assets (other than current
assets) to the extent that the aggregate amount of the gain exceeds
the aggregate amount of losses from the sale, abandonment or other
disposition of assets (other than current assets), (2) any writeup of
assets, (3) the acquisition of any Securities evidencing, or the
extinguishment under GAAP of, Debt of the Company or any Subsidiary or
(4) the termination of an employee benefit plan;

(c) any amount representing the interest of the Company or any
Subsidiary in the undistributed earnings of any Person other than a
Subsidiary;

(d) any income or deficit, prior to the date of acquisition, of
any Person acquired in any manner by the Company or a Subsidiary;

(e) in the case of a successor to the Company or any Subsidiary
by consolidation or merger or a transferee of its assets, any earnings
of the successor or transferee corporation prior to the consolidation,
merger or transfer of assets;

(f) any restoration to income of any contingency reserve, except
to the extent provision for such reserve was made out of income
accrued during such period;

(g) any net income of a Subsidiary which for any reason is
unavailable for the payment of dividends to the Company or another
Subsidiary; and

(h) any items properly classified as extraordinary in accordance
with GAAP.

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"CONSOLIDATED TANGIBLE ASSETS" as at any date of determination, shall
mean the aggregate book value as of such date of the assets of the Company
and its Subsidiaries, real, personal and mixed (but exclusive of treasury
stock and franchises, licenses, permits, patents, patent applications,
copyrights, trademarks, trade names, goodwill, experimental or
organizational expense, unamortized debt discount and expense, deferred
charges and other like intangibles), determined on a consolidated basis in
accordance with GAAP, LESS the aggregate book value of all assets of the
following character included therein: (a) all reserves for depreciation,
depletion, obsolescence and/or amortization of properties (other than
properties excluded as hereinabove provided) and all other reserves (other
than general contingency reserves not allocated to any particular purpose
and reserves representing mere appropriations of surplus) set aside in
connection with the business conducted by the Company and its Subsidiaries,
(b) any write-up in the book value of any asset resulting from the
revaluation thereof subsequent to the date of the most recent audited
financial statements referred to in paragraph 4 of Exhibit B, or any write-
up in excess of the cost of any asset acquired subsequent to such date, and
(c) assets subject to Liens granted by Spartan Insurance on property owned
by it to secure any reimbursement obligation in respect of letters of
credit issued by commercial banks for the account of Spartan Insurance.

"CURRENT DEBT" of any Person as of the date of determination thereof,
shall mean all Debt of such Person other than any such Debt which
constitutes Funded Debt as of such date.

"DEBT" as applied to any Person shall mean (a) all debt of such Person
for borrowed money (and any notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money), (b) any obligation of such Person for all or any part of the
purchase price of property or other assets or for the cost of property or
other assets constructed or of improvements, (c) any obligation secured by
any Lien on or payable out of the proceeds of production from property
owned by such Person even though such Person has not assumed or become
liable for the payment of such obligation, (d) any Capital Lease Obligation
of such Person, (e) any Guaranty by such Person of or with respect to Debt
of another Person, and (f) subject to the following sentence, all
liabilities of such Person for unfunded vested pension and non-pension
benefits. Debt of the Company and its Subsidiaries shall not by reason of
the foregoing clause (f) include obligations of the Company or any
Subsidiary in respect of (1) unfunded vested pension benefits related to
the withdrawal (within the meaning of Title IV of ERISA) by the Company or
any Subsidiary from a Multiemployer Plan or (2) the reorganization (within
the meaning of Section 4241 of ERISA), insolvency (within the meaning of
Section 4245 of ERISA), or termination (within the meaning of Title IV of
ERISA) of any Multiemployer Plan, which obligations are not required in
accordance with GAAP to be shown as a liability on a consolidated balance
sheet of the Company and its Subsidiaries and are not in any event

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attributable to a failure by the Company or such Subsidiary to make
required contributions when due, until, in the case of any obligations
described in the immediately foregoing clause (1), such time as the Company
or a Subsidiary has withdrawn from a Multiemployer Plan or, in the case of
any obligations described in the foregoing clause (2), until such time as
the Company or a Subsidiary, has received notice from the sponsor of such
Multiemployer Plan that such Multiemployer Plan is in reorganization, is
insolvent or has been terminated, as the case may be. In determining the
Debt and assets of any Person, no effect shall be given to deposits, trust
arrangements or similar defeasance arrangements which, in accordance with
GAAP, extinguish Debt for which such Person remains legally liable.

"DEFAULT" shall mean any condition or event which, with notice or
lapse of time or both, would become an Event of Default.

"ENVIRONMENTAL LEGAL REQUIREMENT" shall mean any Federal, state or
local statute, law, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, any such applicable law,
statute or ordinance relating to releases, discharges or emissions to air,
water, land or groundwater, to the withdrawal or use of groundwater, to the
use and handling of polychlorinated byphenyls or asbestos, to the disposal,
treatment, storage or management of solid or hazardous wastes or Hazardous
Substances or crude oil, or fraction thereof, or to exposure to toxic or
hazardous materials, to the handling, transportation, discharge or release
of gaseous or liquid Hazardous Substances and any regulation, order, notice
or demand issued pursuant to such law, statute or ordinance, in each case
applicable to the property of the Company and its Subsidiaries or the
operation, construction or modification of any thereof, including without
limitation the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act of 1976 and the
Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials
Transportation Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking Water Control
Act, the Clean Air Act of 1966, as amended, the Toxic Substances Control
Act of 1976, the Occupational Safety and Health Act of 1977, as amended,
the Emergency Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution Act of 1990
and any similar or implementing state law, and any state statute and any
further amendments to these laws providing for financial responsibility for
cleanup or other actions with respect to the release or threatened release
of Hazardous Substances or crude oil, or any fraction thereof and all
rules, regulations, guidance documents and publication promulgated
thereunder.

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<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

"ERISA AFFILIATE" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations
or a controlled group or trades or businesses, as described in Section
414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA.

"EVENT OF DEFAULT" is defined in <Section>6.1.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same may be in effect at the time.

"FIXED CHARGES" for any period shall mean on a consolidated basis the
sum of (a) all Rentals (other than Capital Lease Obligations) payable
during such period by the Company and its Subsidiaries, and (b) Interest
Expense on all Indebtedness (including the interest component of Capital
Lease Obligations) of the Company and its Subsidiaries payable during such
period.

"FIXED PAYMENT DATES" is defined in <Section>2.1.

"FUNDED DEBT" of any Person as of the date of determination thereof,
shall mean all Debt of such Person, whether secured or unsecured, having a
final maturity (or which, pursuant to the terms of a revolving credit
agreement or otherwise, is renewable or extendible at the option of such
Person for a period ending) more than one year after the date of the
creation thereof (excluding any portion thereof which is on such date
included in current liabilities of such Person).

"GAAP" shall mean generally accepted accounting principles as in
effect in the United States from time to time.

"GOVERNMENTAL BODY" shall mean any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.

"GUARANTY" as applied to any Person, shall mean any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by
such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any Security therefor,

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<PAGE>
or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or any balance
sheet or other financial condition of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders
of such obligation will be protected against loss in respect thereof. The
amount of any Guaranty shall be equal to the amount of the obligation
guaranteed.

"HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional
or Federal authority having jurisdiction over the property of the Company
and its Subsidiaries or its use, including but not limited to any material,
substance or waste which is: (a) defined as a hazardous substance under
Section 311 of the Federal Water Pollution Control Act (33 U.S.C
<Section>1317) as amended; (b) regulated as a hazardous waste under Section
1004 or Section 3001 of the Federal Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act (42 U.S.C. <Section>6901 et
seq.) as amended; (c) defined as a hazardous substance under Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act,
(42 U.S.C. <Section>9601 et seq.) as amended, or (d) defined or regulated
as a hazardous substance or hazardous waste under any rules or regulations
promulgated under any of the foregoing statutes.

"INITIAL HOLDER" shall mean any one of Principal Mutual Life Insurance
Company, Nippon Life Insurance Company of America, United of Omaha Life
Insurance Company, United World Life Insurance Company and Companion Life
Insurance Company.

"INSTITUTIONAL HOLDER" shall mean any of the following Persons
existing under the laws of the United States of America or any state
thereof of Canada or any province thereof: (a) any bank, savings
institution, trust company or national banking association, acting for its
own account or in a fiduciary capacity, (b) any charitable foundation, (c)
any insurance company or fraternal benefit society, (d) any pension,
retirement or profit sharing trust or fund for which any bank, trust
company, national banking association or investment adviser registered
under the Investment Advisers Act of 1940, as amended, is acting as trustee
or agent, having surplus and undivided profits of at least $50,000,000, (e)
any investment company, as defined in the Investment Company Act 1940, as
amended, or (f) any government, public employees' pension or retirement
system or other government agency supervising the investment of public
funds.

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"INSURANCE SUBSIDIARY" is defined in <Section>5.6(B).

"INTEREST EXPENSE" for any period shall mean all interest and all
amortization of debt discount and expense on any particular indebtedness
(including, without limitation, payment-in-kind, zero coupon and any other
like Security) for which such calculations are being made. Computations of
Interest Expense on a PRO FORMA basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.

"INVESTMENT" as applied to any Person, shall mean any direct or
indirect purchase or other acquisition by such Person of stock or other
Securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, or any Guaranty by
such Person with respect to the Debt of any other Person, including all
Debt and accounts receivable from such other Person which are not current
assets or did not arise from transactions with such other Person in the
ordinary course of business. In computing the amount involved in any
Investment, (a) undistributed earnings of, and interest accrued in respect
of Debt owing by, such other Person accrued after the date of such
Investment shall not be included, (b) there shall not be deducted from the
amounts invested in such other Person any amounts received as earnings (in
the form of dividends, interest or otherwise) on such Investment or as
loans from such other Person and (c) unrealized increases or decreases in
value, or write-ups, write-downs or write-offs of Investments in such other
Person shall be disregarded.

"LIEN" as to any Person, shall mean any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or
any interest or title of any vendor, lessor, lender or other secured party
to or of such Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of such
Person, or the signing or filing of a financing statement which names such
Person as debtor, or the signing of any security agreement authorizing any
other party as the secured party thereunder to file any financing statement
which names such Person as debtor.

"MATERIAL ADVERSE EFFECT" as applied, to any Person, shall mean a
material adverse effect on such Person's business, properties, operations
or condition (financial or otherwise); PROVIDED that such term, when used
without reference to any particular Person, shall mean such effect on the
Company and its Subsidiaries, taken as a whole.

"MAKE-WHOLE AMOUNT" shall mean in connection with any prepayment of
the Notes the excess, if any, of (a) the aggregate present value as of the
date of such prepayment of each dollar of principal being prepaid (taking
into account the application of such prepayment required by <Section>2.1)
and the amount of interest (exclusive of interest accrued to the date of

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<PAGE>
prepayment) that would have been payable in respect of such dollar if such
prepayment had not been made, determined by discounting such amounts at the
Reinvestment Rate from the respective dates on which they would have been
payable, over (b) 100% of the principal amount of the outstanding Notes
being prepaid plus interest accrued to the date of prepayment. If the
Reinvestment Rate is equal to or higher than 7.27%, the Make-Whole Amount
shall be zero. For purposes of any determination of the Make-Whole Amount:

"REINVESTMENT RATE" shall mean .50%, plus the arithmetic mean of the
yields for the two columns under the heading "WEEK ENDING" published in the
Statistical Release under the caption "TREASURY CONSTANT MATURITIES" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal being prepaid (taking into
account the application of such prepayment required by <Section>2.1). If no
maturity exactly corresponds to such Weighted Average Life to Maturity,
yields for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity 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 Make-Whole
Amount shall be used.

"STATISTICAL RELEASE" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded

U.S. Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of
the outstanding Notes.

"WEIGHTED AVERAGE LIFE TO MATURITY" of the principal amount of the
Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "REMAINING DOLLAR-YEARS" of such principal shall mean the amount
obtained by (1) multiplying (i) the remainder of (A) the amount of
principal that would have become due on each scheduled payment date if such
prepayment had not been made, LESS (B) the amount of principal on the Notes
scheduled to become due on such date after giving effect to such prepayment
and the application thereof in accordance with the provisions of
<Section>2.1, by (ii) the number of years (calculated to the nearest one-
twelfth) which will elapse between the date of determination and such
scheduled payment date, and (2) totaling the products obtained in (1).

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"MEMBER RETAILER" is defined in <Section>5.6(D).

"MULTIEMPLOYER PLAN" shall have the same meaning as in ERISA.

"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the
sum of (a) Consolidated Net Income during such period, PLUS (to the extent
deducted in determining Consolidated Net Income), (b) (i) all provisions
and reserves for any Federal, state (including taxes payable on the
consolidated "BUSINESS INCOME" of the Company and its Subsidiaries as such
term is defined in the Michigan Single Business Tax MCLA <Section>208.1 ET.
SEQ.) or other income taxes made by the Company and its Subsidiaries during
such period, (ii) Fixed Charges of the Company and its Subsidiaries during
such period and (iii) the Non-Cash Portion of Volume Incentive Rebates.

"NON-CASH PORTION OF VOLUME INCENTIVE REBATES" shall mean "REBATES TO
BE PAID IN COMMON STOCK" as shown in the consolidated statement of cash
flows in the consolidated financial statements of the Company and its
Subsidiaries.

"NOTES" is defined in <Section>1.1.

"OFFICERS' CERTIFICATE" shall mean a certificate executed on behalf of
the Company by the Chairman of the Board of Directors (if an officer) or
its President or its Senior Vice President and Chief Financial Officer.

"ORDER" shall mean any order, writ, injunction, decree, judgment,
award, determination, direction or demand.

"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to all or any of its functions under ERISA.

"PERSON" shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.

"PLAN" shall mean a "PENSION PLAN," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to
which the Company or any ERISA Affiliate contributed or is a member or
otherwise may have any liability.

"PRIORITY DEBT AMOUNT" is defined in <Section>5.1(B).

"PURCHASERS" is defined in <Section>1.1.

"RENTALS" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee
is obligated to make to the lessor on termination of the lease or surrender
of the property) payable by the Company or a Subsidiary, as lessee or

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<PAGE>
sublessee under a lease of real or personal property (LESS, in the case of
any determination of Fixed Charges, any Rentals received by the Company or
such Subsidiary as sublessor under any sublease of the same such real or
personal property), but shall be exclusive of any amounts required to be
paid by the Company or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "PERCENTAGE LEASES" shall
be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues and if
any such percentage lease does not so provide for minimum rents, then fixed
rents under any such percentage lease shall be computed on the basis of the
amount of the last payment of rent next preceding any date of determination
thereof.

"REPORTABLE EVENT" shall have the same meaning as in ERISA.

"RESPONSIBLE OFFICER" shall mean any officer of the Company qualified
to sign an Officers' Certificate (in accordance with the definition of that
term) or any other officer of the Company, regardless of title, who shall
at any time hereafter either (a) perform substantially the same duties as
are performed on the date hereof by any such officer so qualified or (b) be
charged with responsibility for monitoring or administering the Company's
compliance with this Agreement.

"RESTRICTED PAYMENT" shall mean any payment or the incurrence of any
liability to make any payment, in cash, property or other assets (other
than shares of any class of capital stock (but not preferred stock) of the
Company) upon or in respect of any share of any class of capital stock of
the Company, including, without limiting the generality of the foregoing,
payments as dividends and payments (other than out of the net proceeds
actually received by the Company in cash from the sale of common shares of
the Company except for any such shares issued in payment of a Volume
Incentive Rebate) for the purpose of purchasing, retiring or redeeming any
such shares of stock (or any warrants or options evidencing a right to
purchase any such shares of stock) or making any other distribution in
respect of any such shares of stock (or any warrants or options evidencing
a right to purchase any such shares of stock).

"SECURITIES ACT" shall mean the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

"SECURITY" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.

"SPARTAN INSURANCE" is defined in <Section>5.1(B)(1).

"STOCKHOLDERS' EQUITY", as at any date of determination of the amount
thereof, shall mean the sum of the capital stock (but excluding treasury

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stock and capital stock subscribed and unissued), additional paid-in
capital, and retained earnings accounts of the Company and its Subsidiaries
appearing on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP as of such date of
determination, after eliminating all amounts properly attributable to
outside minority interests, if any, in the stock and surplus of
Subsidiaries.

"SUBSIDIARY" shall mean any corporation more than 50% of the Voting
Stock of which is at the time owned by the Company or by one or more
Wholly-owned Subsidiaries or by the Company and one or more Wholly-owned
Subsidiaries.

"SUPPLIER ENTITY" is defined in <Section>5.6(D).

"VOLUME INCENTIVE REBATE" shall mean any amount credited, paid or
accrued as payable by the Company or a Subsidiary to pay (whether paid or
payable by credit to accounts payable, in cash, common stock or other
property of the Company) to any retail customer which shall be a holder of
common stock of the Company, in consideration of the purchase by such
customer from the Company or such Subsidiary of a specified volume or
volumes (by dollar amount, number of cases or otherwise) of merchandise, or
of specified average weekly purchases by weight, volume or purchase price,
or of specified order sizes (whether by purchase price, volume or
otherwise), as a rebate on the purchase price of such merchandise, either
as a predetermined percentage of the price charged to such customer for
such merchandise or measured by weight of shipment or otherwise.

"VOTING STOCK" shall mean capital stock of a corporation the holders
of which are ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate directors (or persons performing similar
functions).

"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary, all of the equity
Securities (except directors' qualifying shares) of which are owned by the
Company or another Wholly-owned Subsidiary.

SECTION 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 GAAP, to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement.

SECTION 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.

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SECTION 9. MISCELLANEOUS.

SECTION 9.1. NOTE REGISTER. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the
Notes, and the Company will register or transfer or cause to be registered
or transferred, as hereinafter provided any Note issued pursuant to this
Agreement.

At any time, and from time to time, the 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 holder
of such Note or its attorney duly authorized in writing.

The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any Note shall be made to or upon the written order of such
holder.

SECTION 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 <Section>9.1, this <Section>9.2 or <Section>9.3, 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 (a) $500,000 or any amount in
excess thereof as such holder shall specify, or (b) in the case of any Note
with an unpaid principal amount which is less than $500,000 in such other
denomination (but not less than $100,000) as such holder shall specify,
dated as of the date to which interest has been paid on the Note so
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or
Persons, or registered assigns, as may be designated by such holder, and
otherwise of the same form and tenor as the Notes so surrendered for
exchange. The Company may require the payment of a sum sufficient to cover
any stamp tax or governmental charge imposed upon such exchange or
transfer.

SECTION 9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction
of any Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of the Note, the Company will make and
deliver without expense to the holder thereof, a new Note, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note. If the

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<PAGE>
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.

SECTION 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.
The Company also agrees to pay directly reasonable attorney's fees incurred
by any holder of the Notes in evaluating any controversy and enforcing such
holder's rights and remedies under this Agreement and all expenses relating
to any amendment, waiver or consent pursuant to the provisions hereof
(whether or not the same are actually executed and delivered), including,
without limitation, any amendment, waiver or consent resulting from any
work-out, renegotiation, 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 except for
any and all brokerage fees and commissions incurred by any Person employed
by you in connection with the consummation of this transaction. Without
limiting the foregoing, the Company agrees to pay the cost of obtaining a
private placement number for the Notes and authorizes the submission of
such information as may be required by Standard & Poor's for the purpose of
obtaining such number.

SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No
delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof, nor shall any single
or partial exercise of the same preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies of the holder of any Note are cumulative to and are not exclusive
of any rights or remedies any such holder would otherwise have, and no
waiver or consent, given or extended pursuant to <Section>7 hereof, shall

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<PAGE>
extend to or affect any obligation or right not expressly waived or
consented to.

SECTION 9.6. NOTICES. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by prepaid
overnight air courier, or by facsimile communication 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 prepaid overnight air courier or by facsimile communication,
in each case to the Company at 850 76th Street S.W., Grand Rapids, Michigan
49518, facsimile (616) 878-2775, facsimile confirmation (616) 878-2426,
Attention: Senior Vice President, 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; PROVIDED, HOWEVER, that a notice to you by
overnight air courier shall only be effective if delivered to you at a
street address designated for such purpose in Schedule I; a notice to you
by facsimile communication shall only be effective if made by confirmed
transmission to you at a telephone number designated for such purpose in
Schedule 1, or, in either case, as you or a subsequent holder of any Note
initially issued to you may designate to the Company in writing; and a
notice to the Company by facsimile communication shall only be effective if
made by confirmed transmission to the Company at the telephone numbers set
forth above or at any other telephone numbers the Company may designate to
you in writing.

SECTION 9.7. REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by you at the closing of your purchase of the Notes (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that any such
legible reproduction shall be admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by you in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

SECTION 9.8. 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.

SECTION 9.9. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All
covenants, representations and warranties made by the Company and you

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<PAGE>
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.

SECTION 9.10. 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, hereafter be declared invalid or unenforceable.

SECTION 9.11. GOVERNING LAW. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with
Michigan law.

SECTION 9.12. 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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<PAGE>
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement

SPARTAN STORES, INC.

By _____________________________________
Its Senior Vice President and
Chief Financial Officer

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<PAGE>
Accepted and agreed to
as of _______________, 1993.
UNITED OF OMAHA LIFE INSURANCE
COMPANY

By _____________________________________
Its__________________________________

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<PAGE>
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES

Spartan Stores, Inc.
Grand Rapids, Michigan

We consent to the use in this Amendment No. 4 to Registration Statement No.
33-94496 of Spartan Stores, Inc. on Form S-1 of our report dated June 10,
1998, appearing in the Prospectus, which is a part of this Registration
Statement, and to the reference to us under the headings "Selected
Consolidated Financial Information" and "Experts" in such Prospectus.

Our audit of the financial statements referred to in our aforementioned
report also included the financial statement schedule of Spartan Stores,
Inc. listed in Item 16b. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial
statement schedule when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/DELOITTE & TOUCHE LLP

July 10, 1998

<PAGE>
EXHIBIT 24

POWER OF ATTORNEY

The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Spartan Stores, Inc. does hereby appoint JAMES
B. MEYER or ALEX J. DeYONKER, and each of them severally, his attorneys or
attorney to execute in his name, place and stead, a Post-Effective
Amendment No. 4 to a Form S-1 Registration Statement of Spartan Stores,
Inc., concerning the issuance of up to 3,500,000 shares of its Class A
Common Stock, $2 par value, and any and all other post-effective amendments
to said Registration Statement, and to file it or them with the Securities
and Exchange Commission.

DATE SIGNATURE

May 11, 1998 /S/DONALD KOOP, CHAIRMAN OF THE BOARD AND DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 13, 1998 /S/RUSSEL H. VANGILDER, JR., VICE CHAIRMAN OF THE
BOARD AND DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 8, 1998 /S/ROGER L. BOYD, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 7, 1998 /S/JAMES G. BUICK, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 10, 1998 /S/JOHN S. CARTON, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 11, 1998 /S/RONALD A. DEYOUNG, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 11, 1998 /S/PARKER T. FELDPAUSCH, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 8, 1998 /S/MARTIN HILL, DIRECTOR
(Sign and print name and title)

<PAGE>
POWER OF ATTORNEY

DATE SIGNATURE

May 13, 1998 /S/DAN R. PREVO, DIRECTOR
(Sign and print name and title)