10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 28, 2009.
	OR
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________ to _______________.

Commission File Number: 000-31127

SPARTAN STORES, INC.
(Exact Name of Registrant as Specified in Its Charter)

Michigan (State or Other Jurisdiction) of Incorporation or Organization)	38-0593940 (I.R.S. Employer Identification No.)
850 76th Street, S.W. P.O. Box 8700 Grand Rapids, Michigan (Address of Principal Executive Offices)	49518-8700 (Zip Code)

Registrant's telephone number, including area code: (616) 878-2000

Securities registered pursuant to Section 12(b) of the Securities Exchange Act:
Title of Class Common Stock, no par value	Name of Exchange on which Registered NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Securities Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  o No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  o No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act).

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o No  x

The aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates based on the last sales price of such stock on the NASDAQ Global Select Market on September 12, 2008 (which was the last trading day of the registrant's second quarter in the fiscal year ended March 28, 2009) was $493,092,405.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Common Stock, no par value, outstanding as of May 11, 2009: 22,173,139 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Part III, Items 10, 11,
12, 13 and 14 Proxy Statement for Annual Meeting to be held August 12, 2009

Forward-Looking Statements

          The matters discussed in this Annual Report on Form 10-K include "forward-looking statements" about the plans, strategies, objectives, goals or expectations of Spartan Stores, Inc. (together with its subsidiaries, "Spartan Stores"). These forward-looking statements are identifiable by words or phrases indicating that Spartan Stores or management "expects," "anticipates," "plans," "believes," "estimates," "intends," is "optimistic" or "confident" that a particular occurrence or event "will," "may," "could," "should" or "will likely" result or occur or "continue" in the future, that the "outlook" or "trend" is toward a particular result or occurrence, that a development is an "opportunity," a "priority" or "strategy" or similarly stated expectations. Accounting estimates, such as those described under the heading "Critical Accounting Policies" in Item 7 of this Annual Report on Form 10-K, are inherently forward-looking. Our asset impairment and exit cost provisions are est imates and actual costs may be more or less than these estimates and differences may be material. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report.

          In addition to other risks and uncertainties described in connection with the forward-looking statements contained in this Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission, there are many important factors that could cause actual results to differ materially. Our ability to maintain and strengthen our retail-store performance; assimilate acquired stores; maintain or grow sales; respond successfully to competitors; maintain or increase gross margin; anticipate and successfully respond to openings of competitors; maintain and improve customer and supplier relationships; realize expected benefits of new relationships; realize growth opportunities; expand our customer base; reduce operating costs; sell on favorable terms assets classified as held for sale; generate cash; continue to meet the terms of our debt covenants; continue to pay dividends, and implement the other programs, plans, priorities, strategies, objectives , goals or expectations described in this Annual Report, our other reports, our press releases and our public comments will be affected by changes in economic conditions generally or in the markets and geographic areas that we serve, adverse effects of the changing food and distribution industries and other factors including, but not limited to, those discussed in the "Risk Factors" discussion in Item 1A of this Annual Report.

          This section and the discussions contained in Item 1A, "Risk Factors," of this report and in Item 7, subheading "Critical Accounting Policies" in this report, both of which are incorporated here by reference, are intended to provide meaningful cautionary statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This should not be construed as a complete list of all of the economic, competitive, governmental, technological and other factors that could adversely affect our expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to Spartan Stores or that Spartan Stores currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. We undertake no obligation to update or revise our forward-looking statements to reflect developments that occur or information obtained after the date of this Annual Report.

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PART I

Item 1. Business

Overview

          Spartan Stores is a leading regional grocery distributor and grocery retailer, operating principally in Michigan and Indiana. We operate two reportable business segments: Distribution and Retail. We estimate that we are the eleventh largest wholesale distributor to supermarkets in the United States and the largest wholesale distributor to supermarkets in Michigan. According to Trade Dimensions Market Scope, our distribution and retail operations hold a combined #1 or #2 market share in the Northern Michigan and Western Michigan markets we serve and a #3 market share in other Michigan markets. For the fiscal year ended March 28, 2009 ("fiscal 2009"), we generated net sales of $2.6 billion.

          Established in 1917 as a cooperative grocery distributor, Spartan Stores converted to a for-profit business corporation in 1973. In January 1999, we began to acquire retail supermarkets in our focused geographic regions. In August 2000, our common stock became listed on the NASDAQ Stock Market under the symbol "SPTN." With approximately 9,700 associates, Spartan Stores distributes a wide variety of products to approximately 350 independent grocery stores and operates 99 conventional supermarkets.

          Spartan Stores' hybrid business model supports the close functioning of its Distribution and Retail operations, optimizing the natural complements of each business segment. The model produces operational efficiencies, helps stimulate distribution product demand, and provides sharper market visibility and broader business growth options. In addition, the Distribution and Retail diversification provides added flexibility to pursue the best growth opportunities in each segment.

          Spartan Stores has established four key management priorities that focus on the longer-term strategy of the Company, including establishing a well-differentiated market offering for our Distribution and Retail segments, and additional strategies designed to create value for our shareholders, retailers and customers. These priorities are:

• Retail sales growth: Continue with our capital plan focusing on remodels, replacement stores, adjacent acquisitions, expansions and new stores to fill in existing markets, leverage investments in fuel centers and pharmacy operations to drive related supermarket customer traffic and continue to focus on category management initiatives, specifically focusing on fresh offerings.

• Distribution sales growth: Focus on increasing penetration of existing customers, attracting new in-market customers and adjacent-state customers, continue to share "best retail practices" with customers, provide a superior value-added relationship and pursue acquisitions.

• Margin enhancement: Continued focus on increasing penetration of private label programs, enhancing offerings in our fresh department, lowering the cost of merchandise through vendor partnerships and improving retail shrink.

• Selling, general and administrative ("SG&A") expense cost containment: Continue to focus on improving efficiency and general cost containment in all areas to allow us to remain cost competitive in the long-term and help offset recessionary impacts on our business in the short-term.

          We believe significant progress has been made towards achieving these long-term priorities in recent years and we will continue to focus on these priorities.

Distribution Segment

          Our Distribution segment provides a selection of approximately 43,000 stock-keeping units (SKU's), including dry groceries, produce, dairy products, meat, deli, bakery, frozen food, seafood, floral products, general merchandise, pharmacy and health and beauty care items to approximately 350 independent grocery stores and our 99 corporate-owned stores. Also included are approximately 3,000 private label grocery and general merchandise items. Total revenues from our Distribution segment, including shipments to our corporate-owned stores which are eliminated in the consolidated financial statements, were $1.9 billion for fiscal 2009.

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          Customers. Our Distribution segment supplies a diverse group of independent grocery store operators that range from a single store to supermarket chains with as many as 20 stores and our corporate-owned stores. Pricing to our customers is generally based upon a "cost plus" model for grocery, frozen, dairy, pharmacy and health and beauty care items and a "variable mark-up" model for meat, deli, bakery, produce, seafood, floral and general merchandise products.

          Our Distribution customer base is very diverse, with no single customer exceeding 5% of consolidated net sales, excluding corporate-owned stores. Our five largest Distribution customers (excluding corporate-owned stores) accounted for approximately 25% of our fiscal 2009 Distribution net sales. In addition, approximately 63% of Distribution net sales, including corporate-owned stores, are covered under supply agreements with our Distribution customers or are directly controlled by Spartan Stores.

          Distribution Functions. Our Distribution business utilizes approximately 1.8 million square feet of warehouse, distribution and office space. We supply our independent Distribution customers and our corporate-owned stores from our distribution centers located in Grand Rapids and Plymouth, Michigan. We believe that our distribution facilities are strategically located to efficiently serve our customers. We are continually evaluating our inventory movement and assigning SKU's to appropriate facilities within our distribution centers to reduce the time required to pick products.

          During fiscal 2009, we began implementation of a comprehensive inventory management strategy that we believe will result in improvement in inventory turnover. We are committed to ensuring that we have the warehouse capacity that will support distribution growth, and to improving our distribution cost structure through productivity initiatives and technology. After nearly two years of planning and modeling, we launched and completed a racking reset project in our entire Grand Rapids grocery warehouse during fiscal 2009. This project will increase the overall capacity and productivity of the warehouse by compressing the selection areas and optimizing the selection process, and allowing for increased cube utilization in transport. Resetting the Grand Rapids grocery warehouse is the first step in the overall Supply Chain strategic plan to upgrade the efficiency and capacity of all our warehouses. Planning is already underway to evaluate alternatives to increase the capacity of our fresh warehouse. Our Plymouth grocery and Grand Rapids general merchandise warehouses will follow, and plans are to complete all warehouses within the next three years. We also upgraded our dock scheduling and traffic management systems that enable the automation of manual processes for scheduling and routing of inbound deliveries to all warehouses.

          To supply our Distribution customers, we operate a fleet of approximately 90 tractors, 200 conventional dry trailers and 180 refrigerated trailers, substantially all of which are leased. We have developed an equipment replacement strategy whereby we continually evaluate the optimum equipment life cycle in order to capitalize on reduced vehicle maintenance costs and the most favorable equipment residual value. In fiscal 2009, we replaced 86 tractors, 120 conventional dry trailers and 30 refrigerated trailers as we continue to place emphasis on investing, updating and developing the fleet as our wholesale distribution business expands. This investment also ensures that our fleet has current pollution control and fuel efficiency equipment, a world-class appearance on the road, and we continue to add new units with more Spartan private label logo visibility. We take pride in our "rolling billboards" that showcase over 25 different colorful designs of Spartan pr ivate label brand products and create positive visual impressions to the consumer as the fleet travels approximately 12 million miles annually.

          Additionally, we upgraded our transportation routing system - an investment that will be critical for aligning and balancing delivery schedules to reduce average route mileage, increase load density and integrate with supply chain business applications to improve cost structure through productivity iniatives. For fiscal 2010, we will continue to focus on leveraging technology to support efficiency improvements in equipment fuel economy and increased cube utilization of our trailers that should allow us to improve our sales dollars delivered per mile, resulting in a reduction in our cost to deliver products.

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          Additional Services. We also offer and provide many of our independent Distribution customers with value-added services, including:

•	Site identification and market analyses	•	Coupon redemption
•	Store planning and development	•	Product reclamation
•	Marketing, promotion and advertising	•	Printing
•	Technology and information services	•	Category management
•	Accounting and tax preparation	•	Real estate services
•	Human resource services	•	Construction management services

Retail Segment

          Our neighborhood market strategy distinguishes our stores from supercenters and limited assortment stores by emphasizing convenient locations, demographically targeted merchandise selections, strong perishables offerings, customer service, value pricing and community involvement.

          On December 29, 2008, we acquired certain assets and assumed certain liabilities related to VG's Food Center, Inc. and VG's Pharmacy, Inc. (collectively, "VG's"). VG's was a privately-held operator of 17 retail grocery stores based in Eastern Michigan. Prior to the acquisition, VG's was an independent customer of our Distribution segment. This transaction, following our acquisitions of D&W Food Centers and Felpausch Food Centers, represents another step in the component of our business strategy focused on growing our business through opportunistic acquisitions of other grocery operators that are adjacent to or in markets where we operate today. The VG's stores serve communities in key markets in Eastern Michigan where we previously had no retail presence. Our Retail segment now operates 99 retail supermarkets predominantly in midsize metropolitan, tourist and lake communities of Michigan. Our retail supermarkets are operated under the banners Glen's Markets, Famil y Fare Supermarkets, D&W Fresh Markets, Felpausch Food Centers and VG's Food and Pharmacy.

          Our 99 retail supermarkets typically offer dry groceries, produce, dairy products, meat, frozen food, seafood, floral products, general merchandise, beverages, tobacco products, health and beauty care products, delicatessen items and bakery goods. Sixty-six of our supermarkets also offer pharmacy services. In addition to nationally advertised products, the stores carry private label items, including our flagship Spartan brand, Top Care, a health and beauty care brand label, Valu Time, a value brand label, and Full Circle, a natural and organic brand label. These private label items provide above-average retail margins and we believe they help generate increased customer loyalty. See "Merchandising and Marketing - Corporate Brands." Our retail supermarkets range in size from approximately 20,300 to 62,100 total square feet and average approximately 41,000 total square feet per store.

          During fiscal 2009, we opened three new fuel centers at our supermarket locations in Michigan operating under the banners Family Fare Quick Stop and Felpausch Quick Stop. We now operate a total of 19 fuel centers. These fuel centers offer refueling facilities and in the adjacent convenience store, a limited variety of immediately consumable products. Our prototypical Quick Stop stores are approximately 1,100 square feet in size and are located adjacent to our supermarkets. We have experienced increases in supermarket sales upon opening fuel centers and initiating cross-merchandising activities. We are planning to continue to open additional fuel centers at our supermarket locations each year over the next few years.

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          We acquired our stores primarily as a result of acquisitions from January 1999 to December 2008. The following chart details the changes in the number of our retail stores over the last five fiscal years:

Fiscal Year	Number of Stores at Beginning of Fiscal Year	Stores Acquired or Added During Fiscal Year	Stores Closed or Sold During Fiscal Year	Number of Stores at End of Fiscal Year
2005	75	-	-	75
2006	75	-	2	73
2007	73	16	2	87
2008	87	20	8	99
2009	99	17	16	100

          In May 2009, one store was closed.

          During fiscal 2009, we completed seven major remodels of our stores in addition to many other limited remodels and store resets. One of those stores was a significant expansion of the existing store to our prototype store format. We also replaced one of the existing stores with a newly constructed prototype store. The two stores follow our prototype for future Family Fare Supermarkets stores and offer a much larger selection of products, new services including a drive-thru pharmacy and a fuel center. The prototype store also is environmentally friendly, with energy efficient lighting, heating and other equipment and has received the Energy Star certification.

          We expect to continue making meaningful progress with our capital investment program during fiscal 2010, and plan to complete remodel work on three additional stores, complete the new construction and relocation of one store, build one new store late in the fiscal year and open six new fuel centers. We evaluate proposed retail projects based on demographics and competition within each market, and prioritize projects based on their expected returns on investment. Approval of proposed capital projects requires a projected internal rate of return that meets or exceeds our policy; however, we may undertake projects that do not meet this standard to the extent they represent required maintenance or necessary infrastructure improvements. We believe that focusing on such measures provides us with an appropriate level of discipline in our capital expenditures process.

Products

          The Company offers a wide variety of grocery products, general merchandise and health and beauty care, pharmacy, fuel and other items and services. The Company's consolidated net sales include the net sales of the Company's corporate-owned stores and fuel centers and the net sales of the Company's Distribution business, net of sales to affiliated stores.

          The following table presents sales by type of similar product and services:

(Dollars in thousands)	2009				2008				2007
Non-perishables (1)	$	1,374,566	53	%	$	1,315,621	53	%	$	1,167,593	53	%
Perishables (2)		904,999	35			857,278	35			777,715	35
Fuel		98,258	4			81,185	3			43,531	2
Pharmacy		198,915	8			222,738	9			217,431	10
Consolidated net sales	$	2,576,738	100	%	$	2,476,822	100	%	$	2,206,270	100	%

(1)	Consists primarily of general merchandise, grocery, beverages, snacks and frozen foods.
(2)	Consists primarily of produce, dairy, meat, bakery, deli, floral and seafood.

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Reporting Segment Financial Data

          More detailed information about our reporting segments may be found in Note 14 to the consolidated financial statements included in Item 8, which is herein incorporated by reference. All of our sales and substantially all of our assets are in the United States of America.

Discontinued Operations

          Certain of our retail and grocery distribution operations have been recorded as discontinued operations in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Accordingly, for all years presented, all Consolidated Statements of Earnings information in this Annual Report on Form 10-K has been adjusted and the discontinued operations information is excluded, unless otherwise noted. Discontinued retail operations consist of certain stores that have been closed or sold. Discontinued Distribution operations consist of our Maumee, Ohio and Toledo, Ohio distribution centers that were consolidated into our Michigan facilities during the fourth quarter of fiscal 2003.

Marketing and Merchandising

          General. Our Distribution and Retail segments use combined marketing and merchandising departments to effectively leverage the use of category management principles. Our Distribution segment pursues incremental sales to existing and prospective customers by partnering with them to satisfy their consumers' needs. Our Retail segment's marketing and merchandising strategies are consumer driven programs in keeping with the implementation of improved category management practices.

          With the efficiencies created from combining each of these functions and by partnering with our vendors to develop more robust category management, we have been able to more effectively develop and roll out our merchandising programs, which has aided our ability to increase our sales and earnings. Our over-arching focus on the consumer gives us keen insight about purchasing behavior and the flexibility to adapt to rapidly changing market conditions by making tactical adjustments to our marketing and merchandising programs that deliver even more tangible value to our customers. We have and will look to expand these offerings and partner with our independent customers over time to continue to realize incremental benefits.

          As we expand our service offerings, we believe that we differentiate ourselves from our competitors by offering a full set of services, from our value added services in our Distribution segment to the addition of fuel centers and Starbucks Coffee shops in our "neighborhood market" retail stores. Our D&W Fresh Markets and Family Fare Supermarkets offer a year round FUEL SAVINGS program that provides gas savings depending on what products shoppers purchase in the retail stores. Fuel centers have proven to be effective traffic-builders for fuel-purchasing customers who wish to take advantage of cross-promotions between the stores and the Quick Stop fuel centers. Consumers are focusing on value in today's economy, and coupons such as the FUEL SAVINGS program are helping us to meet that need.

          In 2007, we embarked on a pharmacy initiative with a healthy living emphasis. As noted above, 66 of our supermarkets now offer pharmacy services. We believe the pharmacy service offering is an important part of the consumer experience, and we have continued this initiative in 2009 by introducing our new $4 Generic Drug Program in the Family Fare Supermarkets and D&W Fresh Markets. In the first quarter of fiscal 2010 we expanded this program to include our Felpausch Food Centers. The comprehensive generic drug program covers more than 300 generic drugs prescribed in 30-day or 90-day supplies that treat a variety of conditions and diseases, including drugs to treat common problems such as diabetes, asthma and heart disease. It offers consumers lower prices and drug choices to meet their healthcare needs, and is another example of the many ways our supermarkets and pharmacies are making it easier for customers to stretch their healthcare dollars.

          In 2009, we also introduced an innovative partnership with an international company that resulted in the formation of the first employer-pharmacy health benefits plan in Michigan, a model for future health management involving employees, pharmacists and physicians. Through the plan, employees have access to a network of pharmacists specially prepared to provide individualized health and wellness information, and consultation as part of their benefits plan. In addition, employees receive reduced co-pays on selected prescriptions, no co-pay on selected medication, and the ability to pick up a 90-day fill at any convenient full service in-store pharmacy. The alliance is

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an important new step in our health and wellness initiative, and offers covered employees the opportunity to utilize the benefits that the supermarkets offer for a total heath and nutrition solution that the drugstore formats cannot provide.

          We are currently consolidating our multiple pharmacy software systems into one system. This will improve our ability to serve customers as well as reduce the cost and effort involved in supporting the current systems.

          At Spartan Stores, we are committed to being a consumer driven retailer. In fiscal 2009, we implemented a new customer satisfaction program that gives consumers a new channel for communicating their store experiences. Retail customers are randomly selected via point-of-sale receipts and invited to give us feedback by taking an online survey. Customers that complete the survey are eligible to win a gift card. Results of the survey will help assess overall customer satisfaction and identify how well we are executing on key drivers of customer satisfaction and loyalty. We value the opinions of our consumers and believe the best way to deliver a satisfactory shopping experience is to let customers tell us what they want and need. We believe this survey dialogue will better enable us to identify opportunities for continuous improvements for consistency and excellence in the overall consumer experience.

          Corporate Brands. We currently market and distribute approximately 3,000 private label brand items including our flagship Spartan brand, Top Care, a health and beauty care brand label, Valu Time, a value brand label, and Full Circle, a natural and organic brand label. We believe that our private label offerings are part of our most valuable strategic assets of the Company, demonstrated through customer loyalty and profitability. These product offerings are serving us particularly well as the consumer shifts toward a more value orientation.

          Since 2004, we have worked diligently to develop a premier private label program. We have added more than 1,300 corporate brand products to our offer in the past five years, with the largest number of products introduced in fiscal 2009. Two of our new products were recently recognized for excellence, marking six consecutive years of award-winning private label products. Spartan Mandarin Oranges won the Salute to Excellence Award in the ready-to-eat category presented by the Private Label Manufacturers Association, an award that represents the industry's appreciation for outstanding products. Also, Private Label Buyer magazine gave Spartan Stores a 2008 packaging award for Spartan Gourmet Coffee. This award underscores Spartan Stores' commitment to quality packaging as well as excellent products.

          With our Spartan brand, we expect to leverage our investment in our fresh food initiative going forward by continuing to focus on pursuing opportunity in fresh department consumer offerings with Spartan fresh products. We recently introduced Spartan brand 100% Natural Fresh Chicken in 21 different varieties, an attractive value option that is also 100% all natural and free of hormones and artificial ingredients. We plan to expand our Spartan fresh product offerings in the future, and are targeting 75 new fresh Spartan brand SKU's for fiscal 2010.

Competition

          Our Distribution and Retail segments operate in highly competitive markets, which typically result in low profit margins for the industry as a whole. Our Distribution and Retail segments compete with, among others, regional and national grocery distributors, independently owned retail grocery stores, large chain stores that have integrated wholesale and retail operations, mass merchandisers, limited assortment stores and wholesale membership clubs, some of whom have greater resources than we do. The principal competitive factors in the retail grocery business include the location and image of the store; the price, quality and variety of the perishable products; and the quality and consistency of service.

          We believe we have developed and implemented strategies and processes that allow us to remain competitive in our Retail segment. We monitor planned store openings by our competitors and have established proactive strategies to respond to new competition both before and after the competitive store opening. Strategies to combat competition vary based on many factors, such as the competitor's format, strengths, weaknesses, pricing and sales focus. During the past three fiscal years, 13 competitor supercenters opened in markets in which we operate corporate-owned stores. Seven additional openings are expected to occur during fiscal 2010 against our corporate-owned stores. As a result of these openings we believe the majority of our supermarkets compete with one, if not multiple, supercenters.

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          The primary competitive factors in the distribution business include price, product quality, variety and service. We believe our overall service level, defined as actual units shipped divided by actual units ordered, is among industry leading performance.

Seasonality

          Our sales and operating performance vary with seasonality. Our first and fourth quarters are typically our lowest sales quarters and therefore operating results are generally lower during these two quarters. Additionally, these two quarters can be affected by the timing of the Easter holiday, which results in a strong sales week. Many northern Michigan stores are dependent on tourism and therefore, are most affected by seasons and weather patterns, including, but not limited to, the amount and timing of snowfall during the winter months and the range of temperature during the summer months. All quarters are 12 weeks, except for our third quarter, which is 16 weeks and includes the Thanksgiving and Christmas holidays. Fiscal 2007 contained 53 weeks; therefore, the fourth quarter of fiscal 2007 consisted of 13 weeks rather than 12 weeks.

Suppliers

          We purchase products from a large number of national, regional and local suppliers of name brand and private label merchandise. We have not encountered any material difficulty in procuring or maintaining an adequate level of products to serve our customers. No single supplier accounts for more than 9% of our purchases. We continue to develop strategic relationships with key suppliers. We believe this will prove valuable in the development of enhanced promotional programs and consumer value perceptions.

Intellectual Property

          We own valuable intellectual property, including trademarks and other proprietary information, some of which are of material importance to our business.

Technology

          We invest in technology as a means of maximizing the efficiency of our operations, improving service to our customers, and where possible deploying technology to provide a competitive advantage in the marketplace. Our focus is to refine and enhance reporting, business processes and data integrity to provide a base for continuous improvement and seamless information flow.

          Supply Chain. During fiscal 2009, we implemented a new inbound transportation scheduling system. We also continued the development of a comprehensive distribution metric reporting system, and implemented a new transportation management system including a major upgrade to our fleet routing system. Additionally, we launched a project to integrate a new yard and dock management system for campus wide scheduling in both of our distribution centers.

          Retail Systems. During fiscal 2009, we deployed a computer-assisted ordering and perpetual inventory system in 20 of our corporate-owned stores for the corporately supplied categories in the grocery, frozen, dairy, general merchandise and HBC departments and we will continue deployment to remaining stores and expanding products covered during fiscal 2010. We also completed installation of a new pharmacy system in 12 of our corporate pharmacies. We expect deployment to the remaining pharmacies will be completed in fiscal 2010. Additionally, we developed and implemented a new fuel POS system and a fuel inventory management system in all 19 fuel centers.

          Financial Systems. During fiscal 2009, we upgraded our financial systems and continued to increase the number of automated interfaces between business partners and our financial systems.

          Human Resources. We replaced an external employment application tracking system with an integrated solution as part of our human resource management system. With our most recent acquisition, we implemented a new labor management system which will be deployed across the remainder of our retail stores.

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          Information Technology. We initiated an upgrade to our core network to expand the capacity and security at both our primary and backup data centers. We continued to enhance the processing infrastructure at our backup data center.

Subsidiaries

          Our Distribution segment consists primarily of our wholly-owned subsidiary, Spartan Stores Distribution, LLC. We operate our Retail segment through our wholly-owned subsidiary, Seaway Food Town, Inc. and its respective subsidiaries.

Associates

          We currently employ approximately 9,700 associates, 4,700 of which are full-time and 5,000 of which are part-time.

          Unions represent approximately 8% of our associates. Contracts covering 161and 635 distribution center and transportation associates expire in April 2010 and October 2011, respectively.

          We consider our relations with our union and non-union associates to be good and have not had any material work stoppages in over twenty years.

Regulation

          We are subject to federal, state and local laws and regulations covering the purchase, handling, sale and transportation of our products. Several of our products are subject to federal Food and Drug Administration regulation. We believe that we are in substantial compliance with Food and Drug Administration and other federal, state and local laws and regulations governing our businesses.

Forward-Looking Statements

          The matters discussed in this Item 1 include forward-looking statements. See "Forward-Looking Statements" at the beginning of this Annual Report on Form 10-K.

Available Information

          The address of our web site is www.spartanstores.com. The inclusion of our website address in this Form 10-K does not include or incorporate by reference the information on or accessible through our website, and you should not consider information contained on or accessible through those websites as part of this Form 10-K. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports (and amendments to those reports) filed or furnished pursuant to Section 13(a) of the Securities Exchange Act available on our web site as soon as reasonably practicable after we electronically file or furnish such materials with the Securities and Exchange Commission. Interested persons can view such materials without charge by clicking on "Investor Information" and then "SEC Filings" on our web site. Spartan Stores is an "accelerated filer" within the meaning of Rule 12b-2 under the Securities Exchange Act.

Item 1A. Risk Factors

          Our business faces many risks. If any of the events or circumstances described in the following risk factors occurs, our financial condition or results of operations may suffer, and the trading price of our common stock could decline. This discussion of risk factors should be read in conjunction with the other information in this Annual Report on Form 10-K. All of our forward-looking statements are affected by the risk factors discussed in this item and this discussion of risk factors should be read in conjunction with the discussion of forward-looking statements which appears at the beginning of this report.

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We operate in an extremely competitive industry. Many of our competitors are much larger than we are and may be able to compete more effectively.

          Our Distribution and Retail segments compete with, among others, regional and national grocery distributors, independently owned retail grocery stores, large chain stores that have integrated wholesale and retail operations, mass merchandisers, limited assortment stores and wholesale membership clubs, some of whom have greater resources than we do.

          This competition may result in reduced profit margins and other harmful effects on us and the independent retail grocery stores that we supply. Ongoing industry consolidation could result in our loss of customers that we currently supply and could confront our retail operations with competition from larger and better-capitalized chains in existing or new markets. We may not be able to compete successfully in this environment.

Government regulation could harm our business.

          Our business is subject to extensive governmental laws and regulations including, but not limited to, employment and wage laws and regulations, regulations governing the sale of alcohol and tobacco, minimum wage requirements, working condition requirements, public accessibility requirements, citizenship requirements and other laws and regulations. A violation or change of these laws could have a material effect on our business, financial condition and results of operations.

          Like other companies that sell food, our stores are subject to various federal, state, local, and foreign laws, regulations, and administrative practices affecting our business. We must comply with numerous provisions regulating health and sanitation standards, facilities inspection, food labeling, and licensing for the sale of food, drugs, and alcoholic beverages.

          We cannot predict the nature of future laws, regulations, interpretations, or applications, or determine what effect either additional government regulations or administrative orders, when and if promulgated, or disparate federal, state, local, and foreign regulatory requirements would have on our future business. They could, however, require that we recall or discontinue sale of certain products, make substantial changes to our facilities or operations, or otherwise result in substantial increases in operating expense. Furthermore, if the Federal Employee Free Choice Act is passed it could adversely affect our flexibility to run our business in the most efficient manner to remain competitive. Any or all of such requirements could have an adverse effect on our results of operations and financial condition.

We are subject to state and federal environmental regulations.

          Under various federal, state and local laws, ordinances and regulations, we may, as the owner or operator of our locations, be liable for the costs of removal or remediation of contamination at these or our former locations, whether or not we knew of, or were responsible for, the presences of such contamination. The failure to properly remediate such contamination may subject us to liability to third parties and may adversely affect our ability to sell or lease such property or to borrow money using such property as collateral.

          Compliance with existing and future environmental laws regulating underground storeage tanks may require significant capital expenditures and increased operating and maintenance costs. The remediation costs and other costs required to clean up or treat contaminated sites could be substantial.

          In the future, we may incur substantial expenditures for remediation of contamination that has not been discovered at existing or acquired locations. We cannot assure you that we have identified all environmental liabilities at all of our current and former locations; that material environmental conditions not known to us do not exist; that future laws, ordinances or regulations will not impose material environmental liability on us; or that a material environmental condition does not otherwise exist as to any one or more of our locations. In addition, failure to comply with any environmental laws, ordinances or regulations or an increase in regulations could adversely affect our operating results and financial condition.

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Safety concerns regarding our products could harm our business.

          Concerns regarding the safety of food products sold by us could cause shoppers to avoid purchasing certain products from us, or to seek alternative sources of supply for some or all of their food needs, even if the basis for concern is outside of our control. Any loss of confidence on the part of our customers would be difficult and costly to re-establish. Any real or perceived issue regarding the safety of any food items sold by us, regardless of the cause, could have a substantial and adverse effect on our business.

We may not be able to implement our strategy of growth through acquisitions.

          Part of our growth strategy involves selected acquisitions of additional retail grocery stores or grocery store chains. We may not be able to implement this part of our growth strategy or ultimately be successful. We may not be able to identify suitable acquisition candidates in the future, complete acquisitions or obtain the necessary financing.

          Because we operate in the Distribution business, future acquisitions of retail grocery stores could result in us competing with our independent grocery store customers and could have adverse effects on existing business relationships with our distribution customers.

          The success of our retail store acquisitions will depend, in part, on whether we obtain the business synergies and related cost savings that we anticipated in connection with these transactions and any future acquisitions. Accordingly, we may not achieve forecasted results and long-term business goals.

Our business is subject to risks from regional economic conditions and other factors in our markets.

          Our business is sensitive to changes in general economic conditions. The United States economy and financial markets have declined and experienced volatility due to uncertainties related to energy prices, availability of credit, difficulties in the banking and financial services sector, the decline in the housing market, diminished market liquidity, falling consumer confidence and rising unemployement rates. Furthermore, most of our sales are to customers located in Michigan and Indiana and the Michigan economy in particular is dependent upon the automotive industry which is experiencing historical economic challenges. Michigan has the highest unemployment rate in the country and that rate is expected to increase. These adverse economic conditions in our markets, potential reduction in the populations in our markets and the loss of purchasing power by residents in our markets could reduce the amount of groceries purchased, adversely affecting our revenues and profitabili ty. Further adverse developments in the automotive and auto supply industries in Michigan and Indiana could have an additional adverse affect on purchasing power of our customers and prospective customers in some markets served by our retail stores and those of our distribution customers. This could lead to additional reductions in consumer spending, to consumers trading down to less expensive mix of products or to consumers trading down to discounters, all of which may affect our financial condition and results of operations.

          In addition, many of our retail grocery stores, as well as stores operated by our independent grocery store customers, are located in areas of northern Michigan that are heavily dependent upon tourism. Unseasonable weather conditions and the economic conditions discussed above may decrease tourism activity and could result in decreased sales by our retail grocery stores and decreased sales to our distribution customers, adversely affecting our business.

We may be unable to retain our key management personnel.

          Our success depends to a significant degree upon the continued contributions of senior management. The loss of any key member of our management team may prevent us from implementing our business plans in a timely manner. We cannot assure you that successors of comparable ability will be identified and appointed and that our business will not be adversely affected.

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A number of our associates are covered by collective bargaining agreements.

          Certain of our associates in our distribution business segment, are covered by collective bargaining agreements, which expire in April 2010 and October 2011. In future negotiations with labor unions, we expect that rising health care, pension and employee benefit costs, among other issues, will continue to be important topics of negotiation. Upon the expiration of our collective bargaining agreements, work stoppages by the affected workers could occur if we are unable to negotiate acceptable contracts with labor unions. This could significantly disrupt our operations. Further, if we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs and an adverse impact on future results of operations.

Costs related to multi-employer pension plans and other postretirement plans could increase.

          We contribute to several multi-employer pension plans based on obligations arising under collective bargaining agreements. These plans are not administered by or in any way controlled by us and we have relatively little control over the level of contributions we are required to make to these plans. We believe a number of these multi-employer plans are underfunded. As a result, contributions are scheduled to increase and we expect that contributions to these plans may be subject to further increases. Additionally, the benefit levels and related issues will continue to create collective bargaining challenges. The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, governmental regulations, the actual return on assets held in the plan, the continued viability and contributions of other employers which contribute to the pla n, and the potential payment of a withdrawal liability if we choose to exit a market, among other factors.

          Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur a withdrawal liability to the plan, which represents the portion of the plan's underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. Withrawal liabilities may be incurred under a variety of circumstances, including selling, closing or substantially reducing employment at a facility. Withdrawal liabilities could be material, and potential exposure to withdrawal liabilities may influence business decisions and could cause the company to forgo business opportunities.

          We maintain defined benefit retirement plans for substantially all of our employees that do not participate in multi-employer pension plans. Expenses associated with the defined benefit plans may significantly increase with changes to actuarial assumptions or investment returns on plan assets that are less favorable than projected. In addition, changes in our funding status could adversely affect our financial position.

Risks associated with insurance plan claims could increase future expenses.

          We use a combination of insurance and self-insurance to provide for potential liabilities for workers' compensation, automobile and general liability, property insurance, director and officers' liability insurance, and employee health care benefits. The liabilities that have been recorded for these claims represent our best estimate, using generally accepted actuarial reserving methods, of the ultimate obligations for reported claims plus those incurred but not reported for all claims incurred through March 28, 2009. Any actuarial projection of losses is subject to a high degree of variability. Changes in legal trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, and changes in discount rates could all affect the level of reserves required and could cause material future expense to maintain reserves at appropriate levels.

Changes in vendor promotions or allowances, including the way vendors target their promotional spending, and our ability to effectively manage these programs could significantly impact our margins and profitability.

          We cooperatively engage in a variety of promotional programs with our vendors. As the parties assess the results of specific promotions and plan for future promotions, the nature of these programs and the allocation of dollars among them change over time. We manage these programs in order to maintain or improve margins while at the same time increasing sales for us and for the vendors. A reduction in overall promotional spending or a shift in promotional spending away from certain types of promotions that we and our distribution customers have historically utilized could have a significant impact on profitability.

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Threats to security or the occurrence of a health pandemic could harm our business.

          Our business could be severely impacted by wartime activities, threats or acts of terrorism or a widespread health pandemic may adversely impact our business by disrupting delivery of products to our corporate stores or our independent retail customers, by affecting our ability to appropriately staff our stores and by causing customers to avoid public places.

          We have large, complex information technology systems that are important to our business operations. Although we have implemented security programs and disaster recovery facilities and procedures, security could be compromised and systems disruptions, deta theft or other criminal activity could occur. This could result in a loss of sales or profits or cause us to incur significant costs to reimburse third parties for damages.

Damage to our facilities could harm our business.

          A majority of the product we supply to our retail stores and distribution customers flows through our two distribution centers. While we believe we have adopted commercially reasonable precautions, insurance programs, and contingency plans, destruction of, or substantial damage to either of these facilities due to natural disaster, accident, terrorism, or other causes could substantially compromise our ability to distribute products to our retail stores and distribution customers. This could result in a substantial loss of sales, profits and asset value.

We are subject to restrictive covenants imposed by our credit facility.

          Our ability to borrow additional funds is governed by the terms of our credit facilities. The credit facilities contain financial and other covenants that, among other things, limit the Company's ability to draw down the full amount of facility, incur additional debt outside of the credit facility, create new liens on property, make acquisitions, or pay dividends. These covenants may affect our operating flexibility and may require us to seek the consent of the lenders to certain transactions that we may wish to carry out. We believe that cash generated from operating activities and available borrowings under our credit facility will be sufficient to meet anticipated requirements for working capital, capital expenditures, and debt service obligations for the foreseeable future. However, there can be no assurance that our business will continue to generate cash flow at or above current levels or that we will maintain our ability to borrow under our credit facility.

Item 1B. Unresolved Staff Comments

          None.

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Item 2. Properties

Distribution Segment Real Estate

          The following table lists the location, approximate size and ownership of the facilities used in our Distribution segment:

Facilities	Location		Total Square Feet	Ownership
Dry grocery		Grand Rapids, MI	585,492	Owned
Fresh (refrigerated)		Grand Rapids, MI	306,522	Owned
General merchandise		Grand Rapids, MI	232,700	Owned
General office (including print shop)		Grand Rapids, MI	127,323	Owned
Transportation and salvage		Grand Rapids, MI	78,760	Owned
Warehouse and office		Grand Rapids, MI	47,500	Leased
Dry grocery		Plymouth, MI	414,700	Leased
Total			1,792,997

          The Company believes that its distribution facilities are generally well maintained, are generally in good operating condition, have sufficient capacity and are suitable and adequate to carry on the Company's distribution business.

Retail Segment Real Estate

          The following table lists the retail banner, number of stores, geographic region, approximate total square footage under the banner, average store size (in square feet) and ownership of our retail supermarkets:

Retail Banner	Number of Stores (Including Fuel Centers)	Geographic Region	Total Square Feet	Average Store Size	Ownership
Family Fare Supermarkets	28	Western and Central Michigan	1,265,465	45,195	Leased
Glen's Markets	34	Northern and Central Michigan	1,222,350	35,951	Leased
D&W Fresh Markets	10	Western Michigan	478,449	47,845	Leased
D&W Fresh Markets	1	Central Michigan	34,460	34,460	Owned
Felpausch Food Centers	9	Western and Central Michigan	339,573	37,730	Leased
VG's Food and Pharmacy	17	Eastern Michigan	777,247	45,720	Leased
Total	99		4,117,544	41,591

We also own one fuel center in Western Michigan that is not included in a supermarket location.

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Item 3. Legal Proceedings

          Various lawsuits and claims, arising in the ordinary course of business, are pending or have been asserted against Spartan Stores and its subsidiaries. While the ultimate effect of such lawsuits and claims 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 Spartan Stores.

Item 4. Submission of Matters to a Vote of Security Holders

          No matters were submitted to a vote of Spartan Stores' shareholders during the fourth quarter of fiscal 2009 through the solicitation of proxies or otherwise.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

          Spartan Stores common stock is traded on the NASDAQ Global Select Market under the trading symbol "SPTN."

          Stock sale prices are based on transactions reported on the NASDAQ Global Select Market. Information on quarterly high and low sales prices for Spartan Stores' common stock appears in Note 15 to the consolidated financial statements and is incorporated here by reference. At May 11, 2009 there were approximately 516 shareholders of record of Spartan Stores common stock.

          The Company has paid a quarterly cash dividend of $0.05 per common share since the fiscal 2006 fourth quarter. Under its senior revolving credit facility, the Company is generally permitted to pay dividends in any fiscal year up to an amount such that all cash dividends, together with any cash distributions or share repurchases, do not exceed $15.0 million. Although we expect to continue to pay a quarterly cash dividend, adoption of a dividend policy does not commit the board of directors to declare future dividends. Each future dividend will be considered and declared by the board of directors at its discretion. The ability of the board of directors to continue to declare dividends will depend on a number of factors, including our future financial condition and profitability and compliance with the terms of our credit facilities.

          See Item 12 for information regarding the Spartan Stores' equity compensation plans.

          There were no transactions regarding Company purchases of its own common stock during the fourth quarter. The Company has no public stock repurchase plans or programs.

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Item 6. Selected Financial Data

          The following table provides selected historical consolidated financial information of Spartan Stores. The historical information was derived from our audited consolidated financial statements as of and for each of the five fiscal years ended March 26, 2005 through March 28, 2009. As noted elsewhere in this Form 10-K, for all years presented, Consolidated Statements of Earnings information in this Form 10-K has been adjusted for the reclassification of discontinued operations information, unless otherwise noted. See Note 4 to the consolidated financial statements in Item 8 for additional information on discontinued operations. Fiscal 2007 consisted of 53 weeks. All other years presented consisted of 52 weeks.

(In thousands, except per share data)

	Year Ended
	March 28, 2009 (D)			March 29, 2008 (D)			March 31, 2007 (D)			March 25, 2006			March 26, 2005
Statements of Operations Data:
Net sales	$	2,576,738		$	2,476,822		$	2,206,270		$	1,872,854		$	1,861,111
Cost of sales		2,040,625			1,981,854			1,774,816			1,527,736			1,514,118
Gross margin		536,113			494,968			431,454			345,118			346,993
Selling, general and administrative    expenses		463,369			433,346			378,324			310,013			311,535
Provision for asset impairments and    exit costs (A)		- -			- -			4,464			985			- -
Operating earnings		72,744			61,622			48,666			34,120			35,458
Interest expense		10,998			11,133			12,132			7,138			8,557
Debt extinguishment (B)		-			-			-			-			561
Other, net		(341	)		(287	)		(647	)		(1,317	)		(898	)
Earnings before income taxes and    discontinued operations		62,087			50,776			37,181			28,299			27,238
Income taxes		25,130			18,265			13,013			9,650			8,316
Earnings from continuing    operations		36,957			32,511			24,168			18,649			18,922
Earnings (loss) from discontinued    operations, net of taxes (C)		1,838			1,795			992			(477	)		(96	)
Net earnings	$	38,795		$	34,306		$	25,160		$	18,172		$	18,826
Basic weighted average shares    outstanding		21,516			21,275			20,913			20,796			20,439
Diluted weighted average shares    outstanding		21,802			21,668			21,408			21,174			20,743
Basic earnings from continuing    operations per share	$	1.71		$	1.53		$	1.15		$	0.89		$	0.92
Diluted earnings from continuing    operations per share		1.70			1.50			1.13			0.88			0.91
Basic earnings per share		1.80			1.61			1.20			0.87			0.92
Diluted earnings per share		1.78			1.58			1.18			0.86			0.91
Cash dividends declared per share		0.20			0.20			0.20			0.05			-
Balance Sheet Data:
Total assets	$	723,932		$	610,137		$	487,499		$	378,597		$	384,457
Property and equipment, net		234,806			183,185			143,213			115,178			108,879
Working capital		20,969			20,499			27,213			20,736			30,258
Long-term obligations		215,686			143,574			106,341			64,015			91,946
Shareholders' equity		234,369			206,646			172,741			145,417			125,410

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(A)	See Note 5 to Consolidated Financial Statements
(B)	We recorded non-cash pre-tax charges of $0.6 million during fiscal 2005 for the write-off of unamortized financing fees as a result of refinancing activities.
(C)	See Note 4 to Consolidated Financial Statements
(D)	For information regarding the VG's, Felpausch and D&W acquisitions, refer to Note 2 to the Consolidated Financial Statements set forth in Part II, Item 8 of this report.
Historical data is not necessarily indicative of the Company's future results of operations or financial condition. See discussion of "Risk Factors" in Part I, Item 1A of this report, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this report, and the Consolidated Financial Statements and notes thereto in Part II, Item 8 of this Annual Report on Form 10-K.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

          Spartan Stores is a leading regional grocery distributor and grocery retailer, operating principally in Michigan and Indiana.

          We currently operate two reportable business segments: Distribution and Retail. Our Distribution segment provides a full line of grocery, general merchandise, health and beauty care, frozen and perishable items to approximately 350 independently owned grocery stores and our 99 corporate owned stores. Our Retail segment operates 99 retail supermarkets in Michigan under the banners Glen's Markets, Family Fare Supermarkets, D&W Fresh Markets, Felpausch Food Centers, and VG's Food and Pharmacy, and 19 fuel centers/convenience stores, included at our supermarket locations, under the banners Glen's Quick Stop, Family Fare Quick Stop, D&W Fresh Markets Quick Stop and Felpausch Quick Stop. Our retail supermarkets have a "neighborhood market" focus to distinguish them from supercenters and limited assortment stores.

          Our sales and operating performance vary with seasonality. Our first and fourth quarters are typically our lowest sales quarters and therefore operating results are generally lower during these two quarters. Additionally, these two quarters can be affected by the timing of the Easter holiday, which results in a strong sales week. Many northern Michigan stores are dependent on tourism, and therefore, are most affected by seasons and weather patterns, including, but not limited to, the amount and timing of snowfall during the winter months and the range of temperature during the summer months. All quarters are 12 weeks, except for our third quarter, which is 16 weeks and includes the Thanksgiving and Christmas holidays. Fiscal 2007 contained 53 weeks; therefore, the fourth quarter of fiscal 2007 consisted of 13 weeks rather than 12 weeks.

          On December 29, 2008, we acquired certain assets and assumed certain liabilities related to VG's Food Center, Inc. and VG's Pharmacy, Inc. (collectively, "VG's"). The results of operations of the VG's acquisition are included in the accompanying consolidated financial statements from the date of acquisition. VG's was a privately-held operator of 17 retail grocery stores based in Eastern Michigan. Prior to the acquisition, VG's was an independent customer of our Distribution segment. This transaction, following our acquisitions of D&W Food Centers and Felpausch Food Centers, represents another step in the component of our business strategy focused on growing our business through opportunistic acquisitions of other grocery operators that are adjacent to or in markets where we operate today. The VG's stores serve communities in key Eastern Michigan markets where we previously had no retail presence. The VG's transaction i s expected to increase annual retail segment sales by approximately $300 million, but annual consolidated sales are expected to increase by approximately $150 million as VG's was an existing distribution customer.

          We previously operated 14 deep-discount food and drug stores under the banner The Pharm. In fiscal 2009, we completed the closure and sale of prescription files of all The Pharm stores, allowing us to concentrate efforts and resources on business opportunities with the best long-term growth potential and focus more on core distribution and conventional supermarket operations. The financial results of The Pharm stores have been included in discontinued operations in the accompanying consolidated financial statements for all periods presented.

          We have established four key management priorities that focus on the longer-term strategy of the Company, including establishing a well-differentiated market offering for our Distribution and Retail segments, and additional strategies designed to create value for our shareholders, retailers and customers. These priorities are:

• Retail sales growth: Continue with our capital plan focusing on remodels, replacement stores, adjacent acquisitions, expansions and new stores to fill in existing markets, leverage investments in fuel centers and pharmacy operations to drive related supermarket customer traffic and continue to focus on category management initiatives, specifically focusing on fresh offerings.

• Distribution sales growth: Focus on increasing penetration of existing customers, attracting new in-market customers and adjacent-state customers, continue to share "best retail practices" with customers, provide a superior value-added relationship and pursue acquisitions.

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• Margin enhancement: Continued focus on increasing penetration of private label programs, enhancing offerings in our fresh department, lowering the cost of merchandise through vendor partnerships and improving retail shrink.

• Selling, general and administrative expense cost containment: Continue to focus on improving efficiency and general cost containment in all areas to allow us to remain cost competitive in the long-term and help offset recessionary impacts on our business in the short-term.

          During fiscal 2009, retail sales growth was fueled by the VG's acquisition completed in fiscal 2009 and the Felpausch acquisition completed in fiscal 2008 and capital expenditures that were made on major remodels at seven stores, one replacement store and three fuel centers. Late in fiscal 2009 we expanded our $4.00 generic prescription program to include additional stores. In fiscal 2010, we expect to continue to focus on capital investments in our retail segment by completing five store remodels, completing one store relocation into a newly constructed facility, adding one new store late in the year and adding six fuel centers. We will also continue to pursue opportunistic acquisitions.

          During fiscal 2009, we continued focusing on product offerings that met or enhanced our individual customers' needs. During fiscal 2010, we will continue our successful model store program where we share the latest product offerings and merchandising programs with our customers.

          We introduced over 200 new private label products during fiscal 2009. These products are typically less expensive and produce higher gross margins than national brands and tend to be more desired by consumers in challenging economic times. In fiscal 2010, we plan to expand our Spartan branded fresh product offerings and are targeting 75 SKU's.

          During fiscal 2009 we completed a re-racking project in our grocery warehouse that will improve operational efficiency in fiscal 2010. Resetting the Grand Rapids grocery warehouse is the first step in the overall Supply Chain strategic plan to upgrade the efficiency and capacity of all our warehouses with a goal to complete all warehouses within the next three years. We also upgraded our dock scheduling and traffic management systems that enable the automation of manual processes for scheduling and routing of inbound deliveries to all warehouses.

          We believe the weak economic cycle is likely to continue for the majority of fiscal 2010 and will influence consumer buying behavior towards a continued value orientation. Given this economic outlook, our near-term position is to be cautious, but opportunistic. We expect to continue making meaningful progress with our capital investment program and the acquisition integration, but we are also expecting additional competition from seven new supercenter openings in several markets where we own retail stores. We expect that these competitive openings will unfavorably impact fiscal 2010 retail comparable sales by approximately 1.7 percent. Moreover, the rate of product cost inflation tempered as we progressed through fiscal 2009, which will lower the inflation sensitive procurement and sales gains that we realized. These lower gains, however, should be partially mitigated by lower LIFO inventory valuation charges in the first three quarters of the fiscal year. Due to these e vents, retail comparable store sales could be slightly negative and core distribution sales, excluding the effect of the VG's sales reclassification, are expected to be comparable to fiscal 2009 levels. To proactively address these trends, we have taken a number of additional steps to reduce operating costs in fiscal 2010 such as, reducing the annual associate target bonus by twenty-five percent, suspending 401(k) matching contributions for all but our non-bonus eligible store associates and department managers, implementing a hiring freeze, and shifting the timing of annual merit pay increases.

          We continuously evaluate our retail store base in the normal course of business to determine actions needed for store remodels, relocations and closings. We expect the retail sales reductions resulting from our store evaluations plus store carryover activity from fiscal 2009 to be approximately $20.0 million for fiscal 2010. The store opening, remodel, closing and other costs related to these activities will be approximately $5.2 million in fiscal 2010 compared with $4.2 million incurred in fiscal 2009.

          As we look forward to what is likely to remain a challenging economic period, we will remain focused on a consumer-centric business strategy. Successfully navigating through this challenging period will require sound execution of the basics in grocery retailing and distribution. The basics include providing everyday good values to consumers, consistently delivering high quality products and services, working to help our distribution customers be more profitable and competitive, and being aware of, and adapting to, evolving conditions in our market place. We

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remain confident that we can be successful against this environment with our retail value proposition and value-added distribution services.

          The matters discussed in this Item 7 include forward-looking statements. See "Forward-Looking Statements" at the beginning and "Risk Factors" in Item 1A of this Annual Report on Form 10-K.

Results of Operations

          The following table sets forth items from our Consolidated Statements of Earnings as a percentage of net sales and the year-to-year percentage change in dollar amounts:

	Percentage of Net Sales			Percentage Change
	March 28, 2009	March 29, 2008	March 31, 2007	2009/2008		2008/2007
Net sales	100.0	100.0	100.0	4.0		12.3
Gross margin	20.8	20.0	19.6	8.3		14.7
Selling, general and administrative    expenses	18.0	17.5	17.2	6.9		14.5
Provision for asset impairments and exit    costs	- -	- -	0.2	- -		*
Operating earnings	2.8	2.5	2.2	18.0		26.6
Other income and expenses	0.4	0.5	0.5	(1.7	)	(5.6	)
Earnings before income taxes and    discontinued operations	2.4	2.0	1.7	22.3		36.6
Income taxes	1.0	0.7	0.6	37.6		40.4
Earnings from continuing operations	1.4	1.3	1.1	13.7		34.5
Earnings from discontinued operations,    net of taxes	0.1	0.1	0.0	2.4		80.9
Net earnings	1.5	1.4	1.1	13.1		36.4
* Percentage change is not meaningful

          Results of Continuing Operations for the Fiscal Year Ended March 28, 2009 Compared to the Fiscal Year Ended March 29, 2008

          Net Sales. Net sales increased $99.9 million, or 4.0%, from $2,476.8 million in fiscal 2008 to $2,576.7 million in fiscal 2009. The sales increase was primarily due to incremental sales from the Felpausch and VG's retail acquisitions, comparable store sales growth in our supermarkets, new distribution customer business and product cost inflation.

          Net sales in our Distribution segment, after intercompany eliminations, decreased $35.7 million, or 2.8%, from $1,284.3 million to $1,248.6 million primarily due to the elimination of sales to VG's and Felpausch stores of $37.8 million and $20.6 million, respectively, (due to our acquisitions of the stores), lower sales in our marginally profitable pharmacy distribution program of $26.1 million, partially offset by incremental sales of $53.5 million to new distribution customers primarily obtained in fiscal 2008. As a result of the VG's acquisition, we expect reported annual Distribution sales to decline approximately $150.0 million compared to pre-acquisition annual sales due to the elimination of intercompany sales.

          Net sales in our Retail segment increased $135.6 million, or 11.4%, from $1,192.5 million to $1,328.1 million. The sales increase was primarily due to incremental sales from the recently acquired VG's stores of $72.7 million and Felpausch retail stores of $43.2 million, supermarket comparable store sales growth of $23.3 million and increases in fuel center sales of $19.4 million, partially offset by lost sales of $23.4 million relating to three stores that were sold in fiscal 2008, one store that was closed early in fiscal 2009 and one store that was sold in the third quarter of fiscal 2009. Total retail comparable store sales increased 3.5 percent in fiscal 2009 principally due to our marketing programs, ongoing capital investment program, including store remodels, and product cost inflation. Excluding sales from fuel centers and Easter holiday sales in the prior year first and fourth quarters, comparable store sales increased 2.7 percent. We define a retail store as co mparable when it is in operation for 14 accounting

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periods (a period equals four weeks), and we include remodeled, expanded and relocated stores in comparable stores.

          Gross Margin. Gross margin represents net sales less cost of sales, which include purchase costs and promotional allowances. Vendor allowances that relate to our buying and merchandising activities consist primarily of promotional allowances, which are generally allowances on purchased quantities and, to a lesser extent, slotting allowances, which are billed to vendors for our merchandising costs, such as setting up warehouse infrastructure. Vendor allowances associated with product cost are recognized as a reduction in cost of sales when the product is sold. Lump sum payments received for multi-year contracts are amortized over the life of the contracts based on contractual terms.

          Gross margin increased by $41.1 million, or 8.3%, from $495.0 million to $536.1 million. As a percent of net sales, gross margin increased from 20.0% to 20.8%. The gross margin rate improvement was due principally to an increase in the mix of higher margin retail sales as a percentage of consolidated sales and an improvement in distribution segment gross margin. We are anticipating higher overall gross profit margin rates in fiscal 2010 due to a higher mix of retail sales and improving gross profits in our retail segment. Higher private label penetration rates, the implementation of additional merchandising initiatives and improvements in our fuel procurement program will contribute to the expected gross profit margin improvement.

          Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses consist primarily of salaries and wages, employee benefits, warehousing costs, store occupancy costs, utilities, equipment rental, depreciation and other administrative costs.

          SG&A expenses increased $30.0 million, or 6.9%, from $433.3 million to $463.4 million, and were 18.0% of net sales compared to 17.5% last year. The net increase in SG&A is due primarily to the following:

• Additional operating costs associated with the acquired VG's retail stores of $17.8 million, including approximately $0.3 million of training and other start-up related costs.

• Additional operating costs, excluding incremental grand re-opening costs for remodeled stores, associated with the acquired Felpausch retail stores of $7.5 million.

• Increases in compensation and benefits, excluding VG's, Felpausch and fuel centers, of $6.7 million.

• Incremental costs of $1.0 million related to grand re-opening costs for remodeled stores.

• Increased depreciation and amortization, excluding VG's, Felpausch and fuel centers, of $1.6 million.

• The cost of operating additional fuel centers of $1.4 million.

• Increased utilities costs, excluding VG's, Felpausch and fuel centers, of $1.2 million.

• Reduced operating costs related to the sale of four retail stores and closure of one store since the prior year of $6.0 million.

• Reclassification of operating expenses due to replacement of $1.5 million of the Michigan Single Business Tax (MSBT) with a new income tax for the State of Michigan. The MSBT was not considered an income tax and was included in operating expenses.

          Given the challenging economic environment previously discussed, we have also taken a number of steps to reduce operating costs in fiscal 2010 such as completing the warehouse re-racking initiative, reducing the annual associate incentive bonus target by twenty-five percent, suspending 401(k) matching contributions for all but our non-bonus eligible store associates and department managers, implementing a hiring freeze, and shifting the timing of annual merit pay increases. Offsetting these cost savings, will be an increase in pension expense of $1.3 million resulting primarily from a decline in the fair value of pension plan assets. We also expect health care costs to trend higher.

          Interest Expense. Interest expense decreased $0.1 million, or 1.2%, from $11.1 million to $11.0 million, and was 0.4% of net sales in both years. The decrease in interest expense is due to a decrease in interest rates, partially offset by an increase in average outstanding borrowings of $14.9 million.

          On January 2, 2009, we entered into an interest rate swap agreement. The interest rate swap is considered to be a cash flow hedge of interest payments on $45.0 million of borrowings under our senior secured revolving credit facility by effectively converting a portion of the variable rate debt to a fixed rate basis. Under the terms of the agreement, we have agreed to pay the counterparty a fixed interest rate of 3.33% and the counterparty has agreed

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to pay Spartan Stores a floating interest rate based upon the 1-month LIBOR plus 1.25% (1.77% at March 28, 2009) on a notional amount of $45 million. The interest rate swap agreement expires concurrently with its senior secured revolving credit facility on December 24, 2012.

          Our fiscal 2010 financial reporting will be modified to comply with FSP No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (FSP No. APB 14-1). In short, this requires that the Company recognize non-cash interest expense on its $110.0 million convertible senior notes. The amount of incremental expense anticipated for fiscal 2010 is approximately $3.4 million, pre-tax. FSP No. APB 14-1 must be applied on a retrospective basis, therefore, upon adoption on March 29, 2009, we expect to retroactively record additional non-cash interest expense of approximately $3.2 million and $2.7 million, pre-tax, for fiscal years 2009 and 2008, respectively.

          Income Taxes. The effective tax rate is 40.5% and 36.0% for fiscal 2009 and fiscal 2008, respectively. The difference from the statutory rate is primarily due to State of Michigan income taxes. On January 1, 2008 a new income tax for the State of Michigan became effective which replaced the Michigan Single Business Tax ("MSBT"). The MSBT was not considered an income tax and was included in SG&A expenses. Total Michigan taxes, net of the Federal income tax benefit, were $3.3 million in fiscal 2009 compared to $1.3 million in fiscal 2008. The fiscal 2008 amount is comprised of MSBT expense of $0.8 million and $0.5 million for the new Michigan income tax, both net of the Federal tax benefit. We expect the effective tax rate for fiscal 2010 to increase to approximately 41.2% due to the affects of state income taxes.

          Results of Continuing Operations for the Fiscal Year Ended March 29, 2008 Compared to the Fiscal Year Ended March 31, 2007

          Net Sales. Net sales increased $270.6 million, or 12.3%, from $2,206.3 million in fiscal 2007 to $2,476.8 million in fiscal 2008. The sales increase was primarily due to incremental sales from the Felpausch acquisition, new distribution customer business, higher fuel center sales, comparable store sales growth in our supermarkets, increased sales to existing distribution customers and incremental sales from the acquired PrairieStone pharmacies. The sales increase was partially offset by the absence of an extra week of sales included in the prior year fourth quarter, lost sales associated with the ending of two customer relationships during the prior year, and lost sales from two corporate-owned stores closed near the end of the first quarter of fiscal 2007.

          Net sales in our Distribution segment, after intercompany eliminations, increased $46.2 million, or 3.7%, from $1,238.1 million in fiscal 2007 to $1,284.3 million in fiscal 2008 primarily due to the addition of new distribution customers of $159.0 million and an increase in sales to existing customers of $19.5 million primarily as a result of a retail competitor exiting the eastern Michigan market, partially offset by the elimination of sales to Felpausch stores of $101.7 million (due to the acquisition), an extra week of sales in fiscal 2007 of $22.9 million and lost sales of $7.7 million as a result of terminated customer relationships in fiscal 2007.

          Net sales in our Retail segment increased $224.3 million, or 23.2%, from $968.2 million in fiscal 2007 to $1,192.5 million in fiscal 2008. The sales increase was primarily due to incremental sales from the recently acquired Felpausch retail stores of $160.4 million, increases in fuel center sales of $40.4 million, supermarket comparable sales growth of $31.5 million, and incremental sales resulting from the acquisition of the PrairieStone pharmacies of $11.5 million, partially offset by lost sales relating to the previously disclosed closing of two retail stores near the end of the prior year first quarter of $3.1 million and an extra week of sales included in the prior year of $16.4 million. Total retail comparable store sales increased 6.1 percent in fiscal 2008 due to our ongoing capital investment program, including store remodels, the opening of additional fuel centers and the PrairieStone Pharmacy acquisition. Excluding sales from fuel centers, the PrairieStone Pha rmacy acquisition and the impact of the extra week of sales in the prior year, comparable store sales increased 3.4 percent. We define a retail store as comparable when it is in operation for 14 accounting periods (a period equals four weeks), and we include remodeled, expanded and relocated stores in comparable stores.

          Gross Margin. Gross margin represents net sales less cost of sales, which include purchase costs and promotional allowances. Vendor allowances that relate to our buying and merchandising activities consist primarily of promotional allowances, which are generally allowances on purchased quantities and, to a lesser extent, slotting allowances, which are billed to vendors for our merchandising costs, such as setting up warehouse infrastructure. Vendor allowances associated with product cost are recognized as a reduction in cost of sales when the product is

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sold. Lump sum payments received for multi-year contracts are amortized over the life of the contracts based on contractual terms.

          Gross margin increased by $63.5 million, or 14.7%, from $431.5 million in fiscal 2007 to $495.0 million in fiscal 2008. As a percent of net sales, gross margin increased from 19.6% to 20.0%. The gross margin rate improvement was primarily due to a larger concentration of higher margin retail sales as a percentage of consolidated sales and an improvement in distribution segment gross margin primarily due to the elimination of sales to our Felpausch stores, partially offset by an increase in LIFO expense of $2.3 million due to higher product costs, growth in lower margin fuel and pharmacy sales and additional promotional activity during grand re-openings of five remodeled stores and one replacement store which have resulted in increased sales and market share.

          Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses consist primarily of salaries and wages, employee benefits, warehousing costs, store occupancy costs, utilities, equipment rental, depreciation and other administrative costs.

          SG&A expenses increased $55.0 million, or 14.5%, from $378.3 million in fiscal 2007 to $433.3 million in fiscal 2008, and were 17.5% of net sales in fiscal 2008 compared to 17.2% in fiscal 2007. The net increase in SG&A is due primarily to the following:

• Incremental operating costs associated with the acquired retail stores of $42.0 million, including approximately $0.6 million of training and other start-up related costs, and also including $1.3 million of costs for grand re-openings of five remodeled stores and one relocated store.

• Increases in other compensation and benefits of $6.2 million due to increased sales volume and the absence of a $1.3 million insurance reserve adjustment recorded in fiscal 2007 due to reductions in workers' compensation and health care costs. The reduction in costs was due to improvement in workplace safety programs, implementation of procedures to settle claims quicker, and improvement in claims trends.

• Increased store labor of $2.9 million primarily due to increases in volume, including costs associated with grand re-openings of five remodeled stores and one replacement store.

• The cost of operating additional fuel centers of $2.5 million.

• Increased transportation fuel costs of $1.1 million.

• Increased depreciation and amortization of $0.9 million.

          The increased SG&A expenses were partially offset by reduced operating costs due to the closure of two supermarkets near the end of the prior year first quarter of $1.1 million.

          Interest Expense. Interest expense decreased $1.0 million, or 8.2%, from $12.1 million in fiscal 2007 to $11.1 million in fiscal 2008, and was 0.4% of net sales in fiscal 2008 compared to 0.5% in fiscal 2007. The decrease in interest expense is primarily due to the amendment of our existing revolving credit facility and the issuance of convertible senior notes, the proceeds of which were used to pay down amounts owed under our revolving credit facility, which has a higher interest rate. The effect of the lower rates was partially offset by an increase in outstanding debt due to the Felpausch acquisition. See the Liquidity and Capital Resources section for additional information on the issuance of convertible senior notes. Total average borrowings increased $36.0 million from $122.0 million in fiscal 2007 to $158.0 million in fiscal 2008.

          In accordance with Emerging Issues Task Force ("EITF") Issue No. 87-24, "Allocation of Interest to Discontinued Operations," interest was allocated to discontinued operations based on the principal amount of debt that could be paid with the proceeds from the sale of such operations, and is allocated based on the ratio of net assets to be sold or discontinued to the sum of total net assets of the consolidated entity plus consolidated debt other than (a) debt of the discontinued operation that will be assumed by the buyer, (b) debt that is required to be paid as a result of the disposal transaction, and (c) debt that can be directly attributed to other operations. Interest expense of $0.2 million and $0.6 million was allocated to, and is included in, earnings from discontinued operations in the Consolidated Statements of Earnings for fiscal 2008 and fiscal 2007, respectively. Interest expense allocated to discontinued operations decreased in fiscal 2008 due to the decrease in consolidated interest expense and a decrease in the net assets ratio.

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          Other, net. Other, net decreased $0.3 million, from $0.6 million in fiscal 2007 to $0.3 million in fiscal 2008. Fiscal 2008 includes a gain on the disposal of businesses of $0.1 million. Fiscal 2007 includes a gain on the sale of land and a building facility not used in operations of $0.5 million.

          Income Taxes. The effective tax rate was 36.0% and 35.0% for fiscal 2008 and fiscal 2007, respectively. The difference from the statutory rate in fiscal 2008 is primarily due to State of Michigan income taxes. On January 1, 2008 a new income tax for the State of Michigan became effective which replaced the Michigan Single Business Tax ("MSBT"). The MSBT was not considered an income tax and was included in SG&A expenses. MSBT expense, net of Federal income tax benefit, was $0.8 million and $0.7 million for fiscal 2008 and fiscal 2007, respectively.

Discontinued Operations

          Certain of our retail and grocery distribution operations have been recorded as discontinued operations. Results of the discontinued operations are excluded from the accompanying notes to the condensed consolidated financial statements for all periods presented, unless otherwise noted.

          During the second quarter of fiscal year 2008, Spartan Stores decided to close five The Pharm stores and one Felpausch Xpressmart. The decision to close the stores was based on a comprehensive evaluation of the stores' performance trends, long-term growth prospects, on-going capital requirements and lease expiration dates. As Spartan Stores will have no continuing interest in the operations of these stores, they have been classified as discontinued operations for all years presented. Prescription lists and pharmacy inventories were sold for $4.7 million, and asset impairment charges of $0.9 million were recognized. The stores were closed early in the third quarter of fiscal 2008.

          During the fourth quarter of fiscal year 2008, Spartan Stores approved a plan to close the remaining 14 The Pharm stores. In fiscal 2009, we completed the closure and sale of prescription files of all The Pharm stores, allowing us to concentrate efforts and resources on business opportunities with the best long-term growth potential and focus more on core distribution and conventional supermarket operations. Cash proceeds of $13.8 million were received. Asset impairment charges and exit costs of $5.6 million were recognized.

Critical Accounting Policies

          This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, assets held for sale, long-lived assets, income taxes, self-insurance reserves, exit costs, retirement benefits, stock-based compensation and contingencies and litigation. We base our estimates on historical experience and on various other assumptions and factors that we believe to be reasonable under the circumstances. Based on our ongoing review, we make adjustments we consider appropriate under the facts and circumstances. We have discussed the development, selection and disclosure of these policies with the Audit Committee.

          We believe that the following represent the more critical estimates and assumptions used in the preparation of our consolidated financial statements.

          Inventories. Inventories are valued at the lower of cost or market using the last-in, first-out ("LIFO") method. If replacement cost had been used, inventories would have been $46.8 million and $45.4 million higher at March 28, 2009 and March 29, 2008, respectively. We use the retail inventory method ("RIM") and replacement cost method to determine the cost of our inventory. Under the RIM method, inventory is stated at cost with cost of sales and gross margin calculated by applying a cost ratio to the retail value of inventories. The replacement cost method utilizes the most current unit purchase cost to calculate the value of inventories. We evaluate inventory shortages throughout the year based on actual physical counts in our facilities. We record allowances for inventory shortages based on the results of recent physical counts to provide for estimated shortages from the last physical count to the financial statement date.

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          Vendor Funds. We receive funds from many of the vendors whose products we buy for resale in our corporate-owned stores and to our independent retail customers. Given the highly promotional nature of the retail supermarket industry, vendor allowances are generally intended to defray the costs of promotion, advertising and selling the vendor's products. Vendor allowances that relate to our buying and merchandising activities consist primarily of promotional allowances, which are generally allowances on purchased quantities and, to a lesser extent, slotting allowances, which are billed to vendors for our merchandising costs such as setting up warehouse infrastructure. The proper recognition and timing of accounting for these items are significant to the reporting of the results of our operations. In accordance with EITF Issue No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor," vendor allowances are rec ognized as a reduction in cost of sales when the related product is sold. Lump sum payments received for multi-year contracts are amortized over the life of the contracts based on contractual terms.

          Goodwill. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," goodwill is reviewed for impairment on an annual basis (during the fourth quarter), or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Fair values are determined based on the discounted cash flows and comparable market values of each reporting segment. If the fair value of the reporting unit is less than its carrying value, the fair value of the implied goodwill is calculated as the difference between the fair value of the reporting unit and the fair value of the underlying assets and liabilities, excluding goodwill. An impairment charge is recorded for any excess of the carrying value over the implied fair value. Our goodwill impairment analysis also includes a comparison of the aggregate estimated fair value of each reporting seg ment to our total market capitalization. Therefore, a significant and sustained decline in our stock price could result in goodwill impairment charges. During times of financial market volatility, significant judgment is given to determine the underlying cause of the decline and whether stock price declines are short-term in nature or indicative of an event or change in circumstances.

          Determining market values using a discounted cash flow method requires that we make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based on historical experience, current market trends and other information. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, including capital expenditures and a 4% long-term assumed growth rate of cash flows for periods after the five-year forecast for the Retail segment and 2.5% for the Distribution segment. The future estimated cash flows were discounted using a rate of 10.4% and 9.7% for the Retail and Distribution segments, respectively. We generally develop these forecasts based on recent sales data for existing operations and other factors. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different assumpti ons could result in different outcomes. We have either met or exceeded assumptions used in prior year's goodwill impairment models. Based on our annual review during fiscal years 2009, 2008 and 2007, no goodwill impairment charge was required to be recorded. No goodwill impairment charge would be required even if the current estimate of future discounted cash flows was 10% lower. Furthermore, no goodwill impairment charge would be required if the discount rate was increased 1%.

          Impairment of Long-Lived Assets Other Than Goodwill. Long-lived assets to be held and used are evaluated for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. When the undiscounted future cash flows are not sufficient to recover an asset's carrying amount, the fair value is compared to the carrying value to determine the impairment loss to be recorded. No material impairments for long-lived assets to be held and used were determined to exist for fiscal years 2009, 2008 and 2007.

          Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value, less cost to sell. Fair values are determined by independent appraisals, quotes or expected sales prices developed by internal real estate professionals. Estimates of expected sales prices are judgments based upon our experience, knowledge of market conditions and current offers received. Changes in market conditions, the economic environment and other factors can significantly impact these estimates. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different assumptions could result in a different outcome. If the current estimate of future discounted cash flows was 10% lower an additional impairment reserve of $0.2 million would be required.

          Insurance Reserves. We are primarily self-insured for costs related to workers' compensation, general liability and health insurance. We record our self-insurance liabilities based on reported claims experience and an

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estimate of claims incurred but not yet reported. Workers' compensation and general liability are actuarially determined on a discounted basis. We have purchased stop-loss coverage to limit our exposure to any significant exposure on a per claim basis. Our exposure for workers' compensation and general liability is $0.5 million per claim and for health insurance our exposure is $0.3 million per associate per year.

          Any projection of losses concerning workers' compensation, general liability and health insurance is subject to a considerable degree of variability. Among the causes of variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns. Although our estimates of liabilities incurred do not anticipate significant changes in historical trends for these variables, such changes could have a material impact on future claim costs and currently recorded liabilities. The impact of many of these variables is difficult to estimate. As of March 28, 2009, a one percentage point decrease in the discount rate, or 100 basis points, would increase our liability less than $0.1 million and a one percentage point increase in the discount rate would decrease our liability by less than $0.1 million.

          Exit Costs. We record exit costs for closed stores that are subject to long-term lease commitments based upon the future minimum lease payments and related ancillary costs from the date of closure to the end of the remaining lease term, net of estimated sublease rentals that could be reasonably expected to be obtained for the property. Future cash flows are based on contractual lease terms and knowledge of the market in which the closed store is located. These estimates are subject to multiple factors, including inflation, ability to sublease the property and other economic conditions. Internally developed estimates of sublease rentals are based upon the market in which the property is located, the results of previous efforts to sublease similar property and the current economic environment. Reserves may be adjusted in the future based upon the actual resolution of each of these factors. At March 28, 2009 exit costs of $44.5 million are recorded net of appr oximately $1.0 million of existing sublease rentals. A 10% increase/decrease in future estimated ancillary costs would increase/decrease the exit costs reserve by approximately $1.9 million. Based upon the current economic environment we do not believe that we will be able to obtain any additional sublease rentals.

          The following table provides the activity of exit costs for fiscal years 2009, 2008 and 2007:

(In thousands)	Lease and Ancillary Costs
Balance at March 26, 2006	$	15,317
Exit costs assumed in acquisition of D&W (see Note 2 to the consolidated financial statements)		19,231
Exit costs assumed in Carter's acquisition (see Note 2 to the consolidated financial statements)		552
Provision for lease and related ancillary costs, net of estimated sublease recoveries		4,050
Payments, net of interest accretion		(6,447	)
Balance at March 31, 2007		32,703
Exit costs assumed in Felpausch acquisition (see Note 2 to the consolidated financial    statements)		11,305
Changes in estimates (see Note 5 to the consolidated financial statements)		(1,868	)
Payments, net of interest accretion		(6,013	)
Balance at March 29, 2008		36,127
Exit costs related to the disposition of The Pharm stores		4,562
Exit costs assumed in VG's acquisition (see Note 2 to the consolidated financial statements)		15,146
Changes in estimates (see Note 5 to the consolidated financial statements)		(4,392	)
Payments, net of interest accretion		(6,898	)
Balance at March 28, 2009	$	44,545

          Pension. Accounting for defined benefit cash balance pension plans involves estimating the cost of benefits to be provided in the future, based on vested years of service, and attributing those costs over the time period each employee works. The significant factors affecting our pension costs are the fair value of plan assets and the selection of management's key assumptions, including the expected return on plan assets, rate of compensation increases and discount rate used by our actuary to calculate our liability. We consider current market conditions, including

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changes in interest rates and investment returns, in selecting these assumptions. Our discount rate is based on current investment yields on high quality fixed-income investments and projected cash flow obligations. The discount rate used to determine fiscal 2009 pension expense was 7.00%. Expected return on plan assets is based on historical experience of the plan's portfolio and the review of projected returns by asset class on broad, publicly traded equity and fixed-income indices, as well as target asset allocation. Our target allocation mix is designed to meet our long-term pension requirements. For fiscal 2009, our assumed rate of return was 8.25%. Over the ten-year period ended March 28, 2009, the average actual return was approximately 3.3%. The deteriorating conditions in the global financial markets during 2008 led to a substantial reduction in the 10-year average rate of return on pension assets. We expect that the markets will eventually recover to our assumed long-term rate of return. We maintai ned our rate of increases in compensation at 4.00%. While we believe the assumptions selected are reasonable, significant differences in our actual experience, plan amendments or significant changes in the fair value of our plan assets may materially affect our pension obligations and our future expense. A 50 basis point increase or decrease in the discount rate would have decreased/increased fiscal 2009 pension expense by less than $0.2 million. A 50 basis point increase or decrease in the expected return on plan assets would have decreased/increased fiscal 2009 pension expense by $0.3 million.

          In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements Nos. 87, 88, 106 and 132(R)" (SFAS 158). SFAS 158 required that we recognize the funded status of defined benefit postretirement plans as an asset or liability in the consolidated balance sheet and to recognize changes in funded status through comprehensive income as of March 31, 2007. SFAS 158 requires that employers measure plan assets and obligations as of the date of their year-end financial statements beginning with our fiscal year ending March 28, 2009. We adopted the measurement date provisions of SFAS 158 on March 30, 2008, the first day of fiscal year 2009, and recorded the cumulative effect of adopting these provisions by decreasing shareholders' equity by $0.3 million.

          The (unfunded) funded status of our defined benefit plans was $(17.6) million and $0.1 million for 2009 and 2008, respectively. The decrease in the funded balance during fiscal 2009 is a result of actual loss on plan assets of 30.0%, service and interest costs exceeding contributions by $2.5 million, partially offset by an actuarial gain and effects of changes in measurement date of $0.9 million. Plan assets decreased by 31.3% primarily due to market losses on assets and benefit payments, partially offset by company contributions of $3.4 million. Pension expense was $1.3 million and $2.2 million in fiscal 2009 and fiscal 2008, respectively.

Liquidity and Capital Resources

          The following table summarizes our consolidated statements of cash flows for fiscal years 2009, 2008 and 2007:

(In thousands)

	March 28, 2009			March 29, 2008			March 31, 2007
Net cash provided by operating activities	$	80,922		$	67,777		$	58,594
Net cash used in investing activities		(159,736	)		(87,946	)		(77,639	)
Net cash provided by financing activities		52,554			21,940			20,370
Net cash provided by discontinued operations		12,912			6,033			3,083
Net (decrease) increase in cash and cash equivalents		(13,348	)		7,804			4,408
Cash and cash equivalents at beginning of year		19,867			12,063			7,655
Cash and cash equivalents at end of year	$	6,519		$	19,867		$	12,063

          Net cash provided by operating activities increased during fiscal 2009 primarily due to increased net earnings, timing of new business in the prior year and collection of new customer advances made in the prior year with delayed payment terms. The increase during fiscal 2008 was primarily due to an increase in net earnings and favorable changes in working capital, partially offset by a pension plan funding contribution.

          During fiscal 2009, our Federal income tax net operating loss carryforward was fully utilized. As a result, we paid $3.9 million of Federal income taxes in fiscal 2009, compared to $2.1 million in fiscal 2008 and $0.6 million in Alternative Minimum Tax in fiscal year 2007.

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          Net cash used in investing activities increased in fiscal 2009 and fiscal 2008 due to acquisitions and increased capital expenditure activity. We paid a total cash purchase price of $103.4 million, $49.1 million and $53.8 million for acquisitions in fiscal years 2009, 2008 and 2007, respectively. Excluding the acquisitions, our Distribution and Retail segments utilized 22% and 78%, respectively, of our capital expenditure dollars for fiscal 2009. Expenditures were used for store remodels and refurbishments, new fuel centers and new equipment and software. Under the terms of our senior secured revolving credit facility, should our available borrowings fall below certain levels, our capital expenditures would be restricted each fiscal year. Our current available borrowings are approximately $80 million above these limits as of March 28, 2009 and we do not expect to fall below these levels. We expect capital expenditures to range from $48 million to $52 million in fiscal 20 10, primarily for one new store, one relocated store, store remodels, fuel centers, new equipment and software.

          Net cash provided by financing activities includes cash paid and received related to our long-term borrowings, dividends paid, tax benefits of stock compensation and proceeds from the issuance of common stock. The increase in cash from financing activities in fiscal 2009 was primarily due to borrowings on our senior secured revolving credit facility that were used to finance the VG's acquisition, partially offset by dividend payments of $4.4 million and other debt repayments. The increase in cash provided from financing activities in fiscal 2008 was due to proceeds from the issuance of $110 million of convertible senior notes that were used to reduce borrowings on the senior secured revolving credit facility, to pay related financing fees and to partially fund the Felpausch acquisition, partially offset by dividend payments of $4.4 million and other debt repayments. Although we currently expect to continue to pay a quarterly cash dividend, adoption of a div idend policy does not commit the board of directors to declare future dividends. Each future dividend will be considered and declared by the board of directors in its discretion. Whether the board of directors continues to declare dividends depends on a number of factors, including our future financial condition and profitability and compliance with the terms of our credit facilities. Our current maturities of long-term debt and capital lease obligations at March 28, 2009 are $3.9 million. Our ability to borrow additional funds is governed by the terms of our credit facilities. We expect that improved cash flows should result in an additional $10 million of availability to reduce debt or apply towards other capital initiatives.

          On January 2, 2009, Spartan Stores entered into an interest rate swap agreement. The interest rate swap is considered to be a cash flow hedge of interest payments on $45.0 million of borrowings under Spartan Stores' senior secured revolving credit facility by effectively converting a portion of the variable rate debt to a fixed rate basis. Under the terms of the agreement, Spartan Stores has agreed to pay the counterparty a fixed interest rate of 3.33% and the counterparty has agreed to pay Spartan Stores a floating interest rate based upon the 1-month LIBOR plus 1.25% (1.77% at March 28, 2009) on a notional amount of $45 million. The interest rate swap agreement expires concurrently with its senior secured revolving credit facility on December 24, 2012.

          Net cash provided by discontinued operations contains the net cash flows of our discontinued operations and consists primarily of the proceeds from the sale of assets and the payment of store exit cost reserves, insurance run-off claims and other liabilities. Included in fiscal years 2009, 2008 and 2007 cash flows from discontinued operations are proceeds on the disposal of assets of $13.8 million, $3.6 million and $3.1 million, respectively. We expect the cash used by our discontinued operations will be approximately $5.0 million to $6.0 million in fiscal 2010.

          Our principal sources of liquidity are cash flows generated from operations and our senior secured revolving credit facility. Interest on our convertible senior notes is payable on May 15 and November 15 of each year. The revolving credit facility matures December 2012, and is secured by substantially all of our assets. As of March 28, 2009, our revolving credit facility had outstanding borrowings of $64.9 million, available borrowings of $100.0 million and maximum availability of $110.0 million, which exceeds the minimum excess availability levels, as defined in the credit agreement.

          Prior to amending our credit facility in the first quarter of fiscal 2008, we had a $225.0 million senior secured revolving credit facility maturing December 2010. The amended credit facility extended the maturity by two years, and, at our option, we may increase the maximum amount available under the credit facility up to $275.0 million through increased commitments from lenders. Additional borrowing would be subject to existing asset levels. On August 17, 2007, Spartan Stores entered into an agreement to increase the maximum credit available under its existing senior secured credit facility from $225.0 million to $255.0 million.

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          Available borrowings under the credit facility are based on stipulated advance rates on eligible assets, as defined in the credit agreement. The credit facility contains covenants that include a minimum fixed charge coverage ratio and maximum capital expenditures, as defined in the credit agreement. These covenants are not effective as long as we maintain minimum excess availability levels, as defined in the credit agreement. The credit facility provides for the issuance of letters of credit of which $4.3 million were outstanding and unused as of March 28, 2009. Borrowings under the revolving credit portion of the facility bear interest at the London InterBank Offered Rate ("LIBOR") plus 1.25%, adjusted based upon availability levels, or the prime rate (weighted average interest rate of 3.01% at March 28, 2009 including the effects of the interest rate swap).

          Our current ratio increased slightly to 1.13:1.00 at March 28, 2009 from 1.11:1.00 at March 29, 2008 and our investment in working capital was $21.0 million at March 28, 2009 versus $20.5 million at March 29, 2008. Our debt to total capital ratio increased to 0.48:1.00 at March 28, 2009 versus 0.43:1.00 at March 29, 2008, primarily due to obligations assumed related to the VG's acquisition.

          Our total capital structure includes borrowings under our credit facility, convertible senior notes, various other debt instruments, leases and shareholders' equity. Historically, we have financed our capital needs through a combination of internal and external sources. Management believes that cash generated from operating activities and available borrowings under the credit facility will be sufficient to meet anticipated requirements for working capital, capital expenditures, dividend payments, and debt service obligations for the foreseeable future. However, there can be no assurance that our business will continue to generate cash flow at or above current levels or that we will maintain our ability to borrow under our credit facility.

          The table below presents our significant contractual obligations as of March 28, 2009 ⁽¹⁾:

(In thousands)	Payment Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt	$	175,585	$	139	$	193	$	65,074	$	110,179
Estimated interest on long-    term debt (2)		25,557		5,676		11,344		8,207		330
Capital leases (3)		44,033		3,793		8,083		7,213		24,944
Interest on capital leases		22,964		3,558		6,164		4,857		8,385
Operating leases (3)		173,940		32,689		53,382		35,581		52,288
Lease and ancillary costs    of closed stores,    including imputed interest		50,360		9,827		16,959		12,129		11,445
Purchase obligations    (merchandise) (4)		742,690		178,187		347,031		203,207		14,265
FIN 48 unrecognized tax    liability		812		529		19		58		206
Self-insurance liability		7,783		6,041		1,024		547		171
Total	$	1,243,724	$	240,439	$	444,199	$	336,873	$	222,213

(1) Excludes funding of pension and other postretirement benefit obligations, which totaled approximately $3.0 million in fiscal 2009. We are not required to make a contribution in fiscal 2010 to meet minimum funding requirements; however we will assess the prudence of making a voluntary contribution to the plan during the third quarter of fiscal 2010. Historically, such voluntary annual contributions have been between $3 million and $5 million. Also excludes contributions under various multi-employer pension plans, which totaled $7.6 million in fiscal 2009. For additional information, refer to Note 10 to the consolidated financial statements.
(2) Interest payments on long-term debt assume our convertible subordinated notes are repurchased in whole on May 15, 2014 in accordance with the applicable terms. For additional information refer to Note 6 to the consolidated financial statements.
(3) Operating and capital lease obligations do not include common area maintenance, insurance or tax payments for which the Company is also obligated. In fiscal 2009, these charges totaled approximately $10.0 million.
(4) The majority of our purchases involve supply orders to purchase products for resale in the ordinary course of business. These contracts are typically cancelable and therefore no amounts have been included in the table above.

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Also excluded are contracts that do not contain minimum annual purchase commitments but include other standard contractual considerations that must be fulfilled in order to earn $3.6 million in advanced contract monies that has been received where recognition has been deferred on the Consolidated Balance Sheet. The purchase obligations shown in this table represent the amount of product we are contractually obligated to purchase to earn $8.5 million in advanced contract monies that are receivable under the contracts. At March 28, 2009, $4.3 million in advanced contract monies has been received under these contracts where recognition has been deferred on the Consolidated Balance Sheet. If we do not fulfill these purchase obligations, we would only be obligated to repay the unearned upfront contract monies.

Cash Dividends

          We paid a quarterly cash dividend of $0.05 per common share in each quarter of fiscal years 2009, 2008 and 2007. Under our senior revolving credit facility, we are generally permitted to pay dividends in any fiscal year up to an amount such that all cash dividends together with any cash distributions or share repurchases, do not exceed $15.0 million. Although we currently expect to continue to pay a quarterly cash dividend, adoption of a dividend policy does not commit the board of directors to declare future dividends. Each future dividend will be considered and declared by the board of directors in its discretion. Whether the board of directors continues to declare dividends depends on a number of factors, including our future financial condition and profitability and compliance with the terms of our credit facilities.

Indebtedness and Liabilities of Subsidiaries

          On May 30, 2007, the Company sold $110 million aggregate principal amount of 3.375% Convertible Senior Notes due 2027 (the "Notes"). The Notes are general unsecured obligations and rank equally in right of payment with all of the Company's other existing and future obligations that are unsecured and unsubordinated. Because the Notes are unsecured, they are structurally subordinated to our subsidiaries' existing and future indebtedness and other liabilities and any preferred equity issued by our subsidiaries. We rely in part on distributions and advances from our subsidiaries in order to meet our payment obligations under the notes and our other obligations. The Notes are not guaranteed by our subsidiaries. Many of our subsidiaries serve as guarantors with respect to our existing credit facility. Creditors of each of our subsidiaries, including trade creditors, and preferred equity holders, generally have priority with respect to the assets and earnings of the subsidiary over the claims of our creditors, including holders of the Notes. The Notes, therefore, are effectively subordinated to the claims of creditors, including trade creditors, judgment creditors and equity holders of our subsidiaries. In addition, our rights and the rights of our creditors, including the holders of the notes, to participate in the assets of a subsidiary during its liquidation or reorganization are effectively subordinated to all existing and future liabilities and preferred equity of that subsidiary. The Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing such indebtedness and to existing and future indebtedness and other liabilities of our subsidiaries (including subsidiary guarantees of our senior credit facility).

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The following table shows the indebtedness and other liabilities of our subsidiaries as of March 28, 2009:

Spartan Stores Subsidiaries Only
(In thousands)

	March 28, 2009
Current Liabilities
Accounts payable	$	97,237
Accrued payroll and benefits		32,929
Other accrued expenses		20,671
Current portion of exit costs		9,759
Current maturities of long-term debt and capital lease obligations		3,932
Total current liabilities		164,528
Long-term Liabilities
Postretirement benefits		24,696
Other long-term liabilities		20,208
Exit costs		34,786
Long-term debt and capital lease obligations		40,746
Total long-term liabilities		120,436
Total Subsidiary Liabilities		284,964
Operating Leases		168,294
Total Subsidiary Liabilities and Operating Leases	$	453,258

Ratio of Earnings to Fixed Charges

          Our ratio of earnings to fixed charges was 3.87:1.00 and 3.38:1.00 for fiscal 2009 and fiscal 2008, respectively. For purposes of calculating the ratio of earnings to fixed charges, earnings consist of pretax earnings from continuing operations plus fixed charges (excluding capitalized interest). Fixed charges consist of interest costs, whether expensed or capitalized, the interest component of rental expense and amortization of debt issue costs, whether expensed or capitalized.

Off-Balance Sheet Arrangements

          We had letters of credit of $4.3 million outstanding and unused at March 28, 2009. The letters of credit are maintained primarily to support payment or deposit obligations. We pay a commission of approximately 2% on the face amount of the letters of credit.

New Accounting Standards

          In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes", and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Further, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are to be applied prospectively. FIN 48 became effective at the beginning of our fiscal year 2008, and the adoption of FIN 48 increased retained earnings by approximately $1.0 million as of the beginning of fiscal year 2008. The adoption of FIN 48 and its effects are more fully described in Note 11 to the consolidated financial statements.

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          In June 2006, the FASB ratified the consensus reached on Emerging Issues Task Force (EITF) Issue No. 06-03, "How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross Versus Net Presentation)" (EITF 06-03). The EITF reached a consensus that the presentation of taxes on either a gross or net basis is an accounting policy decision that requires disclosure. EITF 06-03 was effective at the beginning of our fiscal 2008 first quarter. An entity is not required to reevaluate its existing policies related to taxes assessed by a governmental authority as a result of this consensus. Amounts collected from members, which under common trade practices are referred to as sales taxes, are and have been recorded on a net basis. We have no intention of modifying this accounting policy; therefore, the adoption of EITF 06-03 did not have any effect on our financial position or results of operations.

          In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but applies under other accounting pronouncements that require or permit fair value measurements. SFAS 157 became effective at the beginning of our fiscal year 2009, except as provided in FASB Staff Position (FSP) No. FAS 157-2. The provisions of the Statement are to be applied prospectively, except for limited retrospective application permitted for certain items. The adoption of SFAS 157 did not have a material impact on our financial statements. In February 2007, the FASB issued FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157", which delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, exce pt for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We are currently evaluating the impact, if any, that FSP No. FAS 157-2 will have on the consolidated financial statements.

          In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements Nos. 87, 88, 106 and 132(R)" (SFAS 158). SFAS 158 required that we recognize the funded status of defined benefit postretirement plans as an asset or liability in the consolidated balance sheet and to recognize changes in funded status through comprehensive income as of March 31, 2007. Effective March 31, 2007, we adopted these provisions of SFAS No. 158. The impact of adopting SFAS No. 158 on our financial condition at March 31, 2007 has been included in the accompanying consolidated financial statements. Adoption of SFAS No. 158 resulted in an increase of $0.3 million to Shareholders' Equity. SFAS 158 also requires that employers measure plan assets and obligations as of the date of their year-end financial statements beginning with our fiscal year ending March 28, 2009. We adopted the measurement date provi sions of SFAS 158 on March 30, 2008, the first day of fiscal year 2009, and recorded the cumulative effect of adopting these provisions by decreasing shareholders' equity by $0.3 million.

          In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations" (SFAS 141R), which replaces SFAS No. 141. SFAS 141R establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS 141R will become effective at the beginning of our fiscal year 2010, and must be applied prospectively to business combinations for which the acquisition date is on or after the beginning of fiscal year 2010. The impact of adopting SFAS 141R will be dependent on the future business combinations that we may pursue after its effective date.

          In May 2008, the FASB issued FSP No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)," that changes the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. FSP No. APB 14-1 will require us to recognize non-cash interest expense on our $110 million convertible senior notes based on the market rate for similar debt instruments without the conversion feature. FSP No. ABP 14-1 will be effective at the beginning of fiscal year 2010 and must be applied on a retrospective basis. Upon adoption on March 29, 2009, we expect to retroactively record additional non-cash interest expense of approximately $3.2 million and $2.7 million, pre-tax, for fiscal years 2009 and 2008, respectively. We also expect to retroactively record an increase in shareholders' equity of $17.1 million, net of deferred taxes, and a decrease in long-term debt o f $27.6 million.

          In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 for

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derivative instruments and hedging activities. SFAS 161 is effective beginning March 29, 2009. We do not expect SFAS 161 to have a material impact on the consolidated financial statements.

          In June 2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" (FSP EITF 03-6-1). FSP EITF 03-6-1 clarifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and must be included in the computation of earnings per share pursuant to the two-class method described in FASB Statement No. 128, "Earnings Per Share." FSP EITF 03-6-1 will be effective at the beginning of fiscal year 2010 and must be applied on a retrospective basis. We expect that basic earnings per share will decrease by $0.05, $0.04 and $0.03 for fiscal years 2009, 2008 and 2007, respectively, and dilutive earnings per share will decrease by $0.04, $0.02 and $0.02 for fiscal years 2009, 2008 and 2007, respectively.

          In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets" (FSP FAS 132(R)-1). FSP FAS 132(R)-1 amends and expands the disclosure requirements of SFAS No. 132(R) for plan assets of a defined benefit pension or other postretirement plan. FSP FAS 132(R)-1 will be effective on March 27, 2010. We do not expect that FSP FAS 132(R)-1 will have a significant impact on the consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

          We are exposed to industry related price changes on several commodities, such as dairy, meat and produce that we buy and sell in both our Distribution and Retail segments. These products are purchased for and sold from inventory in the ordinary course of business. We are also exposed to other general commodity price changes such as utilities, insurance and fuel costs.

          We are currently exposed to interest rate risk on our outstanding debt. The senior secured revolving credit facility currently bears interest at the LIBOR plus 1.25% or the prime rate (weighted average interest rate of 3.01% at March 28, 2009 including the effects of the interest rate swap) on the revolving credit portion of the facility. The weighted average interest rates on outstanding debt including loan fee amortization for fiscal years 2009, 2008 and 2007 were 5.53%, 6.71% and 9.73%, respectively.

          On January 2, 2009, Spartan Stores entered into an interest rate swap agreement. The interest rate swap is considered to be a cash flow hedge of interest payments on $45.0 million of borrowings under our senior secured revolving credit facility by effectively converting a portion of the variable rate debt to a fixed rate basis. Under the terms of the agreement, we have agreed to pay the counterparty a fixed interest rate of 3.33% and the counterparty has agreed to pay Spartan Stores a floating interest rate based upon the 1-month LIBOR plus 1.25% (1.77% at March 28, 2009) on a notional amount of $45 million. The interest rate swap agreement expires concurrently with its senior secured revolving credit facility on December 24, 2012. As of March 28, 2009, the net unrealized loss on the interest rate swap agreement was $0.5 million. We do not use financial instruments or derivatives for any trading or other speculative purposes.

          At March 28, 2009 and March 29, 2008, the estimated fair value of our long-term debt, including current maturities, was lower than book value by approximately $35.5 million and a $23.5 million, respectively. The estimated fair values were based on market quotes for similar instruments.

          The following table sets forth the principal cash flows of our debt outstanding and related weighted average interest rates by year of maturity as of March 28, 2009:

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(In thousands, except rates)

	March 28, 2009					Aggregate Payments by Fiscal Year
	Fair Value			Total		2010		2011		2012		2013		2014		Thereafter
Fixed rate debt
Principal payable	$	119,170		$	154,678	$	3,932	$	4,051	$	4,225	$	4,091	$	3,256	$	135,123
Average interest rate					4.82%		4.78%		4.70%		4.60%		4.49%		4.38%		8.09%
Variable rate debt
Principal payable	$	19,940		$	19,940		-		-		-	$	19,940		-		-
Average interest rate					2.28%								2.28%
Interest rate swap	$	(462	)
Variable to fixed	$	45,000		$	45,000							$	45,000
Average pay rate					3.33%								3.33%
Average receive rate					1.77%								1.77%

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Spartan Stores, Inc. and subsidiaries (the "Company") as of March 28, 2009 and March 29, 2008, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended March 28, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements present fairly, in all material respects, the financial position of Spartan Stores, Inc. and subsidiaries as of March 28, 2009 and March 29, 2008, and the results of their operations and their cash flows for each of the three years in the period ended March 28, 2009, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of March 28, 2009, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 5, 2009 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
June 5, 2009

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CONSOLIDATED BALANCE SHEETS

Spartan Stores, Inc. and Subsidiaries
(In thousands)

Assets	March 28, 2009		March 29, 2008
Current assets
Cash and cash equivalents	$	6,519	$	19,867
Accounts receivable, net		51,470		59,885
Inventories, net		113,790		113,078
Prepaid expenses and other current assets		9,579		9,252
Deferred taxes on income		5,201		7,792
Property and equipment held for sale		-		2,404
Total current assets		186,559		212,278
Other assets
Goodwill		249,303		186,531
Other, net		53,264		28,143
Total other assets		302,567		214,674
Property and equipment
Land and improvements		16,660		12,393
Buildings and improvements		198,509		169,761
Equipment		291,532		266,424
Total property and equipment		506,701		448,578
Less accumulated depreciation and amortization		271,895		265,393
Property and equipment, net		234,806		183,185
Total assets	$	723,932	$	610,137

See notes to consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS (continued)

Spartan Stores, Inc. and Subsidiaries
(In thousands)

Liabilities and Shareholders' Equity	March 28, 2009				March 29, 2008
Current liabilities
Accounts payable	$	97,248		$	112,899
Accrued payroll and benefits		35,456			35,723
Other accrued expenses		19,195			23,003
Current portion of exit costs		9,759			9,280
Current maturities of long-term debt and capital lease obligations		3,932			10,874
Total current liabilities		165,590			191,779
Long-term liabilities
Deferred income taxes		27,224			17,730
Postretirement benefits		25,401			8,127
Other long-term liabilities		20,876			15,434
Exit costs		34,786			26,847
Long-term debt and capital lease obligations		215,686			143,574
Total long-term liabilities		323,973			211,712
Commitments and contingencies (Note 8)
Shareholders' equity
Common stock, voting, no par value; 50,000 shares        authorized; 22,213 and 21,909 shares outstanding		137,358			130,718
Preferred stock, no par value, 10,000        shares authorized; no shares outstanding		- -			- -
Accumulated other comprehensive loss		(14,151	)		(1,142	)
Retained earnings		111,162			77,070
Total shareholders' equity		234,369			206,646
Total liabilities and shareholders' equity	$	723,932		$	610,137

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF EARNINGS

Spartan Stores, Inc. and Subsidiaries
(In thousands, except per share data)

	Year Ended
	March 28, 2009			March 29, 2008			March 31, 2007
Net sales	$	2,576,738		$	2,476,822		$	2,206,270
Cost of sales		2,040,625			1,981,854			1,774,816
Gross margin		536,113			494,968			431,454
Operating expenses
Selling, general and administrative		463,369			433,346			378,324
Provision for asset impairments and exit costs		-			-			4,464
Total operating expenses		463,369			433,346			382,788
Operating earnings		72,744			61,622			48,666
Other income and expenses
Interest expense		10,998			11,133			12,132
Other, net		(341	)		(287	)		(647	)
Total other income and expenses		10,657			10,846			11,485
Earnings before income taxes and     discontinued operations		62,087			50,776			37,181
Income taxes		25,130			18,265			13,013
Earnings from continuing operations		36,957			32,511			24,168
Earnings from discontinued operations, net of taxes		1,838			1,795			992
Net earnings	$	38,795		$	34,306		$	25,160
Basic earnings per share:
Earnings from continuing operations	$	1.71		$	1.53		$	1.15
Earnings from discontinued operations		0.09			0.08			0.05
Net earnings	$	1.80		$	1.61		$	1.20
Diluted earnings per share:
Earnings from continuing operations	$	1.70		$	1.50		$	1.13
Earnings from discontinued operations		0.08			0.08			0.05
Net earnings	$	1.78		$	1.58		$	1.18
Weighted average shares outstanding:
Basic		21,516			21,275			20,913
Diluted		21,802			21,668			21,408

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Spartan Stores, Inc. and Subsidiaries
(In thousands)

		Shares Outstanding		Common Stock		Deferred Stock-Based Compensation		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance - March 26, 2006		21,023		$123,256		$        (2,873	)	$           (276	)	$     25,310		$145,417
	Reclassification of deferred stock-    based compensation upon adoption    of SFAS 123(R)	- -		(2,873	)	2,873		- -		- -		- -
Comprehensive income, net of tax:
	Net earnings	-		-		-		-		25,160		25,160
	Minimum pension liability adjustment,    net of taxes of $78	- -		- -		- -		89		- -		89
	Total comprehensive income	-		-		-		-		-		25,249
	Adjustment to initially apply SFAS    No. 158, net of taxes of $169	- -		- -		- -		313		- -		313
	Dividends - $.20 per share	-		-		-		-		(4,302	)	(4,302	)
	Stock-based employee compensation	-		1,918		-		-		-		1,918
	Issuances of common stock and related    tax benefit on stock option exercises	430		4,110		- -		- -		- -		4,110
	Issuances of restricted stock and related    income tax benefits	268		415		- -		- -		- -		415
	Cancellations of restricted stock	(63	)	(379	)	-		-		-		(379	)
Balance - March 31, 2007		21,658		126,447		-		126		46,168		172,741
	Adjustment to initially apply FIN 48	-		-		-		-		967		967
Comprehensive income, net of tax:
	Net earnings	-		-		-		-		34,306		34,306
	Pension liability adjustment, net of taxes    of $770	- -		- -		- -		(1,268	)	- -		(1,268	)
	Total comprehensive income	-		-		-		-		-		33,038
	Dividends - $.20 per share	-		-		-		-		(4,371	)	(4,371	)
	Stock-based employee compensation	-		3,018		-		-		-		3,018
	Issuances of common stock and related    tax benefit on stock option exercises	118		1,573		- -		- -		- -		1,573
	Issuances of restricted stock and related    income tax benefits	178		783		- -		- -		- -		783
	Cancellations of restricted stock	(45	)	(1,103	)	-		-		-		(1,103	)

-42-

Balance - March 29, 2008		21,909		130,718		-	(1,142	)	77,070		206,646
	Effects of changing the pension plans'    measurement date pursuant to SFAS    No. 158, net of taxes	- -		- -		- -	(55	)	(275	)	(330	)
Comprehensive income, net of tax:
	Net earnings	-		-		-	-		38,795		38,795
	Pension liability adjustment, net of taxes    of $8,029	- -		- -		- -	(12,671	)	- -		(12,671	)
	Change in fair value of interest rate swap,    net of taxes of $179	- -		- -		- -	(283	)	- -		(283	)
	Total comprehensive income	-		-		-	-		-		25,841
	Dividends - $.20 per share	-		-		-	-		(4,428	)	(4,428	)
	Stock-based employee compensation	-		4,879		-	-		-		4,879
	Issuances of common stock and related    tax benefit on stock option exercises	158		2,034		- -	- -		- -		2,034
	Issuances of restricted stock and related    income tax benefits	232		777		- -	- -		- -		777
	Cancellations of restricted stock	(86	)	(1,050	)	-	-		-		(1,050	)
Balance - March 28, 2009		22,213		$137,358		$               -	$       (14,151	)	$   111,162		$234,369

See notes to consolidated financial statements.

- -43-

CONSOLIDATED STATEMENTS OF CASH FLOWS

Spartan Stores, Inc. and Subsidiaries
(In thousands)

	Year Ended
	March 28, 2009			March 29, 2008			March 31, 2007
Cash flows from operating activities
Net earnings	$	38,795		$	34,306		$	25,160
Earnings from discontinued operations		(1,838	)		(1,795	)		(992	)
Earnings from continuing operations		36,957			32,511			24,168
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Provision for asset impairments and exit costs		-			-			4,464
Depreciation and amortization		28,919			24,421			21,166
Postretirement benefits expense		1,559			2,195			2,260
Deferred taxes on income		18,143			18,227			12,774
Stock-based compensation expense		4,878			3,013			1,906
Excess tax benefit on stock compensation		(2,099	)		-			-
Loss (gain) on disposal of assets		105			15			(257	)
Change in operating assets and liabilities:
Accounts receivable		3,294			(16,866	)		(1,510	)
Inventories		4,130			(117	)		(5,479	)
Prepaid expenses and other assets		(1,190	)		(4,376	)		(571	)
Accounts payable		(3,296	)		13,917			(305	)
Accrued payroll and benefits		481			1,603			5,115
Postretirement benefits payments		(4,279	)		(7,339	)		(3,695	)
Other accrued expenses and other liabilities		(6,680	)		573			(1,442	)
Net cash provided by operating activities		80,922			67,777			58,594
Cash flows from investing activities
Purchases of property and equipment		(57,249	)		(40,076	)		(26,734	)
Net proceeds from the sale of assets		422			58			2,573
Acquisitions, net of cash acquired		(103,386	)		(49,145	)		(53,773	)
Proceeds from business divestitures		414			1,266			-
Other		63			(49	)		295
Net cash used in investing activities		(159,736	)		(87,946	)		(77,639	)

- -44-

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Spartan Stores, Inc. and Subsidiaries
(In thousands)

	Year Ended
	March 28, 2009			March 29, 2008			March 31, 2007
Cash flows from financing activities
Net proceeds from (payments on) revolving credit facility	$	64,940		$	(76,819	)	$	23,884
Proceeds from long-term borrowings		-			110,000			-
Repayment of long-term borrowings		(11,437	)		(3,830	)		(2,330	)
Financing fees paid		-			(3,775	)		(90	)
Excess tax benefit on stock compensation		2,099			-			-
Proceeds from exercise of stock options		1,380			735			3,208
Dividends paid		(4,428	)		(4,371	)		(4,302	)
Net cash provided by financing activities		52,554			21,940			20,370
Cash flows from discontinued operations
Net cash (used in) provided by operating activities		(885	)		3,287			1,576
Net cash provided by investing activities		13,797			2,746			1,507
Net cash provided by discontinued operations		12,912			6,033			3,083
Net (decrease) increase in cash and cash equivalents		(13,348	)		7,804			4,408
Cash and cash equivalents at beginning of year		19,867			12,063			7,655
Cash and cash equivalents at end of year	$	6,519		$	19,867		$	12,063
Supplemental Cash Flow Information:
Cash paid for interest	$	9,965		$	9,765		$	12,259
Cash paid for income taxes	$	6,610		$	2,100		$	595

See notes to consolidated financial statements.

- -45-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1
Summary of Significant Accounting Policies and Basis of Presentation

Principles of Consolidation: The consolidated financial statements include the accounts of Spartan Stores, Inc. and its subsidiaries ("Spartan Stores"). All significant intercompany accounts and transactions have been eliminated.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 might differ from those estimates.

Fiscal Year: Spartan Stores' fiscal year ends on the last Saturday of March. The fiscal years ended March 28, 2009 and March 29, 2008 consisted of 52 weeks. The fiscal year ended March 31, 2007 consisted of 53 weeks.

Revenue Recognition: The Retail segment recognizes revenues from the sale of products at the point of sale. Customer returns are immaterial. Discounts provided to customers by Spartan Stores at the time of sale are recognized as a reduction in sales as the products are sold. Spartan Stores does not recognize a sale when it sells gift cards and gift certificates, rather, a sale is recognized when the gift card or gift certificate is redeemed to purchase product. The Distribution segment recognizes revenues when products are delivered or ancillary services are provided. Sales and excise taxes are excluded from revenue.

Cost of Sales: Cost of sales includes purchase costs, freight, physical inventory adjustments, markdowns and promotional allowances. Vendor allowances that relate to our buying and merchandising activities consist primarily of promotional allowances, which are generally allowances on purchased quantities and, to a lesser extent, slotting allowances, which are billed to vendors for our merchandising costs such as setting up warehouse infrastructure. Vendor allowances are recognized as a reduction in cost of sales when the related product is sold. Lump sum payments received for multi-year contracts are amortized over the life of the contracts based on contractual terms.

Fair Value of Financial Instruments: Financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts and notes receivable, and accounts payable approximate fair value at March 28, 2009 and March 29, 2008 because of the short-term nature of these financial instruments. The estimated fair value of debt is based on interest rate quotes for instruments with similar terms and remaining maturities. At March 28, 2009, and March 29, 2008 the estimated fair value of long-term debt, including current maturities, was lower than book value by approximately $35.5 million and $23.5 million, respectively. The estimated fair values were based on market quotes for similar instruments.

SFAS 157, "Fair Value Measurements," defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. It does not require any new fair value measurements. SFAS No. 157 prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability, reflecting the reporting entity's own assumptions about the assumptions that market participants would use in pricing.

At March 28, 2009, the fair value liability of the interest rate swap agreement was $0.5 million and is included in the accompanying Consolidated Balance Sheet. This fair value measurement is classified within Level 2 of the hierarchy as significant observable market inputs are readily available as the basis of the fair value measurement.

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.

- -46-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable: Accounts receivable are shown net of allowances for credit losses of $1.8 million in fiscal 2009 and $2.6 million in fiscal 2008. Spartan Stores evaluates the adequacy of its allowances by analyzing the aging of receivables, customer financial condition, historical collection experience, the value of collateral and other economic and industry factors. Operating results include bad debt expense of $0.8 million, $0.1 million, and $0.2 million for fiscal years 2009, 2008 and 2007, respectively.

Inventory Valuation: Inventories are stated at the lower of cost or market using the last-in, first-out ("LIFO") method. If replacement cost had been used, inventories would have been $46.8 million and $45.4 million higher at March 28, 2009 and March 29, 2008, respectively. During fiscal years 2009, 2008 and 2007, certain inventory quantities were reduced. The reductions resulted in liquidation of LIFO inventory carried at lower costs prevailing in prior years, the effect of which decreased the LIFO provision in fiscal years 2009, 2008 and 2007 by $2.9 million, $1.3 million and $2.0 million, respectively. Spartan Stores utilizes the retail inventory method to value inventory for the Retail segment. Under the retail inventory method, inventory is stated at cost with cost of sales and gross margin calculated by applying a cost ratio to the retail value of inventories.

Long-Lived Assets Other than Goodwill: Spartan Stores reviews and evaluates long-lived assets for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. When the undiscounted future cash flows are not sufficient to recover an asset's carrying amount, the fair value is compared to the carrying value to determine the impairment loss to be recorded. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value, less the cost to sell. Fair values are determined by independent appraisals or expected sales prices developed by internal licensed real estate professionals. Estimates of future cash flows and expected sales prices are judgments based upon Spartan Stores' experience and knowledge of operations. These estimates project cash flows several years into the future and are affected by changes in the economy, real estate market conditions and inflation.

Property and Equipment Held for Sale: Property and equipment held for sale as of March 29, 2008 consisted of land, buildings and equipment that Spartan Stores expected to sell within 12 months, substantially all of which related to The Pharm stores closed and sold in fiscal 2009 (see Note 4).

Goodwill: Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in business combinations after amounts have been allocated to intangible assets. Goodwill is not amortized, but is reviewed for impairment during the fourth quarter of each year, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount, using a discounted cash flow model and comparable market values of each reporting segment.

Other Assets: Included in Other assets are intangible assets and debt issuance costs. Intangible assets primarily consist of trade name, favorable lease agreements, prescription lists, non-compete agreements, liquor licenses and franchise fees. Favorable leases are amortized on a straight-line basis over the related lease terms. Prescription lists are amortized on a straight-line basis over the period of expected benefit. Non-compete agreements are amortized on a straight-line basis over the length of the agreements. Franchise fees are amortized on a straight-line basis over the term of the franchise agreement. Debt issuance costs are amortized over the term of the related financing agreement. The trade name and liquor licenses are not amortized as they have indefinite lives.

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 method as follows:

Land improvements	15 years
Buildings and improvements	15 to 40 years
Equipment	3 to 15 years

Software development costs are generally capitalized and amortized between 3 and 7 year periods commencing as each system is implemented.

- -47-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Losses) gains on the disposal of property and equipment totaled $(0.1) million, $(0.1) million and $0.3 million in fiscal years 2009, 2008 and 2007, respectively. Gains and losses on the disposal of property and equipment is included in "Selling, general and administrative expenses" and "Other, net" in the Consolidated Statements of Earnings.

Insurance Reserves: Spartan Stores is primarily self-insured for workers' compensation and general liability costs. Losses are recorded when reported and consist of individual case estimates. Incurred but not reported losses are actuarially estimated based on available historical information. Also included is a provision for losses related to reinsurance policies that insure the run-off of retained risk associated with the discontinued Insurance segment. We have purchased stop-loss coverage to limit our exposure to any significant exposure on a per claim basis. Our exposure for workers' compensation and general liability is $0.5 million per claim.

A summary of changes in Spartan Stores' self-insurance liability is as follows:

(In thousands)	March 28, 2009			March 29, 2008			March 31, 2007
Beginning balance	$	6,979		$	8,082		$	8,782
Expense		2,214			2,187			2,290
Claim payments		(5,345	)		(3,290	)		(2,990	)
Ending balance		3,848			6,979			8,082

The current portion of the self-insurance liability is included in "Other accrued expenses" and the long-term portion is included in "Other long-term liabilities" in the Consolidated Balance Sheets.

Income Taxes: 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 is computed by increasing the weighted average number of common shares outstanding by the dilutive effect of nonvested restricted stock shares outstanding and issuance of common stock for options outstanding under Spartan Stores' stock incentive plans.

The following table sets forth the computation of basic and diluted earnings per share for continuing operations:

(In thousands, except per share amounts)	March 28, 2009		March 29, 2008		March 31, 2007
Numerator:
Earnings from continuing operations	$	36,957	$	32,511	$	24,168
Denominator:
Weighted average shares outstanding - basic		21,516		21,275		20,913
Effect of dilutive options and restricted shares       outstanding		286		393		495
Weighted average shares outstanding - diluted		21,802		21,668		21,408
Basic earnings per share from continuing operations	$	1.71	$	1.53	$	1.15
Diluted earnings per share from continuing operations	$	1.70	$	1.50	$	1.13

Weighted average shares issuable upon the exercise of stock options that were not included in the earnings per share calculations because they were antidilutive were 307,014 in fiscal 2009, 84,824 in fiscal 2008, and 7,058 in fiscal 2007. Weighted average nonvested restricted shares outstanding that were not included in the earnings per share calculations because they were antidilutive amounted to 124,791 shares in fiscal 2009. There were no antidilutive

- -48-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

nonvested restricted share awards that were not included in the earnings per share calculations in fiscal 2008 and fiscal 2007.

The senior subordinated convertible notes due 2027 will be convertible at the option of the holder, only upon the occurrence of certain events, at an initial conversion rate of 28.0310 shares of Spartan Stores common stock per $1,000 principal amount at maturity of the notes (equal to an initial conversion price of approximately $35.67 per share). Upon conversion, Spartan Stores will pay the holder the conversion value in cash up to the accreted principal amount of the note and the excess conversion value, if any, in shares of Spartan Stores common stock - unless Spartan Stores elects to satisfy its obligation under such conversion by delivering only shares of common stock. Therefore, the notes are not currently dilutive to earnings per share as they are only dilutive above the accreted value. (See Note 6.)

Stock-Based Compensation: Effective March 26, 2006, Spartan Stores adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment," using the modified prospective transition method. SFAS No. 123(R) requires all share-based payments to employees, including grants of stock options, to be recognized in the financial statements as compensation cost based on the fair value on the date of grant. We determine the fair value of such awards using the Black-Scholes option-pricing model, which incorporates certain assumptions - such as risk-free interest rate, expected volatility, expected dividend yield and expected life of options - in order to arrive at a fair value estimate, as described in Note 12.

Shareholders' Equity: Spartan Stores' restated 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 10 million shares of preferred stock in one or more series, each with such designations as determined by the board of directors. At March 28, 2009, there were no shares of preferred stock outstanding.

Comprehensive Income: Comprehensive income is net earnings adjusted for the net loss on the interest rate swap agreement and the minimum pension liability, net of applicable income taxes.

(In thousands)	Interest Rate Swap Liability			Minimum Pension Liability			Accumulated Other Comprehensive Income (Loss)
Balance at March 26, 2006	$	-		$	(276	)	$	(276	)
Other comprehensive income					89			89
Adjustment to initially apply SFAS 158					313			313
Balance March 31, 2007		-			126			126
Other comprehensive loss					(1,268	)		(1,268	)
Balance March 29, 2008		-			(1,142	)		(1,142	)
Other comprehensive loss		(283	)		(12,671	)		(12,954	)
Adjustment to apply the measurement date provisions    of SFAS 158		- -			(55	)		(55	)
Balance March 28, 2009	$	(283	)	$	(13,868	)	$	(14,151	)

Advertising Costs: Spartan Stores' advertising costs are expensed as incurred and are included in selling, general and administrative expenses. Advertising expenses were $12.4 million in fiscal 2009, $10.6 million in fiscal 2008 and $9.2 million in fiscal 2007.

Recently Issued Accounting Standards: In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes", and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Further, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are to be applied prospectively. FIN 48 became effective at the beginning of fiscal year 2008, and the adoption of FIN 48 increased

- -49-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

retained earnings by approximately $1.0 million as of the beginning of fiscal year 2008. The adoption of FIN 48 and its effects are more fully described in Note 11 to the consolidated financial statements.

In June 2006, the FASB ratified the consensus reached on Emerging Issues Task Force (EITF) Issue No. 06-03, "How Sales Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross Versus Net Presentation)" (EITF 06-03). The EITF reached a consensus that the presentation of taxes on either a gross or net basis is an accounting policy decision that requires disclosure. EITF 06-03 was effective at the beginning of the fiscal 2008 first quarter. An entity is not required to reevaluate its existing policies related to taxes assessed by a governmental authority as a result of this consensus. Amounts collected from members, which under common trade practices are referred to as sales taxes, are and have been recorded on a net basis. Spartan Stores has no intention of modifying this accounting policy; therefore, the adoption of EITF 06-03 did not have any effect on Spartan Stores' financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but applies under other accounting pronouncements that require or permit fair value measurements. SFAS 157 became effective at the beginning of fiscal year 2009, except as provided in FASB Staff Position (FSP) No. FAS 157-2. The provisions of the Statement are to be applied prospectively, except for limited retrospective application permitted for certain items. The adoption of SFAS 157 did not have a material impact on Spartan Stores' financial statements. In February 2007, the FASB issued FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157", which delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recog nized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Spartan Stores is currently evaluating the impact, if any, that FSP No. FAS 157-2 will have on the consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements Nos. 87, 88, 106 and 132(R)" (SFAS 158). SFAS 158 required that the funded status of defined benefit postretirement plans be recognized as an asset or liability in the consolidated balance sheet and to recognize changes in funded status through comprehensive income as of March 31, 2007. Effective March 31, 2007, Spartan Stores' adopted these provisions of SFAS No. 158. The impact of adopting SFAS No. 158 on Spartan Stores' financial condition at March 31, 2007 has been included in the accompanying consolidated financial statements. Adoption of SFAS No. 158 resulted in an increase of $0.3 million to Shareholders' Equity. SFAS 158 also requires that employers measure plan assets and obligations as of the date of their year-end financial statements beginning with the fiscal year ending March 28, 2009. Spartan Stores adopted the measurement date pr ovisions of SFAS 158 on March 30, 2008, the first day of fiscal year 2009, and recorded the cumulative effect of adopting these provisions by decreasing shareholders' equity by $0.3 million.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations" (SFAS 141R), which replaces SFAS No. 141. SFAS 141R establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS 141R will become effective at the beginning of fiscal year 2010, and must be applied prospectively to business combinations for which the acquisition date is on or after the beginning of fiscal year 2010. The impact of adopting SFAS 141R will be dependent on the future business combinations that Spartan Stores' may pursue after its effective date.

In May 2008, the FASB issued FSP No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)," that changes the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. FSP No. APB 14-1 will require us to recognize non-cash interest expense on our $110 million convertible senior notes based on the market rate for similar debt instruments without the conversion feature. FSP No. ABP 14-1 will be effective at the beginning of fiscal year 2010 and must be applied on a retrospective basis. Upon adoption on March 29, 2009, Spartan Stores expects to retroactively record additional non-cash interest expense of approximately $3.2 million and $2.7 million, pre-tax, for fiscal years 2009 and 2008, respectively. We also expect to retroactively record an

- -50-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

increase in shareholders' equity of $17.1 million, net of deferred taxes, and a decrease in long-term debt of $27.6 million.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 for derivative instruments and hedging activities. SFAS 161 is effective beginning March 29, 2009. Spartan Stores does not expect SFAS 161 to have a material impact on the consolidated financial statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" (FSP EITF 03-6-1). FSP EITF 03-6-1 clarifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and must be included in the computation of earnings per share pursuant to the two-class method described in FASB Statement No. 128, "Earnings Per Share." FSP EITF 03-6-1 will be effective at the beginning of fiscal year 2010 and must be applied on a retrospective basis. Spartan Stores expects that basic earnings per share will decrease by $0.05, $0.04 and $0.03 for fiscal years 2009, 2008 and 2007, respectively, and dilutive earnings per share will decrease by $0.04, $0.02 and $0.02 for fiscal years 2009, 2008 and 2007, respectively.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets" (FSP FAS 132(R)-1). FSP FAS 132(R)-1 amends and expands the disclosure requirements of SFAS No. 132(R) for plan assets of a defined benefit pension or other postretirement plan. FSP FAS 132(R)-1 will be effective on March 27, 2010. Spartan Stores does not expect that FSP FAS 132(R)-1 will have a significant impact on the consolidated financial statements.

Note 2
Acquisitions of Assets

VG's Food Center, Inc.

On December 29, 2008, Spartan Stores acquired certain assets and assumed certain liabilities related to VG's Food Center, Inc. and VG's Pharmacy, Inc. (collectively, "VG's"). The results of operations of the VG's acquisition are included in the accompanying consolidated financial statements from the date of acquisition. VG's was a privately-held operator of 17 retail grocery stores based in Eastern Michigan. Prior to the acquisition, VG's was a customer of Spartan Stores' Distribution segment. The cash purchase price paid to VG's was $85.0 million plus $16.7 million for inventories and cash acquired. Spartan Stores acquired the store locations and operations of VG's in an effort to establish its retail presence in Eastern Michigan. The purchased assets included inventories, prescription files, trade names, leasehold improvements, equipment and licenses. Spartan Stores assumed VG's lease obligations for the 17 stores.

- -51-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The preliminary purchase price allocations are estimates as of March 28, 2009 based on a combination of third-party valuations and internal analyses and will be further adjusted during the allocation period as defined in SFAS 141, which is usually within one year of the date of the acquisition. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of property and equipment, other intangible assets, capital lease obligations and goodwill.

(In thousands)	December 29, 2008
Current assets, less cash acquired	$	16,253
Goodwill		67,366
Trade name		23,690
Favorable leases		269
Customer lists		4,007
Other intangible assets		602
Property and equipment		25,359
Total assets acquired		137,546
Current liabilities		325
Capital lease obligations		11,476
Exit cost reserves		15,146
Other long-term liabilities		6,983
Total liabilities assumed		33,930
Net assets acquired		103,616
Reconciliation to purchase price paid to VG's:
Cash acquired		304
Direct costs of the acquisition		(2,218	)
Total purchase price paid to VG's	$	101,702

Goodwill of $43.5 million and $23.9 million was assigned to the Retail and Distribution segments, respectively, based upon the expected benefits to be derived from the business combination. Goodwill of $67.4 million is expected to be deductible for tax purposes.

Amortizable intangible assets acquired consisted of favorable leases and customer lists and amounted to $0.3 million and $4.0 million, respectively. The weighted average amortization period is 12 years for favorable leases and 7 years for customer lists. Other intangible assets acquired include trade name valued at $23.7 million and licenses for the sale of alcoholic beverages valued at $0.6 million. The trade name and licenses have indefinite lives and are not amortized.

G&R Felpausch Company

On June 15, 2007, Spartan Stores acquired certain assets and assumed certain liabilities related to 20 retail grocery stores, two fuel centers and three convenience stores from G&R Felpausch Company and affiliated companies ("Felpausch"), a privately-held retail grocery operator and customer of its Distribution segment. The Felpausch supermarkets included the operations of ten in-store pharmacies. The cash purchase price paid to Felpausch was $38.0 million plus $12.7 million for inventories. Spartan Stores acquired the store locations and operations of Felpausch in an effort to increase its leading market share position in West Michigan and expand its market presence in central Michigan. The purchased assets included leasehold improvements, fixtures, tangible personal property, equipment, intangible property and inventories. Spartan Stores assumed Felpausch's lease obligations for the 20 stores, two fuel centers and three convenience stores.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

(In thousands)	June 15, 2007
Current assets	$	12,336
Goodwill		41,268
Favorable leases		2,228
Customer lists		2,953
Other intangible assets		723
Property and equipment		10,014
Total assets acquired		69,522
Current liabilities		1,915
Capital lease obligations, less current portion		4,285
Exit cost reserves, less current portion		10,866
Other long-term liabilities		1,749
Total liabilities assumed		18,815
Net assets acquired	$	50,707

Goodwill of $27.9 million and $13.4 million was assigned to the Retail and Distribution segments, respectively, based upon the expected benefits to be derived from the business combination. Additionally, $1.8 million in costs directly related to the acquisition have been included in goodwill, of which $1.2 million and $0.6 million were assigned to the Retail and Distribution segments, respectively. Goodwill of $43.1 million is expected to be deductible for tax purposes.

Amortizable intangible assets acquired consisted of favorable leases and customer lists and amounted to $2.2 million and $3.0 million, respectively. The weighted average amortization period is 10.2 years for favorable leases and seven years for customer lists. Other intangible assets acquired include $0.7 million of licenses for the sale of alcoholic beverages. The licenses have an indefinite life and therefore are not amortized.

D&W Food Centers, Inc.

On March 27, 2006, Spartan Stores acquired certain operating assets of D&W Food Centers, Inc. and D&W Associate Resources, LLC (together "D&W"), a privately-held Grand Rapids, Michigan-based retail grocery operator with retail stores located in West Michigan. The acquisition was made to obtain the store locations and operations of D&W, to diversify our retail offering with a more perishable oriented operation, to solidify and grow market share and to realize numerous synergies. The purchased assets included leasehold improvements, fixtures, tangible personal property, equipment, trademarks, trade names, intangible property and inventories. Spartan Stores paid a total cash purchase price of $47.9 million for these operations. Spartan Stores assumed D&W's lease obligations for the 20 stores and the central commissary as well as specified contracts. Spartan Stores continues to operate 16 of the former D&W stores and the commissary. The funds used for the transaction were drawn under S partan Stores' existing bank credit facilities.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

(In thousands)	March 27, 2006
Current assets	$	5,035
Goodwill		67,914
Favorable leases		1,365
Other intangible assets		1,211
Property and equipment, net		21,280
Total assets acquired		96,805
Current liabilities		2,744
Capital lease obligations, less current portion		21,377
Exit cost reserves, less current portion		17,488
Unfavorable leases		7,274
Total liabilities assumed		48,883
Net assets acquired	$	47,922

Goodwill of $45.0 million and $22.9 million was assigned to the Retail and Distribution segments, respectively, based upon the expected benefits to be derived from the business combination. Additionally, $1.1 million in costs directly related to the acquisition have been included in goodwill. Goodwill of $69.0 million is expected to be deductible for tax purposes.

Amortizable intangible assets acquired consisted of favorable leases and amounted to $1.4 million. The weighted average amortization period is 7.4 years. Other intangible assets acquired include $1.2 million of licenses for the sale of alcoholic beverages. The licenses have an indefinite life and therefore are not amortized.

Other

During the fourth quarter of fiscal 2008, Spartan Stores acquired certain assets and assumed certain liabilities of two retail stores in separate transactions for a total purchase price of $2.6 million. The stores were closed upon acquisition. One store was razed and a new store constructed. The other store was expanded and re-opened in the fourth quarter of fiscal 2009. The acquisitions were made to increase market share. Goodwill of $2.3 million and $0.6 million was assigned to the Retail segment and Distribution segment, respectively, all of which is expected to be deductible for tax purposes.

During the third quarter of fiscal 2007, Spartan Stores acquired certain equipment at five closed grocery stores from Carter's, Inc. in a Chapter 7 federal bankruptcy liquidation proceeding. Store lease obligations were assumed for two of the store locations. The stores will remain closed. The acquisition was made to increase market share of existing retail stores. Spartan Stores also acquired certain operating assets and assumed certain liabilities of a subsidiary of PrairieStone Pharmacy, LLC that were used in the operations of in-store pharmacies in 12 of Spartan Stores' retail supermarkets. The acquisition was made to allow Spartan Stores to better coordinate in-store operations and improve its overall customer service at these locations. For the two acquisitions, Spartan Stores paid a cash purchase price of $5.4 million. The funds used for the transactions were drawn under Spartan Stores' existing bank credit facilities. The estimated fair value of assets acquired consisted of $1.6 million for invent ory, $0.9 million for equipment, $2.9 million for customer lists and $1.1 million for goodwill and liabilities assumed consisted of $0.3 million for capital lease obligations, $0.6 million for closed store lease obligations and $0.2 million for accrued expenses. Goodwill of $1.0 million and $0.1 million was assigned to the Retail and Distribution segments, respectively, based upon the expected benefits to be derived from the business combination. Goodwill of $1.1

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million is expected to be deductible for tax purposes. Additionally, $0.2 million in costs directly related to the acquisitions have been included in goodwill.

Note 3
Goodwill and Other Intangible Assets

SFAS No. 142, "Goodwill and Other Intangible Assets," provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives not be amortized, but tested at least annually for impairment. Any impairment loss incurred subsequent to initial adoption of SFAS No. 142 is recorded as a charge to current period earnings. SFAS No. 142 also requires that goodwill be assigned to reporting units based upon the expected benefits to be derived from synergies resulting from the business combination.

Changes in the carrying amount of goodwill were as follows:

(In thousands)	Retail			Distribution		Total
Balance at April 1, 2007	$	89,181		$	53,707	$	142,888
Felpausch acquisition (Note 2)		29,057			13,987		43,044
Other acquisitions		2,313			582		2,895
Store sales		(428	)		-		(428	)
Other (Note 5)		(1,868	)		-		(1,868	)
Balance at March 29, 2008		118,255			68,276		186,531
VG's acquisition (Note 2)		43,514			23,852		67,366
Other (Note 5)		(4,594	)		-		(4,594	)
Balance at March 28, 2009	$	157,175		$	92,128	$	249,303

The following table reflects the components of amortized intangible assets, included in "Other, net" on the Consolidated Balance Sheets:

(In thousands)	March 28, 2009				March 29, 2008
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Non-compete agreements	$	3,769	$	1,976	$	3,749	$	1,574
Favorable leases		5,844		2,205		6,217		2,234
Customer lists		9,744		1,863		6,439		1,024
Franchise fees and other		535		110		475		72
Total	$	19,892	$	6,154	$	16,880	$	4,904

The weighted average amortization period for amortizable intangible assets is as follows:

Non-compete agreements	9.3 years
Favorable leases	12.4 years
Customer lists	7.2 years
Franchise fees and other	12.3 years
Total	8.7 years

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense for intangible assets was $1.9 million, $1.8 million and $0.9 million for fiscal years 2009, 2008 and 2007, respectively. Estimated amortization expense for each of the five succeeding fiscal years is as follows:

(In thousands)	Fiscal Year		Amortization Expense
	2010	$	2,214
	2011		2,167
	2012		2,040
	2013		2,039
	2014		1,845

Indefinite-lived intangible assets that are not amortized consist primarily of a trade name and licenses for the sale of alcoholic beverages and amounted to $26.7 million and $2.3 million as of March 28, 2009 and March 29, 2008.

Note 4
Discontinued Operations

Certain of our retail and grocery distribution operations have been recorded as discontinued operations. Results of the discontinued operations are excluded from the accompanying notes to the condensed consolidated financial statements for all periods presented, unless otherwise noted.

During the second quarter of fiscal year 2008, Spartan Stores decided to close five The Pharm stores and one Felpausch Xpressmart. The decision to close the stores was based on a comprehensive evaluation of the stores' performance trends, long-term growth prospects, on-going capital requirements and lease expiration dates. As Spartan Stores will have no continuing interest in the operations of these stores, they have been classified as discontinued operations for all years presented. Prescription lists and pharmacy inventories were sold for $4.7 million, and asset impairment charges of $0.9 million were recognized. The stores were closed early in the third quarter of fiscal 2008.

During the fourth quarter of fiscal year 2008, Spartan Stores approved a plan to close the remaining 14 The Pharm stores and sell the prescription files. In the first quarter of fiscal 2009, Spartan Stores completed the closure and disposition of the prescription files of 13 of the 14 remaining The Pharm stores, allowing Spartan Stores to concentrate efforts and resources on business opportunities with the best long-term growth potential and focus more on core distribution and conventional supermarket operations. In the second quarter of fiscal 2009, the closure and disposition of the prescription file of the last remaining store was completed. Total net cash proceeds of $13.8 million were received during the current fiscal year. Asset impairment charges and exit costs of $5.6 million were also recognized (Note 5).

The following table details the results of discontinued operations reported on the Consolidated Statements of Earnings:

(In thousands)	March 28, 2009			March 29, 2008			March 31, 2007
(Loss) earnings from discontinued operations (net of taxes of    ($4,204), ($90) and $444)	$	(6,380	)	$	(93	)	$	992
Gain on disposal of discontinued operations (net of taxes of    $5,415 and $1,027)		8,218			1,888			- -
Total earnings from discontinued operations	$	1,838		$	1,795		$	992

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sales of discontinued operations for fiscal years 2009, 2008 and 2007 were $22.3 million, $139.2 million and $164.2 million, respectively. Significant assets and liabilities of discontinued operations are as follows:

(In thousands)	March 28, 2009		March 29, 2008
Current assets	$	169	$	18,523
Property, net		5,627		6,607
Other long-term assets		36		381
Current liabilities		4,256		14,173
Long-term liabilities		2,342		1,569

Note 5
Asset Impairments and Exit Costs

In fiscal 2009, the Retail segment recorded exit costs of $4.6 million related to the closure of The Pharm stores (Note 4) for store lease obligations of $1.9 million, an estimated partial withdrawal liability from a multi-employer pension plan of $2.3 million and severance of $0.4 million. In addition, asset impairment charges of $1.0 million were recorded for unsold assets.

In fiscal 2009, exit costs were reduced by $4.4 million for changes in estimated future sublease recoveries in excess of previous estimates. Goodwill was reduced as a result of these changes in estimates as the initial charges were established in the purchase price allocations for previous acquisitions.

In fiscal 2008, the Retail segment recorded exit costs of $11.3 million in the purchase price allocation of the Felpausch acquisition (Note 2) for acquired stores that management planned to or had closed. These exit costs were reduced by $1.9 million for changes in estimated future sublease recoveries in excess of previous estimates. Goodwill was reduced as a result of this change in estimate as the initial charges were established in the purchase price allocation for previous acquisitions.

The Retail segment recognized charges of $0.4 million for asset impairment costs and $4.1 million for lease and related ancillary costs in the first quarter of fiscal 2007 related to the closure of two Family Fare Supermarkets stores and moving the central bakery operation into individual retail stores. Neither of the closed stores was acquired in the acquisition of D&W. The restructuring was based on Spartan Stores' comprehensive review of retail grocery store capacity in its markets following the completion of the acquisition of 16 D&W supermarkets, its desire to move the production of bakery products closer to the consumer, and the economics of its central bakery operation.

The exit costs include severance benefits and the present value of future minimum lease payments, calculated using a risk-free interest rate, and related ancillary costs from the date of closure to the end of the remaining lease term, net of estimated sublease income.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the activity of exit costs for our Retail segment for fiscal years 2009, 2008 and 2007. Exit costs recorded in the Consolidated Balance Sheets are included in "Current portion of exit costs" in Current liabilities and "Exit costs" in Long-term liabilities based on when the obligations are expected to be paid.

(In thousands)	Lease and Ancillary Costs
Balance at March 26, 2006	$	15,317
Exit costs assumed in acquisition of D&W (see Note 2)		19,231
Exit costs assumed in Carter's acquisition (see Note 2)		552
Provision for lease and related ancillary costs, net of estimated    sublease recoveries		4,050
Payments, net of interest accretion		(6,447	)
Balance at March 31, 2007		32,703
Exit costs assumed in Felpausch acquisition (see Note 2)		11,305
Change in estimates		(1,868	)
Payments, net of interest accretion		(6,013	)
Balance at March 29, 2008		36,127
Exit costs related to disposition of The Pharm stores		4,562
Exit costs assumed in VG's acquisition (see Note 2)		15,146
Changes in estimates		(4,392	)
Payments, net of interest accretion		(6,898	)
Balance at March 28, 2009	$	44,545

Note 6
Long-Term Debt

Spartan Stores' long-term debt consists of the following:

(In thousands)	March 28, 2009		March 29, 2008
Senior secured revolving credit facility, due December 2012	$	64,940	$	-
Convertible subordinated notes, 3.375% due May 2027		110,000		110,000
Capital lease obligations (Note 9)		44,033		35,815
Other, 7.00% - 9.25%, due fiscal 2012 - 2021		645		8,633
		219,618		154,448
Less current portion		3,932		10,874
Total long-term debt	$	215,686	$	143,574

Effective April 5, 2007, Spartan Stores amended its existing senior secured revolving credit facility. The amendment extended the senior secured revolving credit facility ("credit facility") maturity by two years and now matures in December 2012 rather than December 2010. Spartan Stores amended the credit facility effective May 22, 2007, in part to permit the issuance of the convertible senior notes described below. At Spartan Stores' option, the maximum amount under the credit facility may be increased up to $275.0 million through the increased commitments from lenders, and provided that asset levels are increased sufficient to support the increased borrowings. Interest rates under the amended agreement may be up to 50 basis points lower for London InterBank Offered Rate ("LIBOR") borrowings depending on levels of excess availability under the agreement. The credit facility is secured by substantially all of Spartan Stores' assets. On August 17, 2007, Spartan Stores entered into an agreement to increase the maximum credit available under its existing senior secured credit facility from $225.0 million to $255.0 million.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Available borrowings under the credit facility are based on stipulated advance rates on eligible assets, as defined in the credit agreement. The credit facility contains covenants that include a minimum fixed charge coverage ratio and maximum capital expenditures, as defined in the credit agreement. These covenants are not effective as long as Spartan Stores maintains minimum excess availability levels of $25.0 million with respect to the minimum fixed charge coverage ratio and $20 million with respect to maximum capital expenditures. Spartan Stores had available borrowings of $100.0 million at March 28, 2009 and excess availability of $110.0 million. Payment of dividends and repurchases of outstanding shares are permitted up to a total of $15.0 million per year, provided that excess availability of $20.0 million is maintained. The credit facility provides for the issuance of letters of credit of which $4.3 million were outstanding and unused as of March 28, 2009. Borrowings under the revolving credit por tion of the facility bear interest at LIBOR plus 1.25% or the prime rate (weighted average interest rate of 3.01% at March 28, 2009 including the effect of the interest rate swap (see Note 7)).

On May 30, 2007, Spartan Stores issued $110 million in aggregate principal amount of unsecured 3.375% convertible senior notes due May 15, 2027. The notes are general unsecured obligations and rank equally in right of payment with all of our other existing and future unsecured and unsubordinated obligations. They are effectively subordinated to our existing and any future secured indebtedness to the extent of the assets securing such indebtedness. The notes are structurally subordinated to our subsidiaries' indebtedness and other liabilities. The Notes are not guaranteed by our subsidiaries. The net proceeds from the sale of the notes after deducting selling discounts of 2.5% and offering expenses of $0.6 million were approximately $106.5 million, and were used to pay down amounts owed under our senior secured revolving credit facility and partially fund the Felpausch stores acquisition.

Interest at an annual rate of 3.375% is payable semi-annually on May 15 and November 15 of each year. Contingent interest will be paid to holders of the notes during the period commencing May 20, 2012 and ending on November 14, 2012 and for any six-month period thereafter, if the average contingent interest trading price per $1,000 principal amount of the notes for the five-consecutive-trading-day-period ending on the third trading day immediately preceding the first day of such interest period equals 120% or more of the principal amount of the notes. Contingent interest payable with respect to any six-month period will equal 0.25% per annum of the average contingent interest trading price of $1,000 principal amount of notes during the five-consecutive-trading-day measurement period described above.

Spartan Stores may redeem the notes for cash in whole or in part, at any time or from time to time, on or after May 15, 2014 at 100% of the principal amount of the notes to be redeemed, and prior to that date on or after May 20, 2012 at a price equal to a specified percentage of the principal amount, plus, in each case, any accrued and unpaid interest. Holders may require Spartan Stores to repurchase their notes, in whole or in part, on May 15, 2014, May 15, 2017 and May 15, 2022 for a cash price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. In addition, upon certain fundamental change transactions, each holder would have the option, subject to certain conditions, to require Spartan Stores to repurchase for cash, in whole or in part, such holder's notes. For the purposes of the notes, a "fundamental change" would include, among other events set forth in the Indenture governing the notes, the acquisition of 50% or more of our common stock by a person o r group, a consolidation, merger, or sale of all or substantially all of our assets, certain changes in our board of directors, or a termination of trading of our common stock.

The notes will be convertible at the option of the holder only under certain circumstances summarized as follows:

1.	If the closing sale price per share of Spartan Stores common stock is greater than 130% of the applicable conversion price for a specified period of time,
2.	If the trading price of the notes was less than 98% of the product of the closing sale price per share of Spartan Stores common stock and the conversion rate in effect for the notes for a specified period of time,
3.	If the notes are called for redemption,
4.	At any time on or after February 15, 2027 until the close of business on the business day immediately preceding the maturity date,
5.	Upon the occurrence of specified corporate transactions.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Upon conversion by the holder, the notes convert at an initial conversion rate of 28.0310 shares of Spartan Stores common stock per $1,000 principal amount of notes (equal to an initial conversion price of approximately $35.67 per share), subject to adjustments upon certain events. Upon a surrender of notes for conversion, Spartan Stores will deliver cash equal to the lesser of the aggregate principal amount of notes to be converted and the total conversion obligation, and shares of Spartan Stores common stock in respect of the remainder, if any, of the conversion obligation - unless Spartan Stores has elected to satisfy its obligation under such conversion by delivering only shares of common stock. For the fiscal year ended March 28, 2009, the notes had no impact on diluted earnings per share because the average stock price during the period was below $35.67 per share, and the notes, if converted, would require only cash at settlement.

In connection with the closing of the sale of the notes, Spartan Stores entered into a registration rights agreement with the initial purchasers of the notes, pursuant to which Spartan Stores filed with the Securities and Exchange Commission (SEC) a shelf registration statement covering resale by security holders of the notes and the shares of Spartan Stores common stock issuable upon conversion of the notes. The registration statement was declared effective by the SEC on September 27, 2007.

The weighted average interest rates including loan fee amortization for fiscal 2009, 2008 and fiscal 2007 were 5.53%, 6.71% and 9.73%, respectively.

At March 28, 2009, long-term debt was due as follows:

(In thousands)	Fiscal Year
	2010	$	3,932
	2011		4,051
	2012		4,225
	2013		69,031
	2014		3,256
	Thereafter		135,123
		$	219,618

Note 7
Derivative Instruments

Spartan Stores has limited involvement with derivative financial instruments and uses them only to manage well-defined interest rate risk exposure when appropriate, based on market conditions. Spartan Stores' objective in managing exposure to changes in interest rates is to reduce fluctuations in earnings and cash flows, and consequently, from time to time Spartan Stores uses interest rate swap agreements to manage this risk. Spartan Stores does not use financial instruments or derivatives for any trading or other speculative purposes.

On January 2, 2009, Spartan Stores entered into an interest rate swap agreement. The interest rate swap is considered to be a cash flow hedge of interest payments on $45.0 million of borrowings under Spartan Stores' senior secured revolving credit facility by effectively converting a portion of the variable rate debt to a fixed rate basis. Under the terms of the agreement, Spartan Stores has agreed to pay the counterparty a fixed interest rate of 3.33% and the counterparty has agreed to pay Spartan Stores a floating interest rate based upon the 1-month LIBOR plus 1.25% (1.77% at March 28, 2009) on a notional amount of $45 million. The interest rate swap agreement expires concurrently with its senior secured revolving credit facility on December 24, 2012. The interest rate swap agreement is reflected in the Consolidated Balance Sheets at fair value and the related gain or loss on the contract is deferred in shareholders' equity as a component of other comprehensive income. Deferred gains and losses are amo rtized as an adjustment to expense over the same period in which the related items being hedged are recognized in income; however, to the extent that the swap is not considered to be effective in accordance with SFAS No. 133, any changes in fair value relating to the ineffective portion of the swap is immediately recognized in income. There was no impact on earnings in fiscal 2009 as the cash flow hedge is highly effective and, assuming the swap agreement continues to qualify as a hedge on the related debt, Spartan Stores expects no material impact on earnings in the next twelve months.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8
Commitments and Contingencies

Spartan Stores subleases property at certain locations and received rental income of $1.8 million in fiscal 2009. In the event of the customer's default, Spartan would be responsible for fulfilling these lease obligations. The future payment obligations under these leases are disclosed in Note 9.

Unions represent approximately 8% of Spartan Stores' associates. Contracts covering 161 and 635 distribution center and transportation associates expire in April 2010 and October 2011, respectively.

Various lawsuits and claims, arising in the ordinary course of business, are pending or have been asserted against Spartan Stores. 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 Spartan Stores.

Note 9
Leases

Most of the Company's retail stores are operated in leased facilities. The Company also leases certain warehouse facilities, its tractor and trailer fleet and certain other equipment. Most of the property leases contain renewal options of varying terms. Terms of certain leases contain provisions requiring payment of percentage rent based on sales and payment of executory costs such as property taxes, utilities, insurance and maintenance. Terms of certain leases of transportation equipment contain provisions requiring payment of percentage rent based upon miles driven. Portions of certain property are subleased to others.

Rental expense, net of sublease income, under operating leases consisted of the following:

(In thousands)	2009			2008			2007
Minimum rentals	$	30,665		$	29,083		$	25,530
Contingent payments		1,063			1,056			870
Sublease income		(1,816	)		(1,609	)		(1,409	)
	$	29,912		$	28,530		$	24,991

Total future lease commitments of Spartan Stores under capital and operating leases in effect at March 28, 2009 are as follows:

(In thousands)	Capital			Operating
Fiscal Year	Used in Operations			Used in Operations		Subleased to Others		Total
2010	$	7,351		$	31,549	$	1,140	$	32,689
2011		7,156			28,200		973		29,173
2012		7,091			23,319		890		24,209
2013		6,590			19,418		665		20,083
2014		5,480			15,104		394		15,498
Thereafter		33,329			51,808		480		52,288
Total		66,997		$	169,398	$	4,542	$	173,940
Interest		(22,964	)
Present value of minimum    lease obligations		44,033
Current portion		3,793
Long-term obligations	$	40,240

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense for property under capital leases was $3.2 million, $2.5 million and $1.7 million in fiscal years 2009, 2008 and 2007, respectively.

Assets held under capital leases consisted of the following:

(In thousands)	March 28, 2009		March 29, 2008
Buildings and improvements	$	39,436	$	28,970
Equipment		4,096		4,163
		43,532		33,133
Less accumulated depreciation		9,636		6,420
Net property	$	33,896	$	26,713

One of Spartan Stores' 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. A majority of the leases provide for minimum and contingent rentals based upon stipulated sales volumes and contain renewal options. Certain of the leases contain escalation clauses.

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

(In thousands)	March 28, 2009		March 29, 2008
Land and improvements	$	1,172	$	1,644
Buildings		5,617		5,527
		6,789		7,171
Less accumulated depreciation		3,653		3,220
Net property	$	3,136	$	3,951

Future minimum rentals to be received under operating leases in effect at March 28, 2009 are as follows:

(In thousands)

Fiscal Year	Owned Property		Leased Property		Total
2010	$	1,224	$	1,607	$	2,831
2011		1,005		1,420		2,425
2012		639		1,021		1,660
2013		479		705		1,184
2014		390		418		808
Thereafter		1,555		509		2,064
Total	$	5,292	$	5,680	$	10,972

Note 10
Associate Retirement Plans

Spartan Stores' retirement programs include pension plans providing non-contributory benefits and salary reduction defined contribution plans providing contributory benefits. Substantially all of Spartan Stores' associates not covered by collective bargaining agreements are covered by either a non-contributory cash balance pension plan

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

("Company Plan"), a defined contribution plan or both. Associates covered by collective bargaining agreements are included in multi-employer pension plans.

Spartan Stores' Company Plan benefit formula utilizes a cash balance approach. Under the cash balance formula, credits are added annually to a participant's "account" based on a percent of the participant's compensation and years of vested service at the beginning of each calendar year. Transition credits were also added at Spartan Stores' discretion to certain participants' accounts until the year 2007 if certain age and years-of-service requirements were met. At Spartan Stores' discretion, 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. Annual payments to the pension trust fund are determined in compliance with the Employee Retirement Income Security Act of 1976 ("ERISA"). Company Plan assets consist principally of common stocks and U.S. government and corporate obligations. The Company Plan does not hold any Spartan Stores stock.

Spartan Stores also maintains a Supplemental Executive Retirement Plan ("SERP"), which provides nonqualified deferred compensation benefits to Spartan Stores' officers. Benefits under the SERP are paid from Spartan Stores' general assets, as there is no separate trust established to fund benefits.

Matching contributions made by Spartan Stores to salary reduction defined contribution plans totaled $2.9 million, $2.4 million and $2.0 million in fiscal years 2009, 2008 and 2007, respectively.

In addition to the plans described above, Spartan Stores participates in several multi-employer and other defined contribution plans for substantially all associates covered by collective bargaining agreements. The expense for these plans totaled approximately $7.4 million in fiscal 2009, $7.7 million in fiscal 2008 and $6.6 million in fiscal 2007.

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 Spartan Stores' position with respect to the multi-employer plans are not available.

Spartan Stores and certain subsidiaries provide health care benefits to retired associates who have at least 30 years of service or 10 years of service and have attained age 55, and who were not covered by collective bargaining arrangements during their employment ("covered associates"). Qualified covered associates that retired prior to March 31, 1992 receive major medical insurance with deductible and coinsurance provisions until age 65 and Medicare supplemental benefits thereafter. Covered associates retiring after April 1, 1992 are eligible for monthly postretirement health care benefits of $5 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.

Deteriorating conditions in the global financial markets led to a substantial reduction in the fair value of Spartan Stores' pension plan assets during fiscal 2009. Upon remeasurement of the Company's pension plan benefit obligations as of March 28, 2009, the benefit obligations exceeded the plan assets, resulting in an underfunded status, and eliminating the previously reported prepaid benefit cost.

The following tables set forth the change in benefit obligation, change in plan assets, weighted average assumptions used in actuarial calculations and components of net periodic benefit costs for Spartan Stores' pension and postretirement benefit plans. The accrued benefit costs are reported in Postretirement benefits in the Consolidated Balance Sheets. The measurement date was December 31 for fiscal 2008 and 2007. In accordance with SFAS 158, in fiscal 2009 Spartan Stores changed its measurement date to coincide with its fiscal year end. Spartan Stores adopted the measurement date provisions of SFAS 158 on March 30, 2008, the first day of fiscal year 2009, and recorded the cumulative effect of adopting these provisions by decreasing shareholders' equity by $0.3 million.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except percentages)	Pension Benefits						SERP Benefits						Postretirement Benefits
	March 28, 2009			March 29, 2008			March 28, 2009			March 29, 2008			March 28, 2009			March 29, 2008
Change in benefit obligation
Benefit obligation at beginning of year	$	53,069		$	49,928		$	728		$	643		$	6,089		$	7,133
Service cost		2,660			3,532			52			53			168			211
Interest cost		3,189			2,733			43			35			370			401
Plan amendments		568			-			6			-			-			88
Actuarial (gain) loss		(2,427	)		1,884			138			57			10			(941	)
Benefits paid		(3,569	)		(5,008	)		(59	)		(60	)		(272	)		(803	)
Adjustment for change in measurement date		287			-			9			-			66			-
Benefit obligation at measurement date	$	53,777		$	53,069		$	917		$	728		$	6,431		$	6,089
Change in plan assets
Plan assets at fair value at beginning of year	$	53,937		$	48,058		$	-		$	-		$	-		$	-
Actual return on plan assets		(16,091	)		3,182			-			-			-			-
Actuarial loss		-			-			-			-			539			-
Company contributions		3,343			7,705			59			60			272			803
Benefits paid		(3,569	)		(5,008	)		(59	)		(60	)		(817	)		(803	)
Adjustment for change in measurement date		(551	)		-			-			-			6			-
Plan assets at fair value at measurement date	$	37,069		$	53,937		$	-		$	-		$	-		$	-
Funded (unfunded) status	$	(16,708	)	$	868		$	(917	)	$	(728	)	$	(6,431	)	$	(6,089	)
Contributions during fourth quarter		-			625			-			13			-			-
Net amount recognized in financial position	$	(16,708	)	$	1,493		$	(917	)	$	(715	)	$	(6,431	)	$	(6,089	)
Components of net amount recognized in   financial position:
Noncurrent assets	$	-		$	1,493		$	-		$	-		$	-		$	-
Current liabilities		-			-			(212	)		(69	)		(328	)		(320	)
Noncurrent liabilities		(16,708	)		-			(705	)		(646	)		(6,103	)		(5,769	)
	$	(16,708	)	$	1,493		$	(917	)	$	(715	)	$	(6,431	)	$	(6,089	)
Amounts recognized in accumulated   other comprehensive income:
Net actuarial loss	$	26,869		$	8,226		$	515		$	422		$	903		$	355
Prior service credit		(5,089	)		(6,521	)		(7	)		(14	)		(557	)		(624	)
	$	21,780		$	1,705		$	508		$	408		$	346		$	(269	)
Weighted average assumptions at   Measurement date
Discount rate		7.00%			6.25%			7.00%			6.25%			7.00%			6.25%
Expected return on plan assets		8.25%			8.50%			N/A			N/A			N/A			N/A
Rate of compensation increase		4.00%			4.00%			4.00%			4.00%			N/A			N/A

Under SFAS No. 158, the benefit obligation for pension plans is measured as the projected benefit obligation; the benefit obligation for postretirement benefit plans is measured as the accumulated benefit obligation. The accumulated benefit obligation for both of the defined benefit plans was $53.3 million and $52.1 million at March 28, 2009 and December 31, 2008, respectively.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of net periodic benefit cost

(In thousands)	Pension Benefits									SERP
	March 28, 2009			March 29, 2008			March 31, 2007			March 28, 2009			March 29, 2008			March 31, 2007
Service cost	$	2,660		$	3,532		$	3,084		$	52		$	53		$	45
Interest cost		3,190			2,733			2,438			43			35			35
Expected return on plan assets		(4,330	)		(3,732	)		(3,207	)		-			-			-
Amortization of prior service cost		(690	)		(690	)		(690	)		(1	)		(1	)		(1	)
Recognized actuarial net loss		346			290			310			36			27			27
Net periodic benefit cost	$	1,176		$	2,133		$	1,935		$	130		$	114		$	106

	Postretirement Benefits
	March 28, 2009			March 29, 2008			March 31, 2007
Service cost	$	168		$	211		$	224
Interest cost		371			401			409
Amortization of prior service cost		(54	)		(64	)		(63	)
Recognized actuarial net loss		-			39			66
Net periodic benefit cost	$	485		$	587		$	636

The net actuarial loss, prior service cost and transition obligation included in "Accumulated Other Comprehensive Income" and expected to be recognized in net periodic benefit cost during fiscal year 2010 are as follows:

(In thousands)	Pension Benefits			SERP Benefits		Postretirement Benefits
Net actuarial loss	$	658		$	43	$	20
Prior service credit		(637	)		-		(54	)
	$	21		$	43	$	(34	)

Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Actuarial gains and losses are amortized over the average remaining service life of active participants when the accumulation of such gains and losses exceeds 10% of the greater of the projected benefit obligation and the fair value of plan assets.

Spartan Stores has assumed an average long-term expected return on pension plan assets of 8.25% as of March 28, 2009. The expected return assumption was modeled by third-party investment portfolio managers, based on asset allocations and the expected return and risk components of the various asset classes in the portfolio. The expected return was developed by determining projected stock and bond returns and then applying these returns to the target asset allocations of the plan assets. Equity returns were based primarily on historical returns of the S&P 500 Index. Fixed-income projected returns were based primarily on historical returns for the broad U.S. bond market. This overall return assumption is believed to be reasonable over a longer-term period that is consistent with the liabilities.

Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement plan. The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 9.50% for fiscal 2009, 10.00% for fiscal 2008 and 10.50% for fiscal 2007, decreasing .50% per year to 5.00%. A 1% increase in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligation by 0.53% and the periodic postretirement benefit cost by 0.76%. A 1% decrease in the assumed health care cost trend rate would decrease the accumulated postretirement benefit obligation by 0.47% and periodic postretirement benefit cost by 0.61%.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Plan assets

Plan assets are valued using quoted market prices when available.

Spartan Stores has an investment policy for the pension plan with a long-term asset allocation mix designed to meet the long-term retirement obligations. The asset allocation mix is reviewed annually and, on a regular basis, actual allocations are rebalanced to approximate the prevailing targets. The following table summarizes actual allocations as of March 28, 2009 and December 31, 2007:

			Plan Assets
	Target Range		March 28, 2009		December 31, 2007
Asset Category
Equity securities	55.0 - 75.0	%	55.1	%	62.9	%
Fixed income	25.0 - 45.0		44.9		37.1
Total	100.0	%	100.0	%	100.0	%

The investment policy emphasizes the following key objectives: (1) maintain the purchasing power of the current assets and all future contributions by producing positive real rates of return on plan assets; (2) maximize return within reasonable and prudent levels of risk in order to minimize contributions and (3) control costs of administering the plan and managing the investments.

No payments were required to be made in fiscal 2009 to meet the minimum funding requirements. However, Spartan Stores made a voluntary contribution of $3.3 million to move the plan closer to a fully funded status and reduce future pension expense. Spartan Stores is not required to make a contribution to its defined benefit pension plan in fiscal 2010 to meet minimum pension funding requirements; however, Spartan Stores will assess the prudence of making an additional voluntary contribution to the plan during the third quarter of fiscal 2010.

The following estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid in the following fiscal years:

(In thousands)	Pension Benefits and SERP Benefits		Other Benefits
2010	$	4,843	$	327
2011		4,868		355
2012		5,289		388
2013		5,117		420
2014		5,892		438
2015 to 2019		32,209		2,630

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11
Taxes on Income

The income tax provision for continuing operations is summarized as follows:

(In thousands)	March 28, 2009		March 29, 2008		March 31, 2007
Currently payable:
Federal	$	4,816	$	3,080	$	463
State		2,171		800		-
Total currently payable		6,987		3,880		463
Deferred:
Federal		15,259		14,385		12,550
State		2,884		-		-
Total deferred		18,143		14,385		12,550
Total	$	25,130	$	18,265	$	13,013

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

	2009		2008		2007
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal income tax benefit	5.3		1.0		-
Tax credits	(0.1	)	(0.2	)	(0.3	)
Other	0.3		0.2		0.3
Effective income tax rate	40.5	%	36.0	%	35.0	%

During fiscal 2008, the Michigan legislature enacted a new business income tax effective January 1, 2008, which replaced the former Michigan Single Business Tax ("MSBT") that was in effect through December 31, 2007. The new income tax, or Michigan Business Tax, is reported in Income taxes in the accompanying consolidated statements of earnings, whereas the former MSBT was included in Selling, general and administrative expenses.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets and liabilities resulting from temporary differences as of March 28, 2009 and March 29, 2008 are as follows:

(In thousands)
	2009			2008
Deferred tax assets:
Employee benefits	$	16,077		$	8,082
Accounts receivable		704			916
Alternative Minimum Tax credit		-			1,103
Asset impairment and closed store reserves		1,833			2,309
Deferred revenue		853			893
State taxes		416			790
All other		2,597			2,413
Total deferred tax assets		22,480			16,506
Deferred tax liabilities:
Depreciation		22,049			14,176
Inventory		4,422			3,245
Goodwill		12,142			5,999
Convertible debt interest		4,036			1,599
All other		1,854			1,425
Total deferred tax liabilities		44,503			26,444
Net deferred tax liability	$	(22,023	)	$	(9,938	)

Spartan Stores adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48) on April 1, 2007, the first day of fiscal year 2008. Spartan Stores recorded the cumulative effect of adopting FIN 48 by increasing shareholders' equity by $1.0 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)
	March 28, 2009			March 29, 2008
Balance at beginning of year	$	618		$	384
Gross increases - tax positions taken in prior years		7			365
Gross decreases - tax positions taken in prior years		(521	)		(86	)
Gross increases - tax positions taken in current year		725			-
Lapse of statute of limitations		(17	)		(45	)
Balance at end of year	$	812		$	618

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Spartan Stores anticipates that $0.6 million of the unrecognized tax benefits will be settled prior to March 27, 2010. Spartan Stores recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Accrued interest and penalties are not material. As of March 28, 2009, the balance of unrecognized tax benefits included tax positions of $0.2 million that would reduce Spartan Stores' effective income tax rate if recognized in future periods.

Spartan Stores files income tax returns with federal, state and local tax authorities within the United States. With few exceptions, we are no longer subject to U.S. federal or state examinations by tax authorities for fiscal years before 2004, and are no longer subject to local examination by tax authorities for fiscal years before 2003. In February 2005, the Internal Revenue Service (IRS) completed its examination of Spartan Stores' federal income tax returns for fiscal years 2001 through 2003. In October 2007, the IRS began its examination of the fiscal 2006 tax return.

Note 12
Stock-Based Compensation

Spartan Stores has two shareholder-approved stock incentive plans covering 3,200,000 shares of Spartan Stores' common stock: the Spartan Stores, Inc. 2001 Stock Incentive Plan (the "2001 Plan") and the Spartan Stores, Inc. Stock Incentive Plan of 2005 (the "2005 Plan"). The plans provide for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, and other stock-based awards to directors, officers and other key associates. Shares issued, as a result of stock option exercises, will be funded with the issuance of new shares. Holders of restricted stock and stock awards are entitled to participate in cash dividends and dividend equivalents. As of March 28, 2009, 87,350 shares remained unissued under the 2001 Plan, and 544,468 shares remained unissued under the 2005 Plan.

Stock option awards are generally granted with an exercise price equal to the market value of Spartan Stores common stock at the date of grant, vest and become exercisable in 25 percent increments over a four-year service period and have a maximum contractual term of 10 years. Upon a "Change in Control", as defined by the Plan, all outstanding options vest immediately. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is determined based upon a combination of historical volatility of Spartan Stores common stock and the expected volatilities of guideline companies that are comparable to Spartan Stores in most significant respects to reflect management's best estimate of Spartan Stores' future volatility over the option term. Due to certain events that are considered unusual and/or infrequent in nature, and that resulted in significant business changes during the limited historical exercise period, management does no t believe that Spartan Stores' historical exercise data will provide a reasonable basis upon which to estimate the expected term of stock options. Therefore, the expected term of stock options granted is determined using the "simplified" method as described in SEC Staff Accounting Bulletins that uses the following formula: ((vesting term + original contract term)/2). The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, using U.S. constant maturities with remaining terms equal to the expected term. Expected dividend yield is based on historical dividend payments.

The following weighted average assumptions were used to estimate the fair value of stock options at the date of grant using the Black-Scholes option-pricing model:

	2009	2008	2007
Dividend yield	0.86% - 1.01%	0.70% - 0.89%	1.00% - 1.46%
Expected volatility	37.55% - 39.82%	32.84% - 34.51%	30.43% - 31.70%
Risk-free interest rate	2.25% - 3.28%	4.27% - 4.76%	4.58% - 5.11%
Expected life of option	6.25 years	6.25 years	6.25 years

- -69-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes stock option activity for the three years ended March 28, 2009:

	Shares Under Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life Years		Aggregate Intrinsic Value (In thousands)
Options outstanding at March 26, 2006	1,008,943		$	8.01		6.41	$	5,323
Granted	187,845			13.95
Exercised	(547,269	)		8.30				4,953
Cancelled	(40,122	)		10.68
Options outstanding at March 31, 2007	609,397			9.44		6.87		10,553
Granted	97,138			28.00
Exercised	(117,620	)		6.24				2,370
Cancelled	(8,283	)		9.92
Options outstanding at March 29, 2008	580,632			13.16		6.56		5,059
Granted	290,780			22.72
Exercised	(157,554	)		8.94				2,302
Cancelled	(7,491	)		17.79
Options outstanding at March 28, 2009	706,367		$	17.99		7.20	$	1,506
Options exercisable at March 31, 2007	265,832		$	8.57		5.17	$	4,833
Options exercisable at March 29, 2008	293,321		$	8.85		4.94	$	3,461
Options exercisable at March 28, 2009	244,111		$	11.29		4.65	$	1,329
Vested and expected to vest in the    future at March 28, 2009	679,020		$	17.80		7.12	$	1,503

The weighted average grant-date fair value of stock options granted during fiscal years 2009, 2008 and 2007 was $8.90, $10.91 and $4.85, respectively. Cash received from option exercises was $1.4 million, $0.7 million and $3.2 million during fiscal years 2009, 2008 and 2007, respectively.

- -70-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize information concerning options outstanding and options exercisable at March 28, 2009:

Options Outstanding
Exercise Prices		Options Outstanding	Weighted Average Remaining Contractual Life Years	Weighted Average Exercise Price
$	2.29 - 13.00	161,974	4.33	$	6.83
	13.01 - 22.00	162,933	6.01		14.83
	22.01 - 23.00	271,603	9.13		22.69
	23.01 - 28.28	109,857	8.38		27.51
$	2.29 - 28.28	706,367	7.20	$	17.99

Options Exercisable
Exercise Prices		Options Exercisable	Weighted Average Exercise Price
$	2.29 - 13.00	144,751	$	6.27
	13.01 - 22.00	75,194		15.55
	22.01 - 23.00	750		22.31
	23.01 - 28.28	23,416		28.28
$	2.29 - 28.28	244,111	$	11.29

Restricted shares awarded to employees vest ratably over a five-year service period. Awards granted to directors prior to May 10, 2006 vest 100 percent after three years and awards granted on or after May 10, 2006 vest in one-third increments over a three-year service period. Awards are subject to certain transfer restrictions and forfeiture prior to vesting. All shares fully vest upon a "Change in Control" as defined by the Plan. Compensation expense, representing the fair value of the stock at the measurement date of the award, is recognized over the vesting period.

- -71-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes restricted stock activity for the three years ended March 28, 2009:

	Shares		Weighted Average Grant-Date Fair Value
Outstanding and nonvested at March 26, 2006	436,998		$	7.83
Granted	268,677			13.96
Vested	(117,790	)		6.92
Forfeited	(41,181	)		10.09
Outstanding and nonvested at March 31, 2007	546,704			10.86
Granted	170,011			27.98
Vested	(132,789	)		10.02
Forfeited	(3,836	)		14.91
Outstanding and nonvested at March 29, 2008	580,090			16.04
Granted	217,783			23.03
Vested	(177,062	)		13.67
Forfeited	(30,118	)		20.01
Outstanding and nonvested at March 28, 2009	590,693		$	19.12

The total fair value of shares vested during fiscal years 2009, 2008 and 2007 was $2.4 million, $1.3 million and $0.8 million, respectively.

Share-based compensation expense recognized and included in "Selling, general and administrative expenses" in the Consolidated Statements of Earnings and related tax benefits were as follows:

(In thousands)	2009			2008			2007
Stock options	$	1,841		$	821		$	493
Restricted stock		3,037			2,192			1,413
Tax benefits		(1,976	)		(1,094	)		(667	)
	$	2,902		$	1,919		$	1,239

As of March 28, 2009, total unrecognized compensation cost related to nonvested share-based awards granted under the stock incentive plans was $1.8 million for stock options and $8.3 million for restricted stock. The remaining compensation costs not yet recognized are expected to be recognized over a weighted average period of 2.6 years for stock options and 3.2 years for restricted stock.

Spartan Stores recognized tax deductions of $5.4 million, $5.2 million and $6.3 million related to the exercise of stock options and the vesting of restricted stock during fiscal years 2009, 2008 and 2007, respectively.

Spartan Stores has a stock bonus plan covering 300,000 shares of Spartan Stores common stock. Under the provisions of this plan, certain officers and key associates of Spartan Stores may elect to receive a portion of their annual bonus in common stock rather than cash and will be granted additional shares of common stock worth 30% of the portion of the bonus they elect to receive in stock. Compensation expense is recorded based upon the market price of the stock as of the measurement date. At March 28, 2009, 157,638 shares remained unissued under the plan.

- -72-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13
Supplemental Cash Flow Information

Non-cash financing activities include the issuance of restricted stock to employees and directors of $5.0 million, $4.8 million and $3.8 million for fiscal years ended 2009, 2008 and 2007, respectively. Non-cash investing and financing activities include capital leases and notes payable of $0.3 million, $7.6 million and $0.8 million for fiscal years 2009, 2008 and 2007, respectively. Non-cash investing activities also include capital expenditures included in accounts payable of $3.8 million, $7.0 million and $1.2 million for fiscal years 2009, 2008 and 2007.

Note 14
Reporting Segment Information

Using the management approach as required by SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("SFAS 131"), Spartan Stores' reporting segments are identified by products sold and customer profile and include the Distribution and Retail segments.

Spartan Stores' Distribution segment supplies independent retail customers and its own retail stores with dry grocery, produce, dairy, meat, delicatessen, bakery, beverages, frozen food, seafood, floral, general merchandise, pharmacy and health and beauty care items. Sales to independent retail customers and inter-segment sales are recorded based upon a "cost plus" model for grocery, frozen, dairy, pharmacy and health and beauty care items and a "variable mark-up" model for meat, deli, bakery, produce, seafood, floral and general merchandise products. To supply its wholesale customers, Spartan Stores operates a fleet of tractors, conventional trailers and refrigerated trailers, substantially all of which are leased by Spartan Stores.

The Retail segment operates supermarkets in Michigan that typically offer dry grocery, produce, frozen, dairy, meat, beverages, floral, seafood, health and beauty care, delicatessen and bakery goods. Approximately 66% of the stores offer pharmacy services and 19 fuel centers were in operation as of March 28, 2009.

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

- -73-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables set forth information about Spartan Stores by reporting segment:

(In thousands)
	Distribution		Retail		Total
Year Ended March 28, 2009
Net sales to external customers	$	1,248,614	$	1,328,124	$	2,576,738
Inter-segment sales		635,307		-		635,307
Depreciation and amortization		8,102		20,031		28,133
Operating earnings		43,184		29,560		72,744
Capital expenditures		12,647		44,602		57,249
Year Ended March 29, 2008
Net sales to external customers	$	1,284,299	$	1,192,523	$	2,476,822
Inter-segment sales		608,886		-		608,886
Depreciation and amortization		7,642		16,139		23,781
Operating earnings		34,681		26,941		61,622
Capital expenditures		8,425		31,651		40,076
Year Ended March 31, 2007
Net sales to external customers	$	1,238,079	$	968,191	$	2,206,270
Inter-segment sales		528,210		-		528,210
Depreciation and amortization		7,837		12,609		20,446
Operating earnings		28,442		20,224		48,666
Capital expenditures		6,284		20,450		26,734

(In thousands)
	2009		2008		2007
Total Assets at Year End
Distribution	$	234,071	$	219,962	$	192,176
Retail		484,029		364,664		263,588
Discontinued operations		5,832		25,511		31,735
Total	$	723,932	$	610,137	$	487,499

Spartan Stores offers a wide variety of grocery products, general merchandise and health and beauty care, pharmacy, fuel and other items and services. The following table presents sales by type of similar product and services:

(Dollars in thousands)	2009				2008				2007
Non-perishables (1)	$	1,374,566	53	%	$	1,315,621	53	%	$	1,167,593	53	%
Perishables (2)		904,999	35			857,278	35			777,715	35
Fuel		98,258	4			81,185	3			43,531	2
Pharmacy		198,915	8			222,738	9			217,431	10
Consolidated net sales	$	2,576,738	100	%	$	2,476,822	100	%	$	2,206,270	100	%

(1)	Consists primarily of general merchandise, grocery, beverages, snacks and frozen foods.
(2)	Consists primarily of produce, dairy, meat, bakery, deli, floral and seafood.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15
Quarterly Financial Information (unaudited)

Earnings per share amounts for each quarter are required to be computed independently and may not equal the amount computed for the total year. Common stock prices are the high and low sales prices for transactions reported on the NASDAQ Global Select Market for each period.

(In thousands, except per share data)
Fiscal 2009	Full Year (52 weeks)		4th Quarter (12 weeks)		3rd Quarter (16 weeks)		2nd Quarter (12 weeks)			1st Quarter (12 weeks)
Net sales	$	2,576,738	$	581,254	$	781,949	$	626,830		$	586,705
Gross margin		536,113		135,625		157,440		127,518			115,530
Earnings from continuing    operations before income taxes		62,087		14,367		14,814		20,279			12,627
Earnings from continuing operations		36,957		8,663		8,682		12,035			7,577
Discontinued operations, net of taxes		1,838		230		229		(963	)		2,342
Net earnings		38,795		8,893		8,911		11,072			9,919
Earnings from continuing    operations per share:
Basic	$	1.71	$	0.40	$	0.40	$	0.56		$	0.35
Diluted		1.70		0.40		0.40		0.55			0.35
Net earnings per share:
Basic	$	1.80	$	0.41	$	0.41	$	0.52		$	0.46
Diluted		1.78		0.41		0.41		0.51			0.46
Dividends paid	$	4,428	$	1,111	$	1,108	$	1,104		$	1,105
Common stock price - High		27.26		22.38		27.26		25.87			24.53
Common stock price - Low		12.25		12.25		20.40		22.04			18.24

(In thousands, except per share data)
Fiscal 2008	Full Year (52 weeks)		4th Quarter (12 weeks)		3rd Quarter (16 weeks)		2nd Quarter (12 weeks)		1st Quarter (12 weeks)
Net sales	$	2,476,822	$	570,731	$	787,835	$	598,053	$	520,203
Gross margin		494,968		119,444		153,839		122,415		99,270
Earnings from continuing    operations before income taxes		50,776		12,676		11,630		16,943		9,527
Earnings from continuing operations		32,511		7,787		10,266		8,266		6,192
Discontinued operations, net of taxes		1,795		299		336		836		324
Net earnings		34,306		8,086		10,602		9,102		6,516
Earnings from continuing    operations per share:
Basic	$	1.53	$	0.37	$	0.48	$	0.39	$	0.29
Diluted		1.50		0.36		0.47		0.38		0.29
Net earnings per share:
Basic	$	1.61	$	0.38	$	0.50	$	0.43	$	0.31
Diluted		1.58		0.37		0.49		0.42		0.30
Dividends paid	$	4,371	$	1,095	$	1,095	$	1,091	$	1,090
Common stock price - High		34.09		23.09		24.56		34.09		32.51
Common stock price - Low		17.08		17.08		18.85		21.64		25.41

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

          Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

          An evaluation of the effectiveness of the design and operation of Spartan Stores' disclosure controls and procedures (as currently defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) was performed as of March 28, 2009 (the "Evaluation Date"). This evaluation was performed under the supervision and with the participation of Spartan Stores' management, including its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). As of the Evaluation Date, Spartan Stores' management, including the CEO and CFO, concluded that Spartan Stores' disclosure controls and procedures were effective as of the Evaluation Date to ensure that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and p rocedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is accumulated and communicated to management, including our principal executive and principal financial officers as appropriate to allow for timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

          The management of Spartan Stores, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Spartan Stores' internal controls were designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer, and effected by the Company's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of its financial reporting and the preparation and presentation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Spartan St ores; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Spartan Stores are being made only in accordance with authorizations of management and directors of Spartan Stores; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Spartan Stores' assets that could have a material effect on the financial statements.

          Management of Spartan Stores conducted an evaluation of the effectiveness of its internal controls over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Through this evaluation, management did not identify any material weakness in the Company's internal control. There are inherent limitations in the effectiveness of any system of internal control over financial reporting. Based on the evaluation, management has concluded that Spartan Stores' internal control over financial reporting was effective as of March 28, 2009. On December 29, 2008, we completed the acquisition of certain assets of VG's Food Center, Inc. and VG's Pharmacy, Inc. (the "acquired business"). The acquired business has been excluded from management's assessment of internal controls as of March 28, 2009 as it was acquired by Spartan Stores during the current fiscal year. The acquired business excluded from management's assessment represents 7.0% and 2.8% of total assets and total sales, respectively, as of and for the year ended March 28, 2009.

          The registered public accounting firm that audited the consolidated financial statements included in this Form 10-K Annual Report has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as of March 28, 2009 as stated in their report below.

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Report of Independent Registered Public Accounting Firm

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

          We have audited the internal control over financial reporting of Spartan Stores, Inc. and subsidiaries (the "Company") as of March 28, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

          We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

          A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditu res of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

          Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          On December 29, 2008, the Company completed the acquisition of certain assets of VG's Food Center, Inc. and VG's Pharmacy, Inc. (the "acquired business"). The acquired business has been excluded from management's assessment of internal controls as of March 28, 2009 as it was acquired by the Company during the current fiscal year. The acquired business excluded from management's assessment represents 7.0% and 2.8% of total assets and total sales, respectively, as of and for the year ended March 28, 2009.

          In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 28, 2009, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

          We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended March 28, 2009 of the Company and our report dated June 5, 2009, expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
June 5, 2009

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Changes in Internal Controls Over Financial Reporting

          During the last fiscal quarter, there was no change in Spartan Stores' internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Spartan Stores' internal control over financial reporting.

Item 9B. Other Information

          None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

          The information required by this item is here incorporated by reference from the sections titled "The Board of Directors," "Spartan Stores' Executive Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," "Corporate Governance Principles," and "Transactions with Related Parties" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2009.

Item 11. Executive Compensation

          The information required by this item is here incorporated by reference from the sections entitled "Executive Compensation," "Potential Payments Upon Termination or Change in Control," "Compensation of Directors," "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2009.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

          The information required by this item is here incorporated by reference from the sections titled "Ownership of Spartan Stores Stock" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2009.

          The following table provides information about Spartan Stores' equity compensation plans regarding the number of securities to be issued under these plans, the weighted-average exercise prices of options outstanding under these plans and the number of securities available for future issuance as of the end of fiscal 2009.

EQUITY COMPENSATION PLANS

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans    approved by security    holders (1)	706,367	$  17.99	789,456
Equity compensation plans    not approved by security    holders	0	Not applicable	0
Total	706,367	$ 17.99	789,456

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(1) Consists of the Spartan Stores, Inc. 1991 Stock Option Plan, the Spartan Stores, Inc. 2001 Stock Incentive Plan, the Spartan Stores, Inc. 2001 Stock Bonus Plan, and the Stock Incentive Plan of 2005. Stock options may no longer be issued under the 1991 Stock Option Plan. The numbers of shares reflected in column (c) in the table above with respect to the Stock Incentive Plan of 2005 (544,468 shares), the 2001 Stock Incentive Plan (87,350 shares) and the 2001 Stock Bonus Plan (157,638 shares) represent shares that may be issued other than upon the exercise of an option, warrant or right. Each plan listed above contains customary anti-dilution provisions that are applicable in the event of a stock split or certain other changes in Spartan Stores' capitalization.

Item 13. Certain Relationships and Related Transactions, and Director Independence

          The information required by this item is here incorporated by reference from the section titled "Transactions with Related Persons" and the table captioned "Board of Directors Committee Membership" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2009.

Item 14. Principal Accountant Fees and Services

          The information required by this item is here incorporated by reference from the section titled "Independent Auditors" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2009.

- -80-

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	The following documents are filed as part of this Report:
	1.	Financial Statements.
		A. In Item 8.
		Reports of Independent Registered Public Accounting Firm of Deloitte & Touche LLP dated June 5, 2009
		Consolidated Balance Sheets at March 28, 2009 and March 29, 2008
		Consolidated Statements of Earnings for each of the three years in the period ended March 28, 2009
		Consolidated Statements of Shareholders' Equity for each of the three years in the period ended March 28, 2009
		Consolidated Statements of Cash Flows for each of the three years in the period ended March 28, 2009
		Notes to Consolidated Financial Statements
	2.	Financial Statement Schedules.

Schedules are omitted because the required information is either inapplicable or presented in the consolidated financial statements or related notes.

3. Exhibits.

Exhibit Number	Document
2.1	Asset Purchase Agreement dated December 17, 2005, by and among Family Fare LLC, Prevo's Family Markets, Inc., D&W Food Centers, Inc., and D&W Associate Resources, LLC. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed December 22, 2005. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.2	First Amendment to Asset Purchase Agreement dated March 24, 2006 by and among Family Fare LLC, Prevo's Family Markets, Inc., D&W Food Centers, Inc., and D&W Associate Resources, LLC. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 30, 2006. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.

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Exhibit Number	Document
2.3	Asset Purchase Agreement, dated March 19, 2007, by and among G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., and Felpausch Kalamazoo, LLC as Seller, and Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC as Purchaser, previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, as filed March 23, 2007. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.4	Third Amendment to the Asset Purchase Agreement, dated June 15, 2007, by and among G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., Felpausch Kalamazoo, LLC, and Felpausch-Kelly, L.L.C. as Seller, and Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC as Purchaser, previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed June 21, 2007. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.5	Asset Purchase Agreement dated March 31, 2008 between Rite Aid of Ohio, Inc. and Seaway Food Town, Inc. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the fiscal year ended March 29, 2008. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.6	Asset Purchase Agreement dated October 13, 2008 by and among V.G.'s Food Center, Inc. and VG's Pharmacy, Inc. as Seller and Family Fare, LLC as Purchaser. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed October 15, 2008. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
3.1	Amended and Restated Articles of Incorporation of Spartan Stores, Inc. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 10, 2005. Here incorporated by reference.
3.2	Amended and Restated Bylaws of Spartan Stores, Inc. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on August 20, 2007. Here incorporated by reference.
4.1	Indenture by and between Spartan Stores, Inc. and The Bank of New York Trust Company, N.A. as Trustee dated as of May 30, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
4.2	Registration Rights Agreement among Spartan Stores, Inc. and Banc of America Securities LLC and Bear, Stearns & Co., Inc., as representatives of the Initial Purchasers named therein dated as of May 30, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
4.3	Form of 3.375% Convertible Senior Note due 2027. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
10.1	Purchase Agreement by and among Spartan Stores, Inc. and the Initial Purchasers named therein dated as of May 23, 2007.

-82-

Exhibit Number	Document
10.2	Loan and Security Agreement dated December 23, 2003, by and among Spartan Stores, Inc. and certain subsidiaries as borrowers, Congress Financial Corporation (Central) as agent, the lenders named therein as lenders, and joined in by certain subsidiaries of Spartan Stores, Inc. as guarantors.
10.3	Amendment No. 2 to Loan and Security Agreement dated December 22, 2004, between Spartan Stores, Inc. and its subsidiaries and Congress Financial Corporation, Key Bank National Association, Fleet Capital Corporation, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended January 1, 2005. Here incorporated by reference.
10.4	Amendment No. 3 to Loan and Security Agreement dated December 9, 2005 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed December 12, 2005. Here incorporated by reference.
10.5	Amendment No. 4 to Loan and Security Agreement dated March 17, 2006 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 23, 2006. Here incorporated by reference.
10.6	Amendment No. 5 to Loan and Security Agreement dated April 5, 2007 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed April 11, 2007. Here incorporated by reference.
10.7	Amendment No. 6 to Loan and Security Agreement dated May 22, 2007 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America N.A., National City Business Credit, Inc., General Electric Capital Corporation, and Fifth Third Bank.
10.8	Letter Agreement between Spartan Stores, Inc. and Wachovia Capital Finance Corporation (Central) as Agent for the Lenders, dated August 17, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed August 17, 2007. Here incorporated by reference.
10.9*	Spartan Stores, Inc. Annual Executive Incentive Plan of 2005. Previously filed as Appendix A to Spartan Stores' 2005 Proxy Statement filed on June 24, 2005. Here incorporated by reference.
10.10*	Spartan Stores, Inc. Stock Incentive Plan of 2005. Previously filed as Appendix B to Spartan Stores' 2005 Proxy Statement filed on June 24, 2005. Here incorporated by reference.
10.11*	Spartan Stores, Inc. 1991 Stock Option Plan, as amended. Previously filed as an exhibit to Spartan Stores' Registration Statement on Form S-3 filed January 12, 2001. Here incorporated by reference.
10.12*	Spartan Stores, Inc. Supplemental Executive Retirement Plan. Previously filed as an exhibit to Spartan Stores Annual Report on Form 10-K filed May 23, 2005. Here incorporated by reference.

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Exhibit Number	Document
10.13*	Spartan Stores, Inc. Supplemental Executive Savings Plan. Previously filed as an exhibit to Spartan Stores Form S-8 Registration Statement filed on December 21, 2001. Here incorporated by reference.
10.14*	Spartan Stores, Inc. 2000 Annual Incentive Plan. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the year ended March 31, 2007. Here incorporated by reference.
10.15*	Spartan Stores, Inc. 2001 Stock Incentive Plan. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the year ended March 31, 2007. Here incorporated by reference.
10.16*	Form of Stock Option Grant to officers, dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.17*	Form of Restricted Stock Award to officers dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.18*	Form of Restricted Stock Award to outside directors dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 21, 2007. Here incorporated by reference.
10.19*	Form of Stock Option Award to outside directors dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.20*	Form of Executive Employment Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.21*	Form of Executive Severance Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.22*	Form of Executive Employment Agreement between Spartan Stores, Inc. and Craig C. Sturken. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.23*	Form of Executive Severance Agreement between Spartan Stores, Inc. and Craig C. Sturken. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.24	Amended and Restated Lease, dated as of January 26, 2000, between Plymouth Investors Limited Liability Company and Spartan Stores Distribution, LLC.
12.1	Computation of Ratio of Earnings to Fixed Charges
21	Subsidiaries of Spartan Stores, Inc.
23	Consent of Independent Registered Public Accounting Firm.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Exhibit Number	Document
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to 18 U.S.C. § 1350. This exhibit is furnished, not filed, in accordance with SEC Release Number 33-8212.

*          These documents are management contracts or compensation plans or arrangements required to be filed as exhibits to this Form 10-K.

- -85-

SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Spartan Stores, Inc. (the Registrant) has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SPARTAN STORES, INC. (Registrant)
Date:	June 5, 2009	By	/s/ Dennis Eidson
			Dennis Eidson President and Chief Executive Officer (Principal Executive Officer)

- -86-

                    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Spartan Stores, Inc. and in the capacities and on the dates indicated.

June 5, 2009	By	*/s/ M. Shân Atkins
		M. Shân Atkins Director
June 5, 2009	By	/s/ Dennis Eidson
		Dennis Eidson President, Chief Executive Officer and Director (Principal Executive Officer)
June 5, 2009	By	*/s/ Dr. Frank M. Gambino
		Dr. Frank M. Gambino Director
June 5, 2009	By	*/s/ Frederick S. Morganthall, II
		Frederick S. Morganthall, II Director
June 5, 2009	By	*/s/ Elizabeth A. Nickels
		Elizabeth A. Nickels Director
June 5, 2009	By	*/s/ Timothy J. O'Donovan
		Timothy J. O'Donovan Director
June 5, 2009	By	*/s/ Kenneth T. Stevens
		Kenneth T. Stevens Director
June 5, 2009	By	*/s/ Craig C. Sturken
		Craig C. Sturken Executive Chairman and Director
June 5, 2009	By	*/s/ James F. Wright
		James F. Wright Director
June 5, 2009	By	/s/ David M. Staples
		David M. Staples Executive Vice President and Chief Financial Officer (Principal Financial Officer and Accounting Officer)
June 5, 2009	*By	/s/ Dennis Eidson
		Dennis Eidson Attorney-in-Fact

- -87-

EXHIBIT INDEX

Exhibit Number	Document
2.1	Asset Purchase Agreement dated December 17, 2005, by and among Family Fare LLC, Prevo's Family Markets, Inc., D&W Food Centers, Inc., and D&W Associate Resources, LLC. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed December 22, 2005. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.2	First Amendment to Asset Purchase Agreement dated March 24, 2006 by and among Family Fare LLC, Prevo's Family Markets, Inc., D&W Food Centers, Inc., and D&W Associate Resources, LLC. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 30, 2006. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.3	Asset Purchase Agreement, dated March 19, 2007, by and among G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., and Felpausch Kalamazoo, LLC as Seller, and Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC as Purchaser, previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, as filed March 23, 2007. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.4	Third Amendment to the Asset Purchase Agreement, dated June 15, 2007, by and among G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., Felpausch Kalamazoo, LLC, and Felpausch-Kelly, L.L.C. as Seller, and Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC as Purchaser, previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed June 21, 2007. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.5	Asset Purchase Agreement dated March 31, 2008 between Rite Aid of Ohio, Inc. and Seaway Food Town, Inc. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the fiscal year ended March 29, 2008. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
2.6	Asset Purchase Agreement dated October 13, 2008 by and among V.G.'s Food Center, Inc. and VG's Pharmacy, Inc. as Seller and Family Fare, LLC as Purchaser. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed October 15, 2008. Here incorporated by reference. Exhibits and schedules to this agreement are listed and identified in the agreement. Omitted exhibits and schedules will be furnished supplementally to the Commission upon request.
3.1	Amended and Restated Articles of Incorporation of Spartan Stores, Inc. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 10, 2005. Here incorporated by reference.

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Exhibit Number	Document
3.2	Amended and Restated Bylaws of Spartan Stores, Inc. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on August 20, 2007. Here incorporated by reference.
4.1	Indenture by and between Spartan Stores, Inc. and The Bank of New York Trust Company, N.A. as Trustee dated as of May 30, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
4.2	Registration Rights Agreement among Spartan Stores, Inc. and Banc of America Securities LLC and Bear, Stearns & Co., Inc., as representatives of the Initial Purchasers named therein dated as of May 30, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
4.3	Form of 3.375% Convertible Senior Note due 2027. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 30, 2007. Here incorporated by reference.
10.1	Purchase Agreement by and among Spartan Stores, Inc. and the Initial Purchasers named therein dated as of May 23, 2007.
10.2	Loan and Security Agreement dated December 23, 2003, by and among Spartan Stores, Inc. and certain subsidiaries as borrowers, Congress Financial Corporation (Central) as agent, the lenders named therein as lenders, and joined in by certain subsidiaries of Spartan Stores, Inc. as guarantors.
10.3	Amendment No. 2 to Loan and Security Agreement dated December 22, 2004, between Spartan Stores, Inc. and its subsidiaries and Congress Financial Corporation, Key Bank National Association, Fleet Capital Corporation, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended January 1, 2005. Here incorporated by reference.
10.4	Amendment No. 3 to Loan and Security Agreement dated December 9, 2005 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed December 12, 2005. Here incorporated by reference.
10.5	Amendment No. 4 to Loan and Security Agreement dated March 17, 2006 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 23, 2006. Here incorporated by reference.
10.6	Amendment No. 5 to Loan and Security Agreement dated April 5, 2007 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America Leasing & Capital, LLC, National City Business Credit, General Electric Capital Corporation, and Fifth Third Bank. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed April 11, 2007. Here incorporated by reference.

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Exhibit Number	Document
10.7	Amendment No. 6 to Loan and Security Agreement dated May 22, 2007 between Spartan Stores, Inc. and its subsidiaries and Wachovia Capital Finance Corporation (Central), Key Bank National Association, Bank of America N.A., National City Business Credit, Inc., General Electric Capital Corporation, and Fifth Third Bank.
10.8	Letter Agreement between Spartan Stores, Inc. and Wachovia Capital Finance Corporation (Central) as Agent for the Lenders, dated August 17, 2007. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed August 17, 2007. Here incorporated by reference.
10.9*	Spartan Stores, Inc. Annual Executive Incentive Plan of 2005. Previously filed as Appendix A to Spartan Stores' 2005 Proxy Statement filed on June 24, 2005. Here incorporated by reference.
10.10*	Spartan Stores, Inc. Stock Incentive Plan of 2005. Previously filed as Appendix B to Spartan Stores' 2005 Proxy Statement filed on June 24, 2005. Here incorporated by reference.
10.11*	Spartan Stores, Inc. 1991 Stock Option Plan, as amended. Previously filed as an exhibit to Spartan Stores' Registration Statement on Form S-3 filed January 12, 2001. Here incorporated by reference.
10.12*	Spartan Stores, Inc. Supplemental Executive Retirement Plan. Previously filed as an exhibit to Spartan Stores Annual Report on Form 10-K filed May 23, 2005. Here incorporated by reference.
10.13*	Spartan Stores, Inc. Supplemental Executive Savings Plan. Previously filed as an exhibit to Spartan Stores Form S-8 Registration Statement filed on December 21, 2001. Here incorporated by reference.
10.14*	Spartan Stores, Inc. 2000 Annual Incentive Plan. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the year ended March 31, 2007. Here incorporated by reference.
10.15*	Spartan Stores, Inc. 2001 Stock Incentive Plan. Previously filed as an exhibit to Spartan Stores' Annual Report on Form 10-K for the year ended March 31, 2007. Here incorporated by reference.
10.16*	Form of Stock Option Grant to officers, dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.17*	Form of Restricted Stock Award to officers dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.18*	Form of Restricted Stock Award to outside directors dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 21, 2007. Here incorporated by reference.
10.19*	Form of Stock Option Award to outside directors dated May 18, 2007, filed as an exhibit to Spartan Stores' Current Report on Form 8-K filed May 21, 2007. Here incorporated by reference.
10.20*	Form of Executive Employment Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.

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Exhibit Number	Document
10.21*	Form of Executive Severance Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.22*	Form of Executive Employment Agreement between Spartan Stores, Inc. and Craig C. Sturken. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.23*	Form of Executive Severance Agreement between Spartan Stores, Inc. and Craig C. Sturken. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K on December 24, 2008. Here incorporated by reference.
10.24	Amended and Restated Lease, dated as of January 26, 2000, between Plymouth Investors Limited Liability Company and Spartan Stores Distribution, LLC.
12.1	Computation of Ratio of Earnings to Fixed Charges
21	Subsidiaries of Spartan Stores, Inc.
23	Consent of Independent Registered Public Accounting Firm.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to 18 U.S.C. § 1350. This exhibit is furnished, not filed, in accordance with SEC Release Number 33-8212.

*          These documents are management contracts or compensation plans or arrangements required to be filed as exhibits to this Form 10-K.

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EX-10.1

Exhibit 10.1

$95,000,000 AGGREGATE PRINCIPAL AMOUNT^*

Spartan Stores, Inc.

3.375% CONVERTIBLE SENIOR NOTES DUE 2027

Purchase Agreement

dated May 23, 2007

_________________________________
^* Plus an additional $15,000,000 aggregate principal amount of Notes pursuant to an option granted to the Initial Purchasers.

Purchase Agreement

May 23, 2007

BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
     As Representatives of the several Initial Purchasers

c/o Banc of America Securities LLC
9 West 57^th Street
New York, New York  10019

Ladies and Gentlemen:

          Spartan Stores, Inc., a Michigan corporation (the "Company"), proposes to issue and sell to the several purchasers named in Schedule A (the "Initial Purchasers") $95,000,000 in aggregate principal amount of its 3.375% Convertible Senior Notes due May 15, 2027 (the "Firm Notes"). In addition, the Company has granted to the Initial Purchasers an option to purchase up to an additional $15,000,000 in aggregate principal amount of its 3.375% Convertible Senior Notes due May 15, 2027 (the "Optional Notes" and, together with the Firm Notes, the "Notes"). Banc of America Securities LLC ("BAS," and in its capacity as a representative of the Initial Purchasers, the "Representative") and Bear, Stearns & Co. Inc. have agreed to act as representatives of the several Initial Purchasers in connection with the offering and sale of the Notes. To the extent that there are no Initial Purchasers listed on Schedule A other than BAS and Bear, Stearns & Co. Inc., the term "Initial Purchasers" as used herein shall mean BAS and Bear, Stearns & Co. Inc. as Initial Purchasers.

          The Notes will be convertible on the terms, and subject to the conditions, set forth in the indenture (the "Indenture") to be entered into between the Company and The Bank of New York Trust Company, N.A., as trustee (the "Trustee"), on the Closing Date (as defined herein). As used herein, "Conversion Shares" means the shares of common stock, no par value, of the Company (the "Common Stock") that may be received by the holders of the Notes upon conversion of the Notes pursuant to the terms of the Notes.

          The Notes will be offered and sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder (the "Securities Act"), in reliance upon an exemption therefrom.

          Holders of the Notes (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Resale Registration Rights Agreement, dated the Closing Date, between the Company and the Initial Purchasers (the "Registration Rights Agreement"), pursuant to which the Company will agree to file or have on file with the Commission a shelf registration statement pursuant to Rule 415 under the Securities Act (the "Registration Statement") covering the resale of the Notes and the Conversion Shares. This

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Agreement, the Indenture, the Notes and the Registration Rights Agreement are referred to herein collectively as the "Operative Documents."

          The Company understands that the Initial Purchasers propose to make an offering of the Notes on the terms and in the manner set forth herein and in the Disclosure Package (as defined below), including the Preliminary Offering Memorandum (as defined below), and the Final Offering Memorandum (as defined below) and agrees that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Notes to purchasers (the "Subsequent Purchasers") at any time after the date of this Agreement.

          The Company has prepared an offering memorandum, dated the date hereof, setting forth information concerning the Company, the Indenture, the Notes, the Registration Rights Agreement and the Common Stock, in form and substance reasonably satisfactory to the Initial Purchasers. As used in this Agreement, "Offering Memorandum" means, collectively, the Preliminary Offering Memorandum dated May 22, 2007 (the "Preliminary Offering Memorandum") and the offering memorandum dated the date hereof (the "Final Offering Memorandum"), each as then amended or supplemented by the Company. As used herein, each of the terms "Disclosure Package", "Offering Memorandum", "Preliminary Offering Memorandum" and "Final Offering Memorandum" shall include in each case the documents incorporated or deemed to be incorporated by reference therein.

          The Company hereby confirms its agreements with the Initial Purchasers as follows:

          Section 1.  Representations, Warranties and Covenants of the Company.

          The Company hereby represents, warrants and covenants to each Initial Purchaser as follows:

          (a)  No Registration. Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 6 and their compliance with the agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Notes to the Initial Purchasers, the offer, resale and delivery of the Notes by the Initial Purchasers to Subsequent Purchasers and the conversion of the Notes into Conversion Shares, in each case in the manner contemplated by this Agreement, the Indenture, the Disclosure Package and the Offering Memorandum, to register the Notes or the Conversion Shares under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").

          (b)  No Integration. None of the Company or any of its subsidiaries has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any "security" (as defined in the Securities Act) that is or will be integrated with the sale of the Notes or the Conversion Shares in a manner that would require registration under the Securities Act of the Notes or the Conversion Shares.

          (c)  Rule 144A. No securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Notes are listed on any national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on an automated inter-dealer quotation system.

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          (d)  Exclusive Agreement. The Company has not paid or agreed to pay to any person any compensation for soliciting another person to purchase any Notes (except as contemplated in this Agreement).

          (e)  Offering Memorandum. The Company hereby confirms that it has authorized the use of the Disclosure Package, including the Preliminary Offering Memorandum, and the Final Offering Memorandum in connection with the offer and sale of the Notes by the Initial Purchasers. Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Disclosure Package or the Final Offering Memorandum complied when it was filed, or will comply when it is filed, as the case may be, in all material respects with the Exchange Act and the rules and regulations of the Commission thereunder. The Preliminary Offering Memorandum, at the date thereof, did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the date of this Agreement, the Closing Date and on any Subsequent C losing Date, the Final Offering Memorandum did not and will not (and any amendment or supplement thereto, at the date thereof, at the Closing Date and on any Subsequent Closing Date, will not) contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty as to information included in or omitted from the Preliminary Offering Memorandum or the Final Offering Memorandum in reliance upon and in conformity with written information furnished to the Company by or on the behalf of the Initial Purchasers specifically for inclusion therein, it being understood and agreed that the only such information furnished by or on the behalf of the Initial Purchasers consists of the information described as such in Section 8 hereof.

          (f)  Disclosure Package. The term "Disclosure Package" shall mean (i) the Preliminary Offering Memorandum, as amended or supplemented at the Applicable Time, (ii) the Final Term Sheet (as defined herein) and (iii) any other writings that the parties expressly agree in writing to treat as part of the Disclosure Package ("Issuer Written Information"). The Disclosure Package as of 5:00 pm (Eastern time) on the date hereof (the "Applicable Time") will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to information included in or omitted from the Disclosure Package in reliance upon and in conformity with written information furnished to the Company by or on the behalf of the Initial Purchasers specifically for inclusion therein, it being understood an d agreed that the only such information furnished by or on behalf of any Initial Purchaser consists of the information described as such in Section 8 hereof.

          (g)  Accuracy of Statements in the Disclosure Package and Final Offering Memorandum. The statements (i) in the Preliminary Offering Memorandum and the Final Offering Memorandum under the captions "Dividend Policy," "Description of Capital Stock," "Description of Other Indebtedness" and "U.S. Federal Income Tax Considerations" and (ii) in Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 under the captions "Business-Regulation" and "Legal Proceedings" fairly summarize in all material respects the matters therein described.

          (h)  Authorization of the Purchase Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

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          (i)  Authorization of the Indenture. The Indenture has been duly authorized by the Company and, upon the effectiveness of the Registration Statement, will be qualified under the Trust Indenture Act; on the Closing Date, the Indenture will have been duly executed and delivered by the Company and, assuming due authorization, execution and delivery thereof by the Trustee, will constitute a legally valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles; and on the Closing Date the Indenture will conform in all material respects to the description thereof contained in the Disclosure Package and the Final Offering Memorandum.

          (j)  Authorization of the Notes. The Notes have been duly authorized by the Company; when the Notes are executed, authenticated and issued in accordance with the terms of the Indenture and delivered to and paid for by the Initial Purchasers pursuant to this Agreement on the Closing Date or any Subsequent Closing Date, as the case may be (assuming due authentication of the Notes by the Trustee), such Notes will constitute legally valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles; and the Notes will conform in all material respects to the description thereof contained in the Disclosure Package and the Final Offering Memorandum.

          (k)  Authorization of the Conversion Shares. The Conversion Shares have been duly authorized and reserved and, when issued upon conversion of the Notes in accordance with the terms of the Notes and the Indenture, will be validly issued, fully paid and non-assessable, and the issuance of such Conversion Shares will not be subject to any preemptive or similar rights.

          (l)  Authorization of the Registration Rights Agreement. The Registration Rights Agreement has been duly authorized, executed and delivered by the Company.

          (m)  No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package and the Final Offering Memorandum (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), subsequent to the respective dates as of which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, properties, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (a "Material Adverse Change"); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, nor entered into any material transaction or agreement other than in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company other than regular quarterly dividends consistent in timing and amount with past practice or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.

          (n)  Independent Accountants. Deloitte & Touche LLP, who have expressed their opinion with respect to the respective financial statements (which term as used in this Agreement includes the related notes thereto) of the Company and of D&W Food Centers, Inc. ("D&W") included in the Disclosure Package and the Final Offering Memorandum, are independent

4

registered public accountants with respect to the Company and to D&W as required by the Securities Act and the Exchange Act and the applicable published rules and regulations thereunder.

          (o)  Preparation of the Financial Statements. The financial statements included in the Disclosure Package and the Final Offering Memorandum present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements comply as to form, in all material respects, with the applicable accounting requirements of Regulation S-X and have been prepared, in all material respects, in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto or in the Disclosure Package and the Final Offering Memorandum. The financial data set forth (i) in the Preliminary Offering Memorandum and the Final Offering Memorandum under the captions "Selected Financial Data" and (ii) in Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 under the caption "Selected Financial Data" present fairly the information set forth therein on a basis consistent with that of the audited financial statements included in the Disclosure Package and the Final Offering Memorandum. The Company's ratios of earnings to fixed charges set forth in the Preliminary Offering Memorandum and the Final Offering Memorandum, if any, have been calculated in compliance with Item 503(d) of Regulation S-K under the Securities Act. The pro forma financial statements and the related notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 present fairly the information contained therein, have been prepared, in all material respects, in accordance with the Commission's rules and regulations and guidelines with respect to pro forma financial statements and have been properly presented on the basis described therein , and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.

          (p)  Subsidiaries. The subsidiaries listed on Annex A attached hereto (each a "Significant Subsidiary") are the only "significant subsidiaries" of the Company as defined by Rule 1-02 of Regulation S-X.

          (q)  Incorporation and Good Standing of the Company and its Significant Subsidiaries. Each of the Company and its Significant Subsidiaries has been duly incorporated (or, if not a corporation, otherwise organized) and is validly existing as a corporation (or other legal entity) in good standing under the laws of the jurisdiction of its incorporation (or organization) and has corporate (or other) power and authority to own or lease, as the case may be, and operate its properties and to conduct its business as described in the Disclosure Package and the Final Offering Memorandum and, in the case of the Company, to enter into and perform its obligations under this Agreement. Each of the Company and each Significant Subsidiary is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or on the earnings, business, properties, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (a "Material Adverse Effect"). All of the issued and outstanding shares of capital stock of each Significant Subsidiary that is a corporation have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company, directly or through subsidiaries, free and clear of

5

any security interest, mortgage, pledge, lien, encumbrance or claim except as disclosed in the Disclosure Package and the Final Offering Memorandum. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 (excluding those subsidiaries that may be omitted from such list pursuant to Form 10-K).

          (r)  Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in the Disclosure Package and the Final Offering Memorandum under the caption "Capitalization" (other than for subsequent issuances, if any, pursuant to stock option, stock bonus and other stock plans or arrangements described in the Disclosure Package and the Final Offering Memorandum or upon exercise of outstanding options, warrants or other rights described in the Disclosure Package and the Final Offering Memorandum, as the case may be). The Common Stock (including the Conversion Shares) conforms in all material respects to the description thereof contained in the Disclosure Package and the Final Offering Memorandum. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with federal and state securitie s laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Disclosure Package and the Final Offering Memorandum and subsequent grants or awards of stock options and restricted stock pursuant to the plans described in the Disclosure Package and the Final Offering Memorandum. The description of the Company's stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Disclosure Package and the Final Offering Memorandum accurately and fairly presents and summarizes in all material respects such plans, arrangements, o ptions and rights.

          (s)  Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries (i) is in violation of its articles of incorporation or bylaws, (ii) is (or, with the giving of notice or lapse of time, would be) in default ("Default") under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other agreement, obligation or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound (including, without limitation, the Loan and Security Agreement (the "Bank Facility") dated as of December 23, 2003, as amended, among the Company and certain subsidiaries of the Company as Borrowers, Congress Financial Corp. as Agent and Lender, the other Lenders from time to time thereunder, and certain subsidiaries of the Company as Guarantors, as amended), or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an "Existing Instrument"), or (iii) is in violation of any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such subsidiary or any of its properties, as applicable, except, with respect to clauses (ii) and (iii) only, for such Defaults or violations as would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

          The Company's execution, delivery and performance of the Operative Documents and consummation of the transactions contemplated thereby, as described in the Disclosure Package and the Final Offering Memorandum (i) have been duly authorized by all necessary corporate action on the part of the Company and will not result in any violation of the articles of

6

incorporation or bylaws of the Company or any subsidiary, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or any of its or their properties.

          No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency is required for the Company's execution, delivery and performance of the Operative Documents and consummation of the transactions contemplated thereby, as described in the Disclosure Package and the Final Offering Memorandum, except (i) with respect to the transactions contemplated by the Registration Rights Agreement, as may be required under the Securities Act, the Trust Indenture Act and the rules and regulations promulgated thereunder and (ii) such as have been obtained or made by the Company and are in full force and effect under the Securities Act, applicable state securities or blue sky laws and from the National Association of Securities Dealers, Inc. ("NASD").

          (t)  No Stamp or Transfer Taxes. There are no stamp or other issuance or transfer taxes or duties or other similar fees or charges required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale by the Company of the Notes or upon the issuance of any Conversion Shares upon the conversion of the Notes, if any.

          (u)  No Material Actions or Proceedings. There are no legal or governmental actions, suits or proceedings pending or, to the best of the Company's knowledge, threatened (i) against or affecting the Company or any of its subsidiaries, (ii) which has as the subject thereof any officer or director of, or property owned or leased by, the Company or any of its subsidiaries or (iii) relating to environmental, employment or discrimination matters where, in any case, (A) there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company or such subsidiary and (B) any such action, suit or proceeding, if determined adversely, would reasonably be expected to have a Material Adverse Effect or adversely affect the consummation of the transactions contemplated by this Agreement.

          (v)  Labor Matters. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the best of the Company's knowledge, is threatened or imminent, and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its or its subsidiaries' principal suppliers, contractors or customers, that would reasonably be expected to have a Material Adverse Effect.

          (w)  Intellectual Property Rights. The Company and its subsidiaries own, possess, license or have other rights to use all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the "Intellectual Property") necessary for the conduct of the Company's business as a whole as now conducted or as proposed in the Disclosure Package and the Final Offering Memorandum to be conducted. Except as would not reasonably be expected to have a Material Adverse Effect, (a) no party has been granted an exclusive license to use any portion of such Intellectual Property owned by the Company; (b) to the best of the Company's knowledge, there is no material infringement by third parties of any such Intellectual Property owned by or exclusively licensed to the Company; (c) there is no pending or, to the best of t he Company's knowledge, threatened action, suit,

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proceeding or claim by others challenging the Company's rights in or to any material Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; and (e) there is no pending or, to the best of the Company's knowledge, threatened action, suit, proceeding or claim by others that the Company's business as now conducted infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any other fact that would form a reasonable basis for any such claim.

          (x)  All Necessary Permits, etc. Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each subsidiary possess such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the Company's business as a whole, and neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit.

          (y)  Title to Properties. Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each of its subsidiaries has good and marketable title to all the properties and assets reflected as owned in the financial statements included in the Disclosure Package and the Final Offering Memorandum, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except as disclosed in the Disclosure Package or such as do not, singly or in the aggregate, materially and adversely affect the value of such property and do not, singly or in the aggregate, materially interfere with the use made or proposed to be made of such property by the Company or such subsidiary. The real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as do not result in a Material Ad verse Effect and do not, singly or in the aggregate, materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or such subsidiary.

          (z)  Tax Law Compliance. Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each of its subsidiaries have filed all necessary federal, state, local and foreign income and franchise tax returns in a timely manner and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, except for any taxes, assessments, fines or penalties as may be being contested in good faith and by appropriate proceedings. Except as would not reasonably be expected to have a Material Adverse Effect, the Company has made appropriate provisions in the financial statements included in the Disclosure Package and the Final Offering Memorandum in respect of all federal, state and foreign income and franchise taxes for all current or prior periods as to which the tax liability of the Company or any of its subsidiaries has not been finally determi ned.

          (aa)  Company Not an "Investment Company". The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the "Investment Company Act"). The Company is not, and after receipt of payment for the Notes and application of the proceeds as described under "Use of Proceeds" in the Disclosure Package and the Final Offering Memorandum will not be, an "investment company" within the meaning of the Investment Company Act and will conduct its business in a manner so that it will not become subject to the Investment Company Act.

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          (bb)  Compliance with Reporting Requirements. The Company is subject to and in full compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

          (cc)  Insurance. Except as would not reasonably be expected to have a Material Adverse Effect, each of the Company and its subsidiaries are insured by recognized, financially sound and reputable institutions, or are self-insured, with policies in such amounts and with such deductibles and covering such risks that the Company reasonably deems to be adequate and customary for their businesses including, but not limited to, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of terrorism or vandalism and earthquakes. Except as would not reasonably be expected to have a Material Adverse Effect: (i) all policies of insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect; (ii) the Company and its subsidiaries are in compliance with the terms of such policies and instruments; (iii) there are no claims by the Company or any of its subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; and (iv) neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not have a Material Adverse Effect.

          (dd)  No Restriction on Distributions. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by the Disclosure Package and the Final Offering Memorandum.

          (ee)  No Price Stabilization or Manipulation. The Company has not taken and will not take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Notes.

          (ff)  Related Party Transactions. There are no material business relationships or related party transactions involving the Company or any subsidiary and any other person of the type required to be disclosed under Item 404 of Regulation S-X that have not been described in the Disclosure Package or the Final Offering Memorandum.

          (gg)  No General Solicitation. None of the Company or any of its affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation D")), has, directly or through an agent, engaged in any form of general solicitation or general advertising in connection with the offering of the Notes or the Conversion Shares (as those terms are used in Regulation D) under the Securities Act or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; the Company has not entered into any contractual arrangement with respect to the distribution of the Notes or the Conversion Shares except for this Agreement, and the Company will not enter into any such arrangement except for the Registration Rights Agreement and as may be contemplated thereby.

          (hh)  No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or

9

affiliate of the Company or any of its subsidiaries is aware of or has taken any action on behalf of the Company, directly or indirectly, that would result in a violation by such persons of the FCPA, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company, its subsidiaries and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA. "FCPA" means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

          (ii)  No Conflict with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

          (jj)  No Conflict with OFAC Laws. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

          (kk)  Compliance with Environmental Laws. Except as otherwise disclosed in the Disclosure Package and the Final Offering Memorandum, (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law, regulation, order, permit or other requirement relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, "Materials of Environmental Concern"), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, "Environment al Laws"), which violation includes, but is not limited to, noncompliance with any permits or other governmental authorizations required for the operation of the business of the Company or its subsidiaries under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company or any of its subsidiaries is in violation of any Environmental Law, except as would not, individually or in the aggregate, have a Material Adverse Effect; (ii) there is no claim, action or cause of action filed with a court or governmental authority of which the Company has received service of process or otherwise become aware, no investigation with respect to which the Company has received written notice,

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and no written notice has been given to the Company by any person or entity alleging potential liability for investigatory costs, clean-up costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys' fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any of its subsidiaries, now or in the past (collectively, "Environmental Claims"), pending or, to the best of the Company's knowledge, threatened against the Company or any of its subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) to the best of the Company's knowledge, there are no past, present or anticipated future actions, ac tivities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably could result in a violation of any Environmental Law, require expenditures to be incurred pursuant to Environmental Law, or form the basis of a potential Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law, except as would not, individually or in the aggregate, have a Material Adverse Effect; and (iv) neither the Company nor any of its subsidiaries is subject to any pending or, to the best of the Company's knowledge, threatened proceeding under Environmental Law to which a governmental authority is a party and which is reasonably likely to result in monetary sanctions of $500,000 or more.

          (ll)  ERISA Compliance. None of the following events has occurred or exists except as disclosed in the Disclosure Package or as would not reasonably be expected to have a Material Adverse Effect: (i) a failure to fulfill the obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the regulations and published interpretations thereunder with respect to a Plan, determined without regard to any waiver of such obligations or extension of any amortization period; (ii) an audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other federal or state governmental agency or any foreign regulatory agency with respect to the employment or compensation of employees by the Company or any of its subsidiaries; or (iii) any breach of any contractual obligation, or any violation of l aw or applicable qualification standards, with respect to the employment or compensation of employees by the Company or any of its subsidiaries. None of the following events has occurred or is reasonably likely to occur in the current fiscal year of the Company except as disclosed in the Disclosure Package or as would not reasonably be expected to have a Material Adverse Effect: (i) increases in the aggregate amount of contributions required to be made to all Plans compared to the amount of such contributions made in the Company's most recently completed fiscal year; (ii) a material increase in the Company's consolidated "accumulated post-retirement benefit obligations" (within the meaning of Statement of Financial Accounting Standards 106) compared to the amount of such obligations in the Company's most recently completed fiscal year; or (iii) any event or condition giving rise to a liability under Title IV of ERISA. For purposes of this paragraph, the term "Plan" means a plan (within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with respect to which any member of the Company may have any liability.

          (mm)  Sarbanes-Oxley Compliance. There is and has been no failure on the part of the Company and any of the Company's directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the "Sarbanes-Oxley Act"), including Section 402 related to loans and Sections 302 and 906 related to certifications.

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          (nn)  Internal Controls and Procedures. The Company maintains (i) effective internal control over financial reporting as defined in Rule 13a-15 under the Exchange Act, and (ii) a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

          (oo)  No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package and the Final Offering Memorandum, since the end of the Company's most recent audited fiscal year, there has been (i) no material weakness in the Company's internal control over financial reporting (whether or not remediated) and (ii) no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

          (pp)  Disclosure Controls. The Company and its subsidiaries maintain an effective system of "disclosure controls and procedures" (as defined in Rule 13a-15 of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.

          (qq)  Lending Relationship. Except as disclosed in the Disclosure Package and the Final Offering Memorandum, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of any Initial Purchaser and (ii) does not intend to use any of the proceeds from the sale of the Notes hereunder to repay any outstanding debt owed to any affiliate of any Initial Purchaser.

          Any certificate signed by an officer of the Company and delivered to the Representative or to counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the Company to each Initial Purchaser as to the matters set forth therein.

          Section 2.  Purchase, Sale and Delivery of the Notes

          (a)  The Firm Notes. The Company agrees to issue and sell to the several Initial Purchasers the Firm Notes upon the terms herein set forth. On the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Initial Purchasers agree, severally and not jointly, to purchase from the Company the respective principal amount of Firm Notes set forth opposite their names on Schedule A at a purchase price of 97.5% of the aggregate principal amount thereof. The Initial Purchasers hereby advise the Company that they intend to offer the Notes for resale at an initial price of 100% of the aggregate principal amount thereof.

          (b)  The Closing Date. Delivery of the Firm Notes to be purchased by the Initial Purchasers and payment therefor shall be made at the offices of Cleary Gottlieb Steen &

12

Hamilton LLP (or such other place as may be agreed to by the Company and the Representative) at 9:00 a.m. New York City time, on May 30, 2007 or such other time and date not later than June 13, 2007 as the Representative shall designate by notice to the Company (the time and date of such closing are called the "Closing Date").

          (c)  The Optional Notes; any Subsequent Closing Date. In addition, on the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Company hereby grants an option to the several Initial Purchasers to purchase, severally and not jointly, up to $15,000,000 aggregate principal amount of Optional Notes from the Company at the same price as the purchase price to be paid by the Initial Purchasers for the Firm Notes. The option granted hereunder may be exercised at any time and from time to time upon notice by the Representative to the Company, which notice may be given at any time prior to the 13^th day after the Closing Date. Such notice shall set forth (i) the amount (which shall be an integral multiple of $1,000 in aggregate principal amount) of Optional Notes as to which the Initial Purchasers are exercising the option, (ii) the names and denominatio ns in which the Optional Notes are to be registered and (iii) the time, date and place at which such Notes will be delivered (which time and date may be simultaneous with, but not earlier than, the Closing Date; and in such case the term "Closing Date" shall refer to the time and date of delivery of the Firm Notes and the Optional Notes). Such time and date of delivery, if subsequent to the Closing Date, is called a "Subsequent Closing Date" and shall be determined by the Representative. Such date may be the same as the Closing Date but shall not be earlier than the Closing Date and shall be prior to the 13^th day after the Closing Date. If any Optional Notes are to be purchased, each Initial Purchaser agrees, severally and not jointly, to purchase the principal amount of Optional Notes (subject to such adjustments to eliminate fractional amount as the Representative may determine) that bears the same proportion to the total principal amount of Optional Notes to be purchased as the principal a mount of Firm Notes set forth on Schedule A opposite the name of such Initial Purchaser bears to the total principal amount of Firm Notes.

          (d)  Payment for the Notes. Payment for the Notes shall be made at the Closing Date (and, if applicable, at any Subsequent Closing Date) by wire transfer of immediately available funds to the order of the Company.

          It is understood that the Representative has been authorized, for its own account and the accounts of the several Initial Purchasers, to accept delivery of and receipt for, and make payment of the purchase price for, the Firm Notes and any Optional Notes the Initial Purchasers have agreed to purchase. BAS, individually and not as the Representative of the Initial Purchasers, may (but shall not be obligated to) make payment for any Notes to be purchased by any Initial Purchaser whose funds shall not have been received by the Representative by the Closing Date or any Subsequent Closing Date, as the case may be, for the account of such Initial Purchaser, but any such payment shall not relieve such Initial Purchaser from any of its obligations under this Agreement.

          (e)  Delivery of the Notes. The Company shall deliver, or cause to be delivered, to the Representative for the accounts of the several Initial Purchasers the Firm Notes at the Closing Date, against receipt of a wire transfer of immediately available funds for the amount of the purchase price therefor. The Company shall also deliver, or cause to be delivered, to the Representative for the accounts of the several Initial Purchasers, the Optional Notes the Initial Purchasers have agreed to purchase at the Closing Date or any Subsequent Closing Date, as the case may be, against receipt of a wire transfer of immediately available funds for the amount of the purchase price therefor. Delivery of the Notes shall be made through the facilities of The Depository Trust Company unless the Representative shall otherwise instruct. Time shall be of

13

the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Initial Purchasers.

          Section 3.  Covenants of the Company

          The Company covenants and agrees with each Initial Purchaser as follows:

          (a)  Representative's Review of Proposed Amendments and Supplements. During such period beginning on the date hereof and ending on the date of the completion of the resale of the Notes by the Initial Purchasers (as notified by the Initial Purchasers to the Company), prior to amending or supplementing the Disclosure Package or the Final Offering Memorandum, the Company shall furnish to the Representative for review a copy of each such proposed amendment or supplement, and the Company shall not print, use or distribute such proposed amendment or supplement to which the Representative reasonably objects.

          (b)  Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters. If, at any time prior to the completion of the resale of the Notes by the Initial Purchasers (as notified by the Initial Purchasers to the Company), any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Disclosure Package or the Final Offering Memorandum in order that the Disclosure Package or the Final Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading, or if in the opinion of the Representative or counsel for the Initial Purchasers it is otherwise necessary to amend or supplement the Disclosure Package or the Final Offering Memorandum to comply with law, the Company shall pro mptly notify the Initial Purchasers and prepare, subject to Section 3(a) hereof, such amendment or supplement as may be necessary to correct such untrue statement or omission.

          (c)  Copies of Disclosure Package and the Offering Memorandum. The Company agrees to furnish to the Representative, without charge, until the earlier of nine months after the date hereof or the completion of the resale of the Notes by the Initial Purchasers (as notified by the Initial Purchasers to the Company) as many copies of the materials contained in the Disclosure Package and the Final Offering Memorandum and any amendments and supplements thereto, and deliver them in such quantities and at such places as the Representative may reasonably request.

          (d)  Blue Sky Compliance. The Company shall cooperate with the Representative and counsel for the Initial Purchasers, as the Initial Purchasers may reasonably request from time to time, to qualify or register the Notes for sale under (or obtain exemptions from the application of) the state securities or blue sky laws, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Notes. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Representative promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Notes for offering, sale or trading in any jurisdiction or any i nitiation or, to the best of the Company's knowledge, threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.

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          (e)  Rule 144A Information. For so long as any of the Notes are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Company shall provide to any holder of the Notes or to any prospective purchaser of the Notes designated by any holder, upon request of such holder or prospective purchaser, information required to be provided by Rule 144A(d)(4) of the Securities Act if, at the time of such request, the Company is not subject to the reporting requirements under Section 13 or 15(d) of the Exchange Act.

          (f)  Compliance with Securities Law. For a period of three years from the Closing, the Company will comply in all material respects with all applicable securities and other laws, rules and regulations, including, without limitation, the Sarbanes-Oxley Act, and use all appropriate efforts to cause the Company's directors and officers, in their capacities as such, to comply in all material respects with such laws, rules and regulations, including, without limitation, the provisions of the Sarbanes-Oxley Act.

          (g)  Legends. Each of the Notes will bear, to the extent applicable, the legend contained in "Notice to Investors" in the Disclosure Package and the Final Offering Memorandum for the time period and upon the other terms stated therein.

          (h)  Written Information Concerning the Offering. Without the prior written consent of the Representative, the Company will not give to any prospective purchaser of the Notes any written information concerning the offering of the Notes other than the Disclosure Package, the Final Offering Memorandum or any other offering materials prepared by or with the prior consent of the Representative, including Issuer Written Information.

          (i)  No General Solicitation. Except following the effectiveness of the Registration Statement, the Company will not, and will cause its subsidiaries not to, solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

          (j)  No Integration. The Company will not, and will cause its subsidiaries not to, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any "security" (as defined in the Securities Act) in a transaction that could be integrated with the sale of the Notes in a manner that would require the registration under the Securities Act of the Notes.

          (k)  Information to Publishers. Any information provided by the Company to publishers of publicly available databases about the terms of the Notes shall include a statement that the Notes have not been registered under the Securities Act and are subject to restrictions under Rule 144A under the Securities Act.

          (l)  DTC. The Company will cooperate with the Representative and use commercially reasonable efforts to permit the Notes to be eligible for clearance and settlement through The Depository Trust Company.

          (m)  Rule 144 Tolling. During the period of two years after the last Closing Date, the Company will not, and will not permit any of its "affiliates" (as defined in Rule 144 under the Securities Act) to, resell any of the Notes that constitute "restricted securities" under Rule 144 that have been reacquired by any of them, except for the Notes purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act.

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          (n)  Use of Proceeds. The Company shall apply the net proceeds from the sale of the Notes in the manner described under the caption "Use of Proceeds" in the Disclosure Package and the Final Offering Memorandum.

          (o)  Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

          (p)  Available Conversion Shares. The Company will reserve and keep available at all times, free of pre-emptive rights, the full number of Conversion Shares.

          (q)  Conversion Price. Between the date hereof and the Closing Date, the Company will not do or authorize any act or thing that would result in an adjustment of the conversion price.

          (r)  Company to Provide Interim Financial Statements and Other Information. Prior to the Closing Date, the Company will furnish the Initial Purchasers, as soon as they have been prepared by or are available to the Company, a copy of any unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements appearing in the Disclosure Package and the Final Offering Memorandum.

          (s)  Agreement Not to Offer or Sell Additional Securities. During the period commencing on the date hereof and ending on the 90^th day following the date of the Final Offering Memorandum, the Company will not, without the prior written consent of BAS (which consent may be withheld at the sole discretion of BAS), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open "put equivalent position" or liquidate or decrease a "call equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction that is designed to, or might reasonably be expected to, result in the disposition of), or announce the offering of, or file any registration statement under the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire shares of the Common Stock or securities exchangeable or exercisable for or convertible into shares of Common Stock (other than as contemplated by this Agreement with respect to the Notes and the Conversion Shares); provided, however, that the Company may issue shares of its Common Stock or options to purchase its Common Stock, or Common Stock upon exchange for or exercise of options or warrants, pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Disclosure Package and the Final Offering Memorandum.

          (t)  Future Reports to Stockholders. The Company will, for a period of not less than three years after the Closing Date, make available, by timely filing with the Commission or other reasonably prompt and appropriate means, to its securityholders after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Offering Memorandum), will make available to its securityholders, by timely filing with the Commission or other reasonably prompt and appropriate means, consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail.

          (u)  Future Reports to the Representative. During the period of three years after the Closing Date the Company will furnish to the Representative at 9 West 57^th Street, New York, NY 10019 (i) as soon as practicable after the end of each fiscal year, copies of the annual report of the Company containing the balance sheet of the Company as of the close of such fiscal year

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and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public or certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its capital stock.

          (v)  Investment Limitation. The Company shall not invest or otherwise use the proceeds received by the Company from its sale of the Notes in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.

          (w)  No Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Notes.

          (x)  Lock-Up Agreements. The Company will enforce all agreements between the Company and any of its security holders to be entered into pursuant to this Agreement that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company's securities. In addition, the Company will direct the transfer agent to place stop transfer restrictions upon any such securities of the Company that are bound by such "lock-up" agreements and held in record name by the securityholder bound by the agreement for the duration of the periods contemplated in such agreements.

          (y)  Final Term Sheet. The Company will prepare a final term sheet, containing solely a description of the Notes and the offering thereof, in the form approved by you and attached as Schedule B hereto (the "Final Term Sheet").

          Section 4.  Payment of Expenses

          The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Notes (including all printing and engraving costs), (ii) all fees and expenses of the Trustee under the Indenture, (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Notes to the Initial Purchasers, (iv) all fees and expenses of the Company's counsel, independent public or certified public accountants and other advisors, (v) all costs and expenses incurred in connection with the preparation, printing, shipping and distribution of the materials contained in the Disclosure Package, including the Preliminary Offering Memorandum, and the Final Offering Memorandum and all amendments and supplements thereto, (vi) all filing fees, attorneys' fees and expenses incurred by the Company or reasonably incurred by the Initial Purchasers in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Notes for offer and sale under the state securities or blue sky laws, and, if reasonably requested by the Representative, preparing and printing a "Blue Sky Survey" or memorandum, and any supplements thereto, advising the Initial Purchasers of such qualifications, registrations and exemptions, (vii)  the expenses of the Company and the Initial Purchasers in connection with the marketing and offering of the Notes, including all transportation and other expenses incurred in connection with presentations to prospective purchasers of the Notes, (viii) the fees and expenses associated with

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listing the Conversion Shares on The Nasdaq Global Market and (ix) all expenses and fees in connection with admitting the Notes for trading in the PORTAL Market. Except as provided in this Section 4, Section 7, Section 10 and Section 11 hereof, the Initial Purchasers shall pay their own expenses, including the fees and disbursements of their counsel.

          Section 5.  Conditions of the Obligations of the Initial Purchasers

          The obligations of the several Initial Purchasers to purchase and pay for the Notes as provided herein on the Closing Date and, with respect to the Optional Notes, any Subsequent Closing Date, shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of the Closing Date as though then made and, with respect to the Optional Notes, as of the related Subsequent Closing Date as though then made, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following additional conditions:

          (a)  Accountants' Comfort Letter. On the date hereof, the Representative shall have received from Deloitte & Touche LLP, independent public accountants for the Company, a letter dated the date hereof addressed to the Initial Purchasers, the form of which is attached as Exhibit A.

          (b)  No Material Adverse Change or Rating Agency Change. For the period from and after the date of this Agreement and prior to the Closing Date and, with respect to the Optional Notes, any Subsequent Closing Date:

          (i)  in the judgment of the Representative there shall not have occurred any Material Adverse Change;

          (ii)  there shall not have been any change or decrease specified in the letter referred to in paragraph (a) of this Section 5 which is, in the sole judgment of the Representative, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Notes as contemplated by the Disclosure Package and the Final Offering Memorandum; and

          (iii)  there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities of the Company or any of its subsidiaries by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.

          (c)  Opinion of Sidley Austin LLP. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received the favorable opinion of Sidley Austin LLP, counsel for the Company, dated as of such Closing Date, the form of which is attached as Exhibit B.

          (d)  Opinion of Warner Norcross & Judd LLP. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received the favorable opinion of Warner Norcross & Judd LLP, Counsel for the Company, dated as of such Closing Date, the form of which is attached as Exhibit C.

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          (e)  Opinion of Seyfarth Shaw LLP. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received the favorable opinion of Seyfarth Shaw LLP, Counsel for the Company, dated as of such Closing Date, the form of which is attached as Exhibit D.

          (f)  Opinion of Cleary Gottlieb Steen & Hamilton LLP. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received the favorable opinion of Cleary Gottlieb Steen & Hamilton LLP, counsel for the Initial Purchasers, dated as of such Closing Date, in form and substance satisfactory to, and addressed to, the Representative, with respect to the issuance and sale of the Notes, the Disclosure Package, the Preliminary Offering Memorandum, the Final Offering Memorandum and such other related matters as the Representative may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

          (g)  Officers' Certificate. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer, President or any Executive Vice-President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of such Closing Date, to the effect that the signers of such certificate have examined the Disclosure Package, including the Preliminary Offering Memorandum, and the Final Offering Memorandum, any amendments or supplements thereto and this Agreement, to the effect set forth in subsection (b)(iii) of this Section 5, and further to the effect that:

          (i)  for the period from and after the date of this Agreement and prior to such Closing Date or such Subsequent Closing Date, as the case may be, there has not occurred any Material Adverse Change;

          (ii)  the representations and warranties of the Company set forth in Section 1 of this Agreement are true and correct on and as of the Closing Date or the Subsequent Closing Date, as the case may be, with the same force and effect as though expressly made on and as of such Closing Date or such Subsequent Closing Date, as the case may be; and

          (iii)  the Company has complied with all the agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date or such Subsequent Closing Date, as the case may be.

          (h)  Bring-down Comfort Letter. On each of the Closing Date and any Subsequent Closing Date, the Representative shall have received from Deloitte & Touche LLP, independent public accountants for the Company, a letter dated such date, in form and substance satisfactory to the Representative, to the effect that such firm reaffirms the statements made in the letter furnished by it pursuant to subsection (a) of this Section 5, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the Closing Date or Subsequent Closing Date, as the case may be.

          (i)  Registration Rights Agreement. The Company and the Initial Purchasers shall have executed and delivered the Registration Rights Agreement substantially in the form of Exhibit E hereto and the Registration Rights Agreement shall be in full force and effect.

          (j)  Lock-Up Agreements from Officers and Directors of the Company. On or prior to the date hereof, the Company shall have furnished to the Representative an agreement in the form of

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Exhibit F hereto from each of Theodore C. Adornato, M. Shân Atkins, Dennis Eidson, Alex J. DeYonker, Frank M. Gambino, Derek Jones, Frederick S. Morganthall, II, Elizabeth A. Nickels, Timothy J. O'Donovan, David M. Staples, Kenneth T. Stevens, Craig C. Sturken, Thomas A. Van Hall and James F. Wright, and such agreement shall be in full force and effect on each of the Closing Date and any Subsequent Closing Date.

          (k)  PORTAL Designation. The Notes shall have been designated PORTAL-eligible securities in accordance with the rules and regulations of the NASD.

          (l)  Nasdaq Global Market Listing. The Company shall use commercially reasonable efforts to cause the Conversion Shares to be approved for listing, subject to issuance, on the Nasdaq Global Market.

          (m)  Additional Documents. On or before each of the Closing Date and any Subsequent Closing Date, the Representative and counsel for the Initial Purchasers shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Notes as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

          If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representative by notice to the Company at any time on or prior to the Closing Date and, with respect to the Optional Notes, at any time prior to the applicable Subsequent Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 4, Section 7, Section 8, Section 9 and Section 13 shall at all times be effective and shall survive such termination.

          Section 6.  Representations, Warranties and Agreements of Initial Purchasers

          Each of the Initial Purchasers represents and warrants that it is a "qualified institutional buyer", as defined in Rule 144A under the Securities Act. Each Initial Purchaser agrees with the Company that:

          (a)  it has not offered or sold, and will not offer or sell, any Notes as part of their distribution at any time except to those it reasonably believes to be "qualified institutional buyers" (as defined in Rule 144A under the Securities Act);

          (b)  neither it nor any person acting on its behalf has made or will make any offer or sale of Notes by means of any form of general solicitation or general advertising (within the meaning of Regulation D);

          (c)  in connection with each sale pursuant to Section 6(a), it has taken or will take reasonable steps to ensure that the purchaser of such Notes is aware that such sale is being made in reliance on Rule 144A under the Securities Act;

          (d)  any information provided by the Initial Purchasers to publishers of publicly available databases about the terms of the Notes shall include a statement that the Notes have not been registered under the Securities Act and are subject to restrictions under Rule 144A under the Securities Act; and

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          (e)  it acknowledges that restrictions on the offer, sale and other transfers of the Notes and the Conversion Shares issuable upon conversion thereof are described in the Disclosure Package and the Final Offering Memorandum.

          Section 7.  Reimbursement of Initial Purchasers' Expenses

          If this Agreement is terminated by the Representative pursuant to Section 5, Section 10 or clause (i) of Section 11 (solely with respect to the Company's securities), or if the sale to the Initial Purchasers of the Notes on the Closing Date is not consummated because of any refusal, inability or failure on the part of the Company to perform any agreement herein or to comply with any provision hereof, the Company agrees to reimburse the Representative and the other Initial Purchasers, severally, upon demand for all out-of-pocket expenses that shall have been reasonably incurred by the Representative and the Initial Purchasers in connection with the proposed purchase and the offering and sale of the Notes, including but not limited to reasonable fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.

          Section 8.  Indemnification

          (a)  Indemnification of the Initial Purchasers. The Company agrees to indemnify and hold harmless each Initial Purchaser, its directors, officers, employees and agents, and each person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Initial Purchaser, director, officer, employee, agent or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, the Company's Current Report on Form 8-K furnished to the Commission on May 16, 2007, any Issuer Written Information or any other written information prepared by or on behalf of, or used by, the Company in connection with the offer or sale of the Notes (or any amendment or supplement to the foregoing), or the omission or alleged omission therefrom of a material fact, in each case, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and to reimburse each Initial Purchaser, its officers, directors, employees, agents and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by BAS) as such expenses are reasonably incurred by such Initial Purchaser or its officers, directors, employees, agents or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Representative expressly for use in the Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer Written Information or any other written information prepared by or on behalf of, or used by, the Company in connection with the offer or sale of the Notes (or any amendment or supplement to the foregoing). The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company may otherwise have.

          (b)  Indemnification of the Company, its Directors and Officers. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its

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directors, each of its officers and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company, or any such director, officer or controlling person may become subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer Written Information or any other written information prepared by or on behalf of, or used by, the Company in connection with the offer or sale of the Notes (or any amendment or supplement to the foregoing), or arises out of or is based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under whic h they were made, not misleading, in each case to the extent, and only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer Written Information or any other written information prepared by or on behalf of, or used by, the Company in connection with the offer or sale of the Notes (or any amendment or supplement to the foregoing), in reliance upon and in conformity with written information furnished to the Company by the Representative expressly for use therein; and to reimburse the Company, or any such director, officer or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that the only informatio n that the Initial Purchasers have furnished to the Company expressly for use in the Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer Written Information or any other written information prepared by or on behalf of, or used by, the Company in connection with the offer or sale of the Notes (or any amendment or supplement to the foregoing) are the statements set forth in Schedule C. The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that each Initial Purchaser may otherwise have.

          (c)  Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the failure to so notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party and such indemni fied party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assum e such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the

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indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel for all indemnified parties (other than local counsel), reasonably approved by the indemnifying party (or by BAS in the case of Section 8(b)), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonab le time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

          (d)  Settlements. The indemnifying party under this Section 8 shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but if settled with such consent or if there is a final judgment, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

          Section 9.  Contribution

          If the indemnification provided for in Section 8 is for any reason unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other hand, from the offering of the Notes pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions or alleged statements or alleged omissions that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Initial Purchasers, on the other hand, in connection with the offering of the Notes pursuant to this Agreement shall be deemed to be in the same respective proportions as the

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total net proceeds from the offering of the Notes pursuant to this Agreement (before deducting expenses) received by the Company, and the total discount received by the Initial Purchasers bear to the aggregate initial offering price of the Notes. The relative fault of the Company, on the one hand, and the Initial Purchasers, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Initial Purchasers, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

          The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

          The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9.

          Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to contribute any amount in excess of the purchase discount received by such Initial Purchaser in connection with the Notes purchased by it hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute pursuant to this Section 9 are several, and not joint, in proportion to their respective commitments as set forth opposite their names in Schedule A. For purposes of this Section 9, each director, officer, employee and agent of an Initial Purchaser and each person, if any, who controls an Initial Purchaser within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such Initial Purchaser, and each dire ctor of the Company, each officer of the Company, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

          Section 10.  Default of One or More of the Several Initial Purchasers

          If, on the Closing Date or any Subsequent Closing Date, as the case may be, any one or more of the several Initial Purchasers shall fail or refuse to purchase Notes that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase does not exceed 10% of the aggregate principal amount of the Notes to be purchased on such date, the other Initial Purchasers shall be obligated, severally, in the proportions that the principal amount of Firm Notes set forth opposite their respective names on Schedule A bears to the aggregate principal amount of Firm Notes set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other proportions as may be specified by the Representative with the consent of the non-defaulting Initial Purchasers, to purchase the Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on such date. If, on the Closing Date or any Subsequent Closing Date, as the case may be, any one or more of the Initial Purchasers shall fail or refuse to purchase Notes and the aggregate principal amount of Notes with respect to which such default occurs exceeds 10% of the aggregate principal amount of Notes to be purchased on such date, and arrangements satisfactory to the Representative and the Company for the purchase of such Notes are not made within 48 hours after such default, this

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Agreement shall terminate without liability of any party (other than a defaulting Initial Purchaser) to any other party except that the provisions of Section 4, Section 7, Section 8 and Section 9 shall at all times be effective and shall survive such termination. In any such case either the Representative or the Company shall have the right to postpone the Closing Date or any Subsequent Closing Date, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Final Offering Memorandum or any other documents or arrangements may be effected.

          As used in this Agreement, the term "Initial Purchaser" shall be deemed to include any person substituted for a defaulting Initial Purchaser under this Section 10. Any action taken under this Section 10 shall not relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.

          Section 11.  Termination of this Agreement

          On or prior to the Closing Date this Agreement may be terminated by the Representative by notice given to the Company if at any time (i) trading or quotation in any of the Company's securities shall have been suspended or limited by the Commission or by the Nasdaq Global Market, or trading in securities generally on either the New York Stock Exchange or the Nasdaq Global Market shall have been suspended or limited, or minimum or maximum prices shall have been generally established by the Commission or the NASD on either such stock exchange; (ii) a general banking moratorium shall have been declared by any federal or New York authority or a material disruption in commercial banking or securities settlement or clearance services in the United States has occurred; or (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any change in the United States or international financial markets, or any substantial chang e or development involving a prospective substantial change in United States' or international political, financial or economic conditions, as in the judgment of the Representative is material and adverse and makes it impracticable or inadvisable to market the Notes in the manner and on the terms described in the Disclosure Package and the Final Offering Memorandum or to enforce contracts for the sale of securities. Any termination pursuant to this Section 11 shall be without liability on the part of (a) the Company to any Initial Purchaser, except that the Company shall be obligated to reimburse the expenses of the Representative and the Initial Purchasers pursuant to Sections 4 and 7 hereof or (b) any Initial Purchaser to the Company.

          Section 12.  No Advisory or Fiduciary Responsibility

          The Company acknowledges and agrees that: (i) the purchase and sale of the Notes pursuant to this Agreement, including the determination of the offering price of the Notes and any related discounts and commissions, is an arm's-length commercial transaction between the Company, on the one hand, and the several Initial Purchasers, on the other hand, and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to such transaction each Initial Purchaser is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary of the Company or its affiliates, stockholders, creditors or employees or any other party; (iii) no Initial Purchaser has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Company with respect to any o f the transactions contemplated hereby or the process leading thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the Company on other matters) and no Initial Purchaser has any obligation to the Company with respect to the offering contemplated hereby except the obligations expressly set forth in this

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Agreement; (iv) the several Initial Purchasers and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and that the several Initial Purchasers have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Initial Purchasers have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

          This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the several Initial Purchasers, or any of them, with respect to the subject matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the several Initial Purchasers with respect to any breach or alleged breach of agency or fiduciary duty.

          Section 13.  Representations and Indemnities to Survive Delivery

          The respective indemnities, contribution, agreements, representations, warranties and other statements of the Company, of its officers and of the several Initial Purchasers set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the result hereof, made by or on behalf of any Initial Purchaser or the Company or any of its or their partners, officers, directors, employees, agents or any controlling person, as the case may be, (ii) acceptance of the Notes and payment for them hereunder or (iii) any termination of this Agreement.

          Section 14.  Notices

          All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed, or sent by air courier that guarantees overnight delivery, to the parties hereto as follows:

If to the Representative:
	Banc of America Securities LLC 9 West 57th Street New York, New York 10019 Facsimile:  212-933-2217 Attention:  Syndicate Department
with a copy to:
	Banc of America Securities LLC 9 West 57th Street New York, New York 10019 Attention:  Equity Capital Markets Legal

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If to the Company:
	Spartan Stores, Inc. 850 - 76th Street, SW Grand Rapids, Michigan 49518 Facsimile:  616-878-8287 Attention:  Alex J. DeYonker, Executive Vice President, General Counsel and Secretary
with a copy to:
	Warner Norcross & Judd LLP 900 Fifth Third Center 111 Lyon Street, N.W. Grand Rapids, Michigan 49503-2487 Facsimile:  616-222-2752 Attention:  Gordon R. Lewis

Any party hereto may change the address for receipt of communications by giving written notice to the others.

          Section 15.  Successors

          This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Initial Purchasers pursuant to Section 10 hereof, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 8 and Section 9, and in each case their respective successors. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 15, any legal or equitable right, remedy, or claim under or in respect of this Agreement or any provision contained herein. The term "successors" shall not include any purchaser of the Notes as such from any of the Initial Purchasers merely by reason of such purchase.

          Section 16.  Partial Unenforceability

          The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

          Section 17.  Governing Law

          THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          Section 18.  General Provisions

          This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures

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thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto. The Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

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          If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

Very truly yours,
SPARTAN STORES, INC.
By:	/s/ David M. Staples
	Name:  David M. Staples
	Title:

          The foregoing Purchase Agreement is hereby confirmed and accepted by the Representative as of the date first above written.

BANC OF AMERICA SECURITIES LLC Acting as representative of the several Initial Purchasers named in the attached Schedule A.
By:	/s/ Craig McCracken
	Name:  Craig McCracken
	Title:    Managing Director

BEAR, STEARNS & CO. INC. Acting as representative of the several Initial Purchasers named in the attached Schedule A.
By:	/s/ Paul S. Rosica
	Name:  Paul S. Rosica
	Title:    Senior Managing Director

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ANNEX A

Spartan Stores Distribution, LLC
Spartan Stores Holding, Inc.
Family Fare, LLC
Prevo's Family Markets, Inc.
Spartan Stores Associates, LLC
Seaway Food Town, Inc.
Market Development Corporation

Annex A-1

SCHEDULE A

Initial Purchasers		Aggregate Principal Amount of Firm Notes to be Purchased
Banc of America Securities LLC		$  66,500,000
Bear, Stearns & Co. Inc		12,350,000
Wachovia Capital Markets, LLC		6,650,000
Friedman, Billings, Ramsey & Co., Inc		4,750,000
FTN Midwest Securities LLC		4,750,000
	Total	$  95,000,000

Schedule A-1

SCHEDULE B

TERM SHEET

Spartan Stores, Inc.
3.375% Convertible Senior Notes due 2027

Issuer:	Spartan Stores, Inc.
Title of securities:	3.375% Convertible Senior Notes due 2027
Issue price:	100%
Aggregate principal amount offered:	$95,000,000 (exclusive of the initial purchasers' option to purchase up to $15,000,000 principal amount of additional notes to cover over allotments). This represents an increase of $20,000,000 from the aggregate principal amount set forth on the cover of the Preliminary Offering Memorandum (as defined below).
Net proceeds:	Approximately $92,175,000 (or $106,800,000 if the initial purchasers exercise their option to purchase $15,000,000 of additional notes in full) after deducting underwriting discount and offering expenses
Maturity:	May 15, 2027
Annual interest rate:	3.375%
Interest payment dates:	May 15 and November 15 of each year, beginning November 15, 2007
Call dates:	From and after May 20, 2012 at the below specified percentage of the principal amount of the notes to be redeemed plus accrued and unpaid interest:
	Period Commencing	Redemption Price
	May 20, 2012	100.96%
	May 15, 2013	100.48%
	May 15, 2014	100.00%

Put dates:	May 15, 2014, May 15, 2017 and May 15, 2022
Initial conversion price:	Approximately $35.67
Initial conversion rate:	28.0310 shares of common stock per $1,000 principal amount of notes

Schedule B-1

Use of proceeds:	Estimated to be approximately $92,175,000, after deducting selling discounts and offering expenses (assuming no exercise of the initial purchasers' overallotment option). The Company intends to use the net proceeds from the offering to pay amounts owed under its revolving credit facility (the outstanding balance of which was $73.1 million as of May 21, 2007) and for working capital, capital expenditures and other general corporate purposes, which may include funding the previously announced acquisition of Felpausch retail stores.
Settlement:	May 30, 2007
U.S. federal income tax considerations:	Each holder and beneficial owner of a note (by acquiring or holding the note or a beneficial interest therein) will be deemed to have agreed in the indenture, for United States federal income tax purposes, to treat the notes as "contingent payment debt instruments" and to be bound by our application of the U.S. Department of Treasury regulations that govern contingent payment debt instruments. The comparable yield is 8.25% per annum, compounded semi-annually.
Initial Purchasers:	Joint Book-Running Managers: Banc of America Securities LLC and Bear, Stearns & Co. Inc.
	Co-Managers: Wachovia Capital Markets, LLC, Friedman, Billings, Ramsey & Co., Inc. and FTN Midwest Securities Corp.
Adjustment to conversion rate upon a fundamental change:	We will increase the conversion rate for notes converted in connection with certain fundamental changes by a number of additional shares of common stock set forth in the table below. The specific circumstances under which the conversion rate will be increased are described in the Preliminary Offering Memorandum (as defined below) under "- Make Whole Amount."

Schedule B-2

	Stock Price
Effective Date	$26.04	$30.00	$35.67	$40.00	$45.00	$50.00	$55.00	$60.00	$70.00	$80.00	$90.00
23-May-07	10.3714	8.0190	5.7733	4.5865	3.7068	2.9690	2.5072	2.0807	1.5533	1.2103	0.9546
15-May-08	10.3714	7.4357	5.1622	4.0190	3.1646	2.4550	2.0399	1.6523	1.1947	0.9115	0.7068
15-May-09	10.3714	7.0923	4.7697	3.6440	2.8134	2.1210	1.7454	1.3907	1.0604	0.7528	0.5868
15-May-10	10.3714	6. 3823	4.0099	2.9565	2.1757	1.5310	1.2363	0.9440	0.6476	0.4902	0.3834
15-May-11	10.3714	5.2057	2.6755	1.7440	1.0401	0.5510	0.3890	0.2307	0.1319	0.0952	0.0723
15-May-12	10.3714	4.2257	0.2729	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000
15-May-13	10.3714	4. 5857	0.1383	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000
15-May-14	10.3714	5.3023	0.0038	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

	The maximum increase to the conversion rate we may make pursuant to this provision is 10.3714 shares per $1,000 principal amount of notes, subject to adjustment in the same manner as in the conversion rate.
Rating:	Not rated

This communication is intended for the sole use of the person to whom it is provided by the sender. This communication does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such solicitation or sale would be unlawful prior to registration or qualification of these securities under the laws of any such jurisdiction.

The offering is being made to qualified institutional buyers pursuant to Rule 144A under the Securities Act, as amended. The 3.375% Convertible Senior Notes due 2027 and shares of common stock issuable upon conversion thereof have not been registered under the Securities Act of 1933, as amended, or under any other securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except to qualified institutional buyers pursuant to Rule 144A or pursuant to another applicable exemption from registration.

The information in this term sheet supplements the Company's Preliminary Offering Memorandum, dated May 22, 2007 (the "Preliminary Offering Memorandum") and supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent with the information in the Preliminary Offering Memorandum. This term sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum. Terms used herein but not defined herein shall have the respective meanings as set forth in the Preliminary Offering Memorandum.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE

Schedule B-3

DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

Schedule B-4

SCHEDULE C

INFORMATION PROVIDED BY THE INITIAL PURCHASERS TO THE
COMPANY

(a)         the information in the last full paragraph of the cover page of the Offering Memorandum regarding the delivery of the Notes;

(b)         the fourth sentence in the ninth paragraph of text under the caption "Plan of Distribution" in the Offering Memorandum concerning market making;

(c)         the information in the sixth paragraph of text under the caption "Plan of Distribution" in the Offering Memorandum concerning offer of the notes;

(d)         the information in the eighth paragraph of text under the caption "Plan of Distribution" in the Offering Memorandum concerning offer of the notes; and

(e)         the information in the tenth paragraph of text under the caption "Plan of Distribution" in the Offering Memorandum concerning stabilization and other transactions.

Schedule C-1

EXHIBIT A

FORM OF COMFORT LETTER

Exhibit A-1

FORM OF COMFORT LETTER

[Pricing Date-e.g., June 18], 2007

[Board of Directors]
[Lead Managers]
As Representatives of The Several Underwriters c/o
[Lead Manager]
[Address]

Ladies and Gentlemen:

We have audited the consolidated balance sheets of [•] (the "Company") and subsidiaries as of December 31, 2006 and 2005 and the consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2006, and the related financial statement schedule, all included in the Registration Statement (No. 333- [•]) on Form [•] filed by the Company under the Securities Act of 1933 (the "Act"); our reports with respect thereto also are included in such Registration Statement. We also have audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2006, and our report with respect thereto is also incorporated by reference in the Registration Statement.

In connection with the Registration Statement:

1.	We are independent auditors with respect to the Company within the meaning of the Act and the applicable rules and regulations thereunder adopted by the Securities and Exchange Commission and the Public Company Accounting Oversight Board (United States) (PCAOB).
2.	In our opinion, the consolidated financial statements and financial statement schedule audited by us and included in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations thereunder.
3.	We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2006. The purpose (and therefore the scope) of our audit for the year ended December 31, 2006 was to enable us to express our opinion on the consolidated financial statements at December 31, 2006 and for the year then ended, but not on the financial statements for any interim period within such year. Therefore, we are unable to express and do not express an opinion on: the unaudited condensed consolidated balance sheet at March 31, 2007; the unaudited condensed consolidated statements of income or cash flows for the three-months ended March 31, 2007 and 2006, included in the Registration Statement, or the financial position, results of operations,

changes in shareholders' equity or cash flows as of any date or for any period subsequent to December 31, 2006.

4.

For purposes of this letter, we have read the 2007 minutes of meetings of the shareholders and the Board of Directors of the Company and its subsidiaries as set forth in the minute books through June [15], 2006, officials of the Company having advised us that the minutes of all such meetings through that date were set forth therein [except for the meeting of [the Board of Directors] [the Audit Committee] of the Company [Subsidiary Y] held on [Date X], for which minutes have not been approved. With respect to the meeting of the [the Board of Directors][the Audit Committee] of the Company [Subsidiary Y] held on [Date X], we have obtained a summary from the Secretary of the Company [Subsidiary Y] as to the topics discussed at the meeting]. We have also carried out other procedures to June [13] [i.e., three business days before pricing], 2007 as follows (our work did not extend to June [18], 2007).

a.	With respect to the three-month periods ended March 31, 2007 and 2006, we have:
	(1)       performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in AU 722, Interim Financial Information SAS 100, on the unaudited condensed consolidated balance sheet at March 31, 2007 and the unaudited condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 2007 and 2006, included in the Registration Statement; and
	(2)       inquired of certain officials of the Company who have responsibility for financial and accounting matters as to whether the unaudited condensed consolidated financial statements referred to in a. (1) above comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations.
b.	With respect to the period from March 31, 2007 to May 31, 2007, we have:
	(1)       read the unaudited consolidated financial statements of the Company and subsidiaries for April and May of both 2007 and 2006 furnished us by the Company; the financial information for April and May is incomplete in that it omits the statement of cash flows and other disclosures. Officials of the Company have advised us that no such financial statements as of any date or any period subsequent to May 31, 2007 were available; and
	(2)       inquired of certain officials of the Company who have responsibility for financial and accounting matters whether the unaudited consolidated financial statements referred to in b.(1) above are stated on a basis substantially consistent with that of the audited consolidated financial statements included in the Registration Statement.

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The foregoing procedures do not constitute an audit conducted in accordance with generally accepted auditing standards. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representations as to the sufficiency of the foregoing procedures for your purposes.

5. Nothing came to our attention as a result of the foregoing procedures that caused us to believe that:

a.       any material modifications should be made to the unaudited condensed consolidated financial statements described in 4.a.(1) above, included in the Registration Statement, for them to be in conformity with generally accepted accounting principles.

b.       the unaudited condensed consolidated financial statements described in 4.a.(1) above do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations.

c.       (i) At May 31, 2007 there was any change in the capital stock, increase in long-term debt, or decrease in consolidated net current assets or shareholders' equity of the consolidated companies as compared with amounts shown in the March 31, 2007 unaudited condensed consolidated balance sheet included in the Registration Statement; or

         (ii) for the period from April 1, 2007 to May 31, 2007, there were any decreases, as compared to the corresponding period in the preceding year, in consolidated net sales or in the total or per-share amounts of consolidated net income.

6. As mentioned under 4.b above, Company officials have advised us that no consolidated financial statements as of any date or for any period subsequent to May 31, 2006 are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after May 31, 2007 have, of necessity, been even more limited than those with respect to the periods referred to in 4. above. We have inquired of certain officials of the Company who have responsibility for financial and accounting matters as to whether: (i) there was any change at June [13], 2007 in the capital stock, increase in long-term debt or any decrease in consolidated net current assets or shareholders' equity of the consolidated companies as compared with the amounts shown on the March 31, 2007 unaudited condensed consolidated balance sheet included in the Registration Statement, or (ii) for the period from April 1, 2007 to June [13], 2007, there was any decrease, as compared with the corresponding period in the precedin g year, in consolidated net sales or in the total or per share amounts of consolidated net income. Nothing came to our attention that caused us to believe that there was any such change, increase, or decrease[, except [specify]]. On the basis of these inquiries and our reading of the minutes as described in 4. above, nothing came to our attention that caused us to believe that there was any such change, increase or decrease.

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 7. [If pro formas are included:] At your request, we have:

a.	read the unaudited pro forma condensed consolidated balance sheet as of March 31, 2007, and the unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2006, and the three-month period ended March 31, 2007, included in the registration statement.
b.	Inquired of certain officials of the Company and of [acquired company] who have financial responsibility for financial and accounting matters about:

(i)	The basis for their determination of the pro forma adjustments, and
(ii)	Whether the unaudited pro forma condensed consolidated financial statements referred to in 7.a. comply as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X.

c. Proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the unaudited pro forma condensed consolidated financial statements.

	The foregoing procedures are substantially less in scope than an examination, the objective of which is the expression of an opinion on management's assumptions, the pro forma adjustments, and the application of those adjustments to historical financial information. Accordingly, we do not express such an opinion. The foregoing procedures would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representation about the sufficiency of such procedures for your purposes.
	8.  Nothing came to our attention, as a result of the procedures specified in paragraph 7, however, that caused us to believe that the unaudited pro forma condensed consolidated financial statements referred to in paragraph 7.a. above included in the registration statement do not comply as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements. Had we performed additional procedures or had we made an examination of the pro forma condensed consolidated financial statements, other matters might have come to our attention that would have been reported to you.
9.	At your request, we have also read the items identified by you on the attached copies of selected pages of the Registration Statement and have performed the following procedures, which were applied as indicated with respect to the symbols explained below:

A.       We compared the [dollar] amounts or percentages to the amounts in the audited financial statements described in the introductory paragraph of this letter or to amounts included in the unaudited financial statements described in paragraph 4.a. above, which amounts or percentages are included in or can be derived from such statements and found them to be in agreement.

4

B.       We compared the [dollar] and other amounts not derived directly from audited or unaudited financial statements to the Company's accounting records and found them to be in agreement.

C.       We compared the [dollar] and other amounts not derived directly from audited or unaudited financial statements, or that could not be compared directly to the Company's accounting records, to amounts in analyses prepared by the Company from its accounting records and found them to be in agreement.

D.       We proved the arithmetic accuracy of the percentages or other amounts based on the data in the financial statements referred to in 7.A. above.

E.       We proved the arithmetic accuracy of the percentages or other amounts based on the data in the accounting records referred to in 7.B. above.

F.       We proved the arithmetic accuracy of the percentages or other amounts based on the data in the analysis referred to in 7.C. above.

G.       We proved the arithmetic accuracy of the translation of [currency] amounts to U.S. dollars at the noon buying rate at March 31, 2007.

8.	Our audits of the consolidated financial statements for the periods referred to in the introductory paragraph of this letter were comprised of audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For neither the periods referred to therein nor any other period did we perform audits tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those enumerated above and, accordingly, we do not express an opinion thereon.
9.	It should be understood that we make no representation as to questions of legal interpretation or as to the sufficiency for your purposes of the procedures enumerated in the preceding paragraph; also, such procedures would not necessarily reveal any material misstatement of the information identified in 7. above. Further, we have addressed ourselves solely to the foregoing data as set forth in the Registration Statement and make no representations as to the adequacy of disclosure or as to whether any material facts have been omitted.
10.	This letter is solely for the information of the addressees and to assist the underwriters in conducting and documenting their investigation of the affairs of the Company in connection with the offering of the securities covered by the Registration Statement, and is not to be used, circulated, quoted or otherwise referred to within or without the underwriting group for any other purpose, including, but not limited to, the registration purchase, or sale or securities, nor is it to be filed with or referred to in whole or in part in the Registration Statement or any other document, except that reference may be made to it in the underwriting agreement or any list of closing documents pertaining to the offering of the securities covered by the Registration Statement.

                                                                                            Very truly yours,

5

                                                                                            [Name of Accountants]

6

[BRING-DOWN COMFORT LETTER]

[Issuer's Board of Directors]
[Lead Managers]
As Representatives of The Several Underwriters
 [Lead Manager]
 [Address]

Dear Sirs:

We refer to our letter of June [18] relating to the Registration Statement (No. 333-[•]) of [Company]. We reaffirm as of the date hereof, and as though made on the date hereof, all statements made in that letter, except that for the purposes of this letter:

1.	The Registration Statement to which this letter relates is the Registration Statement in the form in which it became effective.
2.	The reading of minutes described in paragraph 4 of that letter has been carried out through June [19] [date three business days before closing], 2007.
3.	The other procedures and inquiries covered in paragraph 4 of that letter were carried out to June [19], 2006 (our work did not extend to the period from June [20], 2007 to June [22] [i.e., the closing date], 2007, inclusive).
4.	The references to June [13], 2007 in paragraph 6 of that letter are changed to June [19], 2007.
5.	This letter is solely for the information of the addressees and to assist the underwriters in conducting and documenting their investigation of the affairs of the Company in connection with the offering of the securities covered by the Registration Statement, and is not to be used, circulated, quoted or otherwise referred to within or without the underwriting group for any other purpose, including but not limited to the registration, purchase, or sale of securities, nor is it to be filed with or referred to in whole or in part in the Registration Statement or any other document, except that reference may be made to it in the underwriting agreement or in any list of closing documents pertaining to the offering of the securities covered by the Registration Statement.

Very truly yours,

[Name of Accountants]

EXHIBIT B

FORM OF OPINION OF SIDLEY AUSTIN LLP TO BE DELIVERED PURSUANT TO
SECTION 5(c) OF THE PURCHASE AGREEMENT

May __, 2007          

Banc of America Securities LLC Bear, Stearns & Co. Inc. as Representatives of the several Initial Purchasers
c/o	Banc of America Securities LLC 9 West 57th Street New York, New York  10019

Re: Spartan Stores, Inc.
$95,000,000 3.375% Convertible Senior Notes due 2027

Ladies and Gentlemen:

         We have acted as special counsel to Spartan Stores, Inc., a Michigan corporation (the "Company"), in connection with the issuance and sale of $95,000,000 aggregate principal amount of 3.375% Convertible Senior Notes due 2027 (the "Notes") to the Initial Purchasers named in Schedule A to the Purchase Agreement, dated May  23, 2007 (the "Purchase Agreement"), for whom Banc of America Securities LLC and Bear, Stearns & Co. Inc. are serving as Representatives. The Notes will be issued pursuant to an Indenture, dated as of May 30, 2007 (the "Indenture"), between the Company and The Bank of New York, as trustee (the "Trustee"). The Notes will be convertible, under certain circumstances, into cash and shares of the Company's common stock, no par value. This letter is being delivered to you pursuant to Section 5(c) of the Purchase

Exhibit B-1

Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Purchase Agreement.

         As counsel to the Initial Purchasers, we have examined such agreements, instruments, certificates, records and other documents and have made such examination of law as we have deemed necessary or appropriate for the purpose of this letter, including the following:

1.       Copy of the final Offering Memorandum, dated May 23, 2007 (the "Final Offering Memorandum"), relating to the Notes.

2.       Copy of the preliminary Offering Memorandum, dated May 22, 2007 (the "Preliminary Offering Memorandum"), relating to the Notes.

3.       Copy of the final term sheet, in the form attached as Schedule B to the Purchase Agreement (the "Final Term Sheet", and together with the Preliminary Offering Memorandum, the "Disclosure Package").

4.       Executed copy of the Purchase Agreement.

5.       Executed copy of the Indenture.

6.       Specimen of the Notes, certified as of the date hereof by the Secretary of the Company to be a complete and accurate specimen.

         In connection with this letter, we have assumed, without independent investigation or verification, the legal capacity of all natural persons signing any document, the genuineness of signatures of all persons signing any document, the authority of all persons signing any document on behalf of the parties thereto, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as certified, conformed or photostatic copies or by facsimile or other means of electronic transmission, the authenticity of the originals of such latter documents and the truth and accuracy of all matters of fact set forth in all documents. As to all facts relevant to the opinions set forth herein, we have relied,

Exhibit B-2

without independent investigation or verification, on the existence and consequences of those facts upon certificates and oral or written representations or other statements of governmental authorities, public officials, officers and other representatives of the Company and its counsel and accountants, and others.

         Based on the foregoing, but subject to the assumptions, limitations, qualifications and exceptions referred to herein, we are of the opinion that:

         (i)         The Indenture constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

         (ii)         The Notes, when duly executed, issued, authenticated and delivered pursuant to the provisions of the Purchase Agreement and the Indenture against payment of the requisite consideration therefore, will constitute valid and legally binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

Exhibit B-3

         (iii)         The Notes and the Indenture conform, in all material respects, to the descriptions thereof contained in the Disclosure Package and the Final Offering Memorandum.

         (iv)         The statements set forth under the caption "U.S. Federal Income Tax Consequences" in the Disclosure Package and the Final Offering Memorandum, to the extent they summarize laws or regulations, fairly summarize the matters therein described.

         The foregoing opinions are subject to the following assumptions, limitations, qualifications and exceptions:

         A.         This letter is limited to matters arising under the federal laws of the United States of America and the laws of the State of New York (excluding the municipal laws or the laws, rules and regulations of any local agencies or governmental authorities of or within the State of New York). Accordingly, we express no opinion as to the laws, rules or regulations of any other jurisdiction or as to any matter arising thereunder or relating thereto.

         B.         With respect to any instrument or agreement (each, an "Instrument") executed or authenticated or to be executed or authenticated by any party, we have assumed, to the extent relevant to any opinion set forth herein, that (i) such party (if not a natural person) has been duly organized and was at all relevant times and is validly existing and in good standing under the laws of its jurisdiction of organization, (ii) such party had at all relevant times and has the full right, power and authority to execute or authenticate, as the case may be, deliver and perform its obligations under each Instrument to which it is a party, and (iii) such party has duly authorized, executed or

Exhibit B-4

authenticated, as the case may be, and delivered each Instrument to which it is a party and, except with respect to the Company and the Indenture and the Notes as specified in clauses (i) and (ii) above, each such Instrument is a valid, legally binding and enforceable agreement or obligation of such party.

         The opinions set forth herein are given as of the date hereof, and we undertake no obligation to update or supplement this letter if any applicable law changes after the date hereof or if we become aware of any fact or other circumstance that changes or may change any opinion set forth herein after the date hereof or for any other reason.

         This letter is rendered solely to, and is for the benefit of, the Initial Purchasers in connection with the offering of the Notes as contemplated by the Purchase Agreement; accordingly, this letter may not be copied or relied upon by, or be quoted or delivered to, any other person or entity (including, without limitation, any person or entity who acquires Notes from an Initial Purchaser), or be relied upon or used by the Initial Purchasers for any other purpose, without our express prior written consent.

                                                                                            Very truly yours,

Exhibit B-5

EXHIBIT C

FORM OF OPINION OF WARNER NORCROSS & JUDD LLP
TO BE DELIVERED PURSUANT TO SECTION 5(d) OF
THE PURCHASE AGREEMENT

[WNJ Letterhead]
[Subject to completion of due diligence]

May __, 2007

Banc of America Securities LLC
9 West 57^th Street
New York, New York  10019

Bear, Stearns & Co., Inc.
c/o Banc of America Securities LLC
9 West 57^th Street
New York, New York  10019

Dear Ladies and Gentlemen:

                  We have acted as counsel to Spartan Stores, Inc., a Michigan corporation (the "Company"), in connection with the issuance and sale of $95,000,000 aggregate principal amount of 3.375% Convertible Senior Notes due 2027 (the "Notes") to the Initial Purchasers named in Schedule A to the Purchase Agreement, dated May 23, 2007 (the "Purchase Agreement"), for whom Bank of America Securities LLC and Bear, Stearns & Co., Inc. are serving as Representatives. Capitalized terms used but not defined in this letter shall have the meanings given to such terms in the Purchase Agreement. We are furnishing this letter to you under Section 5(d) of the Purchase Agreement.

                  We have examined the following documents:

a.	Purchase Agreement
b.	Indenture
c.	Registration Rights Agreement
d.	Notes
e.	Disclosure Package
f.	Final Offering Memorandum
g.	Officer's Certificate, dated May 30, 2007
h.	Secretary's Certificate, dated May 30, 2007
i.	Articles of incorporation and bylaws (or articles of organization and operating agreements) for the Company and each of the Significant Subsidiaries

Exhibit C-1

j.	Certificates of good standing for the Company and each of the Significant Subsidiaries
k.	Certificates or other evidence of foreign qualification or authorization for the Company and each Significant Subsidiary.
l.	Stock certificates for the Company and each Significant Subsidiary that is a corporation.

                  Items a. through d. above are sometimes referred to collectively as the "Transaction Documents."

                  As to questions of fact material to these opinions, we have, to the extent we deemed appropriate, relied on certificates of officers of the Company, certificates and other communications of public officials and on the factual representations of the Company contained in the Purchase Agreement. We have assumed the genuineness of all signatures on, and the authenticity of, all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as copies, the due authorization, execution and delivery by the parties thereto (other than the Company) of all documents examined by us, and the legal capacity of each individual who signed any of those documents.

                  As used in this letter, whenever a statement is qualified by "to our knowledge" or a similar phrase, it is intended to indicate that those attorneys in this firm responsible for preparing this opinion, after consultation with such other attorneys in the firm as they considered appropriate, do not have a current conscious awareness of the inaccuracy of such statement.

                  Subject to the assumptions, qualifications, and limitations set forth in this letter, we are of the opinion that:

1.	The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Michigan.
2.	The Company has corporate power and authority to own, lease, and operate its properties and to conduct its business as described in the Disclosure Package and the Final Offering Memorandum, to enter into and perform its obligations under the Transaction Documents and to issue the Notes.
3.	The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required by reason of the ownership or leasing of property or the conduct of business as described in the Disclosure Package and the Final Offering Memorandum, except for such jurisdictions where the failure to so qualify or to be in good standing would not, singly or in the aggregate, have a Material Adverse Effect.
4.	Each "significant subsidiary" of the Company named on Annex A to the Purchase Agreement has been duly incorporated or organized and is

Exhibit C-2

	validly existing as a corporation or limited liability company in good standing under the laws of the jurisdiction of its incorporation or organization, has the corporate or limited liability company power and authority to own, lease, and operate its properties and to conduct its business as described in the Disclosure Package and the Final Offering Memorandum and is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing in each jurisdiction in which such qualification is required by reason of the ownership or leasing of property or the conduct of business as described in the Disclosure Package and the Final Offering Memorandum, except for such jurisdictions where the failure to so qualify or to be in good standing would not, singly or in the aggregate, have a Material Adverse Effect.
5.	All of the issued and outstanding capital stock of each Significant Subsidiary that is a corporation has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or, to our knowledge, any pending or threatened claim, except under the Loan and Security Agreement (as defined below). All of the membership interest in each Significant Subsidiary that is a limited liability company has been duly authorized and validly issued and are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or, to our knowledge, any pending or threatened claim, except under the Loan and Security Agreement.
6.	The Company's authorized capitalization is as set forth in the Disclosure Package and the Final Offering Memorandum. The authorized, issued, and outstanding shares of capital stock of the Company (including the Common Stock) conform to the descriptions in the Disclosure Package and the Final Offering Memorandum.
7.	The Purchase Agreement has been duly authorized, executed, and delivered by the Company.
8.	The Indenture has been duly authorized, executed, and delivered by the Company.
9.	The Notes have been duly authorized, executed, and delivered by the Company.
10.	Up to 3,500,000 shares of Common Stock initially issuable upon conversion of the Notes have been duly authorized and reserved and, when issued upon conversion of the Notes in accordance with the terms of the Notes, will be validly issued, fully paid and non-assessable, and the issuance of such shares will not be subject to any preemptive or similar rights arising (i) by operation of the articles of incorporation or bylaws of

Exhibit C-3

	the Company or the law of the State of Michigan or (ii) to our knowledge, by agreement or otherwise.
11.	The Registration Rights Agreement has been duly authorized, executed, and delivered by the Company.
12.	Neither registration of the Notes under the Securities Act nor qualification of the Indenture under the Trust Indenture Act of 1939, as amended, is required for (i) the offer and sale of the Notes by the Company to the Initial Purchasers or (ii) the re-offer and resale of the Notes by the Initial Purchasers in the manner provided in the Purchase Agreement and disclosed in the Disclosure Package and the Final Offering Memorandum.
13.	No shareholder of the Company or any other person has any preemptive right, right of first refusal or other similar right to subscribe for or purchase securities of the Company arising (i) by operation of the articles of incorporation or bylaws of the Company or the laws of the State of Michigan or (ii) to our knowledge, by agreement or otherwise.
14.	Each document filed pursuant to the Exchange Act and incorporated by reference in the Disclosure Package or the Final Offering Memorandum complied when so filed as to form in all material respects with the Exchange Act and the rules and regulations of the Commission thereunder.
15.	We do not know of any legal or governmental actions, suits, or proceedings pending or threatened against the Company or any of its subsidiaries (i) that has as the subject thereof any officer or director of, or property owned or leased by, the Company or any of its subsidiaries or (ii) relating to environmental or discrimination matters where, in either case, we believe (A) there is a reasonable possibility that such action, suit, or proceeding might be determined adversely to the Company or such subsidiary and (B) any such action, suit or proceeding, if determined adversely, is reasonably likely to, singly or in the aggregate, have a Material Adverse Effect or adversely affect the consummation of the transactions contemplated by this Agreement, except as have been previously disclosed to you in our responses to auditors.
16.	No consent, approval, authorization, or other order of, or registration or filing with, any court or other governmental authority or agency is required for the Company's execution and delivery of the Purchase Agreement, the Indenture, and the Notes by the Company and the performance of its obligations thereunder (provided that no opinion is given regarding the requirements of the Securities Act, applicable state securities, or blue sky laws or the NASD).

Exhibit C-4

17.	The execution and delivery of the Purchase Agreement, the Indenture, and the Notes by the Company and the performance by the Company of its obligations thereunder (other than performance by the Company of its obligations under the indemnification section of the Purchase Agreement, as to which no opinion is rendered) (i) will not result in any violation of the provisions of the articles of incorporation, articles of organization, bylaws, or operating agreement of the Company or any Significant Subsidiary; (ii) to our knowledge, will not constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to any material Existing Instrument (provided that no opinion is given regarding the Loan and Security Agreement); and (iii) will not result in any violation of any statute, law, rule, or regulation, or any judgment, order or decree known to us and applicable to the Company or any of its Significant Subsidiaries of any court, regulatory body, administrative agency, governmental body, arbitrator, or other authority having jurisdiction over the Company or any of its Significant Subsidiaries or any of its or their properties.
18.	The Company is not, and after receipt of payment for the Notes and the application of the proceeds as disclosed under the caption "Use of Proceeds" in the Disclosure Package and the Final Offering Memorandum will not be, an "Investment Company" as defined in the Investment Company Act.
19.	The statements set forth under the caption "Description of Capital Stock" in the Disclosure Package and the Final Offering Memorandum, to the extent that they summarize law, regulation or the articles of incorporation or bylaws of the Company, fairly summarize the matters and documents there described.

         In addition, we have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and representatives of the Initial Purchasers at which the contents of the Disclosure Package, including the Preliminary Offering Memorandum, and the Final Offering Memorandum, and any supplements or amendments thereto, and related matters were discussed and, although we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Disclosure Package and the Final Offering Memorandum, and any supplements or amendments thereto (other than as specified above), on the basis of the foregoing, nothing has come to our attention that has caused us believe that (i) the Disclosure Package, as of the Applicable Time, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the sta tements therein, in the light of circumstances under which they were made, not misleading or (ii) either the Final Offering Memorandum or any amendments thereto (on or before the date of this letter) contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under

Exhibit C-5

which they were made, not misleading (provided however, we express no opinion as to the financial statements or schedules or other financial data derived therefrom, included in the Disclosure Package, the Final Offering Memorandum or any amendments or supplements thereto).

                  Our opinions are subject to the following further assumptions, exceptions, qualifications, conditions and limitations:

A.	We do not express an opinion as to laws, statutes, rules or regulations other than the laws, statutes, rules and regulations of the State of Michigan (excluding municipal or other local ordinances, codes and regulations) and the federal laws of the United States of America.
B.	We express no opinion with respect to any financial or accounting matters.
C.	We express no opinion as to the enforceability of the Transaction Documents, which are governed by New York law.
D.	Our opinions in paragraphs 5 and 6 concerning the issued and outstanding shares of the Company and each Significant Subsidiary, and the existence of any security interest, mortgage, pledge, lien, encumbrance, pending claims, or threatened claims are based solely on our review of copies of the stock certificates and other stock records of the Company and the Significant Subsidiaries as provided to us. Our opinion in paragraph 5 concerning the membership interest in each Significant Subsidiary that is a limited liability company and the existence of any security interest, mortgage, pledge, lien, encumbrance, pending claim, or threatened claim is based solely on our review of copies of the Articles of Organization and Operating Agreement for each such Significant Subsidiary.

                  As used in this letter, the term "Loan and Security Agreement" shall mean that certain Loan and Security Agreement dated as of December 23, 2003, among the Company and certain subsidiaries of the Company as Borrowers, Congress Financial Corp. (now Wachovia Capital Finance Corporation (central)) as Agent and Lender, the other Lenders from time to time thereunder, and certain subsidiaries of the Company as Guarantors, as amended.

                  The opinions expressed in this letter are a matter of professional judgment with respect to the laws, regulations, obligations, and matters specifically identified in this letter and are not a guaranty of results. The opinions expressed in this letter are limited to the matters specifically referred to in this letter and no opinion may be implied or inferred beyond those matters. We do not undertake to advise you of any matter within the scope of this letter that comes to our attention after the date of this letter and we disclaim any responsibility to advise you of any future changes in law or fact that may affect the opinions set forth in this letter.

Exhibit C-6

                  The opinions expressed in this letter are solely for your benefit and may not be relied upon, nor may copies be delivered to any other parties or persons, without our prior written consent.

WARNER NORCROSS & JUDD LLP
By
	[                  ], a partner

Exhibit C-7

EXHIBIT D

FORM OF OPINION OF SEYFARTH SHAW LLP TO BE DELIVERED
PURSUANT TO SECTION 5(e) OF THE PURCHASE AGREEMENT

May __, 2007

Banc of America Securities LLC
Bear, Stearns & Co., Inc.
  As Representatives of the several Initial Purchasers
c/o Banc of America Securities LLC
9 West 57^th Street
New York, New York  10019

         Re:         Spartan Stores, Inc.

Ladies and Gentlemen:

         This opinion is furnished to you pursuant to Section 5(e) of the Purchase Agreement, dated as of May 23, 2007, between Banc of America Securities LLC and Bear, Stearns & Co., Inc., as Representatives of the several Initial Purchasers (the "Representatives"), and Spartan Stores, Inc., a Michigan corporation (the "Company"), relating to the purchase and sale of the Company's 3.375% Convertible Senior Notes due May 15, 2027 (the "Purchase Agreement"). We do not represent the Company in connection with all of its legal matters, but have been retained to represent the Company in connection with certain matters relating to the Loan Agreement (as defined below) and to render this opinion in connection with the Purchase Agreement. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

         In rendering the opinions set forth herein, we have examined originals, or copies certified or otherwise identified to our satisfaction as being true copies, of the following documents, each of which is dated, unless otherwise indicated, the date (or as of the date) hereof:

          i.         an executed copy of the Purchase Agreement (including all schedules and exhibits thereto);

          ii.         a specimen copy of the Notes, certified as of the date hereof by the Secretary of the Company to be a complete and accurate specimen;

          iii.         an executed copy of the Indenture;

Exhibit D-1

Bank of America Securities LLC
Bear, Stearns & Co., Inc.
As Representatives of the several Initial Purchasers
May __, 2007
Page 2

          iv.         the "Description of Other Indebtedness," as contained in the Preliminary Offering Memorandum and the Final Offering Memorandum; and

          v.         the Loan and Security Agreement, dated as of December 23, 2003, among the Company and certain subsidiaries of the Company as Borrowers, Wachovia Capital Finance Corporation (Central), formerly known as Congress Financial Corporation (Central), as Agent and Lender, the other Lenders from time to time thereunder, and certain subsidiaries of the Company as Guarantors, as amended and supplemented by Amendment No. 1 to Loan and Security Agreement, dated as of July 29, 2004, Amendment No. 2 to Loan and Security Agreement, dated as of December 22, 2004, Amendment No. 3 to Loan and Security Agreement, dated as of December 9, 2005, Amendment No. 4 to Loan and Security Agreement, dated as of March 17, 2006, Amendment No. 5 to Loan and Security Agreement, dated as of April 5, 2007, and Amendment No. 6 to Loan and Security Agreement, dated as of May 22, 2007 (as so amended and supplemented, the "Loan Agreement").

The Purchase Agreement, the Notes and the Indenture are referred to herein, collectively, as the "Transaction Documents." In connection with this opinion, we have also made such other investigations of questions of law and fact as we have deemed necessary or appropriate for the purposes of expressing the opinions set forth herein.

         In rendering the opinions expressed below, we have assumed and relied upon the following, with your permission and without independent investigation or verification:

          a.         the signatures of persons signing all documents in connection with which this opinion is rendered are genuine;

          b.         all documents submitted to us as originals or duplicate originals are authentic and all documents submitted to us as copies, whether certified or not, conform to authentic original documents;

          c.         all certificates of public officials, all representations and warranties of the Company and all other certificates, statements, representations, documents, records, search results, financial statements and papers with respect to factual matters are accurate, true and correct; and

          d.         the Transaction Documents constitute all of the material documentation with respect to the transactions contemplated thereby and no other documents, undertakings or agreements exist which materially amend, modify or revise the terms, provisions and conditions relating to the transaction referred to in this letter.

          We have further assumed for purposes of this opinion that (i) the Excess Availability of the Borrowers shall at all times be equal to or greater than $10,000,000, (ii) the Fixed Charge Coverage Ratio of the Borrowers (on a combined basis) will be not less than specified for the applicable period under Section 9.26 of the Loan Agreement,

Exhibit D-2

Bank of America Securities LLC
Bear, Stearns & Co., Inc.
As Representatives of the several Initial Purchasers
May __, 2007
Page 3

and (iii) at any time the Parent converts any of the Convertible Notes to cash, the aggregate amount of Excess Availability of Borrowers for each of the immediately preceding ten (10) consecutive days and as of the date of payment, and after giving effect thereto, shall be not less than $25,000,000.

          Based upon the foregoing, and subject to the assumptions and qualifications set forth above and hereinafter set forth, we are of the opinion that:

          1.         The statements set forth under the caption "Description of Other Indebtedness - Senior Credit Facility" in the Preliminary Offering Memorandum and the Final Offering Memorandum, to the extent that they summarize the terms and provisions of the Loan Agreement, fairly summarize in all material respects the matters therein described, except that we express no opinion regarding the amounts of any borrowings outstanding or available or to be outstanding or available under the Loan Agreement.

          2.         The execution and delivery of the Transaction Documents by the Company and the performance by the Company of its obligations thereunder (other than performance by the Company of its obligations under Section 8 or Section 9 of the Purchase Agreement, as to which we express no opinion) will not constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company under, the Loan Agreement.

          We are members of the bar of the State of Illinois and we express no opinion as to any laws, or the effect or applicability of any laws, other than (i) the federal laws of the United States, and (ii) the laws of the State of Illinois.

          The foregoing opinion is issued solely for the benefit of the Representatives in connection with the transaction evidenced by the Purchase Agreement and may not be used, circulated, quoted or assigned to or relied upon by any other person or party for any purpose whatsoever without our prior written consent.

          Our opinions are limited to the specific issues addressed and are limited in all respects to laws and facts existing on the date hereof, and no opinion may be inferred or implied beyond that expressly stated herein. By rendering our opinions, we do not undertake to advise the Representatives of any changes in such laws or facts which may occur after the date hereof.

                                                                                   Very truly yours,

Exhibit D-3

EXHIBIT E

FORM OF REGISTRATION RIGHTS AGREEMENT

$110,000,000 AGGREGATE PRINCIPAL AMOUNT

SPARTAN STORES, INC.

3.375% CONVERTIBLE SENIOR NOTES

DUE 2027

Resale Registration Rights Agreement

Dated May 30, 2007

Exhibit E-1

         RESALE REGISTRATION RIGHTS AGREEMENT, dated as of May 30, 2007, among Spartan Stores, Inc., a Michigan corporation (together with any successor entity, herein referred to as the "Company") and Banc of America Securities LLC and Bear, Stearns & Co. Inc. as representatives (the "Representatives") of the several initial purchasers (the "Initial Purchasers") under the Purchase Agreement (as defined below).

         Pursuant to the Purchase Agreement, dated as of May 23, 2007, between the Company and the Representatives (the "Purchase Agreement"), relating to the initial placement (the "Initial Placement") of the Notes (as defined below), the Initial Purchasers have agreed to purchase from the Company $110,000,000 in aggregate principal amount of 3.375% Convertible Senior Notes due 2027 (the "Notes"). The Notes will be convertible, subject to the terms thereof, into fully paid, nonassessable shares of common stock, no par value, of the Company (the "Common Stock"). To induce the Initial Purchasers to purchase the Notes, the Company has agreed to provide the registration rights set forth in this Agreement pursuant to Section 5(i) of the Purchase Agreement.

         The parties hereby agree as follows:

         1.         Definitions. Capitalized terms used in this Agreement without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized terms shall have the following meanings:

         "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

         "Agreement": This Resale Registration Rights Agreement.

         "Amendment Effectiveness Deadline Date": has the meaning set forth in Section 2(f) hereof.

         "Blue Sky Application": As defined in Section 6(a)(i) hereof.

         "Business Day": The definition of "Business Day" in the Indenture.

         "Closing Date": The date of the first issuance of the Notes.

         "Commission": Securities and Exchange Commission.

         "Common Stock": As defined in the preamble hereto.

Exhibit E-2

         "Company": As defined in the preamble hereto.

         "Effectiveness Date": As defined in Section 2(a)(ii) hereof.

         "Effectiveness Period": As defined in Section 2(a)(iii) hereof.

         "Effectiveness Target Date": As defined in Section 2(a)(ii) hereof.

         "Exchange Act": Securities Exchange Act of 1934, as amended.

         "Free Writing Prospectus": A free writing prospectus, as defined in Rule 405 under the Securities Act.

         "Holder": A Person who owns, beneficially or otherwise, Transfer Restricted Securities.

         "Indemnified Holder": As defined in Section 6(a) hereof.

         "Indenture": The Indenture, dated as of May 30, 2007 between the Company and The Bank of New York Trust Company, N.A., as trustee (the "Trustee"), pursuant to which the Securities are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof.

         "Initial Placement": As defined in the preamble hereto.

         "Initial Purchasers": As defined in the preamble hereto.

         "Issuer Free Writing Prospectus": An issuer free writing prospectus, as defined in Rule 433 under the Securities Act.

         "Liquidated Damages": As defined in Section 3(a) hereof.

         "Liquidated Damages Payment Date": Each May 15 and November 15.

         "Losses": As defined in Section 6(a) hereof.

         "Majority of Holders": Holders holding over 50% of the aggregate principal amount of Notes outstanding; provided that, for the purpose of this Agreement, a holder of shares of Common Stock which constitute Transfer Restricted Securities shall be deemed to hold an aggregate principal amount of the Notes (in addition to the principal amount of the Notes held by such holder) equal to the quotient of (x) the number of such shares of Common Stock held by such holder and (y) the conversion rate in effect at the time of their issuance upon conversion of the Notes as determined in accordance with the Indenture.

Exhibit E-3

         "Managing Underwriter": The investment banker or investment bankers and manager or managers that administer an underwritten offering, if any, conducted pursuant to Section 8 hereof.

         "NASD": National Association of Securities Dealers, Inc.

         "Notes": As defined in the preamble hereto.

         "Notice and Questionnaire" means a written notice executed by the respective Holder and delivered to the Company containing substantially the information called for by the Selling Securityholder Notice and Questionnaire attached as Appendix A to the Offering Memorandum of the Company relating to the Notes.

         "Notice Holder": On any date, any Holder of Transfer Restricted Securities that has delivered a Notice and Questionnaire to the Company on or prior to such date.

         "Permitted Free Writing Prospectus": As defined in Section 9(a) hereof.

         "Person": An individual, partnership, corporation, company, unincorporated organization, trust, joint venture or a government or agency or political subdivision thereof.

         "Purchase Agreement": As defined in the preamble hereto.

         "Prospectus": The prospectus included in a Shelf Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus.

         "Record Date": The definition of "Record Date" in the Indenture.

         "Record Holder": With respect to any Liquidated Damages Payment Date, each Person who is a registered holder of the Notes on Record Date preceding the relevant Liquidated Damages Payment Date.

         "Registration Default": As defined in Section 3(a) hereof.

         "Representatives": As defined in the preamble hereto.

         "Securities Act": Securities Act of 1933, as amended.

         "Shelf Filing Deadline": As defined in Section 2(a)(i) hereof.

         "Shelf Registration Statement": As defined in Section 2(a)(i) hereof.

Exhibit E-4

         "Suspension Notice": As defined in Section 4(c) hereof.

         "Suspension Period": As defined in Section 4(b)(ii) hereof.

         "TIA": Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder, in each case, as in effect on the date the Indenture is qualified under the TIA.

         "Transfer Restricted Securities": Each Note and each share of Common Stock issued upon conversion of Notes until the earliest of:

          (i)         the date on which such Note or such share of Common Stock issued upon conversion has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement;

          (ii)         the date on which such Note or such share of Common Stock issued upon conversion is transferred in compliance with Rule 144 (or any other similar provision then in force) under the Securities Act or eligible for transfer pursuant to paragraph (k) of Rule 144 under the Securities Act (or any other similar provision then in force);

          (iii)         the date on which such Note or such share of Common Stock issued upon conversion ceases to be outstanding (whether as a result of redemption, repurchase and cancellation, conversion or otherwise); or

          (iv)         the date on which such Note or such share of Common Stock has otherwise been transferred and a new Note or share of Common Stock not subject to transfer restrictions under the Securities Act has been delivered by or on behalf of the Company in accordance with Section 2.06(f) of the Indenture.

         "underwriter": Any underwriter of Transfer Restricted Securities in connection with an offering thereof under the Shelf Registration Statement.

         "Underwritten Registration": A registration in which Transfer Restricted Securities of the Company are sold to an underwriter for reoffering to the public.

         Unless the context otherwise requires, the singular includes the plural, and words in the plural include the singular.

Exhibit E-5

         2.         Shelf Registration.

         (a)         The Company shall:

         (i)         file, in no event more than 90 days after the Closing Date (the "Shelf Filing Deadline"), a registration statement pursuant to Rule 415 under the Securities Act or any similar rule that may be adopted by the Commission (the "Shelf Registration Statement"), which Shelf Registration Statement shall be an automatic shelf registration statement if the Company is eligible to use an automatic shelf registration on the Shelf Filing Deadline and shall provide for the registration and resales, on a continuous or delayed basis, of all Transfer Restricted Securities subject to the terms and conditions hereof;

         (ii)         if the Company is not eligible to use an automatic shelf registration statement on the Shelf Filing Deadline, use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective under the Securities Act not later than 180 days after the Closing Date (the "Effectiveness Target Date", and the date of such effectiveness or availability, the "Effectiveness Date"); and

         (iii)         use its commercially reasonable efforts to keep the Shelf Registration Statement effective, supplemented and amended as required by the Securities Act and by the provisions of Section 4(b) hereof to the extent necessary to (A) make it available for resales by the Holders of Transfer Restricted Securities entitled, subject to the terms and conditions hereof, to the benefit of this Agreement and (B) conform with the requirements of this Agreement and the Securities Act and the rules and regulations of the Commission promulgated thereunder as announced from time to time, until the earliest of:

(1)	the date when Holders of Notes and Holders of Common Stock are able to sell such Notes and such Common Stock immediately without restriction pursuant to Rule 144(k) under the Securities Act; or
(2)	the date when all of the Notes and the Common Stock have been sold either pursuant to the Shelf Registration Statement or pursuant to Rule 144 under the Securities Act or any similar provision then in force or the Notes and the Common Stock cease to be outstanding, (the "Effectiveness Period").

Exhibit E-6

         The Company shall be deemed not to have used its commercially reasonable efforts to keep the Shelf Registration Statement effective during the Effectiveness Period if it voluntarily takes any action that would result in Holders of Transfer Restricted Securities not being able to offer and sell such securities at any time during the Effectiveness Period, unless such action is (x) reasonably believed by the Company to be required by applicable law or otherwise undertaken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, or (y) permitted by Section 4(b)(ii) hereof.

         (b)         Not less than 30 days prior to the Effectiveness Target Date, the Company shall mail the Notice and Questionnaire to the Holders. Each Holder that becomes a Notice Holder (and provides such additional information as the Company reasonably may request) no later than 20 days following such Holder's receipt of notice from the Company of the filing of the Shelf Registration Statement shall be named as a selling securityholder in the initial Registration Statement made available to Holders under the Shelf Registration Statement.

         (c)         If the Shelf Registration Statement ceases to be effective for any reason at any time during the Effectiveness Period (other than because all Transfer Restricted Securities registered thereunder shall have been resold pursuant thereto or shall have otherwise ceased to be Transfer Restricted Securities), the Company shall use its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof or file a subsequent Shelf Registration Statement covering all of the securities that as of the date of such filing are Transfer Restricted Securities. If such a subsequent Shelf Registration Statement is filed (and is not already effective), the Company shall use its commercially reasonable efforts to cause the subsequent Shelf Registration Statement to become effective as promptly as is practicable after such filing and to keep such subsequent Shelf Registration Statement effective until the end o f the Effectiveness Period.

         (d)         The Company shall supplement and amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act or as reasonably requested by the Initial Purchasers or by the Trustee on behalf of the Holders of the Transfer Restricted Securities covered by such Shelf Registration Statement.

         (e)         The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, and any Issuer Free Writing Prospectus, as of

Exhibit E-7

the date thereof, (i) to comply in all material respects with the applicable requirements of the Securities Act, and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus and any Issuer Free Writing Prospectus, in light of the circumstances under which they were made) not misleading.

         (f)         Each Holder agrees that if such Holder wishes to sell Transfer Restricted Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with the terms and conditions of this Agreement. Each Holder wishing to sell Transfer Restricted Securities pursuant to a Shelf Registration Statement and related Prospectus from and after the Effectiveness Date agrees to deliver a Notice and Questionnaire to the Company at least 10 Business Days prior to any intended distribution of Transfer Restricted Securities under the Shelf Registration Statement. From and after the Effectiveness Date, the Company shall, as promptly as practicable after the date a Notice and Questionnaire is delivered to it, and in any event upon the later of (x) 10 Business Days after such date (but no earlier than 10 Business Days after effectiveness) or (y) 10 Business Days after the expiration of any Suspension Period in effect when the Notice and Questionnaire is delivered or put into effect within 10 Business Days of such delivery date:

         (i)         if required by applicable law, file with the SEC a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Notice and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Transfer Restricted Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use its commercially reasonable efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as is practicable, but in any event by the date (the "Amendment Effectiveness Dead line Date") that is 45 days after the date such post-effective amendment is required by this clause to be filed;

         (ii)         provide such Holder copies of the documents filed pursuant to Section 2(f)(i); and

Exhibit E-8

         (iii)         notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2(f)(i);

provided that if such Notice and Questionnaire is delivered during a Suspension Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Suspension Period in accordance with Section 4(b). Notwithstanding anything contained herein to the contrary, (i) the Company shall be under no obligation to name any Holder that is not a Notice Holder as a selling securityholder in any Registration Statement or related Prospectus, (ii) the Amendment Effectiveness Deadline Date shall be extended by up to 10 Business Days from the Expiration of a Suspension Period (and the Company shall incur no obligation to pay Liquidated Damages during such extension) if such Suspension Period shall be in effect on the Amendment Effectiveness Deadline Date, (iii) if a post-effective amendment to the Shelf Registration Statement is required, shall be under no obligation to file more than one such am endment for all Holders during one fiscal quarter unless the principal amount of the Notes to be included in such amendment is more than $5 million and (iv) shall be under no obligation to file more than three supplements to the related prospectus during any fiscal quarter.

         3.         Liquidated Damages.

         (a)         If:

         (i)         the Shelf Registration Statement is not filed with the Commission prior to or on the Shelf Filing Deadline;

         (ii)         if the Shelf Registration Statement is not an automatic shelf registration statement, the Shelf Registration Statement has not become effective, prior to or on the Effectiveness Target Date;

         (iii)         the Company has failed to perform its obligations set forth in Section 2(f) within the time periods required therein;

         (iv)         any post-effective amendment to a Shelf Registration Statement filed pursuant to Section 2(f)(i) has not become effective under the Securities Act on or prior to the Amendment Effectiveness Deadline Date;

         (v)         except as provided in Section 4(b)(ii) hereof, the Shelf Registration Statement is filed and has become effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose and the Company does not cure the Registration Statement within 10 Business Days by a post-effective amendment, prospectus

Exhibit E-9

supplement or report filed pursuant to the Exchange Act (other than in the case of a Suspension Period described in paragraph 3(a)(iv)); or

         (vi)         the Company does not terminate a Suspension Period by the 30^th day in any 90-day period or a Suspension Period when aggregated with other suspension periods during any 360-day period, continues for more than 90 days, as the case may be;

(each such event referred to in foregoing clauses (i) through (vi), a "Registration Default"), the Company hereby agrees to pay interest ("Liquidated Damages") with respect to the Transfer Restricted Securities from and including the day following the Registration Default to but excluding the earlier of (1) the day on which the Registration Default has been cured and (2) the date the Shelf Registration Statement is no longer required to be kept effective, accruing at a rate:

         (A)         in respect of the Notes, to each holder of Notes, (x) with respect to the first 90-day period during which a Registration Default shall have occurred and be continuing, equal to 0.25% per annum of the aggregate principal amount of the Notes, and (y) with respect to the period commencing on the 91st day following the day the Registration Default shall have occurred and be continuing, equal to 0.50% per annum of the aggregate principal amount of the Notes; provided that in no event shall Liquidated Damages accrue at a rate per year exceeding 0.50% of the aggregate principal amount of the Notes;

         (B)         in respect of the Notes that are Transfer Restricted Securities submitted for conversion into Common Stock during the existence of a Registration Default with respect to the Common Stock, the holder will not be entitled to receive any Liquidated Damages with respect to such Common Stock but will receive from the Company on the settlement date with respect to such conversion, accrued and unpaid Liquidated Damages calculated in accordance with paragraph (A) to the Conversion Date (as defined in the Indenture);

         (C)         in respect of Common Stock issued upon conversion of Notes, each holder of such Common Stock will not be entitled to any Liquidated Damages if the Registration Default with respect to such Common Stock occurs after the holder has converted the Notes into Common Stock; and

Exhibit E-10

         (D)         in no event will Liquidated Damages be payable in connection with a Registration Default relating to a failure to register the Common Stock. If the Company fails to register both the Notes and the Common Stock deliverable upon conversion of the Notes, the Liquidated Damages will be payable in connection with the Registration Default relating to the failure to register the Notes.

         (b)         All accrued Liquidated Damages shall be paid in arrears to Record Holders by the Company on each Liquidated Damages Payment Date. Upon the cure of all Registration Defaults relating to any particular Transfer Restricted Security, the accrual of applicable Liquidated Damages will cease.

         All obligations of the Company set forth in this Section 3 that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full.

         The Liquidated Damages set forth above shall be the exclusive monetary remedy available to the Holders of Transfer Restricted Securities for each Registration Default.

         4.         Registration Procedures.

         (a)         In connection with the Shelf Registration Statement, the Company shall comply with all the provisions of Section 4(b) hereof and shall use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities, and pursuant thereto, shall as promptly as is reasonably practicable prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Securities Act.

         (b)         In connection with the Shelf Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities, the Company shall:

         (i)         Subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iv)(E), use its commercially reasonable efforts to keep the Shelf Registration Statement continuously effective during the Effectiveness Period; upon the occurrence of any event that would cause the Shelf Registration Statement or the Prospectus contained therein (A) to

Exhibit E-11

contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the Effectiveness Period, the Company shall file as promptly as is reasonably practicable a post-effective amendment to the Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause any such amendment to become effective and the Shelf Registration Statement and the related Prospectus to become usable for their intended purposes as soon as is reasonably practicable thereafter.

         (ii)         Notwithstanding Section 4(b)(i) hereof, the Company may suspend the effectiveness of the Shelf Registration Statement (each such period, a "Suspension Period"):

                    (x) if an event occurs and is continuing as a result of which the Shelf Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein would, in the Company's judgment, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and

                    (y) if the Company determines in good faith that the disclosure of a material event at such time would be seriously detrimental to the Company and its subsidiaries.

Upon the occurrence of any event described in clauses (x) and (y) of this Section 4(b)(ii), the Company shall give notice to the Holders that the availability of the Shelf Registration is suspended and, upon actual receipt of any such notice, each Holder agrees not to sell any Transfer Restricted Securities pursuant to the Shelf Registration until such Holder's receipt of copies of the supplemented or amended Prospectus provided for in Section 4(b) hereof. The Suspension Period shall not exceed 30 days in any 90-day period, provided further that Suspension Periods shall not exceed an aggregate of 90 days in any 360-day period. The Company shall not be required to specify in the written notice to the Holders the nature of the event giving rise to the Suspension Period.

         (iii)         Prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary to keep the Shelf Registration Statement effective during the Effectiveness Period; cause the Prospectus to be supplemented by any required

Exhibit E-12

prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rule 424 under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all Transfer Restricted Securities covered by the Shelf Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth or to be set forth in the Shelf Registration Statement or supplement to the Prospectus.

         (iv)         Advise the selling Holders and any Initial Purchaser that has provided in writing to the Company a telephone or facsimile number and address for notices, promptly and, if requested by such selling Holders, to confirm such advice in writing (which notice pursuant to clauses (C) through (F) below shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension):

         (A)         when the Shelf Registration Statement has become effective,

         (B)         when the Prospectus, any prospectus supplement, any post-effective amendment or any Issuer Free Writing Prospectus has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment thereto, when the same has become effective,

         (C)         of any request by the Commission for amendments or supplements to the Shelf Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for additional information relating thereto,

         (D)         of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement under the Securities Act or of any notice that would prevent its use, or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes,

         (E)         of the existence of any fact or the happening of any event, during the Effectiveness Period, that makes any statement of a material fact made in the Shelf Registration

Exhibit E-13

Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Shelf Registration Statement or the Prospectus in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading, or

         (F)         when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement.

         (v)         If at any time the Commission shall issue any stop order suspending the effectiveness of the Shelf Registration Statement or any notice that would prevent its use, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time, including, if necessary, by filing an amendment to the Shelf Registration Statement or a new Shelf Registration Statement and using its commercially reasonable efforts to have such amendment or new Shelf Registration Statement declared effective, and will provide to each Holder who is named in the Shelf Registration Statement prompt notice of the withdrawal of any such order or of the filing or effectiveness of any s uch amendment or new registration statement.

         (vi)         Make available at reasonable times for inspection by one or more representatives of the selling Holders, designated in writing by a Majority of Holders whose Transfer Restricted Securities are included in the Shelf Registration Statement, and any attorney or accountant retained by such selling Holders and any underwriter participating in any disposition pursuant to the Shelf Registration Statement, all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act, and cause the Company's officers, directors, managers and employees to supply all information reasonably requested by any such representative or representatives of the selling Holders, attorney or accountant in connection therewith; provided that such Holders shall have first entered into a confidentiality agr eement if and as reasonably required by the Company.

Exhibit E-14

         (vii)         If requested by any selling Holders or the Representatives, promptly incorporate in the Shelf Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities.

         (viii)         Deliver to each selling Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto, and any Issuer Free Writing Prospectus, as such Persons reasonably may request; subject to Section 4(b)(ii) and subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iv)(C) through (F), the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto, and any Issuer Free Writing Prospectus, by each of the selling Holders in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto.

         (ix)         Before any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions in the United States as the selling Holders may reasonably request and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that the Company shall not be required (A) to register or qualify as a foreign corporation or a dealer of securities where it is not now so qualified or to take any action that would subject it to the service of process in any jurisdiction where it is not now so subject, other than service of process for suits arising out of the Initial Placement or any offering pursuant to the Sh elf Registration Statement; (B) to subject itself to general or unlimited service of process or to taxation in any such jurisdiction if they are not now so subject; or (C) register or qualify in any jurisdiction which the Company reasonably believes, based on advice of counsel, that registration or qualification is not required.

         (x)         Unless any Transfer Restricted Securities shall be in book-entry form only, cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates

Exhibit E-15

representing Transfer Restricted Securities to be sold and not bearing any restrictive legends (unless required by applicable securities laws); and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders may reasonably request at least two Business Days before any sale of Transfer Restricted Securities.

         (xi)         Use its commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Shelf Registration Statement to be registered with or approved by such other U.S. governmental agencies or authorities as may be reasonably necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities.

         (xii)         Subject to Section 4(b)(ii) hereof, if any fact or event contemplated by Section 4(b)(iv)(C) through (E) hereof shall exist or have occurred, use its commercially reasonable efforts to prepare a supplement or post-effective amendment to the Shelf Registration Statement, related Prospectus (including by means of an Issuer Free Writing Prospectus), relevant Issuer Free Writing Prospectus or any document incorporated therein by reference or to file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, none of the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus will contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus and any such Issuer Free Writing Prospectus, in the light of the circumstances in which they are made) not misleading.

         (xiii)         Provide CUSIP numbers for all Transfer Restricted Securities not later than the effective date of the Shelf Registration Statement and provide the Trustee under the Indenture with certificates for the Notes that are in a form eligible for deposit with The Depository Trust Company.

         (xiv)         Reasonably cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter that is required to be undertaken in accordance with the rules and regulations of the NASD.

         (xv)         Otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the rules and regulations of the Exchange Act.

Exhibit E-16

         (xvi)         Make generally available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act as soon as practicable after the effective date of the Shelf Registration Statement and in any event no later than 40 days after the end of the 12-month period (or 75 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration Statement.

         (xvii)         Use its commercially reasonable efforts to cause the Indenture to be qualified under the TIA not later than the effective date of the Shelf Registration Statement required by this Agreement (or the time when the registration as to the Notes under the Shelf Registration Statement is required to become effective hereunder), and, in connection therewith, cooperate with the Trustee and the holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its commercially reasonable efforts to cause the Trustee thereunder to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner. In the event that any such amendment or modification referred to in this Section 4(b)(xvii) involves the a ppointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

         (xviii)         Use its commercially reasonable efforts to cause all Common Stock covered by the Shelf Registration Statement to be listed or quoted, as the case may be, on each securities exchange or automated quotation system on which Common Stock is then listed or quoted.

         (xix)         Provide to each Holder upon written request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act after the effective date of the Shelf Registration Statement, unless such document is available through the Commission's EDGAR system.

         (xx)         Use its commercially reasonable efforts, if the Notes have been rated prior to the initial sale of such Notes, to confirm such ratings will apply to the Notes covered by the Shelf Registration Statement.

Exhibit E-17

         (xxi)         In connection with any underwritten offering conducted pursuant to Section 8 hereof, make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement.

         (xxii)         In connection with any underwritten offering conducted pursuant to Section 8 hereof, obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters.

         (xxiii)         In connection with any underwritten offering conducted pursuant to Section 8, hereof, obtain "comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each selling Holder of Securities registered thereunder and the underwriters, in customary form and covering matters of the type customarily covered in "comfort" letters in connection with primary underwritten offerings.

         (xxiv)         In connection with any underwritten offering conducted pursuant to Section 8 hereof, deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, including those to evidence compliance with Section 4(b)(iii) hereof and with any customary conditions contained in the Purchase Agreement or other agreement entered into by the Company.

         (xxv)         In connection with any underwritten offering conducted pursuant to Section 8 hereof, the Company shall, if requested, promptly include or incorporate in a prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as the Managing Underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required

Exhibit E-18

filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment.

         (xxvi)         Use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Transfer Restricted Securities covered by the Shelf Registration Statement.

         (xxvii)         Enter into customary agreements (including, if requested, an underwriting agreement in customary form) and take all other reasonably appropriate actions in order to expedite or facilitate the registration or the disposition of the Transfer Restricted Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures reasonably acceptable to the Company (the Company acknowledges that those provisions and procedures set forth in Section 6 hereof are acceptable).

         The actions set forth in clauses (xxii), (xxiii), (xxiv) and (xxv) of this Section 4(b) shall be performed at (A) the effectiveness of the Shelf Registration Statement and each post-effective amendment thereto; and (b) each closing under any underwriting or similar agreement as and to the extent required thereunder.

         (c)         Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice (a "Suspension Notice") from the Company of the existence of any fact of the kind described in Section 4(b)(iv)(C) through (F) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the Shelf Registration Statement and use of the Prospectus and any related Free Writing Prospectuses until:

         (i)         such Holder has received copies of the supplemented or amended Prospectus or applicable Issuer Free Writing Prospectus contemplated by Section 4(b)(xi) hereof; or

         (ii)         such Holder is advised in writing by the Company that the use of the Prospectus and any applicable Issuer Free Writing Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.

If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted

Exhibit E-19

Securities and any Issuer Free Writing Prospectus that was current at the time of receipt of such Suspension Notice.

         (d)         Each Holder agrees by acquisition of a Transfer Restricted Security, that no Holder shall be entitled to sell any of such Transfer Restricted Securities pursuant to a Registration Statement, or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(b) or Section 2(f) hereof (including the information required to be included in such Notice and Questionnaire) and the information set forth in the next sentence. The Company may require each Notice Holder of Notes to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Notes as the Company may from time to time reasonably require for inclusion in such Registration Statement. Each Notice Holder agrees promptly to furnish to the Company all information required to be disclosed in order to make the informa tion previously furnished to the Company by such Notice Holder not misleading and any other information regarding such Notice Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably request in writing. The Company may exclude from such Shelf Registration Statement the Notes of any Holder that fails to furnish such information within a reasonable time after receiving such request. Each Holder also agrees by acquisition of a Transfer Restricted Security to deliver a Prospectus to purchasers.

         5.         Registration Expenses.

         All reasonable expenses incident to the Company's performance of or compliance with this Agreement shall be borne by the Company regardless of whether a Shelf Registration Statement becomes effective, including, without limitation:

         (a)         all registration and filing fees and expenses (including filings made with the NASD);

         (b)         all fees and expenses of compliance with federal securities and state Blue Sky or securities laws;

         (c)         all expenses of printing (including printing of Prospectuses, Issuer Free Writing Prospectuses and certificates for the Common Stock to be issued upon conversion of the Notes) and the Company's expenses for messenger and delivery services and telephone;

         (d)         all fees and disbursements of counsel to the Company;

Exhibit E-20

         (e)         all application and filing fees in connection with listing (or authorizing for quotation) the Common Stock on a national securities exchange or automated quotation system pursuant to the requirements hereof; and

         (f)         all fees and disbursements of independent certified public accountants of the Company.

         The Company shall bear its internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal, accounting or other duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company.

         6.         Indemnification And Contribution.

         (a)         The Company agrees to indemnify and hold harmless each Holder of Transfer Restricted Securities (including each Initial Purchaser), its directors, officers, employees and agents, and each person, if any, who controls any Holder within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Holder"), against any loss, claim, damage, liability or expense, as incurred, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or expense relating to resales of the Transfer Restricted Securities) (collectively, "Losses"), to which such Indemnified Holder may become subject, insofar as any such Loss arises out of or is based upon:

         (i)         any untrue statement or alleged untrue statement of a material fact contained in (A) the Shelf Registration Statement as originally filed or in any amendment thereof, or (B) any blue sky application or other document or any amendment or supplement thereto prepared or executed by the Company (or based upon written information furnished by or on behalf of the Company expressly for use in such blue sky application or other document or amendment or supplement) filed in any jurisdiction specifically for the purpose of qualifying any or all of the Transfer Restricted Securities under the securities law of any state or other jurisdiction (such application or document being hereinafter called a "Blue Sky Application"), or, in each case, the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading; or

         (ii)         any untrue statement or alleged untrue statement of a material fact contained in any Issuer Free Writing Prospectus, any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom

Exhibit E-21

of a material fact, in each case, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,

and to reimburse each Indemnified Holder for any and all expenses including the fees and disbursements of counsel as such expenses are reasonably incurred by such Indemnified Holder in connection with investigating, defending, settling, compromising or paying any such Loss; provided, however, that the foregoing indemnity agreement shall not apply to any Loss to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder (or its related Indemnified Holder) expressly for use therein. The indemnity agreement set forth in this Section 6(a) shall be in addition to any liabilities that the Company may otherwise have.

The Company also agrees to indemnify as provided in this Section 6(a) or contribute as provided in Section 6(e) hereof to Losses of each underwriter, if any, of Transfer Restricted Securities registered under a Shelf Registration Statement, their directors, officers, employees or agents and each person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchasers and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(b)(xxvii) hereof.

         (b)         Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its directors, each of its officers who sign the Shelf Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (i) to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity and (ii) against any Loss, joint or several, including, but not limited to, any Loss relating to resales of the Transfer Restricted Securities, to which such person may become subject, insofar as any such Loss arises out of, or is based upon any Free Writing Prospectus used by such Holder without the prior consent of the Issuer, and in connection with any under written offering, the underwriters, provided that the indemnification obligation in this clause (ii) shall be several, not joint and several, among the Holders who used such Free Writing Prospectus. This indemnity agreement set forth in this Section shall be in addition to any liabilities which any such Holder may otherwise have.

Exhibit E-22

         (c)         Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof, but the failure to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, th e indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defe nse of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel for all indemnified parties (other than local counsel), reasonably approved by the indemnifying party, representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

Exhibit E-23

         (d)         The indemnifying party under this Section 6 shall not be liable for any settlement of any proceeding effected without its written consent, which shall not be withheld unreasonably, but if settled with such consent or if there is a final judgment, the indemnifying party agrees to indemnify the indemnified party against any Loss by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 6(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

         (e)         If the indemnification provided for in Section 6 is for any reason unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any Loss referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any Loss referred to therein:

         (i)         in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, from the offering and sale of the Transfer Restricted Securities, on the one hand, and a Holder with respect to the sale by such Holder of the Transfer Restricted Securities, on the other hand, or

         (ii)         if the allocation provided by Section (6)(e)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in Section 6(e)(i) above but also the relative fault of the Company, on the one hand, and the Holders, on the other hand, in connection with the statements or

Exhibit E-24

omissions or alleged statements or omissions that resulted in such Loss, as well as any other relevant equitable considerations.

The relative benefits received by the Company, on the one hand, and the Holders, on the other hand, in connection with such offering and such sale of the Transfer Restricted Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Notes purchased under the Purchase Agreement (before deducting expenses) received by the Company and the total proceeds received by the Holders with respect to their sale of Transfer Restricted Securities. The relative fault of the Company, on the one hand, and the Holders, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Holders, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement o r omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 6(e).

         The amount paid or payable by a party as a result of the Loss referred to above shall be deemed to include, subject to the limitations set forth in Section 6(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

         Notwithstanding the provisions of this Section 6, in no event will (i) any Holder be required to undertake liability to any person under this Section 6 for any amounts in excess of the dollar amount of the proceeds to be received by such Holder from the sale of such Holder's Transfer Restricted Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Shelf Registration Statement under which such Transfer Restricted Securities are to be registered under the Securities Act and (ii) any underwriter be required to undertake liability to any person hereunder for any amounts in excess of the discount or commission payable to such underwriter with respect to the Transfer Restricted Securities underwritten by it and distributed to the public. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent m isrepresentation. The Holders' obligations to contribute as provided in this Section 6(e) are several and not joint.

Exhibit E-25

         (f)         The provisions of this Section 6 shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company or any of the officers, directors, employees, agents or controlling persons referred to in Section 6 hereof, and will survive the sale by a Holder of Transfer Restricted Securities.

         7.         Rule 144A and Rule 144. The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to use its commercially reasonable efforts to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144.

         8.         Underwritten Registrations.

         (a)         Any Holder of Transfer Restricted Securities who desires to do so may sell Transfer Restricted Securities (in whole or in part) in an underwritten offering; provided that (i) the Electing Holders of at least 33-1/3% in aggregate principal amount of the Transfer Restricted Securities then covered by the Shelf Registration Statement shall request such an offering and (ii) at least such aggregate principal amount of such Transfer Restricted Securities shall be included in such offering; and provided further that the Company shall not be obligated to participate in more than one underwritten offering during the Effectiveness Period. Upon receipt of such a request, the Company shall provide all Holders of Transfer Restricted Securities written notice of the request, which notice shall inform such Holders that they have the opportunity to participate in the offering. If any of the Transfer Restricted Securities covered by the S helf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders; provided, however, such underwriter must be reasonably acceptable to the Company.

         (b)         No person may participate in any underwritten offering pursuant to the Shelf Registration Statement unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements; (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of

Exhibit E-26

such underwriting arrangements; and (iii) if such Holder is not then a Notice Holder, such Holder returns a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b) or Section 2(f) hereof within a reasonable amount of time before such underwritten offering.

         (c)         The Holders participating in any underwritten offering shall be responsible for any underwriting discounts and commissions and fees and, subject to Section 5 hereof, expenses of their own counsel. The Company shall pay all other reasonable expenses customarily borne by issuers in an underwritten offering, including but not limited to filing fees, the reasonable fees and disbursements of its counsel and independent public accountants and any printing expenses incurred in connection with such underwritten offering. Notwithstanding the foregoing or the provisions of Section 4(b)(xxv) hereof, upon receipt of a request from the Managing Underwriter or a representative of holders of a majority of the Transfer Restricted Securities to be included in an underwritten offering to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the fi ling of any such amendment or supplement for up to 90 days if the Board of Directors of the Company shall have determined in good faith that the Company has a bona fide business reason for such delay.

         9.         Miscellaneous.

         (a)         Free Writing Prospectuses. Each Holder represents that it has not prepared or had prepared on its behalf or used or referred to, and agrees that it will not prepare or have prepared on its behalf or use or refer to, any Free Writing Prospectus, and has not distributed and will not distribute any written materials in connection with the offer or sale of the Transfer Restricted Securities without the prior express written consent of the Company and, in connection with any underwritten offering, the underwriters. Any such Free Writing Prospectus consented to by the Company and, if applicable, the underwriters, as the case may be, is hereinafter referred to as a "Permitted Free Writing Prospectus." The Company represents and agrees that it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, including in respect of timely filing with the Commission, legen ding and recordkeeping.

         (b)         Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely, and that, in the

Exhibit E-27

event of any such failure, in addition to being entitled to exercise all rights provided to it herein, in the Indenture or in the Purchase Agreement or granted by law, including recovery of liquidated or other damages, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Section 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

         (c)         Actions Affecting Transfer Restricted Securities. The Company shall not, directly or indirectly, take any action with respect to the Transfer Restricted Securities as a class that would materially and adversely affect the ability of the Holders of Transfer Restricted Securities to include such Transfer Restricted Securities in a registration undertaken pursuant to this Agreement.

         (d)         No Inconsistent Agreements. The Company has not, as of the date hereof, entered into any agreement with respect to its securities that remains in effect, nor shall it on or after the date hereof enter into any new agreement with respect to its securities, that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. In addition, the Company shall not grant to any of its securityholders (other than the Holders of Transfer Restricted Securities in such capacity) the right to include any of its securities in the Shelf Registration Statement provided for in this Agreement other than the Transfer Restricted Securities.

         (e)         Amendments and Waivers. This Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, unless the Company has obtained the written consent of a Majority of Holders; provided, however, that with respect to any matter that directly or indirectly adversely affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Shelf Registration Statement and does not directly or indirectly adversely affect the rights of other Holders, may be given by the Majority Holders, determined on the basis of Transfer Restricted Securities being sold rather than registered under such Shelf Registration Statement.

         (f)         Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first

Exhibit E-28

class mail (registered or certified, return receipt requested), facsimile transmission, or air courier guaranteeing overnight delivery:

         (i)         if to a Holder, at the address set forth on the records of the registrar under the Indenture or the transfer agent of the Common Stock, as the case may be; and

         (ii)         if to the Company, initially at its address set forth in the Purchase Agreement,

With a copy to:

Warner Norcross & Judd LLP
Attention: Gordon R. Lewis
900 Fifth Third Center
111 Lyon Street, NW
Grand Rapids, Michigan 49503

         All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

         Any party hereto may change the address for receipt of communications by giving written notice to the others.

         (g)         Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities. The Company hereby agrees to extend the benefit of this Agreement to any Holder and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto.

         (h)         Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

         (i)         Notes Held by the Company or Their Affiliates. Whenever the consent or approval of Holders of a specified percentage of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by the Company or its Affiliates (other than subsequent Holders if such subsequent Holders are deemed to be Affiliates solely by reason of their holding of such Transfer Restricted Securities) shall not be counted

Exhibit E-29

in determining whether such consent or approval was given by the Holders of such required percentage.

         (j)         Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

         (k)         GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

         (l)         Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

         (m)         Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

Exhibit E-30

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

SPARTAN STORES, INC.
By:
	Name:
	Title:

BANC OF AMERICA SECURITIES LLC
Acting as representative of the several Initial Purchasers
By:
	Name:
	Title:
BEAR, STEARNS & CO. INC.
Acting as representative of the several Initial Purchasers
By:
	Name:
	Title:

Exhibit E-31

EXHIBIT F

FORM OF LOCK UP AGREEMENT

BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.

c/o Banc of America Securities LLC
9 West 57^th Street
New York, New York  10019

         Re:         Spartan Stores, Inc. (the "Company")

Ladies and Gentlemen:

                  The undersigned is an owner of certain shares of common stock, no par value (the "Common Stock") of the Company and/or options to acquire Common Stock. The Company proposes to carry out an offering (the "Offering") of Convertible Senior Notes due 2027, which will be convertible into Common Stock of the Company, for which you will act as initial purchasers (or, if there are additional initial purchasers, representatives of the initial purchasers). The undersigned recognizes that the Offering will benefit the Company and thus will be of benefit to the undersigned. The undersigned acknowledges that you and any other initial purchasers are relying on the agreements of the undersigned contained in this letter in carrying out the Offering and in entering into purchase arrangements with the Company with respect to the Offering.

                  In consideration of the foregoing, the undersigned hereby agrees that, except as set forth below, the undersigned will not (and will cause any spouse or immediate family member of the spouse or the undersigned living in the undersigned's household not to), without the prior written consent of Banc of America Securities LLC (which consent may be withheld in its sole discretion), directly or indirectly:

• sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open "put equivalent position" in respect of, or liquidate or decrease a "call equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in respect of, or otherwise dispose of or transfer (or enter into any transaction that is designed to, or might reasonably be expected to, result in such disposition) any shares of Common Stock, options or warrants to acquire shares of Common Stock, or securities exchangeable or exercisable for or convertible into shares of Common Stock currently or hereafter owned, either of record or beneficially (as defined in Rule 13d-3 under the Exchange Act), by the undersigned (or such spouse or family member);

• revoke, amend, or modify any prearranged trading plan executed in reliance upon Rule 10b5-1 of the Exchange Act with respect to the Common Stock;

Exhibit F-1

• publicly announce an intention to do any of the foregoing (including the filing or participation in the filing of a registration statement registering such a transaction with the Securities and Exchange Commission),

for a period commencing on the date hereof and continuing through the close of trading on the date 90 days after the date of the final Offering Memorandum relating to the Offering.

                  The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions.

                  The foregoing restrictions will have no effect on the undersigned's ability to engage in any of the following transactions: (i) transactions pursuant to a prearranged trading plan executed in reliance upon Rule 10b5-1 of the Exchange Act prior to May 1, 2007 and provided to the initial purchasers prior to the commencement of the Offering, (ii) the surrender of shares of Common Stock to the Company to satisfy tax withholding obligations; (iii) the surrender of shares of Common Stock to the Company to pay the exercise price in connection with the exercise of stock options issued pursuant to the terms of any of the Company's equity incentive plans; (iv) forfeiture of restricted shares of Common Stock or stock options pursuant to the terms of any of the Company's equity incentive plans in effect as of the date set forth above; or (v) sale of shares of Common Stock by a broker or other intermediary to pay the option exercise price and wit hholding taxes due upon exercise of a stock option (a so-called "cashless exercise").

                  This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned.

[Name]

Exhibit F-2

EX-10.2

EXHIBIT 10.2

[Execution Copy]

Loan and Security Agreement

by and among

Spartan Stores, Inc.
Spartan Stores Distribution, LLC
United Wholesale Grocery Company
Market Development Corporation
Spartan Stores Associates, LLC
Family Fare, LLC
MSFC, LLC
Seaway Food Town, Inc.
The Pharm of Michigan, Inc.
Valley Farm Distributing Co.
Gruber's Food Town, Inc.
Gruber's Real Estate, LLC
Prevo's Family Markets, Inc.
Custer Pharmacy, Inc.
Buckeye Real Estate Management Co.
as Borrowers

and

JFW Distributing Company
LLJ Distributing Company
Spartan Stores Holding, Inc.
SI Insurance Agency, Inc.
as Guarantors

Congress Financial Corporation (Central)
as Agent

and

The Lenders from Time to Time Party Hereto
as Lenders

TABLE OF CONTENTS

			Page
SECTION 1 DEFINITIONS			2
SECTION 2 CREDIT FACILITIES			35
	2.1	Loans	35
	2.2	Letter of Credit Accommodations	35
	2.3	Commitments	40
	2.4	Joint and Several Liability	40
SECTION 3 INTEREST AND FEES			41
	3.1	Interest	41
	3.2	Fees	42
	3.3	Changes in Laws and Increased Costs of Loans	43
SECTION 4 CONDITIONS PRECEDENT			46
	4.1	Conditions Precedent to Initial Loans and Letter of Credit Accommodations	46
	4.2	Conditions Precedent to All Loans and Letter of Credit Accommodations	49
SECTION 5 GRANT AND PERFECTION OF SECURITY INTEREST			49
	5.1	Grant of Security Interest	49
	5.2	Perfection of Security Interests	51
SECTION 6 COLLECTION AND ADMINISTRATION			54
	6.1	Borrowers' Loan Accounts	54
	6.2	Statements	54
	6.3	Collection of Accounts	55
	6.4	Payments	57
	6.5	Authorization to Make Loans	58
	6.6	Use of Proceeds.	59
	6.7	Appointment of Parent as Lead Borrower for Requesting Loans and Receipts of Loans and Statements	59
	6.8	Pro Rata Treatment	60
	6.9	Sharing of Payments, Etc	60
	6.10	Settlement Procedures	61
	6.11	Obligations Several; Independent Nature of Lenders' Rights	64
SECTION 7 COLLATERAL REPORTING AND COVENANTS			64
	7.1	Collateral Reporting	64
	7.2	Accounts Covenants	66
	7.3	Inventory Covenants	67
	7.4	Equipment and Real Property Covenants	68

(ii)

	7.5	Prescription Files Covenants	69
	7.6	Power of Attorney	69
	7.7	Right to Cure	70
	7.8	Access to Premises	71
SECTION 8 REPRESENTATIONS AND WARRANTIES			71
	8.1	Corporate Existence, Power and Authority	71
	8.2	Name; State of Organization; Chief Executive Office; Collateral Locations	72
	8.3	Financial Statements; No Material Adverse Change	72
	8.4	Priority of Liens; Title to Properties	72
	8.5	Tax Returns	73
	8.6	Litigation	73
	8.7	Compliance with Other Agreements and Applicable Laws	73
	8.8	Environmental Compliance	74
	8.9	Employee Benefits	74
	8.10	Bank Accounts	75
	8.11	Intellectual Property	75
	8.12	Subsidiaries; Affiliates; Capitalization; Solvency	76
	8.13	Labor Disputes	76
	8.14	Restrictions on Subsidiaries	77
	8.15	Material Contracts	77
	8.16	Credit Card Agreements	77
	8.17	HIPPA Compliance	78
	8.18	Compliance with Health Care Laws	78
	8.19	Interrelated Businesses	79
	8.20	Notices from Farm Products Sellers, etc	79
	8.21	Accuracy and Completeness of Information	80
	8.22	Survival of Warranties; Cumulative	80
SECTION 9 AFFIRMATIVE AND NEGATIVE COVENANTS			80
	9.1	Maintenance of Existence	80
	9.2	New Collateral Locations	81
	9.3	Compliance with Laws, Regulations, Etc	81
	9.4	Payment of Taxes and Claims	82
	9.5	Insurance	82
	9.6	Financial Statements and Other Information	83
	9.7	Sale of Assets, Consolidation, Merger, Dissolution, Etc	85
	9.8	Encumbrances	94
	9.9	Indebtedness	96
	9.10	Loans, Investments, Etc	101
	9.11	Dividends and Redemptions	106
	9.12	Transactions with Affiliates	107
	9.13	Compliance with ERISA	108
	9.14	End of Fiscal Years; Fiscal Quarters	108
	9.15	Credit Card Agreements	108
	9.16	Change in Business	109

(iii)

	9.17	Limitation of Restrictions Affecting Subsidiaries	109
	9.18	Minimum EBITDA	109
	9.19	Capital Expenditures	109
	9.20	Minimum Excess Availability	110
	9.21	License Agreements	110
	9.22	Agricultural Products	111
	9.23	After Acquired Real Property	112
	9.24	Costs and Expenses	112
	9.25	Further Assurances	113
SECTION 10 EVENTS OF DEFAULT AND REMEDIES			113
	10.1	Events of Default	113
	10.2	Remedies	116
SECTION 11 JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW			120
	11.1	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	120
	11.2	Waiver of Notices	121
	11.3	Amendments and Waivers	121
	11.4	Waiver of Counterclaims	123
	11.5	Indemnification	123
SECTION 12 THE AGENT			124
	12.1	Appointment, Powers and Immunities	124
	12.2	Reliance by Agent	124
	12.3	Events of Default	125
	12.4	Congress in its Individual Capacity	125
	12.5	Indemnification	125
	12.6	Non-Reliance on Agent and Other Lenders	126
	12.7	Failure to Act	126
	12.8	Additional Loans	126
	12.9	Concerning the Collateral and the Related Financing Agreements	127
	12.10	Field Audit, Examination Reports and other Information; Disclaimer by Lenders. By signing this Agreement, each Lender:	127
	12.11	Collateral Matters	127
	12.12	Agency for Perfection	129
	12.13	Successor Agent	129
	12.14	Co-Agent	130
SECTION 13 TERM OF AGREEMENT; MISCELLANEOUS			130
	13.1	Term	130
	13.2	Interpretative Provisions	132
	13.3	Notices	133
	13.4	Partial Invalidity	134
	13.5	Confidentiality	134

(iv)

13.6	Successors	136
13.7	Assignments; Participations	136
13.8	Entire Agreement	138
13.9	Counterparts, Etc	138
LOAN AND SECURITY AGREEMENT		2

(v)

INDEX TO
EXHIBITS AND SCHEDULES

Exhibit A	Form of Assignment and Acceptance
Exhibit B	Form of Borrowing Base Certificate
Exhibit C	Information Certificate
Exhibit D	Form of Financial Statements
Exhibit E	Form of Compliance Certificate
Schedule 1.52	Existing Lenders
Schedule 1.53	Existing Letters of Credit
Schedule 1.83	Marion Real Property
Schedule 1.92	Mortgages
Schedule 1.128	Supplemental Loan Guarantors
Schedule 1.131	Supplemental Loan Lender Agreements
Schedule 1.132	Supplemental Loan Priority Collateral
Schedule 1.136	United Wholesale Division Assets
Schedule 1.137	United Wholesale Sale Agreements
Schedule 8.9	ERISA Matters
Schedule 8.17	Business Associate Agreements
Schedule 8.18	Participation Agreements
Schedule 9.7	Existing Subleases of Real Property and Minimum Proceeds Amount for Owned Real Property
Schedule 9.14	Fiscal Year and Quarter Ends
Schedule 9.18	Minimum EBITDA
Schedule 10.1	Minimum Quarterly Consolidated Revenues

(vi)

LOAN AND SECURITY AGREEMENT

          This Loan and Security Agreement dated December 23, 2003 is entered into by and among Spartan Stores, Inc., a Michigan corporation ("Parent"), Spartan Stores Distribution, LLC, a Michigan limited liability company ("Stores Distribution"), United Wholesale Grocery Company, a Michigan corporation ("United"), Market Development Corporation, a Michigan corporation ("MDC"), Spartan Stores Associates, LLC, a Michigan limited liability company ("Associates"), Family Fare, LLC, a Michigan limited liability company ("Family Fare"), MSFC, LLC, a Michigan limited liability company ("MSFC"), Seaway Food Town, Inc., a Michigan corporation ("Seaway"), The Pharm of Michigan, Inc. ("Pharm"), a Michigan corporation, Valley Farm Distributing Co., an Ohio corporation ("Valley Farm"), Gruber's Food Town, Inc., a Michigan corporation ("Gruber Food Town"), Gruber's Real Estate, LLC, a Michigan limited liability company ("Gruber RE"), Prevo's Family Markets, Inc., a Michigan corporation ("Prev o"), Custer Pharmacy, Inc., a Michigan corporation ("Custer"), Buckeye Real Estate Management Co., an Ohio corporation ("Buckeye" and together with Parent, Stores Distribution, United, MDC, Associates, Family Fare, MSFC, Seaway, Pharm, Valley Farm, Gruber Food Town, Gruber RE, Prevo and Custer, each individually a "Borrower" and collectively, "Borrowers"), Spartan Stores Holding, Inc., a Michigan corporation ("Holding"), SI Insurance Agency, Inc., a Michigan corporation ("SI"), , JFW Distributing Company, a Michigan corporation ("JFW"), LLJ Distributing Company, a Michigan corporation ("LLJ", and together with Holding, SI and JFW, each individually a "Guarantor" and collectively, "Guarantors"), the parties hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a "Lender" and collectively, "Lenders") and Congress Financial Corporation (Central), an Illinois corporation, in its capacity as agent for Lenders (in such capacity, "Agent").

W I T N E S S E T H:

          WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter into financing arrangements with Borrowers pursuant to which Lenders may make loans and provide other financial accommodations to Borrowers; and

          WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Agent is willing to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements;

          NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1 DEFINITIONS

          For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

          1.1 "Account Debtor" shall mean a person obligated on an Account, and including, without limitation, an account debtor as such term is defined in the UCC, Credit Card Issuer, Credit Card Processor, Fiscal Intermediary or other Third Party Payor.

          1.2 "Accounts" shall mean, as to each Borrower and Guarantor, all present and future rights of such Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with the card. The term "Accounts" as used herein shall include, without limitation, Credit Card Receivables.

          1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a decimal, prescribed by any United States or foreign banking authority for determining the reserve requirement which is or would be applicable to deposits of United States dollars in a non-United States or an international banking office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.

          1.4 "Affiliate" shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds ten (10%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term "control" (including with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or ca use the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

2

          1.5 "Agent" shall mean Congress Financial Corporation (Central), in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

          1.6 "Agent Payment Account" shall mean account no. 5000000030266 of Agent at Wachovia Bank, National Association, or such other account of Agent as Agent may from time to time designate to Lead Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

          1.7 "Applicable Margin" means, at any time, as to the interest rate for Prime Rate Loans and the interest rate for Eurodollar Rate Loans the applicable percentage (on a per annum basis) set forth below if the Monthly Average Excess Availability for the immediately preceding calendar month is at or within the amounts indicated for such percentage:

Tier	Monthly Average Excess Availability	Applicable Prime Rate Margin	Applicable Eurodollar Rate Margin
1	$50,000,000 or more	1/2%	2 3/4 %
2	Greater than or equal to $25,000,000 and less than $50,000,000	3/4%	3%
3	Less than $25,000,000	1%	3 1/4 %

provided, that, (a) the Applicable Margin shall be calculated and established once each calendar month and shall remain in effect until adjusted thereafter as of the first day of the next month and (b) notwithstanding the amount of the Monthly Average Excess Availability, for each month prior to the month commencing July 1, 2004, in no event shall the Applicable Margin be less than the percentages set forth in Tier 2 of the schedule above for the applicable category of Loans.

          1.8 "Assignment and Acceptance" shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender's interest hereunder in accordance with the provisions of Section 13.7 hereof.

          1.9 "Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.

          1.10 "Borrowing Base" shall mean, at any time, the amount equal to:

                    (a) the lesser of:

                              (i) the amount equal to:

                                        (A) eighty-five (85%) percent of Eligible Accounts, plus

3

                                        (B) eighty-five (85%) percent of Eligible Credit Card Receivables, plus

                                        (C) the lesser of: (1) sixty-five (65%) percent multiplied by the Value of the Eligible Inventory of the Retail Division or (2) eighty-five (85%) percent of the Net Recovery Percentage for the Inventory of the Retail Division multiplied by the Value of such Eligible Inventory; plus

                                        (D) the lesser of: (1) seventy-five (75%) percent multiplied by the Value of the Eligible Inventory of the Distribution Division or (2) eighty-five (85%) percent of the Net Recovery Percentage for the Inventory of the Distribution Division multiplied by the Value of such Eligible Inventory, plus

                                        (E) the lesser of: (1) seventy-five (75%) percent multiplied by the Value of the Eligible Inventory of the United Wholesale Division or (2) eighty-five (85%) percent of the Net Recovery Percentage for the Inventory of the United Wholesale Division multiplied by the Value of such Eligible Inventory, plus

                                        (F) the Prescription File Availability; plus

                                        (G) the Fixed Asset Availability; or

                              (ii) the Maximum Credit,

                                        minus

                    (b) Reserves.

The amounts of Eligible Inventory of any Borrower shall, at Agent's option, be determined based on the lesser of the amount of Inventory set forth in the general ledger of such Borrower, as reconciled, or the perpetual inventory record or stock ledger record, as applicable, maintained by such Borrower.

          1.11 "Borrowing Base Certificate" shall mean a certificate substantially in the form of Exhibit B hereto, as such form may from time to time be modified by Agent, which is duly completed (including all schedules thereto) and executed by the chief financial officer, vice president of finance, treasurer or controller of Parent and delivered to Agent.

          1.12 "Business Day" shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of Illinois, or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

          1.13 "Capital Expenditures" shall mean with respect to any Person for any period the aggregate of all expenditures by such Person and its Subsidiaries during such period that in accordance with GAAP are or should be included in "property, plant and equipment" or in a

4

similar fixed asset account on its balance sheet, whether such expenditures are paid in cash or financed and including all obligations under Capital Leases paid or payable during such period (but not including in the case of Borrowers and Guarantors payments made pursuant to Section 9.10(i) hereof).

          1.14 "Capital Leases" shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

          1.15 "Capital Stock" shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

          1.16 "Cash Equivalents" shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided, that, the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers' acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $250,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower or Guarantor) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a divis ion of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above.

          1.17 "Change of Control" shall mean (a) the transfer (in one transaction or a series of transactions) of all or substantially all of the assets of any Borrower or Guarantor to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof; (b) the liquidation or dissolution of any Borrower or Guarantor or the adoption of a plan by the stockholders of any Borrower or Guarantor relating to the dissolution or liquidation of such Borrower or Guarantor, other than as permitted in Section 9.7 hereof;

5

(c) the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), of beneficial ownership, directly or indirectly, of more than thirty (30%) percent of the voting power of the total outstanding Voting Stock of Parent; (d) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Parent (together with any new directors whose nomination for election or election was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Parent then still in office; or (e) the failure of Parent to own directly or indirectly one hundred (100%) percent of the voting power of the total outstanding Voting Stock of any other Borrower or Guarantor (except to the extent resulting from mergers, consolidations, liquidations or dissolutions permitted under Section 9.7 hereof).

          1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

          1.19 "Collateral" shall have the meaning set forth in Section 5 hereof.

          1.20 "Collateral Access Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, by any lessor of premises to any Borrower or Guarantor, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent with respect to the collateral located at such premises or otherwise in the custody, control or possession of such person.

          1.21 "Commitment" shall mean, at any time, as to each Lender, the principal amount set forth below such Lender's signature on the signatures pages hereto designated as the Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as "Commitments".

          1.22 "Congress" shall mean Congress Financial Corporation (Central), an Illinois corporation, in its individual capacity, and its successors and assigns.

          1.23 "Consolidated Net Income" shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries, on a consolidated basis, for such period (and as to Borrowers and Guarantors, excluding to the extent included therein (i) any extraordinary, one-time or non-recurring gains, (ii) extraordinary, one-time or non-recurring non-cash losses or charges, (iii) operations that have been discontinued on or before the date hereof, and (iv) the net income (loss) of United on and after the date that the United Wholesale Division Assets are sold in accordance with the terms hereof ) after deducting all charges which should be deducted before arriving at the net income (loss) for such period (but without regard to operations that have been discontinued on or before the date hereof) and after deducting the Provision for Taxes for such period, all as determined in accordance with GAAP; provided, that, (a) the net income of any Person that is not a wholly-owned Subsidiary or that is

6

accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a wholly-owned Subsidiary of such Person (except that up to $750,000 of the net income of MDP L.L.C. may be included in the calculation of the net income (loss) of Borrowers notwithstanding that no such dividends or distributions are paid or payable); (b) except to the extent included pursuant to the foregoing clause, the net income of any Person accrued prior to the date it becomes a wholly-owned Subsidiary of such Person or is merged into or consolidated with such Person or any of its wholly-owned Subsidiaries or that Person's assets are acquired by such Person or by any of its wholly-owned Subsidiaries shall be excluded; (c) the effect of any change in accounting principles adopted by such Person or its Subsidiaries after the date hereof shall be excluded; (d) net income shall exclude interest accruing, but not paid on indebtedness owing to a S ubsidiary or parent corporation of such Person; and (e) the net income (if positive) of any wholly-owned Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such wholly-owned Subsidiary to such Person or to any other wholly-owned Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such wholly-owned Subsidiary shall be excluded (except that up to $750,000 of the net income of MDP L.L.C. may be included in the calculation of the net income (loss) of Borrowers notwithstanding that no such dividends or distributions are paid or payable). For the purposes of this definition, net income excludes any gain and non-cash loss together with any related Provision for Taxes for such gain and non-cash loss realized upon the sale or other disposition of any assets that are not sold in the ordinary course of business (including , without limitation, dispositions pursuant to sale and leaseback transactions and for this purpose sales or other dispositions of retail store locations shall not be deemed to be in the ordinary course of the business of Borrowers and Guarantors) or of any Capital Stock of such Person or a Subsidiary of such Person and any net income or non-cash loss realized as a result of changes in accounting principles or the application thereof to such Person.

          1.24 "Credit Card Acknowledgments" shall mean, collectively, the agreements by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements in favor of Agent acknowledging Agent's first priority security interest, in the monies due and to become due to a Borrower or Guarantor (including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; sometimes being referred to herein individually as a "Credit Card Acknowledgment".

          1.25 "Credit Card Agreements" shall mean all agreements now or hereafter entered into by any Borrower or any Guarantor for the benefit of any Borrower, in each case with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, including, but not limited to, the agreements set forth on Schedule 8.16 hereto.

          1.26 "Credit Card Issuer" shall mean any person (other than a Borrower or Guarantor) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover,

7

Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc. or Discover Financial Services, Inc.

          1.27 "Credit Card Processor" shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any Borrower's or Guarantor's sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

          1.28 "Credit Card Receivables" shall mean, collectively, (a) all present and future rights of any Borrower or Guarantor to payment from any Credit Card Issuer, Credit Card Processor or other third party arising from sales of goods or rendition of services to customers who have purchased such goods or services using a credit card or debit card and (b) all present and future rights of any Borrower or Guarantor to payment from any Credit Card Issuer, Credit Card Processor or other third party in connection with the sale or transfer of Accounts arising pursuant to the sale of goods or rendition of services to customers who have purchased such goods or services using a credit card or a debit card, including, but not limited to, all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.

          1.29 "Credit Facility" shall mean the Loans and Letter of Credit Accommodations provided to or for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof.

          1.30 "Default" shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

          1.31 "Defaulting Lender" shall have the meaning set forth in Section 6.10 hereof.

          1.32 "Deposit Account Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, the Borrower or Guarantor with a deposit account at any bank and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions originated by Agent directing disposition of the funds in the deposit account without further consent by such Borrower or Guarantor and has such other terms and conditions as Agent may require.

          1.33 "Distribution Division" shall mean, collectively, the following (together with their respective successors and assigns): Parent, Associates, Stores Distribution, Valley Farm and MDC.

          1.34 "EBITDA" shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (b) depreciation and amortization and other non-cash charges including imputed interest, deferred compensation and in the case of Borrowers and Guarantors, non-cash costs associated with the closing of retail store locations, in each case for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), all in accordance with GAAP, plus (c) Interest Expense for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), plus (d) the Provision for Taxes for such period (to the extent

8

deducted in the computation of Consolidated Net Income of such Person), plus (e) all charges with respect to the Single Business Tax as levied by the Michigan Department of Treasury for such period (to the extent deducted in the computation of Consolidated Net Income for such Person).

          1.35 "Eligible Accounts" shall mean Accounts created by a Borrower which are and continue to be acceptable to Agent in good faith based on the criteria set forth below. In general, Accounts shall be Eligible Accounts if:

                    (a) such Accounts arise from the actual and bona fide sale and delivery of goods by such Borrower or rendition of services by such Borrower in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;

                    (b) such Accounts are not unpaid (i) for Accounts with stated terms of fifteen (15) days or greater, more than sixty (60) days after the original due date thereof or more than ninety (90) days after the original invoice or statement date (as applicable) or (ii) for Accounts with stated terms of less than fifteen (15) days, more than thirty (30) days after the original due date thereof or more than ninety (90) days after the original invoice or statement date (as applicable) (it being understood that the statement date is applicable to Accounts of the Distribution Division);

                    (c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this Agreement;

                    (d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the Account Debtor may be conditional or contingent;

                    (e) the chief executive office of the Account Debtor with respect to such Accounts is located in the United States of America or Canada (provided, that, at any time promptly upon Agent's request, such Borrower shall execute and deliver, or cause to be executed and delivered, such other agreements, documents and instruments as may be required by Agent to perfect the security interests of Agent in those Accounts of an Account Debtor with its chief executive office or principal place of business in Canada in accordance with the applicable laws of the Province of Canada in which such chief executive office or principal place of business is located and take or cause to be taken such other and further actions as Agent may request to enable Agent as secured party with respect thereto to collect such Accounts under the applicable Federal or Provincial laws of Canada) or, at Agent's option, if the chief executive office and princip al place of business of the Account Debtor with respect to such Accounts is located other than in the United States of America or Canada, then if either: (i) the Account Debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed by a bank satisfactory to Agent and payable only in the United States of America and in U.S. dollars, sufficient to cover such Account, in form and substance satisfactory to Agent and if required by Agent, the original of such letter of credit has been delivered to Agent or Agent's agent and the issuer thereof, and such Borrower has complied with the terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of such letter of credit to Agent or naming Agent as

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transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is subject to credit insurance payable to Agent issued by an insurer and on terms and in an amount acceptable to Agent, or (iii) such Account is otherwise acceptable in all respects to Agent (subject to such lending formula with respect thereto as Agent may determine);

                    (f) such Accounts do not consist of progress billings (such that the obligation of the Account Debtors with respect to such Accounts is conditioned upon such Borrower's satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received an agreement in writing from the Account Debtor, in form and substance satisfactory to Agent, confirming the unconditional obligation of the Account Debtor to take the goods related thereto and pay such invoice;

                    (g) the Account Debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and is not owed any amounts that may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such Account Debtor in excess of the amount at any time and from time to time owed by such Borrower to such Account Debtor or claimed owed by such Account Debtor may be deemed Eligible Accounts),

                    (h) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Accounts;

                    (i) such Accounts are subject to the first priority, valid and perfected security interest of Agent and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent;

                    (j) neither the Account Debtor nor any officer or employee of the Account Debtor with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower or Guarantor;

                    (k) the Account Debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof, unless, if the Account Debtor is the United States of America, any State, political subdivision, department, agency or instrumentality thereof, upon Agent's request, the Federal Assignment of Claims Act of 1940, as amended or any similar State or local law, if applicable, has been complied with in a manner satisfactory to Agent or except as to Medicaid Accounts, Medicare Accounts and Accounts arising from WIC or food stamp programs, such Accounts otherwise constitute Eligible Accounts hereunder;

                    (l) there are no proceedings or actions which are threatened or pending against the Account Debtors with respect to such Accounts which might result in any material adverse change in any such Account Debtor's financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding);

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                    (m) the aggregate amount of such Accounts owing by a single Account Debtor do not constitute more than fifteen (15%) percent of the aggregate amount of all otherwise Eligible Accounts of Borrowers (but the portion of the Accounts not in excess of the applicable percentages may be deemed Eligible Accounts);

                    (n) such Accounts are not owed by an Account Debtor who has Accounts unpaid (i) for Accounts with stated terms of fifteen (15) days or greater, more than sixty (60) days after the original due date thereof or more than ninety (90) days after the original invoice or statement date (as applicable) or (ii) for Accounts with stated terms of less than fifteen (15) days, more than thirty (30) days after the original due date thereof or more than ninety (90) days after the original invoice or statement date (as applicable), in any case which constitute more than fifty (50%) percent of the total Accounts of such Account Debtor (it being understood that the statement date is applicable to Accounts of the Distribution Division);

                    (o) the Account Debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;

                    (p) such Accounts are owed by Account Debtors whose total indebtedness to such Borrower does not exceed the credit limit with respect to such Account Debtors as determined by such Borrower from time to time, to the extent such credit limit as to any Account Debtor is established consistent with the current practices of such Borrower as of the date hereof and such credit limit is acceptable to Agent (but the portion of the Accounts not in excess of such credit limit may be deemed Eligible Accounts);

                    (q) such Accounts are owed by Account Debtors deemed creditworthy at all times by Agent in good faith;

                    (r) as to Medicaid Accounts, (i) the claim for reimbursement related to such Account has been submitted to the appropriate Fiscal Intermediary in accordance with the applicable regulations under Medicaid within thirty (30) days from the date the claim arose, (ii) the person to whom the goods were sold is an eligible Medicaid beneficiary at the time such goods are sold and such eligibility has been verified by the Borrower making such sale, (iii) such Account is owed to a Borrower who is not under any investigation (other than the periodic audits conducted by a Fiscal Intermediary in the ordinary course of business) or subject to any action or proceeding concerning the status of such Borrower as a Certified Medicaid Provider and/or the payments under Medicaid to such Borrower have not been contested, suspended, delayed, deferred or otherwise postponed due to any investigation, action or proceeding by the U.S. Justice Department or any ot her Governmental Authority, (iv) the amount of such Account does not exceed the amounts to which the Borrower making such sale is entitled to reimbursement for such eligible Medicaid beneficiary under applicable Medicaid regulations (provided, that, to the extent that the amount of any such excess is de minimis, the portion of the Account not in excess of the reimbursable amount may be deemed an Eligible Account), (v) all authorization and billing procedures and documentation required in order for the Borrower making such sale to be

11

reimbursed and paid on such Account by the Fiscal Intermediary have been properly completed and satisfied to the extent required in order for such Borrower to be so reimbursed and paid and (vi) the terms of the sale giving rise to such Accounts and all practices of such Borrower and Guarantors with respect to such Accounts comply in all material respects with applicable Federal, State, and local laws and regulations; provided, that, in no event shall the aggregate amount of Medicaid Accounts, Medicare Accounts and Accounts arising from WIC or food stamp programs that are deemed to be Eligible Accounts (but without limitation as to the amount of such Accounts) exceed $2,500,000;

                    (s) as to Medicare Accounts, (i) the claim for reimbursement related to such Account has been submitted to the appropriate Fiscal Intermediary in accordance with the applicable regulations under Medicare within thirty (30) days from the date the claim arose, (ii) the person to whom the goods were sold is an eligible Medicare beneficiary at the time such goods are sold and such eligibility has been verified by the Borrower making such sale, (iii) such Account is owed to a Borrower who is not under any investigation (other than the periodic audits conducted by a Fiscal Intermediary in the ordinary course of business) or subject to any action or proceeding concerning the status of such Borrower as a Certified Medicare Provider and/or the payments under Medicare to such Borrower have not been contested, suspended, delayed, deferred or otherwise postponed due to any investigation, action or proceeding by the U.S. Justice Department or any ot her Governmental Authority, (iv) the amount of such Account does not exceed the amounts to which the Borrower making such sale is entitled to reimbursement for such eligible Medicare beneficiary under applicable Medicare regulations (provided, that, to the extent that the amount of any such excess is de minimis, the portion of the Account not in excess of the reimbursable amount may be deemed an Eligible Account); (v) all authorization and billing procedures and documentation required in order for the Borrower making such sale to be reimbursed and paid on such Account by the Fiscal Intermediary have been properly completed and satisfied to the extent required for such Borrower to be so reimbursed and paid, and (vi) the terms of the sale giving rise to such Accounts and all practices of such Borrower and Guarantors with respect to such Accounts comply in all material respects with applicable Federal, State, and local laws and regulations; provided, that, in no event shall the aggregate amount of Medicaid Accounts, Medicare Accounts and Accounts arising from WIC or food stamp programs that are deemed to be Eligible Accounts (but without limitation as to the amount of such Accounts) exceed $2,500,000;

                    (t) as to Accounts where the Account Debtor is a Third Party Payor (other than for Medicare Accounts and Medicaid Accounts), (i) the Borrower making the sale giving rise to such Account has a valid and enforceable agreement with the Third Party Payor providing for payment to such Borrower or such Borrower is otherwise entitled to payment under the terms of its arrangements with the insurance company that is the Third Party Payor, and such agreement and arrangements are in full force and effect and there is no default thereunder that would be a basis for such Third Party Payor to cease or suspend any payments to such Borrower (including any deductions, setoffs or defenses), (ii) the goods sold giving rise to such Account are of the type that are covered under the agreement or arrangements with the Third Party Payor and the party receiving such goods is entitled to coverage under such agreement or arrangement, (iii) the Borrower making th e sale giving rise to such Account has contacted the Third Party Payor or otherwise received confirmation from such Third Party Payor that the party receiving the goods is entitled to coverage under the terms of the agreement with such Third Party Payor and the

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Borrower is entitled to reimbursement for such Account, (iv) the amount of such Account does not exceed the amounts to which the Borrower making such sale is entitled to reimbursement for the goods sold under the terms of such agreements or arrangements (provided, that, to the extent that the amount of any such excess is de minimis, the portion of the Account not in excess of the reimbursable amount may be deemed an Eligible Account), (v) there are no contractual or statutory limitations or restrictions on the rights of the Borrower making such sale to assign its rights to payment arising as a result thereof or to grant any security interest therein, (vi) all authorization and billing procedures and documentation required in order for the Borrower making such sale to be reimbursed and paid on such Account by the Third Party Payor have been properly completed and satisfied to the extent required for such Borrower to be so reimbursed and paid and (vii) the terms of the sale giving rise to such Accounts and all practices of such Borrower and Guarantors with respect to such Accounts comply in all material respects with applicable Federal, State, and local laws and regulations.

The criteria for Eligible Accounts set forth above may only be changed and any new criteria for Eligible Accounts may only be established by Agent in good faith based on either: (A) an event, condition or other circumstance arising after the date hereof, or (B) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (A) or (B) which adversely affects or could reasonably be expected to adversely affect the Accounts in the good faith determination of Agent. Any Accounts that are not Eligible Accounts shall nevertheless be part of the Collateral.

          1.36 "Eligible Credit Card Receivables" shall mean, as to each Borrower, Credit Card Receivables of such Borrower which are and continue to be acceptable to Agent in good faith based on the criteria set forth below. Credit Card Receivables shall be Eligible Credit Card Receivables if:

                    (a) such Credit Card Receivables arise from the actual and bona fide sale and delivery of goods or rendition of services by such Borrower in the ordinary course of the business of such Borrower which transactions are completed in accordance with the terms and provisions contained in any agreements binding on such Borrower or the other party or parties related thereto;

                    (b) such Credit Card Receivables are not past due (beyond any stated applicable grace period, if any, therefor) pursuant to the terms set forth in the Credit Card Agreements with the Credit Card Issuer or Credit Card Processor of the credit card or debit card used in the purchase which give rise to such Credit Card Receivables;

                    (c) such Credit Card Receivables are not unpaid more than seven (7) days after the date of the sale of Inventory giving rise to such Credit Card Receivables;

                    (d) all material procedures required by the Credit Card Issuer or the Credit Card Processor of the credit card or debit card used in the purchase which gave rise to such Credit Card Receivables shall have been followed by such Borrower (including, but not limited to, obtaining any required authorization and approval by such Credit Card Issuer or Credit Card Processor for the sale giving rise to such Credit Card Receivables and submitting all materials

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required by the Credit Card Issuer or Credit Card Processor obligated in respect of such Credit Card Receivables in order for such Borrower to be entitled to payment in respect thereof) and all documents required for the authorization and approval by such Credit Card Issuer or Credit Card Processor shall have been obtained in connection with the sale giving rise to such Credit Card Receivables;

                    (e) the Credit Card Issuer or Credit Card Processor obligated in respect of such Credit Card Receivable has not failed to remit any monthly payment in respect of such Credit Card Receivable;

                    (f) such Credit Card Receivables comply with the applicable terms and conditions contained in Section 7.2 of this Agreement;

                    (g) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to, any right of setoff against such Credit Card Receivables (other than setoffs to fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with such Borrower as of the date hereof or as such practices may change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstance of such Borrower), but the portion of the Credit Card Receivables owing by such Credit Card Issuer or Credit Card Processor in excess of the amount owing by such Borrower to such Credit Card Issuer or Credit Card Processor pursuant to such fees and chargebacks may be deemed Eligible Credit Card Receiva bles;

                    (h) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not setoff against amounts otherwise payable by such Credit Card Issuer or Credit Card Processor to such Borrower for the purpose of establishing a reserve or collateral for obligations of such Borrower to such Credit Card Issuer or Credit Card Processor (notwithstanding that the Credit Card Issuer or Credit Card Processor may have setoffs for fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with such Borrower as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Borrower);

                    (i) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Credit Card Receivables;

                    (j) such Credit Card Receivables are subject to the first priority, valid and perfected security interest and lien of Agent, for and on behalf of itself and Lenders, as to such Credit Card Receivables of such Borrower and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any security interest or lien in favor of any person other than Agent except as otherwise permitted in this Agreement, in each case subject to and in accordance with the terms and conditions applicable hereunder to any such permitted security interest or lien;

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                    (k) there are no proceedings or actions which are pending against the Credit Card Issuers or Credit Card Processors with respect to such Credit Card Receivables which would reasonably be expected to result in any material adverse change in the financial condition of any such Credit Card Issuer or Credit Card Processor;

                    (l) such Credit Card Receivables are owed by Credit Card Issuers or Credit Card Processors deemed creditworthy at all times by Agent in good faith;

                    (m) no event of default has occurred under the Credit Card Agreement of such Borrower with the Credit Card Issuer or Credit Card Processor who has issued the credit card or debit card or handles payments under the credit card or debit card used in the sale which gave rise to such Credit Card Receivables which event of default gives such Credit Card Issuer or Credit Card Processor the right to cease or suspend payments to such Borrower or any Guarantor and no event shall have occurred which gives such Credit Card Issuer or Credit Card Processor the right to setoff against amounts otherwise payable to such Borrower, including on behalf of a Guarantor (other than for then current fees and chargebacks consistent with the current practices of such Credit Card Issuer or Credit Card Processor as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processo r applicable to its customers generally and unrelated to the circumstances of such Borrower or any Guarantor), except as may have been waived in writing on terms and conditions reasonably satisfactory to Agent pursuant to the Credit Card Acknowledgment by such Credit Card Issuer or Credit Card Processor) or the right to establish reserves or establish or demand collateral, and the Credit Card Issuer or Credit Card Processor has not sent any written notice of default and/or notice of its intention to cease or suspend payments to such Borrower in respect of such Credit Card Receivables or to establish reserves or cash collateral for obligations of such Borrower to such Credit Card Issuer or Credit Card Processor, and such Credit Card Agreements are otherwise in full force and effect and constitute the legal, valid, binding and enforceable obligations of the parties thereto;

                    (n) the terms of the sale giving rise to such Credit Card Receivables and all practices of such Borrower and Guarantors with respect to such Credit Card Receivables comply in all material respects with applicable Federal, State, and local laws and regulations; and

                    (o) the customer using the credit card or debit card giving rise to such Credit Card Receivable shall not have returned the merchandise purchased giving rise to such Credit Card Receivable.

Credit Card Receivables which would otherwise constitute Eligible Credit Card Receivables pursuant to this Section will not be deemed ineligible solely by virtue of the Credit Card Agreements with respect thereto having been entered into by any Guarantor, for the benefit of Borrowers. General criteria for Eligible Credit Card Receivables may only be changed and any new criteria for Eligible Credit Card Receivables may only be established by Agent in good faith, upon notice to Borrower Agent, based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Credit

15

Card Receivables in the good faith determination of Agent. Any Credit Card Receivables that are not Eligible Credit Card Receivables shall nevertheless be part of the Collateral.

          1.37 "Eligible Equipment" shall mean, as to each Borrower, Equipment owned by such Borrower and included in an appraisal of Equipment received by Agent in accordance with the requirements of Agent (including Equipment acquired by such Borrower after the date hereof), which Equipment is in good order, repair, running and marketable condition (ordinary wear and tear excepted) and in each case acceptable to Agent in good faith based on the criteria set forth below. In general, Eligible Equipment shall not include: (a) Equipment at premises other than those owned or leased and controlled by any Borrower; (b) Equipment subject to a security interest or lien in favor of any person other than Agent except those permitted hereunder that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent); (c) Equipment located outside the United States of America; (d) Equipment that is not subject t o the first priority, valid and perfected security interest of Agent; (e) damaged or defective Equipment or Equipment not used or usable in the ordinary course of such Borrower's business as presently conducted. Any Equipment that is not Eligible Equipment shall nevertheless be part of the Collateral.

          1.38 "Eligible Inventory" shall mean, as to each Borrower, Inventory of such Borrower consisting of finished goods held for resale in the ordinary course of the business of such Borrower, in each case which are acceptable to Agent in good faith based on the criteria set forth below. In general, Eligible Inventory shall not include (a) spare parts for equipment; (b) packaging and shipping materials; (c) supplies used or consumed in such Borrower's business; (d) Inventory at premises other than those owned or leased and controlled by any Borrower; (e) Inventory subject to a security interest or lien in favor of any Person other than Agent except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent; (f) bill and hold goods; (g) obsolete Inventory; (h) Inventory which is not subject to the first priority, valid and perfected security interest of Agent; (i) Inventory that is past the expiration date; (j) Inventory that is held for return to vendors (other than undamaged overstock allowed to be returned to a vendor under the return policy between a Borrower and the vendor that is on terms and conditions acceptable to Agent in good faith); (k) damaged and/or defective Inventory; (l) Inventory purchased or sold on consignment and (m) Inventory located outside the United States of America. The criteria for Eligible Inventory set forth above may only be changed and any new criteria for Eligible Inventory may only be established by Agent in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Inventory in the good fa ith determination of Agent. Any Inventory that is not Eligible Inventory shall nevertheless be part of the Collateral.

          1.39 "Eligible Prescription Files" shall mean, as to each Borrower, Prescription Files of such Borrower arising and maintained in the ordinary course of the business of such Borrower and included in an appraisal of Prescription Files received by Agent in accordance with the requirements of Agent (including Prescription Files acquired by such Borrower after the date hereof), in each case which are acceptable to Agent in good faith based on the criteria set forth

16

below. In general, Eligible Prescription Files shall not include (a) Prescription Files at premises other than those owned or leased and controlled by any Borrower; (b) Prescription Files subject to a security interest or lien in favor of any Person other than Agent except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent; (c) Prescription Files that are not in a form that may be sold or otherwise transferred or are subject to regulatory restrictions on the transfer thereof that are not acceptable to Agent in good faith, provided that, the existing limitations as of the date hereof applicable in the States of Ohio and Michigan that the transferee have the licenses required under applicable State law to operate a pharmacy and sell products subject to a prescription shall be deemed acceptable to Agent. The criteria for Eligible Prescription Files set forth abov e may only be changed and any new criteria for Eligible Prescription Files may only be established by Agent in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the value of the Prescription Files or ability of Agent to sell or otherwise dispose of them in the good faith determination of Agent. Any Prescription Files that are not Eligible Prescription Files shall nevertheless be part of the Collateral.

          1.40 "Eligible Real Property" shall mean, as to each Borrower, Real Property owned by such Borrower in fee simple and included in an appraisal of such Real Property received by Agent in accordance with the requirements of Agent (including Real Property acquired by such Borrower after the date hereof) and in each case acceptable to Agent in good faith based on the criteria set forth below. In general, Eligible Real Property shall not include: (a) Real Property which is not owned and operated by a Borrower (and for this purpose vacant land or Real Property, including any closed retail store location, that is actively managed by a Borrower shall be deemed to be "operated" by such Borrower); (b) Real Property subject to a security interest, lien or mortgage or other encumbrance in favor of any person other than Agent, except those permitted hereunder that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such lien and Agent or are otherwise acceptable to Agent); (c) Real Property that is not located in the United States of America; (d) Real Property that is not subject to the valid and enforceable, first priority, perfected security interest, lien and mortgage of Agent; (e) Real Property where Agent determines that issues relating to compliance with Environmental Laws adversely affect in any material respect the value thereof or the ability of Agent to sell or otherwise dispose thereof (but subject to the right of Agent to establish Reserves after the date hereof to reflect such adverse affect); and (f) Real Property improved with residential housing. Any Real Property that is not Eligible Real Property shall nevertheless be part of the Collateral.

          1.41 "Eligible Transferee" shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and

17

similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (A) any other commercial bank having a combined capital and surplus of at least $250,000,000 or financial institution having a net worth (or the equivalent thereof in the case of an investment partnership, managed account, limited liability company or similar entity) calculated in accordance with applicable generally accepted accounting principles of not less than $100,000,000, or "accredited investor" (as defined in Regulation D under the Securities Act) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business having a net worth (or the equivalent thereof in the case of an investment partnership, managed account, limited liability company or similar entity) calculated in accordance with applicable generally accepted a ccounting principles of not less than $100,000,000, and in each case, approved by Agent, provided, that, (ii) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee and (iii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as Agent may otherwise specifically agree.

          1.42 "Environmental Laws" shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower or Guarantor and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting r equirements respecting Hazardous Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

          1.43 "Equipment" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

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          1.44 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, together with all rules, regulations and interpretations thereunder or related thereto.

          1.45 "ERISA Affiliate" shall mean any person required to be aggregated with any Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

          1.46 "ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the occurrence of a non-exempt "prohibited transaction" with respect to which any Borrower, Guarantor or any of its or their respective Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of the Code) or with respect to which any Borrower, Guarantor or any of its or their respective Subsidiaries could o therwise be liable; (f) a complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to terminate a Plan subject to Title IV of ERISA, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of $5,000,000 and (j) any other event or condition with respect to a Plan including any Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in an increase of $5,000,000 or more in the amount required to be paid by any Borrower in any year in excess of the amount such Borrower would have been required but for such event or condition.

          1.47 "Eurodollar Rate" shall mean with respect to the Interest Period for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is offered deposits of United States dollars in the London interbank market (or other Eurodollar Rate market selected by a Borrower and approved by Agent) on or about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and available to such Borrower in accordance with this Agreement, with a maturity of comparable duration to the Interest Period selected by or on behalf of a Borrower.

          1.48 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

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          1.49 "Event of Default" shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

          1.50 "Excess Availability" shall mean the amount, as determined by Agent, calculated at any date, equal to:

                    (a) the lesser of: (i) the Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Accommodations), minus

                    (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations of such Borrower (but not including for this purpose Obligations of such Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of the other Borrowers or any outstanding Letter of Credit Accommodations), plus (ii) the amount of all Reserves then established in respect of Letter of Credit Accommodations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of such Borrower which are outstanding more than thirty (30) days past due as of such time (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus (iv) without duplication, the amount of checks issued by such Borrower to pay trade payables and other obligations which are more than thirty (30) days past due as of such time (other than trade payables or other obligat ions being contested or disputed by such Borrower in good faith), but not yet sent.

          1.51 "Exchange Act" shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

          1.52 "Existing Lenders" shall mean the lenders to Borrowers listed on Schedule 1.52 hereto (and including Standard Federal Bank, formerly known as Michigan National Bank in its capacity as agent acting for such lenders) and their respective predecessors, successors and assigns.

          1.53 "Existing Letters of Credit" shall mean, collectively, the letters of credit issued for the account of a Borrower or Guarantor or for which such Borrower or Guarantor is otherwise liable listed on Schedule 1.53 hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.54 "Farm Products" shall mean crops, livestock, supplies used or produced in a farming operation and products of crops or livestock and including farm products as such term is defined in the Food Security Act and the UCC.

          1.55 "Farm Products Sellers" shall mean, collectively, sellers or suppliers to any Borrower of any farm product (as such term is defined in the Food Security Act and the UCC) and including any perishable agricultural commodity (as defined in PACA) or livestock (as defined in the PSA), meat, meat food products or livestock products derived therefrom or any poultry or poultry products derived therefrom; sometimes being referred to herein individually as a "Farm Product Seller".

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          1.56 "Fee Letter" shall mean the amended and restated letter agreement, dated of even date herewith, by and among Borrowers, Guarantors and Agent, setting forth certain fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.57 "Financing Agreements" shall mean, collectively, this Agreement and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or Obligor in connection with this Agreement.

          1.58 "Fiscal Intermediary" shall mean any qualified insurance company or other financial institution that has entered into an ongoing relationship with any Governmental Authority to make payments to payees under Medicare, Medicaid or any other Federal, State or local public health care or medical assistance program pursuant to any of the Health Care Laws.

          1.59 "Fixed Asset Availability" shall mean the amount equal to the lesser of:

                    (a) the Fixed Asset Availability Limit; or

                    (b) the sum of:

                              (i) sixty (60%) percent of the fair market value of Eligible Real Property as set forth in the most recent acceptable appraisal (or acceptable updates of existing appraisals) of such Real Property received by Agent in accordance with Section 7.4 hereof, plus

                              (ii) eighty-five (85%) percent of the forced liquidation value of the Eligible Equipment as set forth in the most recent acceptable appraisal (or acceptable updates of existing appraisals) of such Equipment received by Agent in accordance with Section 7.4 hereof, net of estimated liquidation expenses, costs and commissions;

Provided, that, the Fixed Asset Availability shall be reduced as of the first day of each month, commencing on the first day of the month after the date hereof, by an amount equal to the initial Fixed Asset Availability divided by eighty-four (84).

          1.60 "Fixed Asset Availability Limit" shall mean $40,000,000.

          1.61 "Food Security Act" shall mean the Food Security Act of 1984, 7 U.S.C. Section 1631 et. seq., as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

          1.62 "Food Security Act Notices" shall have the meaning set forth in Section 8.21 hereof.

          1.63 "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are

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applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Section 9.18 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof.

          1.64 "Governmental Authority" shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

          1.65 "Guarantors" shall have the meaning assigned thereto in the preamble to this Agreement.

          1.66 "Hazardous Materials" shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated biphenyls, pesticides, herbicides, sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

          1.67 "Health Care Laws" shall mean all Federal, State and local laws, rules, regulations, interpretations, guidelines, ordinances and decrees primarily relating to patient healthcare, any health care provider, medical assistance and cost reimbursement program, as now or at any time hereafter in effect, applicable any Borrower or Guarantor, including, but not limited to, the Social Security Act, the Social Security Amendments of 1972, the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, the Medicare and Medicaid Patient and Program Protection Act of 1987 and HIPAA.

          1.68 "HIPAA" shall mean the Health Insurance Portability and Accountability Act of 1996, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

          1.69 "Indebtedness" shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (except any such balance that constitutes an account payable to a trade creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed by such Person in the ordinary course of business of such Person in connection with obtaining goods, materials or services that is not overdue by more than ninety (90) days, unless the trade payable is being contested in good faith); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase,

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or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker's acceptances, drafts or similar documents or instruments issued for such Person's account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) all obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; and (j) the principal and interest portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP.

          1.70 "Information Certificate" shall mean, collectively, the Information Certificates of Borrowers and Guarantors constituting Exhibit C hereto containing material information with respect to Borrowers and Guarantors, their respective businesses and assets provided by or on behalf of Borrowers and Guarantors to Agent in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein.

          1.71 "Intellectual Property" shall mean, as to each Borrower and Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright registrations, trademarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or the license of any trademark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

          1.72 "Interest Expense" shall mean, for any period, as to any Person, as determined in accordance with GAAP, the total interest expense of such Person, whether paid or accrued during such period (including the interest component of Capital Leases for such period), including, without limitation, discounts in connection with the sale of any Accounts, but excluding interest paid in property other than cash and any other interest expense not payable in cash.

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          1.73 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), three (3) or six (6) months duration as any Borrower may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; provided, that, such Borrower may not elect an Interest Period which will end after the last day of the then-current term of this Agreement.

          1.74 "Interest Rate" shall mean,

                    (a) Subject to clauses (b) and (c) of this definition below:

                              (i) as to Prime Rate Loans, a rate equal to three-quarters (3/4%) percent per annum in excess of the Prime Rate;

                              (ii) as to Eurodollar Rate Loans, a rate equal to three (3%) percent per annum in excess of the Adjusted Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for the relevant Interest Period, whether such rate is higher or lower than any rate previously quoted to a Borrower);

                    (b) Subject to clause (c) of this definition below, effective as of the first (1st) day of the second calendar month after the date hereof, the Interest Rate payable by each Borrower shall be increased or decreased, as the case may be, (i) as to Prime Rate Loans, to the rate equal to the Applicable Margin for Prime Rate Loans on a per annum basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the rate equal to the Applicable Margin for Eurodollar Rate Loans on a per annum basis in excess of the Adjusted Eurodollar Rate.

                    (c) Notwithstanding anything to the contrary contained in clauses (a) and (b) of this definition, the Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall be the highest percentage set forth in the definition of the term Applicable Margin for each category of Loans (without regard to the amount of Monthly Average Excess Availability) plus two (2%) percent per annum, at Agent's option, (i) for the period (A) from and after the effective date of termination or non-renewal hereof until Agent and Lenders have received full and final payment of all outstanding and unpaid Obligations which are not contingent and cash collateral or letter of credit, as Agent may specify, in the amounts and on the terms required under Section 13.1 hereof for contingent Obligations (notwithstanding entry of a judgment against any Borrower or Guarantor) and (B) from and after the date of the occurren ce of an Event of Default and for so long as such Event of Default is continuing and (ii) on Loans to a Borrower at any time outstanding in excess of the Borrowing Base of such Borrower (whether or not such excess(es) arise or are made with or without the knowledge or consent of Agent or any Lender and whether made before or after an Event of Default).

          1.75 "Interest Rate Protection Agreements" shall mean, collectively, any interest rate protection agreements and other types of interest rate hedging agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) between an Obligor and an Affiliate of Agent, or another financial institution acceptable to Agent, designed to protect against or manage exposure to fluctuations in interest rates; sometimes being referred to herein individually as an "Interest Rate Protection Agreement".

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          1.76 "Inventory" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower for sale or lease or to be furnished under a contract of service; (c) are furnished by such Borrower or Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business

          1.77 "Investment Property Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor agreeing that such securities intermediary, commodity intermediary or other person will comply with entitlement orders originated by Agent with respect to such investment property, or other instructions of Agent and including such other terms and conditions as Agent may require.

          1.78 "Lead Borrower" shall mean Spartan Stores, Inc., a Michigan corporation in its capacity as Lead Borrower on behalf of itself and the other Borrowers pursuant to Section 6.7 hereof and it successors and assigns in such capacity.

          1.79 "Lenders" shall mean the financial institutions who are signatories hereto as Lenders and other persons made a party to this Agreement as a Lender in accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a "Lender".

          1.80 "Letter of Credit Accommodations" shall mean, collectively, the letters of credit, merchandise purchase or other guaranties which are from time to time either (a) issued or opened by Agent or any Lender for the account of any Borrower or Obligor or (b) with respect to which Agent or Lenders have agreed to indemnify the issuer or guaranteed to the issuer the performance by any Borrower or Obligor of its obligations to such issuer; sometimes being referred to herein individually as "Letter of Credit Accommodation".

          1.81 "License Agreements" shall have the meaning set forth in Section 8.11 hereof.

          1.82 "Loans" shall mean the loans now or hereafter made by or on behalf of any Lender or by Agent for the account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1 hereof.

          1.83 "Marion Real Property" shall mean the Real Property owned by Buckeye as of the date hereof located in Marion, Ohio and the assets related thereto described on Schedule 1.83 hereto.

          1.84 "Material Adverse Effect" shall mean a material adverse effect on (a) the financial condition, business, performance or operations of Borrowers and Guarantors (taken as a whole) or the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (b) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral (taken as a whole); (c) the Collateral (taken as a whole) or its value (taken as a whole), (d) the ability of Borrowers (taken as a whole) to repay the Obligations or of Borrowers (taken as a whole) to perform their obligations under this

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Agreement or any of the other Financing Agreements as and when to be performed; or (e) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements (taken as a whole).

          1.85 "Material Contract" shall mean (a) any contract or other agreement (other than the Financing Agreements or contracts relating to the purchase or sale of Inventory in the ordinary course of business)), written or oral, of any Borrower or Guarantor involving monetary liability of or to any Person in an amount in excess of $5,000,000 in any fiscal year and (b) any other contract or other agreement (other than the Financing Agreements or contracts relating to the purchase or sale of Inventory in the ordinary course of business), whether written or oral, to which any Borrower or Guarantor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

          1.86 "Maximum Credit" shall mean the amount of $170,000,000.

          1.87 "Medicaid" shall mean the health care financial assistance program jointly financed and administered by the Federal and State governments under Title XIX of the Social Security Act.

          1.88 "Medicaid Account" shall mean any Accounts of Borrowers or Guarantors arising pursuant to services rendered by Borrowers or Guarantors to eligible Medicaid beneficiaries to be paid by a Fiscal Intermediary or by the United States of America acting under the Medicaid program, any State or the District of Columbia acting pursuant to a health plan adopted pursuant to Title XIX of the Social Security Act or any other Governmental Authority under Medicaid.

          1.89 "Medicare" shall mean the health care financial assistance program under Title XVIII of the Social Security Act.

          1.90 "Medicare Account" shall mean any Accounts of Borrowers or Guarantors arising pursuant to goods sold or services rendered by Borrowers or Guarantors to eligible Medicare beneficiaries to be paid by a Fiscal Intermediary or by the United States of America acting under the Medicare program or any other Governmental Authority under Medicare.

          1.91 "Monthly Average Excess Availability" shall mean, at any time, the average of the aggregate amount of the Excess Availability of Borrowers during the immediately preceding calendar month as calculated by Agent in good faith based on the date of the information received by Agent with respect to the components of the Borrowing Base during such month.

          1.92 "Mortgages" shall mean, collectively, the mortgages, deeds of trust and deeds to secure debt with respect to Real Property of any Borrower or Guarantor in favor of, or for the benefit of Agent, as set forth on Schedule 1.92 hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.93 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower, Guarantor or any ERISA Affiliate.

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          1.94 "Net Proceeds" shall mean the aggregate cash proceeds payable to any Borrower or Guarantor in respect of any sale, lease, transfer or other disposition of any assets or properties, or interest in assets and properties or as proceeds of any loans or other financial accommodations provided to any Borrower or Guarantor or as proceeds from the issuance and/or sale of any Capital Stock, in each case net of the reasonable and customary direct costs relating to such sale, lease, transfer or other disposition or loans or other financial accommodation or issuance and/or sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), and amounts applied to the repayment of indebtedness secured by a valid and enforceable lien on the asset or assets that are the subject of such sale or othe r disposition required to be repaid in connection with such transaction. Net Proceeds shall exclude any non-cash proceeds received from any sale or other disposition or other transaction, but shall include such proceeds when and as converted by any Borrower or Guarantor to cash or other immediately available funds.

          1.95 "Net Recovery Percentage" shall mean the fraction, expressed as a percentage, as to Inventory, (a) the numerator of which is the amount equal to the amount of the recovery in respect of the Inventory at such time, as to Inventory of the Retail Division, on a "going-out-of-business sale" basis, and as to Inventory of the Distribution Division and the United Wholesale Division, on a "net orderly liquidation value" basis as set forth in the most recent acceptable appraisal of Inventory received by Agent in accordance with Section 7.3, in each case, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the applicable original cost of the aggregate amount of the Inventory subject to such appraisal.

          1.96 "Obligations" shall mean (a) any and all Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any Lender and/or any of their Affiliates, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or in direct, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations of Borrowers or Guarantors to a Lender or an Affiliate of Lender, or another financial institution acceptable to Agent, arising under or pursuant to an Interest Rate Protection Agreement in each case acceptable to Agent, provided, that, upon Agent's request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with such Lender, Affiliate or other Person that is a counterparty to such Interest Rate Protection Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Lender, Affiliate or other Person, as the case m ay be, in connection with such arrangements. In no event shall the party to such Interest Rate Protection Agreement to whom such obligations are owed be deemed a Lender

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for purposes hereof to the extent of and as to such obligations other than for purposes of Section 5.1 hereof and other than for purposes of Sections 12.1, 12.2, 12.5, 12.6, 12.7 and 12.12 hereof.

          1.97 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (including, without limitation, Guarantors), other than Borrowers.

          1.98 "PACA" shall mean the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. Section 499a et. seq., as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

          1.99 "PSA" shall mean the Packers and Stockyard Act of 1921, 7 U.S.C. Section 181 et. seq., as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

          1.100 "Parent" shall mean Spartan Stores, Inc., a Michigan corporation, and its successors and assigns.

          1.101 "Participant" shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Loans and Letter of Credit Accommodations in conformity with the provisions of Section 13.7 of this Agreement governing participations.

          1.102 "Person" or "person" shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

          1.103 "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years.

          1.104 "Prescription Files" shall mean, as to each Borrower and Guarantor, all of such Borrower's or Guarantor's now owned or hereafter existing or acquired retail customer files, including prescriptions for retail customers and other medical information related thereto, maintained by the retail pharmacies of Borrowers and Guarantors, wherever located.

          1.105 "Prescription File Availability" shall mean the lesser of: (a) seventy-five (75%) percent of the "net orderly liquidation value" of the Eligible Prescription Files based on the most recent acceptable appraisal thereof received by Agent using the average of the average recovery under each of the percent of script sales method, the dollars per average number of scripts filled per week method and the percent of past year script margin method (or such other methodology or methodologies as may be acceptable to Agent), net of estimated liquidation expenses, costs and commissions, or (b) $10,000,000.

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          1.106 "Prime Rate" shall mean the rate from time to time publicly announced by Wachovia Bank, National Association, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank.

          1.107 "Prime Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof.

          1.108 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender's Commitment and the denominator of which is the aggregate amount of all of the Commitments of Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; provided, that, if the Commitments have been terminated, the numerator shall be the unpaid amount of such Lender's Loans and its interest in the Letter of Credit Accommodations and the denominator shall be the aggregate amount of all unpaid Loans and Letter of Credit Accommodations.

          1.109 "Provision for Taxes" shall mean an amount equal to all taxes imposed on or measured by net income, whether Federal, State, Provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.

          1.110 "Real Property" shall mean all now owned and hereafter acquired real property of each Borrower and Guarantor, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located, including the real property and related assets more particularly described in the Mortgages.

          1.111 "Receivables" shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borro wer or Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary).

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          1.112 "Records" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any Account Debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower or Guarantor with respect to the foregoing maintained with or by any other person).

          1.113 "Reference Bank" shall mean Wachovia Bank, National Association, or such other bank as Agent may from time to time designate.

          1.114 "Refinancing Indebtedness" shall have meaning set forth in Section 9.9 hereof.

          1.115 "Renewal Date" shall the meaning set forth in Section 13.1 hereof.

          1.116 "Register" shall have the meaning set forth in Section 13.7 hereof.

          1.117 "Required Lenders" shall mean, at any time, those Lenders whose Pro Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom at least fifty-one (51%) percent of the then outstanding Obligations are owing.

          1.118 "Reserves" shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith reducing the amount of Loans and Letter of Credit Accommodations which would otherwise be available to any Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which adversely affect, or have a reasonable likelihood of adversely affecting (i) the assets or business of Borrowers, including the Collateral or its value or the amount that might be obtained upon the sale or other disposition or realization on such Collateral or (ii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent's good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or Obligor to Agent is or was incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in good faith constitutes a Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, at Agent's option in good faith, be established to reflect: (i) chargebacks with respect to Accounts, (ii) returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts, (iii) the sales, excise or similar taxes included in the amount of any Accounts reported to Agent, (iv) a change in the turnover, age or mix of the categories of Inventory that adversely affects the aggregate value of all Inventory, (v) variances between the perpetual inventory records of Borrowers (to the extent such perpetual inventory records are maintained) and the results of the test counts of the Inventory that is subject to such perpetual inventory records conducted by Agent with respect thereto in excess of the percentage acceptable to Agent, (vi) variances between the inventory records of Borrowers and Guarantors and the results of test counts or physical counts of inventory with respect thereto, (vii) upon the establishment of reliable,

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consistent and accurate stock ledger inventory system at the Retail Division, variances between the stock ledger inventory report for non-perishable items in the Retail Division and the general ledger with respect thereto; (viii) the failure of Borrowers and Guarantors to establish a reliable, consistent and accurate stock ledger inventory system at the Retail Division on or before March 31, 2004, and failure of Agent to receive evidence, in form and substance satisfactory to it of the establishment of such a system by such date, (ix) in the event that the United Wholesale Division Assets are not sold pursuant to the terms of the United Wholesale Sale Agreements on or before March 31, 2004, the variances, lack of detail and information and other deficiencies in the inventory reporting systems of the United Wholesale Division, (x) amounts owing by Borrowers to Credit Card Issuers or Credit Card Processors in connection with the Credit Card Agreements, (xi) amounts due or to become due in respect of sales, exc ise, use and/or withholding taxes, (xii) liabilities of any Borrower or Guarantor that are entitled to receive the benefit of a security interest or trust pursuant to the PACA, the PSA or any other similar state law (provided, that, as of the date hereof, Borrowers represent that there are no such liabilities under the PSA since Borrowers have written agreements providing for the extension of credit to them for all purchases of meat, meat products and livestock products by Borrowers), (xiii) inventory shrinkage, (xiv) the aggregate amount of merchandise gift certificates and coupons, (xv) any rental payments, service charges or other amounts to become due to lessors of real property to the extent Inventory, Equipment or Records are located in or on such property or such Records are needed to monitor or otherwise deal with the Collateral (except for rents and amounts due for the lease of Real Property by Borrowers where Agent has received a Collateral Access Agreement in a form acceptable to Age nt, provided, that, in the event that Agent has not received a Collateral Access Agreement or has received a Collateral Access Agreement that does not have terms that are acceptable to Agent for any retail store location that is leased by a Borrower, the Reserves established in respect of such location pursuant to this clause (xvi) shall not exceed at any time the lesser of (A) the aggregate of amounts payable to the owners and lessors of such location for the next two (2) months from any such time and including amounts if any, then outstanding and unpaid owed by a Borrower to such owners and lessors or (B) the value of the Eligible Equipment and Eligible Inventory at such location to the extent included in the Borrowing Base, except that such limitation on the amount of the Reserves shall not apply at any time that a Default or Event of Default shall exist or have occurred and be continuing, or a notice of any default or event of default under the lease with respect to such location has been received by or on behalf of any Borrower or Guarantor (except where the existence of the default specified in such notice is being disputed in good faith by such Borrower or Guarantor provided that such Borrower or Guarantor is continuing to pay rent and all other amounts payable under the lease with respect to such premises or if not, then is paying such rent and other amounts into escrow so that such funds will be available to the lessor in the event that such Borrower or Guarantor does not succeed in such dispute) or a Borrower has granted to the owner and lessor a security interest or lien upon any assets of such Borrower, (xvii) reductions in the number of repeat prescriptions, the average volume of prescriptions being filled, or the change in the mix of the types of payors with respect to sales of prescriptions, or any other changes to the factors identified in any appraisal that adversely affect the amount that may be recovered by Agent from the sale or other disposition of the Prescription Files (provided, < U>that, Borrowers may at any time and from time to time obtain appraisals that satisfy the requirements of Agent provided for herein with respect to the Prescription Files, and to the extent that the Borrowing Base has been adjusted to reflect the then current value of the Eligible Prescription Files based on the results of

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such appraisal, such Reserves shall not be established), (xviii) any statutory or regulatory changes after the date hereof, or as to Ohio and Michigan laws are not disclosed in the opinions of counsel to Borrowers addressed and delivered to Agent on the date hereof, that adversely affect the transferability of the Prescription Files, (xix) obligations (contingent or otherwise) of Borrowers or Guarantors to any Affiliate of Agent or a Lender or any other Person arising under or in connection with any Interest Rate Protection Agreement of any Borrower or Guarantor with such Affiliate or Person or as such Affiliate or Person may otherwise require in connection therewith to the extent that such obligations constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Agent in any Collateral, provided, that, the amount of the Reserves in respect of such obligations shall be based on the amount of the liability of Borrowers or Guarantors as agreed by the other p arty or parties to the Interest Rate Protection Agreements and reported by such other party or parties to Agent in a form and substance satisfactory to Agent. To the extent Agent may revise the lending formulas used to determine the Borrowing Base or establish new criteria or revise existing criteria for Eligible Accounts or Eligible Inventory so as to address any circumstances, condition, event or contingency in a manner satisfactory to Agent, Agent shall not establish a Reserve for the same purpose. The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by Agent in good faith.

          1.119 "Retail Division" shall mean, collectively (together with their respective successors and assigns): Family Fare, Prevo, MSFC, Seaway, Custer, Pharm, Gruber Food Town and Gruber RE.

          1.120 "Social Security Act" shall mean the Social Security Act, 92 U.S.C. $$1396, et seq, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

          1.121 "Solvent" shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability a s reduced to reflect the probability of it becoming a matured liability).

          1.122 "Special Agent Advances" shall have the meaning set forth in Section 12.11 hereof.

          1.123 "Store Accounts" shall have the meaning set forth in Section 6.3 hereof.

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          1.124 "Subsidiary" or "subsidiary" shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

          1.125 "Supplemental Loan Agent" shall mean Kimco Capital Spartan, L.L.C., in its capacity as agent acting for and on behalf of the Supplemental Loan Lenders pursuant to the Supplemental Loan Lender Agreements, and any replacement or successor agent in such capacity, and their respective successors and assigns.

          1.126 "Supplemental Loan Agreement" shall mean the Loan Agreement, dated of even date herewith, by and among Supplemental Loan Agent, Supplemental Loan Lenders, Parent as the borrower thereunder and the other Borrowers and Guarantors as the guarantors thereunder, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.127 "Supplemental Loan Debt" shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by any Borrower or Guarantor to Supplemental Loan Lenders, including principal, interest, charges, fees, premiums, indemnities, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under the Supplemental Loan Lender Agreements.

          1.128 "Supplemental Loan Guarantors" shall mean, collectively, the Borrowers and Guarantors listed on Schedule 1.128 hereto that have guaranteed the Indebtedness of Parent to Supplemental Loan Lenders arising under the Supplemental Loan Agreement.

          1.129 "Supplemental Loan Intercreditor Agreement" shall mean the Intercreditor and Subordination Agreement, dated of even date herewith, by and between Agent and Supplemental Loan Agent , as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.130 "Supplemental Loan Lenders" shall mean, collectively, (together with their respective successors and assigns): (a) Kimco Capital Spartan L.L.C. and (b) the other parties to the Supplemental Loan Agreement from time to time as a lender; sometimes being referred to herein individually as a "Supplemental Loan Lender".

          1.131 "Supplemental Loan Lender Agreements" shall mean, collectively, the following (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced): (a) the Supplemental Loan Agreement; (b) the agreements, documents and instruments set forth on Schedule 1.131 hereto; and (d) all other agreements, documents and instruments at any time executed and/or delivered by any Borrower or Guarantor with, to or in favor of Supplemental Loan Agent or any Supplemental Loan Lender in connection

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therewith or related thereto; sometimes being referred to herein individually as a "Supplemental Loan Lender Agreement".

          1.132 "Supplemental Loan Priority Collateral" shall mean the leasehold interests of Borrowers and Guarantors in Real Property that are subject to the valid and enforceable first priority security interests and mortgages and liens of Supplemental Loan Agent and described on Schedule 1.132 hereto.

          1.133 "Third Party Payor" shall mean any Person, such as, a Fiscal Intermediary, Blue Cross/Blue Shield, or private health insurance company, which is obligated to reimburse or otherwise make payments to health care providers who provide medical care or medical assistance or other goods or services for eligible patients under Medicare, Medicaid or any private insurance contract.

          1.134 "UCC" shall mean the Uniform Commercial Code as in effect in the State of Illinois, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of Illinois on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine).

          1.135 "United Wholesale Division" shall mean United.

          1.136 "United Wholesale Division Assets" shall mean the assets and properties of the United Wholesale Division as described on Schedule 1.136 hereto.

          1.137 "United Wholesale Sale Agreements" shall mean, collectively, the agreements, documents and instruments listed on Schedule 1.137 hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

          1.138 "Value" shall mean, as determined by Agent in good faith, with respect to Inventory, the lower of (A) cost computed on a first-in first-out basis in accordance with GAAP or (b) market value, provided, that, for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate on the sale thereof to any Borrower (other than the profit of the Distribution Division for sales of Inventory to the Retail Division in the ordinary course of business consistent with current practices and for sales at prices no more than the Retail Division could purchase such Inventory from a person that is not an Affiliate), (B) the amount of cigarette taxes that are capitalized in inventory, or (C) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the In ventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Agent prior to the date hereof, if any (except to the extent that the method of calculation of the cost may be affected by the establishment of a reliable, consistent and accurate stock ledger inventory system at the Retail Division in accordance with the terms hereof).

          1.139 "Voting Stock" shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time

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Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

          1.140 "Weighted Average Life to Maturity" shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

SECTION 2 CREDIT FACILITIES

          2.1 Loans.

                    (a) Subject to and upon the terms and conditions contained herein, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to Borrowers from time to time in amounts requested by a Borrower up to the amount outstanding at any time equal to the lesser of: (i) the Borrowing Base at such time or (ii) the Maximum Credit.

                    (b) Except in Agent's discretion, with the consent of all Lenders, or as otherwise provided herein, (i) the aggregate amount of the Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed the Maximum Credit and (ii) the aggregate principal amount of the Loans and Letter of Credit Accommodations outstanding at any time shall not exceed the Borrowing Base.

                    (c) In the event that the aggregate principal amount of the Loans and Letter of Credit Accommodations outstanding exceed the Borrowing Base, or the aggregate amount of the outstanding Letter of Credit Accommodations exceed the sublimit for Letter of Credit Accommodations set forth in Section 2.2(e), or the aggregate amount of the Loans and Letter of Credit Accommodations exceed the Maximum Credit, such event shall not limit, waive or otherwise affect any rights of Agent or Lenders in such circumstances or on any future occasions and Borrowers shall, upon demand by Agent, which may be made at any time or from time to time, immediately repay to Agent the entire amount of any such excess(es) for which payment is demanded.

          2.2 Letter of Credit Accommodations.

                    (a) Subject to and upon the terms and conditions contained herein, at the request of a Borrower, Agent agrees, for the ratable risk of each Lender according to its Pro Rata Share, to provide or arrange for Letter of Credit Accommodations for the account of such Borrower containing terms and conditions acceptable to Agent and the issuer thereof (which issuer shall be Wachovia Bank, National Association, a Lender or such other institution reasonably acceptable to Agent and Parent). Any payments made by or on behalf of Agent or any Lender to any issuer thereof and/or related parties in connection with the Letter of Credit Accommodations provided

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to or for the benefit of a Borrower shall constitute additional Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

                    (b) In addition to any charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations, Borrowers shall pay to Agent, for the benefit of Lenders, monthly a letter of credit fee at a rate equal to two and one-quarter (2 1/4%) percent per annum on the daily outstanding balance of the Letter of Credit Accommodations during the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, provided, that, effective as of the first (1st) day of the second calendar month after the date hereof, such percentage shall be increased or decreased, as the case may be, to the percentage (on a per annum basis) set forth below if the Monthly Average Excess Availability for the immediately preceding calendar month is at or within the amounts indicated for such percentages:

Tier	Monthly Average Excess Availability	Applicable Letter of Credit Fee Margin
1	$50,000,000 or more	2%
2	Greater than or equal to $25,000,000 and less than $50,000,000	2 1/4%
3	Less than $25,000,000	2 1/2%

Provided, that, (i) the applicable percentage shall be calculated and established once each calendar month and shall remain in effect until adjusted thereafter after the end of the next calendar month, (ii) notwithstanding the amount of the Monthly Average Excess Availability, for each month prior to the month commencing July 1, 2004, in no event shall the Applicable Letter of Credit Fee Margin be less than the percentage set forth in Tier 2 of the schedule above and (iii) notwithstanding anything to the contrary contained herein, Agent may, and upon the written direction of Required Lenders shall, require Borrowers to pay to Agent for the benefit of Lenders, such letter of credit fee at a rate equal to four and one-half (4 1/2%) percent per annum on such daily outstanding balance (A) for the period (1) from and after the effective date of termination or non-renewal hereof until Agent and Lenders have received full and final payment of all outstanding and unpaid Obligations which are not con tingent and cash collateral or letter of credit, as Agent may specify, in the amounts and on the terms required under Section 13.1 hereof for contingent Obligations (notwithstanding entry of a judgment against any Borrower or Guarantor) and (2) from and after the date of the occurrence of an Event of Default and for so long as such Event of Default is continuing. Such letter of credit fee shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination of this Agreement.

                    (c) The Borrower requesting such Letter of Credit Accommodation shall give Agent two (2) Business Days' prior written notice of such Borrower's request for the issuance of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit Accommodation requested, the effective date (which

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date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit Accommodation, whether such Letter of Credit Accommodations may be drawn in a single or in partial draws, the date on which such requested Letter of Credit Accommodation is to expire (which date shall be a Business Day), the purpose for which such Letter of Credit Accommodation is to be issued, and the beneficiary of the requested Letter of Credit Accommodation. The Borrower requesting the Letter of Credit Accommodation shall attach to such notice the proposed terms of the Letter of Credit Accommodation.

                    (d) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit Accommodations shall be available unless each of the following conditions precedent have been satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of Credit Accommodation shall have delivered to the proposed issuer of such Letter of Credit Accommodation at such times and in such manner as such proposed issuer may require, an application, in form and substance satisfactory to such proposed issuer and Agent, for the issuance of the Letter of Credit Accommodation and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit Accommodation; and (iii) the Excess Availability of the Borrower requesting such Letter of Credit Accommodation, prior to giving effect to any Reserves with respect to such Letter of Credit Accommodations, on the date of the proposed issuance of any Letter of Credit Accommodations, shall be equal to or greater than: (A) if the proposed Letter of Credit Accommodation is for the purpose of purchasing Eligible Inventory and the documents of title with respect thereto are consigned to the issuer, the sum of (1) the percentage equal to one hundred (100%) percent minus the then applicable percentage with respect to Eligible Inventory set forth in the definition of the term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of such Borrower's locations for Eligible Inventory within the United States of America and (B) if the proposed Letter of Credit Accommodation is for any other purpose or the documents of title are not consigned to the issuer in connection with a Letter of Credit Accommodation for the purpose of purchasing Inventory, an amount equal to one hundred (100%) percent of the face amount thereof and all other commitments and obligations made or incurred by Agent with respect thereto. Effective on the is suance of each Letter of Credit Accommodation, a Reserve shall be established in the applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

                    (e) Except in Agent's discretion, with the consent of all Lenders, the amount of all outstanding Letter of Credit Accommodations and all other commitments and obligations

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made or incurred by Agent or any Lender in connection therewith shall not at any time exceed $30,000,000.

                    (f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Agent or any Lender may suffer or incur in connection with any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect to any Letter of Credit Accommodation, except to the extent of losses, claims, damages, liabilities, costs or expenses resulting from the gross negligence or wilful misconduct of Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. As between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, and without limitation of any rights of any Borrower or Guarantor as against any issuer of a Let ter of Credit Accommodation, each Borrower and Guarantor assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower and Guarantor assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Borrower and Guarantor hereby releases and holds Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by any Borrower, Guarantor, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit Accommodation, except to the extent resulting from the gross negligence or wilful misconduct of Agent or any Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction. T he provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

                    (g) In connection with Inventory purchased pursuant to Letter of Credit Accommodations, Borrowers and Guarantors shall, at Agent's request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to, at such time as Agent may request, deliver them to Agent and/or subject to Agent's order, and if they shall come into such Borrower's or Guarantor's possession, to deliver them, upon Agent's request, to Agent in their original form, provided, that, Agent shall not exercise its rights under this clause (g) to have such persons deliver any cash, checks or Inventory to Agent unless a Default or Event of Default shall exist or have occurred and be continuing.. Borrowers and Guarantors shall also, at Agent's request, designate Agent as the consignee on all bills of lading and other negotiable a nd non-negotiable documents.

                    (h) Each Borrower and Guarantor hereby irrevocably authorizes and directs any issuer of a Letter of Credit Accommodation to name such Borrower or Guarantor as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by issuer pursuant to the Letter of Credit Accommodations and to accept and rely upon Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit Accommodations or the applications therefor. Nothing contained herein shall be deemed or construed to grant any Borrower or Guarantor any right or authority to pledge the credit of Agent or any Lender in any manner. Agent and Lenders shall have no liability of any

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kind with respect to any Letter of Credit Accommodation provided by an issuer other than Agent or any Lender unless Agent has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit Accommodation. Borrowers and Guarantors shall be bound by any reasonable interpretation made in good faith by Agent, or any other issuer or correspondent under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower or Guarantor, except as to any issuer without limiting the rights of any Borrower or Guarantor as against any issuer to the extent provided in clause (m) below.

                    (i) So long as no Event of Default exists or has occurred and is continuing, a Borrower may (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, and (iv) with Agent's consent, grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents, and agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral.

                    (j) At any time an Event of Default exists or has occurred and is continuing, Agent shall have the right and authority to, and Borrowers shall not, without the prior written consent of Agent, (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, (iv) grant any extensions of the maturity of, time of payments for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral. Agent may take such actions either in its own name or in any Borrower's n ame.

                    (k) Any rights, remedies, duties or obligations granted or undertaken by any Borrower or Guarantor to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have been granted or undertaken by such Borrower or Guarantor to Agent for the ratable benefit of Lenders. Any duties or obligations undertaken by Agent to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement by Agent in favor of any issuer or correspondent to the extent relating to any Letter of Credit Accommodation, shall be deemed to have been undertaken by Borrowers and Guarantors to Agent for the ratable benefit of Lenders and to apply in all respects to Borrowers and Guarantors.

                    (l) Immediately upon the issuance or amendment of any Letter of Credit Accommodation, each Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation to

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the extent of such Lender's Pro Rata Share of the liability with respect to such Letter of Credit Accommodation (including, without limitation, all Obligations with respect thereto).

                    (m) Each Borrower is irrevocably and unconditionally obligated, without presentment, demand or protest, to pay to Agent any amounts paid by an issuer of a Letter of Credit Accommodation with respect to such Letter of Credit Accommodation (whether through the borrowing of Loans in accordance with Section 2.2(a) or otherwise); provided, that, nothing contained herein shall be construed to limit or waive any right of any Borrower to assert against an issuer of a Letter of Credit Accommodation any claim for direct damages suffered by such Borrower to the extent caused by the gross negligence or wilful misconduct of the issuer in determining whether a request presented under any Letter of Credit Accommodation issued by it complied with the terms of such Letter of Credit Accommodation. In the event that any Borrower fails to pay Agent on the date of any payment under a Letter of Credit Accommodation in an amount equal to the amount of such pa yment, Agent (to the extent it has actual notice thereof) shall promptly notify each Lender of the unreimbursed amount of such payment and each Lender agrees, upon one (1) Business Day's notice, to fund to Agent the purchase of its participation in such Letter of Credit Accommodation in an amount equal to its Pro Rata Share of the unpaid amount. The obligation of each Lender to deliver to Agent an amount equal to its respective participation pursuant to the foregoing sentence is absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuance of any Event of Default, the failure to satisfy any other condition set forth in Section 4 or any other event or circumstance. If such amount is not made available by a Lender when due, Agent shall be entitled to recover such amount on demand from such Lender with interest thereon, for each day from the date such amount was due until the date such amount is paid to Agent at the interest rate then payable by any Borrower in respe ct of Loans that are Prime Rate Loans as set forth in Section 3.1(a) hereof.

          2.3 Commitments. The aggregate amount of each Lender's Pro Rata Share of the Loans and Letter of Credit Accommodations shall not exceed the amount of such Lender's Commitment, as the same may from time to time be amended in accordance with the provisions hereof.

          2.4 Joint and Several Liability. All Borrowers shall be jointly and severally liable for all amounts due to Agent and Lenders under this Agreement and the other Financing Agreements, regardless of which Borrower actually receives the Loans or Letter of Credit Accommodations hereunder or the amount of such Loans received or the manner in which Agent or any Lender accounts for such Loans, Letter of Credit Accommodations or other extensions of credit on its books and records. All references herein or in any of the other Financing Agreements to any of the obligation of Borrowers to make any payment hereunder or thereunder shall constitute joint and several obligations of Borrowers. The Obligations with respect to Loans made to a Borrower, and the Obligations arising as a result of the joint and several liability of a Borrower hereunder, with respect to Loans made to the other Borrowers, shall be separate and distinct obligations, but all such other Obligations shall b e primary obligations of all Borrowers. The Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letter of Credit Accommodations or other extensions of credit made to the other Borrowers shall, to the fullest extent permitted by law, be unconditional irrespective of (a) the validity or enforceability, avoidance or subordination of the Obligations of the other

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Borrowers or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrowers, (b) the absence of any attempt to collect the Obligations from the other Borrowers, any Guarantor or any other security therefor, or the absence of any other action to enforce the same, (c) the waiver, consent, extension, forbearance or granting of any indulgence by Agent or any Lender with respect to any provisions of any instrument evidencing the Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter executed by the other Borrowers and delivered to Agent or any Lender, (d) the failure by Agent or any Lender to take any steps to perfect and maintain its security interest in, or to preserve its rights and maintain its security or collateral for the Obligations of the other Borrowers, (e) the election of Agent and Lenders in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (f) t he disallowance of all or any portion of the claim(s) of Agent or any Lender for the repayment of the Obligations of the other Borrowers under Section 502 of the Bankruptcy Code, or (g) any other circumstances which might constitute a legal or equitable discharge or defense of a Guarantor or of the other Borrowers other than to the extent of the gross negligence or wilful misconduct of Agent or a Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. With respect to the Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letter of Credit Accommodations or other extensions of credit made to the other Borrowers hereunder, each Borrower waives, until the Obligations shall have been paid in full and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent or any Lender now has or may hereafter have against any Borrower or Guarantor and any benefit of , and any right to participate in, any security or collateral given to Agent or any Lender. Upon any Event of Default, and for so long as such Event of Default is continuing, Agent may proceed directly and at once, without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrowers or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that Agent and Lenders shall be under no obligation to marshall any assets in favor of Borrower(s) or against or in payment of any or all of the Obligations.

SECTION 3 INTEREST AND FEES

          3.1 Interest.

                    (a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Loans at the Interest Rate. All interest accruing hereunder on and after the date of any Event of Default or termination hereof shall be payable on demand.

                    (b) Each Borrower may from time to time request Eurodollar Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from a Borrower shall specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Agent of such a request from a Borrower, such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar

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Rate Loans shall continue, as the case may be, provided, that, (i) no Default or Event of Default shall exist or have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination of this Agreement, such Borrower shall have complied with such customary procedures as are established by Agent and specified by Agent to Lead Borrower from time to time for requests by Borrowers for Eurodollar Rate Loans, (iii) no more than eight (8) Interest Periods may be in effect at any one time, (iv) the amount of any Eurodollar Rate Loan shall be not less than $1,000,000 and the aggregate amount of the Eurodollar Rate Loans outstanding at any time must be in an amount not less than $5,000,000, and (v) Agent and each Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to Agent and such Lender and can be readily determined as of the date of the request for such Eurodollar Rate Loan by such Borrower. Any request by or on behalf of a Borrower f or Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Agent and Lenders shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.

                    (c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last day of the applicable Interest Period, unless Agent has received and approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to Parent, be subsequently converted to Prime Rate Loans in the event that this Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its option, charge any loan account of any Borrower) any amounts required to compensate any Lender or Participant for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.

                    (d) Interest shall be payable by Borrowers to Agent, for the account of Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conf orm thereto.

          3.2 Fees.

                    (a) Borrowers shall pay to Agent, for the account of Lenders, monthly an unused line fee at a rate equal to one-quarter (1/4%) percent per annum calculated upon the amount by which the Maximum Credit (less any reduction in the Fixed Asset Availability effected in accordance with the proviso to the definition thereof) exceeds the average daily principal balance

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of the outstanding Loans and Letter of Credit Accommodations during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears.

                    (b) Borrowers agree to pay to Agent the other fees and amounts set forth in the Fee Letter in the amounts and at the times specified therein.

          3.3 Changes in Laws and Increased Costs of Loans.

                    (a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit necessary to fund the Loans hereunder (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank or any Lender determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank or any Lender complies with any request o r directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender's capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank's or Lender's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender of funding or maintaining the Loans, the Letter of Credit Accommodations or its Commitment, then Borrowers and Guarantors shall from time to time upon demand by Agent pay to Agent additional amounts sufficient to indemnify Lenders against such inc reased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Lead Borrower by Agent and shall be conclusive, absent manifest error.

                    (b) If prior to the first day of any Interest Period, (i) Agent shall have determined in good faith (which determination shall be conclusive and binding upon Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, (ii) Agent has received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available in the London interbank market, Agent shall give telecopy or telephonic notice thereof to Lead Borrower as soon as practicable thereafter, and will also give prompt w ritten notice to Lead Borrower when such conditions no longer exist. If such

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notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of the then-current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower have the right to convert Prime Rate Loans to Eurodollar Rate Loans.

                    (c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof occurring after the date hereof shall make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly give written notice of such circumstances to Lead Borrower (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then have a commitme nt only to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender's Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.3(d) below.

                    (d) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may sustain or incur as a consequence of (i) default by a Borrower in making a borrowing of, conversion into or extension of Eurodollar Rate Loans after such Borrower has given a notice requesting the same in accordance with the provisions of this Loan Agreement, (ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so b orrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Loan Agreement and the payment of the Obligations.

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                    (e) Borrowers and Guarantors shall be liable for any tax or penalties imposed on Agent or any Lender as a result of the financing arrangements provided for herein and each Borrower and Guarantor agrees to indemnify and hold Agent harmless with respect to the foregoing, and to repay to Agent, for the benefit of Lenders, on demand the amount thereof, and until paid by such Borrower or Guarantor such amount shall be added and deemed part of the Loans, provided, that, nothing contained herein shall be construed to require any Borrower or Guarantor to pay any income, franchise or similar taxes imposed upon Lenders and attributable to any amounts charged or paid hereunder to Lenders. The foregoing indemnity shall survive the payment of the Obligations and the termination of this Agreement.

                    (f) Each Lender requiring compensation pursuant to Section 3.3(a), 3.3(d) or 3.3(e) shall notify Borrowers and Agent in writing of any event or circumstance giving rise to such demand for compensation no later than ninety (90) days following the date upon which the Lender has actual knowledge of such event or circumstance. Any demand for compensation pursuant to this Section 3.3 shall be in writing and shall state the amount due, if any, under Section 3.3(d) or 3.3(e) and shall set forth in reasonable detail the calculations upon which such Lender determined such amount. Such written demand shall be conclusive, absent manifest error.

                    (g) If a Borrower is required to pay additional amounts to any Lender pursuant to Section 3.3(a) or Section 3.3(e) that increase the effective lending rate of such Lender with respect to its share of the Loans to greater than one-eighth (1/8%) percent in excess of the percentage of the effective lending rate of the other Lenders, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office with respect to making Eurodollar Rate Loans so as to eliminate any such additional payment by Borrowers which may thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender. In the event that any one or more Lenders, pursuant to Section 3.3(a) or Section 3.3(e) hereof, incur any increased costs or taxes (other than increased costs to the extent such increased costs are not a recurring cost) for which any such Len der demands compensation pursuant to Section 3.3(a) or Section 3.3(e) hereof which increases the effective lending rate of such Lender with respect to its share of the Loans to greater than one-eighth (1/8%) percent in excess of the percentage of the effective lending rate of the other US Lenders and such Lender has not mitigated such costs within sixty (60) days after receipt by such Lender from Lead Borrower of a written notice that such Lender's effective lending rate has so exceeded the effective lending rate of the other Lenders, then and in any such event, Lead Borrower may substitute another financial institution which is an Eligible Transferee acceptable to Agent for such Lender to assume the Commitment of such Lender and to purchase the Loans of such Lender hereunder, without recourse to or warranty by, or expense to, such Lender for a purchase price equal to the outstanding principal amount of the Loans owing to such Lender plus any accrued but unpaid interest on such Loans and accrued but unpaid f ees and other amounts in respect of such Lender's Commitment and share of the Loans (other than any early termination fee). Upon such purchase such Lender shall no longer be a party hereto or have any rights or benefits hereunder (except for rights or benefits that such Lender would retain hereunder and under the other Financing Agreements upon payment in full of all of the Obligations other than as to any early termination fee) and the replacement Lender shall succeed to the rights and benefits, and shall assume the obligations, of such Lender hereunder and

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thereunder. In no event may Lead Borrower replace a Lender that is also Agent or an issuer of a Letter of Credit Accommodation.

SECTION 4 CONDITIONS PRECEDENT

          4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations. Each of the following is a condition precedent to Agent and Lenders making the initial Loans and providing the initial Letter of Credit Accommodations hereunder:

                    (a) Agent shall have received, in form and substance satisfactory to Agent in good faith, all releases, terminations and such other documents as Agent may request to evidence and effectuate the termination by the Existing Lenders of their respective financing arrangements with Borrowers and Guarantors and the termination and release by it or them, as the case may be, of any interest in and to any assets and properties of each Borrower and Guarantor, duly authorized, executed and delivered by it or each of them, including, but not limited to, (i) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as secured party and any Borrower or Guarantor, as debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of it or any of them, in form acceptable for recording with the appropriate Governmen tal Authority;

                    (b) all requisite corporate or limited liability company action and proceedings in connection with this Agreement and the other Financing Agreements shall be satisfactory in form and substance to Agent in good faith, and Agent shall have received all information and copies of all documents, including records of requisite corporate or limited liability company action and proceedings which Agent may have requested in connection therewith, such documents where requested by Agent or its counsel to be certified by appropriate officers or Governmental Authority (and including a copy of the articles or certificate of incorporation or comparable organizational documents of each Borrower and Guarantor certified by the Secretary of State (or equivalent Governmental Authority) which shall set forth the same complete corporate or limited liability company name of such Borrower or Guarantor as is set forth herein and such document as shall set forth the organizational identification number of each Borrower or Guarantor, if one is issued in its jurisdiction of organization);

                    (c) no material adverse change shall have occurred in the assets, business or prospects of Borrowers and Guarantors (taken as a whole) since the date of Agent's latest field examination (not including for this purpose the field review referred to in clause (d) below, it being understood that macroeconomic adverse changes within the same industry of Borrowers and Guarantors that do not affect Borrowers and Guarantors shall not be deemed a material adverse change for purposes of this clause (c);

                    (d) Agent shall have completed a field review of the Records and such other information with respect to the Collateral as Agent may require to determine the amount of Loans available to Borrowers (including, without limitation, current perpetual inventory records and/or roll-forwards of Accounts and Inventory through the Borrowers' fiscal period ended December 6, 2003 and test counts of the Inventory of the Distribution Division in a manner satisfactory to Agent, together with such supporting documentation as may be necessary or

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appropriate, and other documents and information that will enable Agent to accurately identify and verify the Collateral), the results of which in each case shall be satisfactory to Agent, not more than seven (7) Business Days prior to the date hereof or such longer period not more than thirty (30) days prior to the date hereof if Agent shall have been receiving such reports with respect to the Collateral as are provided for herein and are otherwise acceptable to Agent at all times during such period;

                    (e) Agent shall have received, in form and substance satisfactory to Agent in good faith, all consents, waivers, acknowledgments and other agreements from third persons which Agent may deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, including, without limitation, Credit Card Acknowledgments (except as to American Express, Agent shall only require a letter from Borrowers and Guarantors to American Express in form and substance satisfactory to Agent) and Collateral Access Agreements by owners and lessors of leased premises of each Borrower and by processors and warehouses at which Collateral is located; provided, that, so long as Borrowers have delivered up to sixty (60) Collateral Access Agreements for the leased locations of Borrowers such condition as to such Colla teral Access Agreements shall be deemed satisfied, so long as all other conditions are met after giving effect to any Reserves established by Agent in respect of amounts due or to become due to the owners or lessors of leased locations for which such Collateral Access Agreements have not been delivered;

                    (f) Agent shall have received the Supplemental Loan Intercreditor Agreement, in form and substance satisfactory to Agent, as duly authorized, executed and delivered by the Supplemental Loan Agent , Borrowers and Guarantors;

                    (g) Agent shall have received true, correct and complete copies of the Supplemental Loan Lender Agreements and all related agreements, documents and instruments, which shall each be in form and substance satisfactory to Agent, as duly authorized, executed and delivered by the parties thereto;

                    (h) Agent shall have received evidence, in form and substance satisfactory to Agent, that Borrowers and Guarantors have received not less than $15,000,000 (less fees and expenses of Supplemental Loan Agent in amounts reasonably acceptable to Agent) in cash or other immediately available funds constituting proceeds of the initial loans from the Supplemental Loan Lenders;

                    (i) the Excess Availability as determined by Agent, as of the date hereof, shall be not less than $20,000,000 after giving effect to the initial Loans made or to be made and Letter of Credit Accommodations issued or to be issued in connection with the initial transactions hereunder;

                    (j) Agent shall have received, in form and substance satisfactory to Agent, Deposit Account Control Agreements by and among Agent, each Borrower and Guarantor, as the case may be and each bank where such Borrower (or Guarantor) has a deposit account other than banks where such Borrower (or Guarantor) maintains a Store Account for which no Deposit

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Account Control Agreement is required pursuant to Section 6.3 hereof, in each case, duly authorized, executed and delivered by such bank and Borrower or Guarantor, as the case may be;

                    (k) Agent shall have received evidence, in form and substance satisfactory to Agent, that (i) Agent has a valid perfected first priority security interest in all of the Collateral (other than the Supplemental Loan Priority Collateral) and (ii) Agent has a valid and enforceable second priority security interest in the Supplemental Loan Priority Collateral subordinate only to the first priority security interest of Supplemental Loan Agent pursuant to the terms of the Supplemental Loan Intercreditor Agreement;

                    (l) Agent shall have received a Borrowing Base Certificate setting forth the Loans available to Borrowers as completed in a manner satisfactory to Agent and duly authorized, executed and delivered on behalf of Parent;

                    (m) Agent shall have received and reviewed lien and judgement search results for the jurisdiction of organization of each Borrower and Guarantor, the jurisdiction of the chief executive office of each Borrower and Guarantor and all jurisdictions in which assets of Borrowers and Guarantors are located, which search results shall be in form and substance satisfactory to Agent;

                    (n) Agent shall have received environmental audits of the Real Property to be subject to the Mortgages conducted by an independent environmental engineering firm acceptable to Agent, and in form, scope and methodology satisfactory to Agent in good faith, confirming that (i) each Borrower and Guarantor is in compliance with all material applicable Environmental Laws in all material respects and (ii) the absence of any material environmental problems;

                    (o) Agent shall have received, in form and substance satisfactory to Agent, a valid and effective title insurance policy issued by a company and agent acceptable to Agent: (i) insuring the priority, amount and sufficiency of the Mortgages, (ii) insuring against matters that would be disclosed by surveys and (iii) containing any legally available endorsements, assurances or affirmative coverage reasonably requested by Agent in accordance with its customary practices for protection of its interests;

                    (p) Agent shall have received originals of the shares of the stock certificates representing all of the issued and outstanding shares of the Capital Stock of each Borrower and Guarantor (other than Parent) and owned by any Borrower or Guarantor (other than the shares of Capital Stock of MDP L.L.C., Port Clinton Realty Co. and Spartan Insurance Company Ltd.), in each case together with stock powers duly executed in blank with respect thereto;

                    (q) Agent shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance satisfactory to Agent, and certificates of insurance policies and/or endorsements naming Agent as loss payee;

                    (r) Agent shall have received, in form and substance satisfactory to Agent, such opinion letters of counsel to Borrowers and Guarantors with respect to the Financing Agreements and such other matters as Agent may reasonably request; and

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                    (s) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Agent, in form and substance satisfactory to Agent.

          4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations. Each of the following is an additional condition precedent to the Loans and/or providing Letter of Credit Accommodations to Borrowers, including the initial Loans and Letter of Credit Accommodations and any future Loans and Letter of Credit Accommodations:

                    (a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

                    (b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which purports to enjoin, prohibit, restrain or otherwise affect (i) the making of the Loans or providing the Letter of Credit Accommodations, or (ii) the consummation of the transactions contemplated pursuant to the terms hereof or the other Financing Agreements; and

                    (c) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto.

SECTION 5 GRANT AND PERFECTION OF SECURITY INTEREST

          5.1 Grant of Security Interest.

                    (a) To secure payment and performance of all Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and the benefit of Lenders, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of Lenders, as security, all personal and real property and fixtures, and interests in property and fixtures, of each Borrower and Guarantor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by Agent or any Lender, collectively, the "Collateral"), including:

                              (i) all Accounts;

                              (ii) all general intangibles, including, without limitation, all Intellectual Property;

                              (iii) all goods, including, without limitation, Inventory and Equipment;

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                              (iv) all Real Property and fixtures;

                              (v) all chattel paper, including, without limitation, all tangible and electronic chattel paper;

                              (vi) all instruments, including, without limitation, all promissory notes;

                              (vii) all documents;

                              (viii) all deposit accounts;

                              (ix) all letters of credit, banker's acceptances and similar instruments and including all letter-of-credit rights;

                              (x) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (A) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (B) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (C) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (D) deposits by and property of Account Debtors or other persons securing the obligations of Account Debtors;

                              (xi) all (A) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and (B) monies, credit balances, deposits and other property of any Borrower or Guarantor now or hereafter held or received by or in transit to Agent, any Lender or its Affiliates or at any other depository or other institution from or for the account of any Borrower or Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

                              (xii) all commercial tort claims, including, without limitation, those identified in the Information Certificate;

                              (xiii) to the extent not otherwise described above, all Receivables;

                              (xiv) all Prescription Files and other Records; and

                              (xv) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral.

                    (b) Notwithstanding anything to the contrary set forth in Section 5.1(a) above, the types or items of Collateral described in such Section shall not include the Capital Stock of MDP L.L.C., Port Clinton Realty Co. and Spartan Insurance Company Ltd.

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          5.2 Perfection of Security Interests.

                    (a) Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower or Guarantor as debtor, as Agent may require, and including any other information with respect to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Each Borrower and Guarantor hereby ratifies and approves all financing statements naming Agent or its designee as secured party and such Borrower or Guarantor, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to such financ ing statements) filed by or on behalf of Agent prior to the date hereof and ratifies and confirms the authorization of Agent to file such financing statements (and amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Agent or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or Guarantor to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to an y of the Collateral. In no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower or Guarantor as debtor.

                    (b) Each Borrower and Guarantor does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any chattel paper or instrument after the date hereof, Borrowers and Guarantors shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree. At Agent's option, each Borrower and Guarantor shall, or Agent may at any t ime on behalf of any Borrower or Guarantor, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: "This [chattel paper][instrument] is subject to the security interest of Congress Financial Corporation and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party."

                    (c) In the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic chattel paper or any "transferable record" (as such term is defined in

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Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent's request, such Borrower or Guarantor shall take, or cause to be taken, such actions as Agent may request to give Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

                    (d) Each Borrower and Guarantor does not have any deposit accounts as of the date hereof, except as set forth in the Information Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of any Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Agent the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be acceptable to Agent, and (iii) on or before the opening of s uch deposit account, such Borrower or Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit Account Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's or Guarantor's salaried employees or deposit accounts for which a Deposit Account Control Agreement is not required pursuant to Section 6.3.

                    (e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Information Certificate.

                              (i) In the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities, such Borrower or Guarantor shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify. If any securities, now or hereafter acquired by any Borrower or Guarantor are uncertificated and are issued to such Borrower or Guarantor or its nominee directly by the issuer thereof, such Borrower or Guarantor shall immediately notify Agent thereof and cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Borrower or Guarantor or such nominee.

                              (ii) Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities

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intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Agent the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such account is to be opened or established, the individual at such intermediary with whom such Borrower or Guarantor is dealing and the purpose of the account, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to Agent, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower or Guarantor shall execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower or Guarantor and such securities intermediary or commodity intermediary.

                    (f) Borrowers and Guarantors are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker's acceptance or similar instrument as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any right to payment under any letter of credit, banker's acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Such Borrower or Guarantor shall immediately, as Agent may specify, either (i) deliver, or cause to be delivered to Agent, with respect to any such letter of credit, banker's acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and s ubstance satisfactory to Agent, consenting to the assignment of the proceeds of the letter of credit to Agent by such Borrower or Guarantor and agreeing to make all payments thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent to become, at Borrowers' expense, the transferee beneficiary of the letter of credit, banker's acceptance or similar instrument (as the case may be).

                    (g) Borrowers and Guarantors do not have any commercial tort claims as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall at any time after the date hereof have any commercial tort claims, such Borrower or Guarantor shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower or Guarantor to Agent of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower or Guarantor to Agent shall be deemed to constitute such grant to Agent. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. With out limiting the authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower or Guarantor of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and such Borrower or Guarantor as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower and Guarantor shall

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promptly upon Agent's request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and instruments as Agent may require in connection with such commercial tort claim.

                    (h) Borrowers and Guarantors do not have any goods, documents of title or other Collateral in the custody, control or possession of a third party as of the date hereof, except as set forth in the Information Certificate and except for goods located in the United States in transit to a location of a Borrower or Guarantor permitted herein in the ordinary course of business of such Borrower or Guarantor in the possession of the carrier transporting such goods. In the event that any goods, documents of title or other Collateral are at any time after the date hereof in the custody, control or possession of any other person not referred to in the Information Certificate or such carriers, Borrowers and Guarantors shall promptly notify Agent thereof in writing. Promptly upon Agent's request, Borrowers and Guarantors shall deliver to Agent a Collateral Access Agreement duly authorized, executed and delivered by such person and the Borrower or Gu arantor that is the owner of such Collateral.

                    (i) Borrowers and Guarantors shall take any other actions reasonably requested by Agent from time to time to cause the attachment, perfection and first priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that any Borrower's or Guarantor's signature thereon is required therefor, (ii) causing Agent's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.

SECTION 6 COLLECTION AND ADMINISTRATION

          6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letter of Credit Accommodations and other Obligations and the Collateral, (b) all payments made by or on behalf of any Borrower or Guarantor and (c) all other appropriate debits and credits as provided in this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Agent's customary practices as in effect from time to time.

          6.2 Statements. Agent shall render to Lead Borrower each month a statement setting forth the balance in the Borrowers' loan account(s) maintained by Agent for Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Agent but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively binding upon Borrowers and Guarantors as an account stated except to the

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extent that Agent receives a written notice from Lead Borrower of any specific exceptions of Lead Borrower thereto within forty-five (45) days after the date such statement has been received by Parent. Until such time as Agent shall have rendered to Lead Borrower a written statement as provided above, the balance in any Borrower's loan account(s) shall be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrowers and Guarantors.

          6.3 Collection of Accounts.

                    (a) Each Borrower and Guarantor shall establish and maintain, at its expense, deposit account arrangements and merchant payment arrangements with the banks set forth on Schedule 8.10 to the Information Certificate and subject to Section 5.2(d) hereof such other banks as such Borrower or Guarantor may hereafter select. The banks set forth on Schedule 8.10 to the Information Certificate constitute all of the banks with which Borrowers and Guarantors have deposit account arrangements and merchant payment arrangements as of the date hereof and identifies each of the deposit accounts at such banks that are used solely for receiving store receipts from a retail store location of a Borrower (together with any other deposit accounts at any time established or used by any Borrower for receiving such store receipts from any retail store location, collectively, the "Store Accounts" and each individually, a "Store Account") or otherwise describes t he nature of the use of such deposit account by such Borrower.

                              (i) Each Borrower shall deposit all proceeds from sales of Inventory in every form, including, without limitation, cash, checks, credit card sales drafts, credit card sales or charge slips or receipts and other forms of daily store receipts, from each retail store location of such Borrower (other than Medicare Accounts and Medicaid Accounts) into the Store Account of such Borrower used solely for such purpose in accordance with the current practices of such Borrower as of the date hereof, but in any event no less frequently than once every three (3) Business Days; provided, that, each retail store of a Borrower may retain in such store funds of up to $15,000 immediately after each deposit of funds from such store into the applicable Store Account. All such funds deposited into the Store Accounts shall be sent by wire transfer or other electronic funds transfer on each Business Day to the Blocked Accounts as provided in Section 6.3(a)(ii) below, except nominal amounts which are required to be maintained in such Store Accounts under the terms of such Borrower's arrangements with the bank at which such Store Accounts are maintained (which amounts, together with all amounts held at the retail store locations and not yet deposited in the Store Accounts, shall not in the aggregate exceed $5,000,000 at any one time, except to the extent from time to time additional amounts may be held in the retail stores or the Store Accounts on Saturday, Sunday or other days where the applicable depository bank is closed, which additional amounts are to be, and shall be, transferred on the next Business Day to the Blocked Accounts) and except as Agent may otherwise agree.

                              (ii) Within thirty (30) days after the date hereof, each Borrower shall establish and maintain a separate lockbox and related deposit account into which such Borrower shall promptly deposit, and shall direct each Fiscal Intermediary or other Third Party Payor in accordance with the applicable Medicare and Medicaid regulations to directly remit, all payments in respect of any Medicare Accounts or Medicaid Accounts. Such separate lockboxes and related deposit accounts shall only be used for purposes of receiving payments in respect of Medicare Accounts and Medicaid Accounts and shall be under the sole control of the applicable

55

Borrower; provided, that, (A) Borrowers shall authorize, direct and instruct the depository banks at which such separate lockboxes and deposit accounts are maintained to remit by federal funds wire transfer all funds received or deposited into such lockboxes and related deposit accounts amounts on deposit in such accounts on a daily basis to one of the Blocked Accounts or such bank account of Agent as Agent may from time to time designate for such purpose, which instructions by Borrowers to such banks may only be changed after not less than three (3) Business Days' prior written notice to such banks and Agent and (B) any change in such instructions without the prior written consent of Agent shall be an Event of Default hereunder.

                              (iii) Each Borrower shall establish and maintain, at its expense, deposit accounts with such banks as are reasonably acceptable to Agent (the "Blocked Accounts") into which each Borrower shall promptly either cause all amounts on deposit in the Store Accounts of such Borrower to be sent as provided in Section 6.3(a)(i) above or shall itself deposit or cause to be deposited all proceeds of Receivables or other Collateral, including all proceeds from sales of Inventory, all amounts payable to each Borrower from Credit Card Issuers and Credit Card Processors and all other proceeds of Collateral (but not including payments of Medicare Accounts or Medicaid Accounts that are sent to the separate lockbox and related deposit accounts established pursuant to clause (ii) above).

                              (iv) Borrowers and Guarantors shall deliver, or cause to be delivered to Agent a Deposit Account Control Agreement duly authorized, executed and delivered by each bank where a Blocked Account is maintained as provided in Section 5.2 hereof. At any time a Default or an Event of Default shall exist or have occurred and be continuing, promptly upon Agent's request, Borrowers and Guarantors shall deliver, or cause to be delivered, to Agent a Deposit Account Control Agreement duly authorized, executed and delivered by such banks where a Store Account is maintained as Agent shall specify. Without limiting any other rights or remedies of Agent or Lenders, Agent may, at its option, instruct the depository banks at which the Blocked Accounts are maintained to transfer all available funds received or deposited into the Blocked Accounts to the Agent Payment Account at any time that either: (A) an Event of Default shall exist or have occurred and be continuing, or (B) at any time prior to December 31, 2004, Excess Availability is less than $20,000,000 or at any time on and after December 31, 2004, Excess Availability is less than $30,000,000. Without limiting any other rights or remedies of Agent or Lenders, in the event that a Deposit Account Control Agreement is in effect for a Store Account, then Agent may, at its option, instruct the depository bank at which the Store Account is maintained to transfer all available funds received or deposited into the Store Account to the Agent Payment Account at any time that an Event of Default shall exist or have occurred and be continuing. As to the Blocked Accounts or the Store Accounts, as the case may be, Agent shall send to Lead Borrower a copy of any such written instruction sent by Agent to the depository bank promptly thereafter. In the event that at any time ninety (90) days after Agent has instructed such depository banks to transfer such funds to the Agent Payment A ccount, the Monthly Average Excess Availability for any calendar month commencing after the end of such ninety (90) day period is greater than $20,000,000 for any month ending on or before December 31, 2004 or $30,000,000 for any month ending thereafter and so long as no Event of Default exist or have occurred, upon Lead Borrower's written request received by Agent within five (5) Business Days after the satisfaction of such conditions, Agent shall rescind its prior instructions and give new instructions to such depository banks to transfer the funds on deposit in such accounts to such operating deposit account of Borrowers and Guarantors as Lead Borrower may

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specify in writing to Agent until such time as Agent is entitled to notify and shall notify the depository bank otherwise as provided above. At all times that Agent shall have notified any depository bank to transfer funds from a Blocked Account or Store Account to the Agent Payment Account, all payments made to such Blocked Accounts or Store Accounts, whether in respect of the Receivables, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to Agent in respect of the Obligations and therefore shall constitute the property of Agent and Lenders to the extent of the then outstanding Obligations.

                    (b) For purposes of calculating the amount of the Loans available to each Borrower, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent of immediately available funds in the Agent Payment Account provided such payments and notice thereof are received in accordance with Agent's usual and customary practices as in effect from time to time and within sufficient time to credit the applicable loan account on such day, and if not, then on the next Business Day. For the purposes of calculating interest on the Obligations, such payments or other funds received will be applied (conditional upon final collection) to the Obligations one (1) Business Day following the date of receipt of immediately available funds by Agent in the Agent Payment Account provided such payments or other funds and notice thereof are received in accordance with Agent's usual and customary practices as in effect from time to time and within sufficient time to credit the applicable loan account on such day, and if not, then on the next Business Day. In the event that at any time or from time to time there are no Loans outstanding or the amounts on deposit in the Blocked Accounts are not being remitted to the Agent Payment Account, Agent shall be entitled to an administrative fee in an amount calculated based on the Interest Rate for Eurodollar Rate Loans (on a per annum basis) then in effect multiplied by the amount of the funds received in the Blocked Account for such day in accordance with the customary practice of Agent. The economic benefit of the timing in the application of payments (and the administrative fee with respect thereto, if applicable) shall be for the sole benefit of Agent.

                    (c) Each Borrower and Guarantor and their respective employees, agents and Subsidiaries shall, acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Accounts or other Collateral which come into their possession or under their control and promptly upon receipt thereof, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Agent. In no event shall the same be commingled with any Borrower's or Guarantor's own funds. Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any bank or other financial institution at which a Blocked Account or any other deposit account or investment account is established or any other bank, financial institution or other person involved in the transfer of funds to or from the Blocked Accounts arising out of Agent' s payments to or indemnification of such bank, financial institution or other person. The obligations of Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

          6.4 Payments.

                    (a) All Obligations shall be payable to the Agent Payment Account as provided in Section 6.3 or such other place as Agent may designate from time to time. Agent shall apply payments received or collected from any Borrower or Guarantor or for the account of any

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Borrower or Guarantor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to pay any fees, indemnities or expense reimbursements then due to Agent and Lenders from any Borrower or Guarantor; second, to pay interest due in respect of any Loans (and including any Special Agent Advances); third, to pay principal in respect of Special Agent Advances; fourth, to pay principal in respect of the Loans and to pay or prepay Obligations arising under or pursuant to any Interest Rate Protection Agreements of a Borrower or Guarantor with an Affiliate of Agent (up to the amount of any then effective Reserve established in respect of such Obligations), on a pro rata basis; fifth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Agent determines or to be held as cash collateral in connection with any Letter of Credit Accommodations or other contingent Obligations (but not includi ng for this purpose any Obligations arising under or pursuant to any Interest Rate Protection Agreements) and sixth, to pay or prepay any Obligations arising under or pursuant to Interest Rate Protection Agreements (other than to the extent provided for above) on a pro rata basis. Notwithstanding anything to the contrary contained in this Agreement, (i) unless so directed by Lead Borrower, or unless a Default or an Event of Default shall exist or have occurred and be continuing, Agent shall not apply any payments which it receives to any Eurodollar Rate Loans, except (A) on the expiration date of the Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event that there are no outstanding Prime Rate Loans and (ii) to the extent any Borrower uses any proceeds of the Loans or Letter of Credit Accommodations to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Ob ligations shall be deemed applied first to the Obligations arising from Loans and Letter of Credit Accommodations that were not used for such purposes and second to the Obligations arising from Loans and Letter of Credit Accommodations the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which such Borrower acquired such rights in or the use of such Collateral.

                    (b) At Agent's option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower maintained by Agent. Borrowers and Guarantors shall make all payments to Agent and Lenders on the Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent or any Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4(b) shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

          6.5 Authorization to Make Loans. Agent and Lenders are authorized to make the Loans and provide the Letter of Credit Accommodations based upon telephonic or other instructions received from anyone purporting to be the chief financial officer, vice president of finance,

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treasurer, assistant treasurer, director of finance, controller of Parent or other authorized person designated by any of such persons from time to time to Agent or, at the discretion of Agent, if such Loans are necessary to satisfy any Obligations. All requests for Loans or Letter of Credit Accommodations hereunder shall specify the date on which the requested advance is to be made or Letter of Credit Accommodations established (which day shall be a Business Day) and the amount of the requested Loan. Requests received after 11:00 a.m. Chicago time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. All Loans and Letter of Credit Accommodations under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, any Borrower or Guarantor when deposited to the credit of any Borrower or Guarantor or otherwise disbursed or established in accordance with the instructions of any Borrower or Guarant or or in accordance with the terms and conditions of this Agreement.

          6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans provided by Agent to Borrowers hereunder only for: (a) payments to each of the persons listed in the disbursement direction letter furnished by Borrowers to Agent on or about the date hereof and (b) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements. All other Loans made or Letter of Credit Accommodations provided to or for the benefit of any Borrower pursuant to the provisions hereof shall be used by such Borrower only for general operating, working capital and other proper corporate purposes of such Borrower not otherwise prohibited by the terms hereof. None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margi n security or for any other purpose which might cause any of the Loans to be considered a "purpose credit" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.

          6.7 Appointment of Parent as Lead Borrower for Requesting Loans and Receipts of Loans and Statements.

                    (a) Each Borrower hereby irrevocably appoints and constitutes Lead Borrower to request and receive Loans and Letter of Credit Accommodations pursuant to this Agreement and the other Financing Agreements from Agent or any Lender in the name or on behalf of such Borrower, to select the applicable Interest Rate for any such Loans or to take other actions contemplated as being taken by any Borrower under this Agreement or any of the other Financing Agreements. Agent and Lenders may disburse the Loans to such bank account of Lead Borrower or a Borrower or otherwise make such Loans to a Borrower and provide such Letter of Credit Accommodations to a Borrower as Lead Borrower may designate or direct, without notice to any other Borrower or Obligor. Notwithstanding anything to the contrary contained herein, Agent and Lead Borrower may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

                    (b) Lead Borrower hereby accepts the appointment by Borrowers to act for and on behalf of the other Borrowers pursuant to this Section 6.7. Lead Borrower shall ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the account of Parent,

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or the issuance of any Letter of Credit Accommodations for a Borrower hereunder, shall be paid to or for the account of such Borrower.

                    (c) Each other Borrower and Guarantor hereby irrevocably appoints and constitutes Lead Borrower to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Financing Agreements and any statements or notices sent to or received by Lead Borrower shall be deemed received by each of the other Borrowers and Guarantors.

                    (d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Borrower or any Guarantor by Lead Borrower shall be deemed for all purposes to have been made by such Borrower or Guarantor, as the case may be, and shall be binding upon and enforceable against such Borrower or Guarantor to the same extent as if made directly by such Borrower of Guarantor.

                    (e) No purported termination of the appointment of Lead Borrower as agent as aforesaid shall be effective, except after ten (10) days' prior written notice to Agent.

          6.8 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement: (a) the making and conversion of Loans shall be made among the Lenders based on their respective Pro Rata Shares as to the Loans and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares and shall be distributed accordingly.

          6.9 Sharing of Payments, Etc.

                    (a) Each Borrower and Guarantor agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim Agent or any Lender may otherwise have, each Lender shall be entitled, at its option (but subject, as among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset balances held by it for the account of such Borrower or Guarantor at any of its offices, in dollars or in any other currency, against any principal of or interest on any Loans owed to such Lender or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to such Borrower or Guarantor), in which case it shall promptly notify Lead Borrower and Agent thereof; provided, that, such Lender's failure to give such notice shall not affect the validity thereof.

                    (b) If any Lender (including Agent) shall obtain from any Borrower or Guarantor payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any of the other Financing Agreements through the exercise of any right of setoff, banker's lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due hereunder or thereunder by any Borrower or Guarantor to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a participation

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in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.

                    (c) Each Borrower and Guarantor agrees that any Lender purchasing a participation (or direct interest) as provided in this Section may exercise, in a manner consistent with this Section, all rights of setoff, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation.

                    (d) Nothing contained herein shall require any Lender to exercise any right of setoff, banker's lien, counterclaims or similar rights or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other Indebtedness or obligation of any Borrower or Guarantor. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to Agent for the benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

          6.10 Settlement Procedures.

                    (a) In order to administer the Credit Facility in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Agent may, at its option, subject to the terms of this Section, make available, on behalf of Lenders, the full amount of the Loans requested or charged to any Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof, without requirement of prior notice to Lenders of the proposed Loans.

                    (b) With respect to all Loans made by Agent on behalf of Lenders as provided in this Section, the amount of each Lender's Pro Rata Share of the outstanding Loans shall be computed weekly, and shall be adjusted upward or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. Chicago time on the Business Day immediately preceding the date of each settlement computation; provided, that, Agent retains the absolute right at any time or from time to time to make the above described adjustments at intervals more frequent than weekly, but in no event more than twice in any week. Agent shall deliver to each of the Lenders after the end of each week, or at such lesser period or periods as Agent shall determine, a summary statement of the amount of outstanding Loans for such period (such week or lesser period or periods being hereinafter referred to as a "Settlement Period"). If the summary statement is sent by Agent and received by a Lender prior to 12:00 p.m. Chicago time, then such Lender shall make the settlement transfer described in this Section by no later than 3:00 p.m. Chicago time on the same Business Day and if received by a Lender after 12:00 p.m. Chicago

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time, then such Lender shall make the settlement transfer by not later than 3:00 p.m. Chicago time on the next Business Day following the date of receipt. If, as of the end of any Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro Rata Share of the outstanding Loans as of the end of the previous Settlement Period, then such Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of the increase. Alternatively, if the amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement Period is less than the amount of such Lender's Pro Rata Share of the outstanding Loans for the previous Settlement Period, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of the decrease. The obligation of each of the Lenders to transfer such funds and effect such settlement shall b e irrevocable and unconditional and without recourse to or warranty by Agent. Agent and each Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such Loans have been funded by such Lender. Because the Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid such Loans, interest with respect to Loans shall be allocated by Agent in accordance with the amount of Loans actually advanced by and repaid to each Lender and the Agent and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers or actually settled with the applicable Lender as described in this Section.

                    (c) To the extent that Agent has made any such amounts available and the settlement described above shall not yet have occurred, upon repayment of any Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts made available by Agent pursuant to this Section. In lieu of weekly or more frequent settlements, Agent may, at its option, at any time require each Lender to provide Agent with immediately available funds representing its Pro Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower. In such event, all Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares. No Lender shall be responsible for any default by any other Lender in the other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other Lender's oblig ation to make a Loan hereunder.

                    (d) If Agent is not funding a particular Loan to or for the benefit of a Borrower pursuant to Sections 6.10(a) and 6.10(b) on any day, but is requiring each Lender to provide Agent with immediately available funds on the date of such Loan, Agent may assume that each Lender will make available to Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on such day and Agent may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made available to or for the benefit of such Borrower on such day. If Agent makes such corresponding amount available to a Borrower and such corresponding amount is not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent's option based on the arithmetic mean determined by Agent of the rates

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for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans. During the period in which such Lender has not paid such corresponding amount to Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Financing Agreements, the amount so advanced by Agent to or for the benefit of any Borrower shall, for all purposes hereof, be a Loan made by Agent for its own account. Upon any such failure by a Lender to pay Agent, Agent shall promptly thereafter notify Lead Borrower of such failure and Borrowers shall pay such corresponding amount to Agent for its own account within five (5) Business Days of Lead Borrower's receipt of such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans made available by the Agent on such Lender's behalf, or any Lender who fails to pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, relend to a Borrower the amount of all such payments received or retained by it for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a De faulting Lender until such default is cured. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by any Borrower or Obligor of their duties and obligations hereunder.

                    (e) Lead Borrower and Agent shall have the right, but not the obligation, at any time that there is a Defaulting Lender, and upon the exercise by either Lead Borrower or Agent of such right, such Defaulting Lender shall have the obligation, to sell, assign and transfer to an Eligible Transferee designated by Lead Borrower and approved by Agent or designated by Agent, the Commitment of such Defaulting Lender and all rights and interests of such Defaulting Lender pursuant thereto. Lead Borrower or Agent, as the case may be, shall provide the Defaulting Lender (and the Lead Borrower or the Agent as the case may be) with prior written notice of its intent to exercise its right under this Section, which notice shall specify the date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the Defaulting Lender), except that on the date of su ch purchase and sale, the Eligible Transferee specified by Lead Borrower and approved by Agent or Agent, shall pay to the Defaulting Lender (except as Agent and such Defaulting Lender may otherwise agree) the amount equal to: (i) the principal balance of the Loans held by the Defaulting Lender outstanding as of the close of business on the Business Day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Defaulting Lender to the effective date of the purchase (but in no event shall the Defaulting Lender be deemed entitled to any early termination fee), minus (iii) the amount of the closing fee received by the Defaulting Lender pursuant to the terms hereof or of any of the other Financing Agreements multiplied by the fraction, the numerator of which is the number of months remaining in the then current term of the Credit Facility and the denominator of which is the number of months in the then current

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term thereof. Such purchase and sale shall be effective on the date of the payment of such amount to the Defaulting Lender and the Commitment of the Defaulting Lender shall terminate on such date.

                    (f) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of any default by any Lender hereunder in fulfilling its Commitment.

          6.11 Obligations Several; Independent Nature of Lenders' Rights. The obligation of each Lender hereunder is several, and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to Section 12.3 hereof, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

SECTION 7 COLLATERAL REPORTING AND COVENANTS

          7.1 Collateral Reporting.

                    (a) Borrowers shall provide Agent with the following documents in a form reasonably satisfactory to Agent:

                              (i) as soon as possible after the end of each calendar week (but in any event within three (3) Business Days after the end thereof), or more frequently as Agent may request at any time Excess Availability is less than $30,000,000 or a Default or Event of Default shall exist or have occurred, (A) an aging of accounts receivable for each of the Retail Division, the Distribution Division and the United Wholesale Division and (B) an inventory summary report for each of the Retail Division, the Distribution Division and the United Wholesale Division (provided, that, the summary report for the United Wholesale Division shall be only at the level of the division using the beginning of month amounts, sales and purchases for the entire division as the basis for the calculation thereof and prior to March 31, 2004, the summary report for the Retail Division shall be only at the level of the division using the beg inning of month amounts, sales and purchases for the entire division as the basis for the calculation thereof);

                              (ii) as soon as possible after the end of each fiscal four (4) week period of Borrowers and Guarantors determined in accordance with the current accounting practices of Borrowers and Guarantors as of the date hereof (but in any event within ten (10) Business Days after the end thereof), or more frequently as Agent may request at any time that Excess Availability is less than $30,000,000 or a Default or Event of Default shall exist or have occurred, (A) a Borrowing Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the immediately preceding period as to the Accounts and Inventory, duly completed and executed by the chief financial officer, vice president of finance, treasurer or

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controller of Parent, together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed (including a recap of all Accounts created, collections received and credit memos issued for the immediately preceding period); (B) perpetual inventory reports for the Distribution Division, (C) agings of accounts receivable, (D) list of outstanding accounts payable, (E) reports on sales and use tax collections, deposits and payments, including a statement confirming the payment of monthly sales and use taxes, and (F) the number of prescriptions filled in the immediately preceding month, the average dollar amount of such prescriptions during such period, and the dollar amount of sales of prescriptions in the preceding period;

                              (iii) as soon as possible after the end of each fiscal four (4) week period of Borrowers and Guarantors determined in accordance with the current accounting practices of Borrowers and Guarantors as of the date hereof (but in any event ten (10) Business Days after the end thereof), in each case certified by the chief financial officer, vice president of finance, treasurer or controller of Borrowers or Lead Borrower as true and correct: (A) a statement confirming the payment of the aggregate amount of rent and other amounts due to owners and lessors of real property used by Borrowers (other than amounts being contested or disputed in good faith), subject to year-end or monthly percentage rent payment adjustments, (B) the addresses of all new retail store locations of Borrowers and Guarantors opened and existing retail store locations closed or sold, in each case since the date of the most recent certific ate delivered to Agent containing the information required under this clause, and (C) a report of any new deposit account established or used by any Borrower or Guarantor with any bank or other financial institution, including the Borrower or Guarantor in whose name the account is maintained, the account number, the name and address of the financial institution at which such account is maintained, the purpose of such account and, if any, the amount held in such account on or about the date of such report;

                              (iv) upon Agent's request at any time Excess Availability is less than $30,000,000 or a Default or Event of Default shall exist or have occurred, (A) reports of sales for each category of Inventory, (B) reports of aggregate Inventory purchases and identifying items of Inventory in transit to any Borrower or Guarantor related to the applicable documentary letter of credit and/or bill of lading number, (C) copies of remittance advices and reports, and copies of deposit slips and bank statements, (D) copies of shipping and delivery documents, (E) electronic summaries of purchase orders or journals, invoices and delivery documents for Inventory and Equipment acquired by Borrowers and Guarantor, and (F) reports by retail store location of sales and four wall cash flows for each such retail store location;

                              (v) upon Agent's request at any time Excess Availability is less than $30,000,000 or a Default or Event of Default shall exist or have occurred, the monthly statements received by any Borrower or any of its Affiliates from any Credit Card Issuers or Credit Card Processors, together with such additional information with respect thereto as shall be sufficient to enable Agent to monitor the transactions pursuant to the Credit Card Agreements;

                              (vi) such other reports as to the Collateral as Agent shall reasonably request from time to time.

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                    (b) Nothing contained in any Borrowing Base Certificate shall be deemed to limit, impair or otherwise affect the rights of Agent contained herein and in the event of any conflict or inconsistency between the calculation of the Borrowing Base as set forth in any Borrowing Base Certificate and as determined by Agent in good faith, the determination of Agent shall govern and be conclusive and binding upon Borrowers and Guarantors. Without limiting the foregoing, Borrowers shall furnish to Agent any information which Agent may reasonably request regarding the determination and calculation of any of the amounts set forth in any Borrowing Base Certificate. The Borrowing Base may be adjusted based on the information set forth in the reports received by Agent under Section 7.1(a)(i) above. If any Borrower's or Guarantor's records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent , such Borrower and Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to Agent and to follow Agent's instructions with respect to further services at any time that an Event of Default exists or has occurred and is continuing.

          7.2 Accounts Covenants.

                    (a) Borrowers shall notify Agent promptly of: (i) any material delay in any Borrower's or performance of any of its material obligations to any Account Debtor or the assertion of any material claims, offsets, defenses or counterclaims by any Account Debtor, or any material disputes with Account Debtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse information known to any Borrower or Guarantor relating to the financial condition of any Account Debtor reasonably likely to adversely impact the collectability or enforceability of an Account, (iii) any event or circumstance which, to the best of any Borrower's or Guarantor's knowledge, would cause Agent to consider any then existing Accounts as no longer constituting Eligible Accounts, (iv) any notice of a material default by any Borrower under any of the Credit Card Agreements or of any default which might result in the Credit Card Issuer or Credit Card Pr ocessor ceasing to make payments or suspending payments to any Borrower, (v) any notice from any Credit Card Issuer or Credit Card Processor that such person is ceasing or suspending, or will cease or suspend, any present or future payments due or to become due to any Borrower from such person, or that such person is terminating or will terminate any of the Credit Card Agreements, and (vi) the failure of any Borrower to comply with any material terms of the Credit Card Agreements or any terms thereof which might result in the Credit Card Issuer or Credit Card Processor ceasing or suspending payments to any Borrower. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor without Agent's consent, except in the ordinary course of a Borrower's or Guarantor's business in accordance with its practices and policies previously disclosed in writing to Agent and except as set forth in the schedules delivered to Agent pursuant to Section 7.1(a) above. So long as no Event of Default exists or has occurred and is continuing, Borrowers and Guarantors shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any Account Debtor. At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtors or grant any credits, discounts or allowances.

                    (b) With respect to each Account: (i) the amounts shown on any invoice delivered to Agent or schedule thereof delivered to Agent shall be true and complete, (ii) no payments

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shall be made thereon except payments immediately delivered to Blocked Accounts (or other deposit accounts in the case of Medicare Accounts and Medicaid Accounts identified to Agent that are used exclusively for handling payments or other remittances in respect of such Accounts), in each case, maintained in accordance with the terms of this Agreement, (iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any Account Debtor except as reported to Agent in accordance with this Agreement and except for credits, discounts, allowances or extensions made or given in the ordinary course of each Borrower's business in accordance with practices and policies previously disclosed to Agent, (iv) there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to Agent in accordance with the terms of this Agreement, (v) none of the transactions giving rise thereto will violate any applicabl e foreign, Federal, State or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

                    (c) Agent shall have the right at any time or times, in Agent's name or in the name of a nominee of Agent, to verify the validity, amount or any other matter relating to any Receivables or other Collateral, by mail, telephone, facsimile transmission or otherwise.

          7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain correct and accurate inventory records in a manner consistent with its current practices as of the date hereof (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate stock ledger inventory system at the Retail Division), (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least once each fiscal quarter as to non-perishable Inventory of the Retail Division (or on and after the establishment of a stock ledger inventory system at the Retail Division that is satisfactory to Borrowers and Agent, two (2) times each year) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guar antors as of the date hereof) as to the perishable Inventory of the Retail Division, three (3) times each year as to Inventory of the United Wholesale Division (provided, that, in the event that the United Wholesale Division Assets are not sold pursuant to the United Wholesale Sale Agreements on or before March 31, 2004, Agent may require that such physical counts be conducted more frequently) and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Agent with a report in the form and with such specificity as may be reasonably satisfactory to Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Agent, except for sales, returns or transfers of Inventory in the ordinary course of its business that are reported to Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent's request, Borrowers shall, at their expense, no more than one (1) time in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent

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written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g ) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Agent's request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Agent, a physical count of the Inventory of the Retail Division and the United Wholesale Division in form, scope and methodology acceptable to Agent (but only to the extent that a physical count that is acceptable to Borrowers and Agent has not been conducted by such inventory counting service within the immediately preceding fiscal quarter so long as no Default or Event of Default shall exist or have occurred or four (4) f iscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the date hereof) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Agent and Borrowers shall promptly deliver confirmation to Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers; (k) Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Lead Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.

          7.4 Equipment and Real Property Covenants. With respect to the Equipment and Real Property: (a) upon Agent's request, Borrowers and Guarantors shall, at their expense, no more than one (1) time in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent written appraisals as to the Equipment and/or the Real Property in form, scope and methodology reasonably acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and upon which Agent is expressly permitted to rely; (b) Borrowers and Guarantors shall keep the Equipment in good order, repair, running and marketable condition (ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment and Real Property with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all applicable laws in all material respects; (d) the Equipment is and shall be used in the business of Borrowers and Guarantors and not for personal, family, household or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired, replaced or maintained in the ordinary course of its business or to move Equipment directly from one location set forth or

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permitted herein to another such location and except for the movement of motor vehicles used by or for the benefit of such Borrower or Guarantor in the ordinary course of business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Equipment to be or become a part of or affixed to real property (but not including for this purpose any plumbing and electrical fixtures, heating, ventilation and air conditioning, wall and floor coverings, walls or ceilings and other fixtures not constituting trade fixtures); and (g) as between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the use, sale or other disposition of the Equipment (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party).

          7.5 Prescription Files Covenants. With respect to the Prescription Files: (a) each Borrower and Guarantor shall at all times maintain the Prescription Files in a manner consistent with the requirements of Federal, State and local laws and regulations in all material respects, including all Health Care Laws, which files and records related thereto shall be correct and accurate; (b) Borrowers and Guarantors shall not remove any Prescription Files from the locations set forth or permitted herein, without the prior written consent of Agent, except for transfers of Prescription Files in the ordinary course of its business (including at the request of customers with respect to such customer's own Prescription Files) and except to move Prescription Files directly from one location set forth or permitted herein to another such location; (c) upon Agent's request, Borrowers shall, at their expense, no more than one (1) time in any twelve (12) month period, but at any time o r times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent written appraisals as to the Prescription Files in form, scope and methodology reasonably acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (d) Borrowers and Guarantors shall use, store and maintain the Prescription Files with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the HIPAA, as amended and all rules, regulations and orders related thereto) in all material respects; (e) there are no limitations or restrictions on the rights of any Borrower or Guarantor to sell, transfer or otherwise assign the Prescription Files to any third party so long as such third party has the licenses required under applicable state law to operate a pharmacy and sell products subject to a prescription; (f ) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the use and sale of prescriptions and the maintenance and use of the Prescription Files (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); and (g) Borrowers and Guarantors shall keep the Prescription Files in good and marketable condition.

          7.6 Power of Attorney. Each Borrower and Guarantor hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as such Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time on and after an Event of Default exists or has occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's rights and remedies to collect any Receivable or other Collateral, (iv) sell or assign any Receivable upon such terms, for such amount and at such time or times as the Agent deems

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advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other similar document against an Account Debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from Account Debtors or other obligors in respect of Receivables or other proceeds of Collateral to an address designated by Agent, and open and dispose of all mail addressed to such Borrower or Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and things which are necessary, in Agent's determination, to fulfill such Borrower's or Guarantor's obligations under this Agreement and the other Financing Agreements and (b) at all times that Agent has exercised its right to instruct the depository banks at which Blocked Accounts are maintained to transfer fu nds to the Agent Payment Account as provided in Section 6.3 hereto (or at any time that any item of payment referred to below may be received by Agent or any Lender), to (i) take control in any manner of any item of payment in respect of Receivables or constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender, (ii) have access to any lockbox or postal box into which remittances from Account Debtors or other obligors in respect of Receivables or other proceeds of Collateral are sent or received, (iii) endorse such Borrower's or Guarantor's name upon any items of payment in respect of Receivables or constituting Collateral or otherwise received by Agent and any Lender and deposit the same in Agent's account for application to the Obligations, and (c) at any time to (i) endorse such Borrower's or Guarantor's name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable or any good s pertaining thereto or any other Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (ii) clear Inventory the purchase of which was financed with Letter of Credit Accommodations through U.S. Customs or foreign export control authorities in such Borrower's or Guarantor's name, Agent's name or the name of Agent's designee, and to sign and deliver to customs officials powers of attorney in such Borrower's or Guarantor's name for such purpose, and to complete in such Borrower's or Guarantor's or Agent's name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, and (iii) sign such Borrower's or Guarantor's name on any verification of Receivables and notices thereof to Account Debtors or any secondary obligors or other obligors in respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and their respective officers, employees and designees from any lia bilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except to the extent resulting from Agent's or any Lender's own gross negligence or wilful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

          7.7 Right to Cure. Agent may, at its option, upon notice to Lead Borrower, (a) cure any default by any Borrower or Guarantor under any material agreement with a third party that affects the Collateral, its value or the ability of Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Agent or any Lender therein or the ability of any Borrower or Guarantor to perform its obligations hereunder or under any of the other Financing Agreements, (b) pay or bond on appeal any judgment entered against any Borrower or Guarantor, (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and pay any amount, incur any expense or perform any act which, in Agent's good faith judgment, is necessary or appropriate to preserve, protect,

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insure or maintain the Collateral and the rights of Agent and Lenders with respect thereto. Agent may add any amounts so expended to the Obligations and charge any Borrower's account therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Borrower or Guarantor. Any payment made or other action taken by Agent or any Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

          7.8 Access to Premises. From time to time as requested by Agent, at the cost and expense of Borrowers, (a) Agent or its designee shall have complete access to all of each Borrower's and Guarantor's premises during normal business hours and after notice to Parent, or at any time and without notice to Lead Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of each Borrower's and Guarantor's books and records, including the Records, and (b) each Borrower and Guarantor shall promptly furnish to Agent such copies of such books and records or extracts therefrom as Agent may request, and Agent or any Lender or Agent's designee may use during normal business hours such of any Borrower's and Guarantor's personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing and if an Event of Default exists or has occurred and is continuing for the coll ection of Receivables and realization of other Collateral.

SECTION 8 REPRESENTATIONS AND WARRANTIES

          Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:

          8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor is a corporation or limited liability company duly organized and in good standing under the laws of its state of organization and is duly qualified as a foreign corporation or limited liability company and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within each Borrower's and Guarantor's corporate or limited liability company powers, (b) have been duly authorized, (c) are not in contravention of law or the terms of any Borrower's or Guarantor's certificate or articles of incorporation, by-laws, o r other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound and (d) will not result in the creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of any Borrower or Guarantor. This Agreement and the other Financing Agreements to which any Borrower or Guarantor is a party constitute legal, valid and binding obligations of such Borrower and Guarantor enforceable in accordance with their respective terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of

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creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

          8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.

                    (a) The exact legal name as of the date hereof of each Borrower and Guarantor is as set forth on the signature page of this Agreement and in the Information Certificate. No Borrower or Guarantor has, during the five years prior to the date of this Agreement, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in the Information Certificate.

                    (b) Each Borrower and Guarantor is as of the date hereof an organization of the type and organized in the jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets forth the organizational identification number of each Borrower and Guarantor or accurately states that such Borrower or Guarantor has none and accurately sets forth the federal employer identification number of each Borrower and Guarantor, in each case, as of the date hereof.

                    (c) The chief executive office and mailing address of each Borrower and Guarantor and each Borrower's and Guarantor's Records concerning Accounts are located only at the address identified as such in Schedule 8.2 to the Information Certificate and its only other places of business and the only other locations of Collateral not in transit to the extent permitted herein, if any, are the addresses set forth in Schedule 8.2 to the Information Certificate, subject to the rights of any Borrower or Guarantor to establish new locations in accordance with Section 9.2 below. The Information Certificate correctly identifies any of such locations which as of the date hereof are not owned by a Borrower or Guarantor and sets forth the owners and/or operators thereof.

          8.3 Financial Statements; No Material Adverse Change. All financial statements relating to any Borrower or Guarantor which have been or may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have been prepared in accordance with GAAP (except as to any interim financial statements, to the extent such statements are subject to normal year-end adjustments and do not include any notes) and fairly present in all material respects the financial condition and the results of operation of such Borrower and Guarantor as at the dates and for the periods set forth therein. Except as disclosed in any interim financial statements furnished by Borrowers and Guarantors to Agent prior to the date of this Agreement, as of the date hereof, there has been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements of any Borrower or Guarantor furnished by any Bo rrower or Guarantor to Agent prior to the date of this Agreement.

          8.4 Priority of Liens; Title to Properties. The security interests and liens granted to Agent under this Agreement and the other Financing Agreements constitute a valid perfected first priority security interest in all of the Collateral (other than the Supplemental Loan Priority Collateral) and a valid perfected second priority security interest in the Supplemental Loan

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Priority Collateral subordinate only to the perfected first priority security interest of Supplemental Loan Agent pursuant to the terms of the Supplemental Loan Intercreditor Agreement, in each case subject only to the liens indicated on Schedule 8.4 to the Information Certificate and the other liens permitted under Section 9.8 hereof. Each Borrower and Guarantor has good and marketable fee simple title to or valid leasehold interests in all of its Real Property and good, valid and merchantable title to all of its other properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Agent and such others as are specifically listed on Schedule 8.4 to the Information Certificate or permitted under Section 9.8 hereof.

          8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be filed, in a timely manner all material tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Each Borrower and Guarantor has paid or caused to be paid all material taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower or Guarantor and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of all material accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

          8.6 Litigation. Except as set forth on Schedule 8.6 to the Information Certificate, (a) there is no investigation by any Governmental Authority pending, or to the best of any Borrower's or Guarantor's knowledge threatened, against or affecting any Borrower or Guarantor, or its or their assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to the best of any Borrower's or Guarantor's knowledge threatened, against any Borrower or Guarantor or its or their assets or goodwill, or against or affecting any transactions contemplated by this Agreement, in each case, which if adversely determined against such Borrower or Guarantor has or could reasonably be expected to have a Material Adverse Effect.

          8.7 Compliance with Other Agreements and Applicable Laws.

                    (a) Borrowers and Guarantors are not in default in any respect under, or in violation in any respect of the terms of, any agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound where such default or violation has or could reasonably be expected to have a Material Adverse Effect. Borrowers and Guarantors are in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to their respective businesses, including, without limitation, those set forth in or promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as amended, and the rules and regulations thereunder, and all Environmental Laws where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect.

                    (b) Borrowers and Guarantors have obtained all permits, licenses, approvals, consents, certificates, orders or authorizations of any Governmental Authority required for the lawful conduct of its business (the "Permits") where the failure to have such Permits has or could

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reasonably be expected to have a Material Adverse Effect. All of the Permits are valid and subsisting and in full force and effect. Except as set forth on Schedule 8.8 of the Information Certificate, there are no actions, claims or proceedings pending or to the best of any Borrower's or Guarantor's knowledge, threatened that seek the revocation, cancellation, suspension or modification of any of the Permits.

          8.8 Environmental Compliance.

                    (a) Except as set forth on Schedule 8.8 to the Information Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner that violates any applicable Environmental Law or Permit where such violation has or could reasonably be expected to have a Material Adverse Effect.

                    (b) Except as set forth on Schedule 8.8 to the Information Certificate, there has been no, and to the best of any Borrower's or Guarantor's knowledge there is no pending or threatened, investigation by any Governmental Authority or any proceeding, complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person with respect to any non-compliance with or violation of the requirements of any Environmental Law by any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or any other environmental, health or safety matter, which has or could reasonably be expected to have a Material Adverse Effect.

                    (c) Except as set forth on Schedule 8.8 to the Information Certificate, as of the date hereof, Borrowers, Guarantors and their Subsidiaries have no material liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials.

          8.9 Employee Benefits.

                    (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or State law. Except as set forth on Schedule 8.9, as of the date hereof each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and to the best of any Borrower's or Guarantor's knowledge, nothing has occurred which would cause the loss of such qualification. Each Borrower and its ERISA Affiliates have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

                    (b) Except as set forth on Schedule 8.9, (i) as of the date hereof, there are no pending, or to the best of any Borrower's or Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan and (ii) there has

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been no non-exempt prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan.

                    (c) Except as set forth on Schedule 8.9, (i) no ERISA Event has occurred or is reasonably expected to occur; (ii) the current value of each Plan's assets (determined in accordance with the assumptions used for funding such Plan pursuant to Section 412 of the Code) are not less than such Plan's liabilities under Section 4001(a)(16) of ERISA (provided, that, any underfunding set forth on Schedule 8.9 has not, as of the date hereof, given rise to the requirement that any additional minimum funding payments be made except as disclosed therein); (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability under Title IV of ERISA with respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA Affiliates, have not engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.

          8.10 Bank Accounts. All of the deposit accounts, investment accounts or other accounts in the name of or used by any Borrower or Guarantor maintained at any bank or other financial institution are set forth on Schedule 8.10 to the Information Certificate, subject to the right of each Borrower and Guarantor to establish new accounts in accordance with Section 5.2 hereof.

          8.11 Intellectual Property.

                    (a) Each Borrower and Guarantor owns or licenses or otherwise has the right to use all Intellectual Property necessary for the operation of its business as presently conducted or proposed to be conducted. As of the date hereof, Borrowers and Guarantors do not have any Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.11 to the Information Certificate and has not granted any licenses with respect thereto other than as set forth in Schedule 8.11 to the Information Certificate. No event has occurred which permits or would permit after notice or passage of time or both, the revocation, suspension or termination of such rights where any such event has or could reasonably be expected to have a Material Ad verse Effect.

                    (b) To the best of any Borrower's and Guarantor's knowledge, no slogan or other advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by any Borrower or Guarantor infringes in any material respect as to any patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned by any other Person presently and no claim or litigation is pending or threatened against or affecting any Borrower or Guarantor contesting its right to sell or use any such Intellectual Property where any such infringements, claims or litigation have or could reasonably be expected to have a Material Adverse Effect. Schedule 8.11 to the Information Certificate sets forth all of the agreements or

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other arrangements of each Borrower and Guarantor pursuant to which such Borrower or Guarantor has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof and the dates of the expiration of such agreements or other arrangements of such Borrower or Guarantor as in effect on the date hereof (collectively, together with such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the date hereof, collectively, the "License Agreements" and individually, a "License Agreement"). No trademark, servicemark, copyright or other Intellectual Property at any time used by any Borrower or Guarantor which is owned by another person, or owned by such Borrower or Guarantor subject to any security interest, lien, collateral assignment, pledge or other encumbrance in favor of any person other than Agent, is affixed to any Eligible Inventory, except (a) to the extent permitted under t he term of the license agreements listed on Schedule 8.11 to the Information Certificate and (b) to the extent the sale of Inventory to which such Intellectual Property is affixed is permitted to be sold by such Borrower or Guarantor under applicable law (including the United States Copyright Act of 1976).

          8.12 Subsidiaries; Affiliates; Capitalization; Solvency.

                    (a) Each Borrower and Guarantor does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership except as set forth in Schedule 8.12 to the Information Certificate and except to the extent permitted after the date hereof under Section 9.10 hereof.

                    (b) Each Borrower and Guarantor is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 to the Information Certificate as being owned by such Borrower or Guarantor and as may be permitted after the date hereof under Section 9.10 hereof.

                    (c) The issued and outstanding shares of Capital Stock of each Borrower (other than Parent) and Guarantor are directly and beneficially owned and held by the persons indicated in the Information Certificate, and in each case all of such shares of Borrowers (other than Parent) and Guarantors have been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any kind, except as disclosed in Schedule 8.12 of the Information Certificate or as otherwise disclosed in Agent in writing prior to the date hereof.

                    (d) Borrowers and Guarantors (taken as a whole) are and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transactions contemplated hereunder. Each of Spartan, Stores Distribution, MDC, Family Fare, MSFC, Prevo, Buckeye, Pharm, United and Seaway and its Subsidiaries (taken as a whole) are Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transactions contemplated hereunder.

          8.13 Labor Disputes.

                    (a) Set forth on Schedule 8.13 to the Information Certificate is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to

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each Borrower and Guarantor and any union, labor organization or other bargaining agent in respect of the employees of any Borrower or Guarantor on the date hereof.

                    (b) There is no significant unfair labor practice complaint pending against any Borrower or Guarantor or, to the best of any Borrower's or Guarantor's knowledge, threatened against it, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Borrower or Guarantor or, to best of any Borrower's or Guarantor's knowledge, threatened against it which has or could reasonably be expected to have a Material Adverse Effect, and no significant strike, labor dispute, slowdown or stoppage is pending against any Borrower or Guarantor or, to the best of any Borrower's or Guarantor's knowledge, threatened against any Borrower or Guarantor which has or could reasonably be expected to have a Material Adverse Effect.

          8.14 Restrictions on Subsidiaries. Except for restrictions contained in this Agreement or any other agreement with respect to Indebtedness of any Borrower or Guarantor permitted hereunder as in effect on the date hereof, there are no contractual or consensual restrictions on any Borrower or Guarantor or any of its Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or other assets (i) between any Borrower or Guarantor and any of its or their Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor or (b) the ability of any Borrower or Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant security interests to Agent or any Lender in the Collateral.

          8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets forth all Material Contracts to which any Borrower or Guarantor is a party or is bound as of the date hereof. Borrowers and Guarantors have delivered true, correct and complete copies of such Material Contracts to Agent on or before the date hereof. Borrowers and Guarantors are not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party to terminate any Material Contract.

          8.16 Credit Card Agreements. Set forth in Schedule 8.16 hereto is a correct and complete list of all of the Credit Card Agreements and all other agreements, documents and instruments existing as of the date hereof between or among any Borrower, any of its Affiliates, the Credit Card Issuers, the Credit Card Processors and any of their Affiliates. The Credit Card Agreements constitute all of such agreements necessary for each Borrower to operate its business as presently conducted with respect to credit cards and debit cards and no Receivables of any Borrower arise from purchases by customers of Inventory with credit cards or debit cards, other than those which are issued by Credit Card Issuers with whom such Borrower has entered into one of the Credit Card Agreements set forth on Schedule 8.16 hereto or with whom Borrower has entered into a Credit Card Agreement in accordance with Section 9.15 hereof. Each of the Credit Card Agreements constitutes the legal, valid and binding obligations of the Borrower that is party thereto and to the best of each Borrower's and Guarantor's knowledge, the other parties thereto, enforceable in accordance with their respective terms and is in full force and effect. No default or event of default, or act, condition or event which after notice or passage of time or both, would constitute a default or an event of default under any of the Credit Card Agreements exists or has occurred. Each Borrower and the other parties thereto have complied in all material respects with all of the terms and conditions of the Credit Card Agreements to the extent

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necessary for such Borrower to be entitled to receive all payments thereunder. Borrowers have delivered, or caused to be delivered to Agent, true, correct and complete copies of all of the Credit Card Agreements in effect as of the date hereof.

          8.17 HIPAA Compliance.

                    (a) To the extent that and for so long as any Borrower or Guarantor is a "covered entity" within the meaning of HIPAA, such Borrower or Guarantor (i) has undertaken or will promptly undertake all appropriate surveys, audits, inventories, reviews, analyses and/or assessments (including any necessary risk assessments) of all areas of its business and operations required by HIPAA; (ii) has developed or will promptly develop an appropriate plan and time line for becoming HIPAA Compliant (a "HIPAA Compliance Plan"); and (iii) has implemented or will implement those provisions of such HIPAA Compliance Plan in all material respects necessary to ensure that such Borrower or Guarantor is or becomes HIPAA Compliant.

                    (b) For purposes hereof, "HIPAA Compliant' shall mean that a Borrower or Guarantor (i) is or will be in compliance in all material respects with each of the applicable requirements of the so-called "Administrative Simplification" provisions of HIPAA on and as of each date that any part thereof, or any final rule or regulation thereunder, becomes effective in accordance with its or their terms, as the case may be (each such date, a "HIPAA Compliance Date") and (ii) is not and could not reasonably be expected to become, as of any date following any such HIPAA Compliance Date, the subject of any civil or criminal penalty, process, claim, action or proceeding, or any administrative or other regulatory review, survey, process or proceeding (other than routine surveys or reviews conducted by any government health plan or other accreditation entity) that could result in any of the foregoing or that has or could reasonably be expected to have a Material Adverse Effect.

                    (c) Schedule 8.17 hereto sets forth a complete list of all "business associate agreements" (as such term is defined in HIPAA) that any Borrower or Guarantor has entered into with any person as of the date hereof.

          8.18 Compliance with Health Care Laws. Without limiting the generality of Sections 8.7 or 8.17, or any other representation or warranty made herein or in any of the other Financing Agreements:

                    (a) Each Borrower and Guarantor is in compliance in all material respects with all applicable Health Care Laws, including all Medicare and Medicaid program rules and regulations applicable to them. Without limiting the generality of the foregoing, no Borrower or Guarantor has received notice by a Governmental Authority of any violation of any provisions of the Medicare and Medicaid Anti-Fraud and Abuse or Anti-Kickback Amendments of the Social Security Act (presently codified in Section 1128(B)(b) of the Social Security Act) or the Medicare and Medicaid Patient and Program Protection Act of 1987.

                    (b) Each Borrower and Guarantor has maintained in all material respects all records required to be maintained by the Joint Commission on Accreditation of Healthcare Organizations, the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy and the Federal and State Medicare and Medicaid programs as required by the

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Health Care Laws each Borrower and Guarantor and has all necessary permits, licenses, franchises, certificates and other approvals or authorizations of Governmental Authority as are required under applicable Health Care Laws.

                    (c) Each Borrower and Guarantor who is a Certified Medicare Provider or Certified Medicaid Provider has in a timely manner filed all requisite cost reports, claims and other reports required to be filed in connection with all Medicare and Medicaid programs due on or before the date hereof, all of which are complete and correct in all material respects. There are no known claims, actions or appeals pending before any Third Party Payor or Governmental Authority, including without limitation, any Fiscal Intermediary, the Provider Reimbursement Review Board or the Administrator of the Centers for Medicare and Medicaid Services, with respect to any Medicare or Medicaid cost reports or claims filed by any Borrower or Guarantor on or before the date hereof. There currently exist no restrictions, deficiencies, required plans of correction actions or other such remedial measures with respect to Federal and State Medicare and Medicaid certificati ons or licensure.

                    (d) Schedule 8.18 hereto sets forth an accurate, complete and current list of all participation agreements of any Borrower or Guarantor with health maintenance organizations, insurance programs, preferred provider organizations and other Third Party Payors and all such agreements are in full force and effect and no material default exists thereunder.

          8.19 Interrelated Businesses. Borrowers and Guarantors make up a related organization of various entities constituting a single economic and business enterprise so that Borrowers and Guarantors share an identity of interests such that any benefit received by any one of them benefits the others. Borrowers and Guarantors render services to or for the benefit of the other Borrowers and/or Guarantors, as the case may be, purchase or sell and supply goods to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other Borrowers and Guarantors and provide administrative, marketing, payroll and management services to or for the benefit of the other Borrowers and Guarantors. Borrowers and Guarantors have the same chief executive office, certain centralized accounting and legal services, certain common officers and directors and generally do not provide consolidating financial statements to cre ditors.

          8.20 Notices from Farm Products Sellers, etc.

                    (a) Each Borrower has not, within the one (1) year period prior to the date hereof, received any written notice pursuant to the applicable provisions of the PSA, PACA, the Food Security Act, the UCC or any other applicable local laws from (i) any Farm Products Seller or (ii) any lender to any Farm Products Seller or any other Person with a security interest in the assets of any Farm Products Seller or (iii) the Secretary of State (or equivalent official) or other Governmental Authority of any State, Commonwealth or political subdivision thereof in which any Farm Products purchased by such Borrower are produced, in any case advising or notifying such Borrower of the intention of such Farm Products Seller or other Person to preserve the benefits of any trust applicable to any assets of any Borrower established in favor of such Farm Products Seller or other Person under the provisions of any law or claiming a security interest in or lien u pon or other claim or encumbrance with respect to any perishable agricultural commodity or any other Farm Products which may be or have been purchased by a Borrower or

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any related or other assets of such Borrower (all of the foregoing, together with any such notices as any Borrower may at any time hereafter receive, collectively, the "Food Security Act Notices").

                    (b) No Borrower is a "live poultry dealer" (as such term is defined in the PSA) or otherwise purchases or deals in live poultry of any type whatsoever. Borrowers and Guarantors do not purchase livestock pursuant to cash sales as such term is defined in the PSA. Each Borrower is not engaged in, and shall not engage in, raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operations.

          8.21 Accuracy and Completeness of Information. All information furnished by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Information Certificate is true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading.

          8.22 Survival of Warranties; Cumulative. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to Agent and Lenders on the date of each additional borrowing or other credit accommodation hereunder and shall be conclusively presumed to have been relied on by Agent and Lenders regardless of any investigation made or information possessed by Agent or any Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which any Borrower or Guarantor shall now or hereafter give, or cause to be given, to Agent or any Lender.

SECTION 9 AFFIRMATIVE AND NEGATIVE COVENANTS

          9.1 Maintenance of Existence.

                    (a) Each Borrower and Guarantor shall at all times preserve, renew and keep in full force and effect its corporate or limited liability company existence and rights and franchises with respect thereto and maintain in full force and effect all licenses, trademarks, tradenames, approvals, authorizations, leases, contracts and Permits necessary to carry on the business as presently or proposed to be conducted, except as to any Borrower or Guarantor other than Parent as permitted in Section 9.7 hereto.

                    (b) No Borrower or Guarantor shall change its name unless each of the following conditions is satisfied: (i) Agent shall have received not less than thirty (30) days prior written notice from Lead Borrower of such proposed change in its corporate or limited liability company name, which notice shall accurately set forth the new name; and (ii) Agent shall have received a copy of the amendment to the Certificate of Incorporation or Articles of Incorporation (or Certificate of Formation or other organizational document as applicable) of such Borrower or Guarantor providing for the name change certified by the Secretary of State of the jurisdiction of incorporation or organization of such Borrower or Guarantor as soon as it is available.

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                    (c) No Borrower or Guarantor shall change its chief executive office or its mailing address or organizational identification number (or if it does not have one, shall not acquire one) unless Agent shall have received not less than thirty (30) days' prior written notice from Lead Borrower of such proposed change, which notice shall set forth such information with respect thereto as Agent may in good faith require and Agent shall have received such agreements as Agent may reasonably require in connection therewith. No Borrower or Guarantor shall change its type of organization, jurisdiction of organization or other legal structure, except as to any Borrower (other than Parent) to the extent permitted in Section 9.7 hereof and in any event after not less than thirty (30) days prior written notice to Agent.

          9.2 New Collateral Locations. Each Borrower and Guarantor may only open any new location within the continental United States provided such Borrower or Guarantor (a) gives Agent thirty (30) days prior written notice of the intended opening of any such new location and (b) executes and delivers, or causes to be executed and delivered, to Agent such agreements, documents, and instruments as Agent may deem reasonably necessary or desirable to protect its interests in the Collateral at such location.

          9.3 Compliance with Laws, Regulations, Etc.

                    (a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, comply in all material respects with all laws, rules, regulations, licenses, approvals, orders and other Permits applicable to it and duly observe all requirements of any foreign, Federal, State or local Governmental Authority, including ERISA, the Code, the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, all Health Care Laws and all Environmental Laws where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect.

                    (b) Each Borrower and Guarantor shall give written notice to Agent promptly after any Borrower's or Guarantor's receipt of any notice of, or any Borrower's or Guarantor's otherwise obtaining knowledge of, (i) any release, spill or discharge, threatened or actual, of any Hazardous Material at or from its premises (whether or not owned by it) other than as permitted under any applicable Environmental Law or other occurrence that constitutes a violation in any material respect of any Environmental Law at any such premises or (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice from or on behalf of any Governmental Authority with respect to: (A) any material non-compliance with or violation of any Environmental Law by any Borrower or Guarantor or (B) the release, spill or discharge, threatened or actual, of any Hazardous Material other than as permitted under any applicable Environmental Law. Upon the request of Agent, copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial investigations shall be promptly furnished, or caused to be furnished, by such Borrower or Guarantor to Agent. Each Borrower and Guarantor shall take prompt action to respond to any material non-compliance with any of the Environmental Laws and shall keep Agent reasonably informed regarding the status of such response.

                    (c) Without limiting the generality of the foregoing, whenever Agent reasonably determines that there is material non-compliance, or any condition that requires any action by or on behalf of any Borrower or Guarantor in order to avoid any material non-compliance, with any

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Environmental Law, Borrowers shall, at Agent's request and Borrowers' expense: (i) cause an independent environmental engineer reasonably acceptable to Agent to conduct such tests of the site where material non-compliance or alleged material non-compliance with such Environmental Laws has occurred as to such material non-compliance and prepare and deliver to Agent a report as to such material non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report of such engineer whenever the scope of such material non-compliance, or such Borrower's or Guarantor's response thereto or the estimated costs thereof, shall change in any material respect.

                    (d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and Lenders and their respective directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of any Borrower or Guarantor and the preparation and implementation of any closure, remedial or other required plans. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

          9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, duly pay and discharge when due all material taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes, assessments, contributions and governmental charges the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to which adequate reserves have been set aside on its books and Agent may, at its option, establish any Reserves in respect thereof to the extent that such taxes give rise to a security interest, lien or other claim that is pari passu or has priority over the security interests of Agent or that would otherwise impair the ability of Agent to realize upon the Collateral.

          9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Said policies of insurance shall be reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and Guarantors shall furnish certificates, policies or endorsements to Agent as Agent shall reasonably require as proof of such insurance, and, if any Borrower or Guarantor fails to do so, Agent is authorized, but not required, to obtain such insurance at the expense of Borrowers. All policies shall provide for at least thirty (30) days prior written notice to Agent of any cancellation or reduction of coverage and that Agent may act as attorn ey for each Borrower and Guarantor in obtaining (if any Borrower or Guarantor fails to do so), and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling, amending and canceling such insurance. Borrowers and Guarantors shall cause Agent to be named as a loss payee and an additional insured (but without

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any liability for any premiums) under such insurance policies and Borrowers and Guarantors shall obtain non-contributory lender's loss payable endorsements to all insurance policies in form and substance satisfactory to Agent. Such lender's loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Agent as its interests may appear and further specify that Agent and Lenders shall be paid regardless of any act or omission by any Borrower, Guarantor or any of its or their Affiliates. Without limiting any other rights of Agent or Lenders, any insurance proceeds received by Agent at any time may be applied to payment of the Obligations, whether or not then due, in any order and in such manner as Agent may determine. Upon application of such proceeds to the Loans, Loans may be available subject and pursuant to the terms hereof to be used for the costs of repair or replacement of the Collateral lost or damages resulting in the payment of such insurance proceeds.

          9.6 Financial Statements and Other Information.

                    (a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, keep proper books and records of all dealings or transactions of or in relation to the Collateral and the business of such Borrower, Guarantor and its Subsidiaries in accordance with GAAP. Borrowers and Guarantors shall furnish to Agent and Lenders within a reasonable time all such financial and other information as Agent shall reasonably request relating to the Collateral and the assets, business and operations of Borrowers and Guarantors, and Borrower shall notify the auditors and accountants of Borrowers and Guarantors that Agent is authorized to obtain such information directly from them; provided, that, so long as no Default or Event of Default shall exist or have occurred and be continuing, Agent shall not exercise its right under this Section 9.6 to contact the accountants and auditors directly to obtain information from them not relating to the Collateral without the prior approval of Lead Borrower, which approval shall not be unreasonably withheld, conditioned or delayed. Without limiting the foregoing, Borrowers and Guarantors shall furnish or cause to be furnished to Agent, the following: (i) within thirty (30) days after the end of each fiscal four (4) week period (or forty-five (45) days after the end of each fiscal quarter), unaudited consolidated financial statements (including in each case balance sheets, statements of income and loss, statements of cash flows, and statements of shareholders' equity), and unaudited consolidating financial statements (including balance sheets and statements of income and loss), all in reasonable detail and substantially in the form of Exhibit D-1 hereto, fairly presenting the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and through such fiscal four (4) week period, certified to be correct by the chief financial officer or vice president of finance of Parent, subje ct to normal year-end adjustments and no footnotes and accompanied by a compliance certificate substantially in the form of Exhibit E hereto, along with a schedule in a form satisfactory to Agent in good faith of the calculations used in determining, as of the end of such four (4) week period, whether Borrowers and Guarantors are in compliance with the covenants set forth in Sections 9.18 and 9.19 of this Agreement for such fiscal four (4) week period and (ii) within ninety (90) days after the end of each fiscal year, audited consolidated financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, statements of cash flows, and statements of shareholders' equity) and unaudited consolidating financial statements (including balance sheets and statements of income and loss), and the accompanying notes thereto, all in reasonable detail and substantially in the form of Exhibit D-2 hereto, fairly presenting in all material respects the financial positio n and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal year, together with the unqualified

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opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be Deloitte & Touche LLP, another nationally recognized independent accounting firm selected by Borrowers and acceptable to Agent or a regional independent accounting firm selected by Borrowers and acceptable to Agent, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Parent and its Subsidiaries as of the end of and for the fiscal year then ended. All references to a "fiscal four (4) week period" herein or otherwise in this Agreement or any of the other Financing Agreements shall mean such four (4) or five (5) week periods as calculated in accordance with the current accounting practices of Borrowers and Guarantors as of the date hereof.

                    (b) Borrowers and Guarantors shall promptly notify Agent in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $1,000,000, or which if adversely determined would result in a Material Adverse Effect, (ii) any order, judgment or decree in excess of $5,000,000 that shall have been entered against any Borrower or Guarantor any of its or their properties or assets, (iv) any notification of a material violation of laws or regulations received by any Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.

                    (c) Borrowers and Guarantors shall promptly after the sending or filing thereof furnish or cause to be furnished to Agent copies of all reports which Parent sends to its stockholders generally and copies of all reports and registration statements which any Borrower or Guarantor files with the Securities and Exchange Commission, any national securities exchange or the National Association of Securities Dealers, Inc.

                    (d) Borrowers and Guarantors shall furnish or cause to be furnished to Agent such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrowers and Guarantors, as Agent may, from time to time, reasonably request. Subject to the terms of Section 13.5 hereof, Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrowers and Guarantors to any court or other Governmental Authority or to any Lender or Participant or prospective Lender or Participant or any Affiliate of any Lender or Participant. Each Borrower and Guarantor hereby irrevocably authorizes and directs all accountants or auditors to deliver to Agent, at Borrowers' expense, upon Agent's request, copies of the financial statements of any Borrower and Guarantor and any reports or management letters prepared by such accountants or auditors on behalf of any Borrower or Guarantor and to disclose to Agent and Lenders upon Agent's request such information as they may have regarding the business of any Borrower and Guarantor. So long as no Default or Event of Default shall exist or have occurred and be continuing, Agent shall not exercise its right under this Section 9.6 to contact the accountants and auditors directly to obtain information from them not relating to the Collateral without the prior approval of Lead Borrower, which approval shall not be unreasonably withheld, conditioned or delayed. Any documents, schedules, invoices or other papers delivered to Agent or any Lender may be destroyed or otherwise disposed of by Agent or such Lender one (1) year after the same are delivered to Agent or such Lender, except as otherwise designated by Lead Borrower to Agent or such Lender in writing.

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          9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly,

                    (a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it except that any Borrower may merge with and into or consolidate with any other Borrower and any Guarantor may merge with and into or consolidate with any Borrower, provided, that, each of the following conditions is satisfied as determined by Agent in good faith: (i) Agent shall have received not less than ten (10) Business Days' prior written notice of the intention of such Subsidiaries to so merge or consolidate, which notice shall set forth in reasonable detail satisfactory to Agent, the persons that are merging or consolidating, which person will be the surviving entity, the locations of the assets of the persons that are merging or consolidating, and the material agreements and documents relating to such merger or consolidation, (ii) Agent shall have received such other info rmation with respect to such merger or consolidation as Agent may reasonably request, (iii) as of the effective date of the merger or consolidation and after giving effect thereto, no Default or Event of Default shall exist or have occurred, (iv) Agent shall have received, true, correct and complete copies of all agreements, documents and instruments relating to such merger or consolidation, including, but not limited to, the certificate or certificates of merger to be filed with each appropriate Secretary of State (with a copy as filed promptly after such filing), (v) the surviving corporation shall expressly confirm, ratify and assume the Obligations and the Financing Agreements to which it is a party in writing, in form and substance satisfactory to Agent, and Borrowers and Guarantors shall execute and deliver such other agreements, documents and instruments as Agent may request in connection therewith and (v) to the extent a Guarantor is merging with and into or consolidating with a Borrower, the Borrowe r shall be the surviving corporation;

                    (b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Capital Stock, or Indebtedness owed to it, to any other Person or any of its assets to any other Person, except for

                              (i) sales of Inventory in the ordinary course of business,

                              (ii) the sale or other disposition of Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of any Borrower or Guarantor) so long as such sales or other dispositions do not involve Equipment having an aggregate fair market value in excess of $2,500,000 for all such Equipment disposed of in any fiscal year of Borrowers or as Agent may otherwise agree, and

                              (iii) the issuance and sale by any Borrower or Guarantor of Capital Stock of such Borrower or Guarantor after the date hereof; provided, that, (A) Agent shall have received not less than ten (10) Business Days' prior written notice of such issuance and sale by such Borrower or Guarantor, which notice shall specify the parties to whom such shares are to be sold, the terms of such sale, the total amount which it is anticipated will be realized from the issuance and sale of such stock and the net cash proceeds which it is anticipated will be received by such Borrower or Guarantor from such sale, (B) such Borrower or Guarantor shall not be required to pay any cash dividends or repurchase or redeem such Capital Stock or make any other payments in respect thereof, except as otherwise permitted in Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and conditions of the purch ase and sale thereof, shall

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not include any terms that include any limitation on the right of any Borrower to request or receive Loans or Letter of Credit Accommodations or the right of any Borrower and Guarantor to amend or modify any of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or affect the arrangements of Borrowers and Guarantors with Agent and Lenders or are more restrictive or burdensome to any Borrower or Guarantor than the terms of any Capital Stock in effect on the date hereof, (D) except as Agent may otherwise agree in writing, all of the Net Proceeds of the sale and issuance of such Capital Stock shall be paid to Agent for application to the Obligations in such order and manner as Agent may determine and (E) as of the date of such issuance and sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred,

                    (iv) the issuance of Capital Stock of any Borrower or Guarantor consisting of common stock pursuant to an employee stock option or grant or similar equity plan (including the Associate Stock Purchase Plan of Parent) or 401(k) plans of such Borrower or Guarantor for the benefit of its employees, directors and consultants, provided, that, in no event shall such Borrower or Guarantor be required to issue, or shall such Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default,

                    (v) sales or other dispositions by any Borrower of assets in connection with the closing or sale of a retail store location of such Borrower in the ordinary course of such Borrower's business which consist of leasehold interests in the premises of such store (including the subleasing of the leasehold interest of such Borrower in such premises), the bulk sale of Inventory, Equipment and fixtures located at such premises to the purchaser of the leasehold interests and the books and records relating exclusively and directly to the operations of such store; provided, that, as to each and all such sales and closings, (A) on the date of, and after giving effect to, any such closing or sale, the number of retail store locations that had been operated by Borrowers closed or sold by Borrowers shall not be greater than five (5) retail store locations during the period commencing on the date hereof and ending on the end of the curren t fiscal year and thereafter, in any twelve (12) month period, twenty (20%) percent of the number of retail stores operated by Borrowers as of the end of the immediately preceding fiscal year, (B) Agent shall have received not less than ten (10) Business Days prior written notice of such sale or closing, which notice shall set forth in reasonable detail satisfactory to Agent, the parties to such sale or other disposition, the assets to be sold or otherwise disposed of, the purchase price and the manner of payment thereof and such other information with respect thereto as Agent may request, (C) as of the date of such sale or other disposition and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing, (D) such sale shall be on commercially reasonable prices and terms in a bona fide arm's length transaction with a Person that is not an Affiliate, (E) as of the date of any such sale or other disposition and after giving effect thereto, the Excess Availabili ty shall have been not less than $20,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any such sale or other disposition and after giving effect thereto, the Excess Availability shall be not less than $20,000,000, and (F) any and all Net Proceeds payable or delivered to such Borrower in respect of such sale or other disposition shall be paid or delivered, or caused to be paid or delivered, to Agent in accordance with the terms of this Agreement for application to the Obligations in such order and manner as Agent may determine,

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                              (vi) the sale by Borrowers of all or substantially all of the United Wholesale Division Assets pursuant to and in accordance in all material respects with the terms of the United Wholesale Sale Agreements as in effect on the date hereof, provided, that:

                                        (A) as to such sale, each of the following conditions is satisfied: (1) such sale shall be consummated and the transfer of ownership of such assets effective by no later than February 28, 2004, (2) the Net Proceeds of such sale paid in cash or other immediately available funds at the time of the transfer of ownership or control of the United Wholesale Division Assets (or any material portion thereof) shall be not less than $6,000,000, (3) Agent shall have received true, correct and complete copies of the United Wholesale Sale Agreements and all agreements, documents and instruments related thereto, (4) as of the date of such sale and after giving effect thereto (including the reduction in the Borrowing Base as a result of the assets subject to such sale no longer being included in the Borrowing Base), Excess Availability shall be not less than $15,000,000, (5) all con sideration delivered or payable to any Borrower or Guarantor in respect of such sale, including all amounts at any time payable to any Borrower or Guarantor, and all rights, benefits and remedies of any Borrower and Guarantor pursuant to the United Wholesale Sale Agreement and any agreement, document or instrument related thereto, is and shall continue at all times to be subject to the valid and enforceable, first priority perfected security interest and lien of Agent, and Borrowers and Guarantor shall take such other and further actions as may be required hereunder with respect to any such consideration, (6) Borrowers and Guarantors shall cause the Net Proceeds (including amounts to be applied to the Obligations) at any time payable to any Borrower or Guarantor pursuant to the United Wholesale Sale Agreements or any related agreement, document or instrument to be paid by the other party or parties thereto directly to Agent for application to the Obligations, (7) such sale is permitted under the Supplemental Loan Agreement and is otherwise permitted under any other agreement to which any Borrower or Guarantor is a party or by which it or its assets are bound and Borrowers and Guarantors shall have obtained all consents and approvals to such sale as may be required that shall be in full force and effect and the release of all other security interests, mortgages and liens with respect to the United Wholesale Division Assets to be sold, including the release of the security interests, mortgages and liens of Supplemental Loan Agent, (8) any material amendments to the United Wholesale Sale Agreements after the date hereof shall be on terms and conditions reasonably satisfactory to Agent, and (9) upon such sale, the Fixed Asset Availability Limit shall be reduced by the amount equal to the Net Proceeds payable in respect of the Real Property so sold up to $5,328,000 and after the Fixed Asset Availability Limit is reduced to zero, Agent shall establish a Reserve in the amount of any other Net Proceeds received in resp ect of such sale; provided, that, the amount of any such Reserve shall not exceed the then outstanding principal amount of the Supplemental Loan Debt,

                                        (B) upon the satisfaction of each of the conditions set forth in clause (A) above, including, but not limited to, the receipt by Agent of the Net Proceeds from such sale in immediately available funds in the Agent Payment Account and evidence that Supplemental Loan Agent has on or before the release by Agent of its security interest, mortgage and lien unconditionally executed and delivered to Lead Borrower a release instrument acceptable to Agent with respect thereto and UCC Financing Statement Amendments with respect to financing statements in which Supplemental Loan Agent is the secured party in form acceptable for recording to release such assets from its collateral (together with a written authorization to file such UCC Financing Statement Amendments in form and substance

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satisfactory to Agent), Agent shall, at Borrowers' expense, (1) release the security interest, mortgage and lien of Agent in and upon all of the United Wholesale Division Assets, (2) execute and deliver to Lead Borrower a release instrument with respect to the Real Property included in such assets, in form and substance satisfactory to Agent and (3) cause to be filed a UCC Financing Statement Amendment in form acceptable for recording with respect to the appropriate financing statements then of record and for which Agent has the recording information with respect to the personal property included in the United Wholesale Division Assets so sold;

                              (vii) the sale by Buckeye of the Marion Real Property owned by Buckeye located in Marion, Ohio pursuant to and in accordance in all material respects with the terms of the Real Estate Buy-Sell Agreement, dated as of July 21, 2003 between Skilken D.S., LLC, and Buckeye as in effect on the date hereof, provided, that:

                                        (A) as to such sale, each of the following conditions is satisfied: (1) such sale shall be consummated and the transfer of ownership of such assets effective by no later than March 31, 2004, (2) as of the date of such sale and after giving effect thereto (including the reduction in the Borrowing Base as a result of the assets subject to such sale no longer being included in the Borrowing Base), Excess Availability shall be not less than $15,000,000, (3) Agent shall have received true, correct and complete copies of all agreements, documents and instruments related to the sale of the Marion Real Property, (4) all consideration delivered or payable to any Borrower or Guarantor in respect of such sale, including all amounts at any time payable to any Borrower or Guarantor, and all rights, benefits and remedies of any Borrower and Guarantor pursuant to any agreement, docu ment or instrument related to the sale of the Marion Real Property, is and shall continue at all times to be subject to the valid and enforceable, first priority perfected security interest and lien of Agent, and Borrowers and Guarantors shall take such other and further actions as may be required hereunder with respect to any such consideration, (5) Borrowers and Guarantors shall cause the Net Proceeds at any time payable to any Borrower or Guarantor pursuant to any agreement, document or instrument related to the sale of the Marion Real Property to be paid by the other party or parties thereto directly to Agent for application to the Obligations, (6) such sale is permitted under the Supplemental Loan Agreement and is otherwise permitted under any other agreement to which any Borrower or Guarantor is a party or by which it or its assets are bound and Borrowers and Guarantors shall have obtained all consents and approvals to such sale as may be required that shall be in full force and effect and the release of all other security interests, mortgages and liens with respect to the Marion Real Property to be sold, including the release of the security interests, mortgages and liens of Supplemental Loan Agent, and (7) upon the sale of such Real Property, the Fixed Asset Availability Limit shall be reduced by the amount equal to the Net Proceeds payable in respect of the Real Property so sold up to $935,000 and after the Fixed Asset Availability Limit is reduced to zero, Agent shall establish a Reserve in the amount of any other Net Proceeds received in respect of such sale; provided, that, the amount of any such Reserve shall not exceed the then outstanding principal amount of the Supplemental Loan Debt, and

                                        (B) upon the satisfaction of each of the conditions set forth in clause (A) above, including, but not limited to, the receipt by Agent of the Net Proceeds from such sale in immediately available funds in the Agent Payment Account and evidence that Supplemental Loan Agent has on or before the release by Agent of its security interest,

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mortgage and lien unconditionally executed and delivered to Lead Borrower a release instrument acceptable to Agent with respect thereto and UCC Financing Statement Amendments with respect to financing statements in which Supplemental Loan Agent is the secured party in form acceptable for recording to release such assets from its collateral (together with a written authorization to file such UCC Financing Statement Amendments in form and substance satisfactory to Agent), Agent shall, at Borrowers' expense, (1) release the security interest, mortgage and lien of Agent in and upon all of the Marion Real Property, (2) execute and deliver to Lead Borrower a release instrument with respect to the Real Property included in such assets, in form and substance satisfactory to Agent and (3) cause to be filed a UCC Financing Statement Amendment in form acceptable for recording with respect to the appropriate financing statements then of record and for which Agent has the recording information with respect to the persona l property included in the Marion Real Property so sold;

                              (viii) the sale after the date hereof by a Borrower or Guarantor of Real Property and fixtures owned by such Borrower or Guarantor on the date hereof listed on Part I of Schedule 9.7 hereto, provided, that:

                                        (A) as to any such sale, each of the following conditions is satisfied: (1) the aggregate amount of the Net Proceeds of such sale paid in cash or other immediately available funds at the time of the transfer of ownership or control of such Real Property (or any material portion thereof) shall be not less than the amount for such Real Property set forth on Part I of Schedule 9.7 hereto, (2) Agent shall have received true, correct and complete copies of all agreements, documents and instruments related to the sale of such Real Property, (3) as of the date of any such sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, except as Agent may otherwise agree, (4) all consideration delivered or payable to any Borrower or Guarantor in respect of such sale, including all amounts at any time payable to any Borrower or Guarantor, and all rights, benefits and remedies of any Borrower and Guarantor pursuant to any agreement, document or instrument related to the sale of such Real Property, shall continue at all times to be subject to the valid and enforceable, first priority perfected security interest and lien of Agent, and Borrowers and Guarantors shall take such other and further actions as may be required hereunder with respect to any such consideration, (5) Borrowers and Guarantors shall cause all amounts at any time payable to any Borrower or Guarantor pursuant to any agreement, document or instrument related to the sale of such Real Property to be paid by the other party or parties thereto directly to Agent for application to the Obligations, (6) such sale is permitted under the Supplemental Loan Agreement and is otherwise permitted under any other agreement to which any Borrower or Guarantor is a party or by which it or its assets are bound and Borrowers and Guarantors shall have obtained all consents and approva ls to such sale as may be required that shall be in full force and effect and the release of all other security interests, mortgages and liens with respect to the Real Property to be sold, including the release of the security interests, mortgages and liens of Supplemental Loan Agent, (7) such sale shall be to a person that is not an Affiliate and (8) Agent shall have received not less than ten (10) Business Days' prior written notice of any such sale, which notice shall set forth in reasonable detail satisfactory to Agent, the parties to such sale, the purchase price and the manner of payment thereof (and including the Net Proceeds to be received by the seller after deducting commissions, fees, costs and expenses), and the material agreements and documents relating to such sale and (8) upon the sale of such Real Property, the Fixed Asset Availability Limit shall be reduced by the amount for such Real

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Property set forth on Part I of Schedule 9.7 hereto if the sale of such Real Property is part of a sale of an ongoing business concern, or if not then in an amount equal to the Net Proceeds payable in respect of the Real Property so sold, and after the Fixed Asset Availability Limit is reduced to zero, Agent shall establish a Reserve in the amount of any other Net Proceeds received in respect of such sale; provided, that, the amount of any such Reserve shall not exceed the then outstanding principal amount of the Supplemental Loan Debt, and

                                        (B) upon the satisfaction of each of the conditions set forth in clause (A) above, including, but not limited to, the receipt by Agent of the Net Proceeds from such sale in immediately available funds in the Agent Payment Account and evidence that Supplemental Loan Agent has on or before the release by Agent of its security interest, mortgage and lien unconditionally executed and delivered to Lead Borrower a release instrument acceptable to Agent with respect thereto and UCC Financing Statement Amendments with respect to financing statements in which Supplemental Loan Agent is the secured party in form acceptable for recording to release such assets from its collateral (together with a written authorization to file such UCC Financing Statement Amendments in form and substance satisfactory to Agent), Agent shall, at Borrowers' expense, (1) release the security interest , mortgage and lien of Agent in and upon all of the Real Property and fixtures so sold, (2) execute and deliver to Lead Borrower a release instrument with respect to the Real Property and fixtures included in such assets, in form and substance satisfactory to Agent and (3) cause to be filed a UCC Financing Statement Amendment in form acceptable for recording with respect to the appropriate financing statements then of record and for which Agent has the recording information with respect to the fixtures included as part of the Real Property so sold;

                              (ix) the sale after the date hereof by Family Fare of the Capital Stock owned by it of MDP, L.L.C. or the sale after the date hereof by Seaway of the Capital Stock owned by it of Port Clinton Realty Company; provided, that:

                                        (A) as to any such sale, each of the following conditions is satisfied: (1) Agent shall have received true, correct and complete copies of all agreements, documents and instruments related to the sale of such Capital Stock, (2) as of the date of any such sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, except as Agent may otherwise agree, (3) all consideration delivered or payable to any Borrower or Guarantor in respect of such sale, including all amounts at any time payable to any Borrower or Guarantor, and all rights, benefits and remedies of any Borrower and Guarantor pursuant to any agreement, document or instrument related to the sale of such Capital Stock, shall continue at all times to be subject to the valid and enforceable, first priority perfected security interest and lien of Agent, and Bor rowers and Guarantors shall take such other and further actions as may be required hereunder with respect to any such consideration, (4) such sale shall be on commercially reasonable terms in a bona fide arms' length transaction with a person that is not an Affiliate (provided, that, for purposes of the sale of the Capital Stock of MDP, L.L.C., Holiday Pardington Ventures, L.L.C. and for purposes of the sale of the Capital Stock of Port Clinton Realty Company, Sandusco, Inc. shall not be deemed to be Affiliates), (5) Borrowers and Guarantors shall cause the Net Proceeds at any time payable to any Borrower or Guarantor pursuant to any agreement, document or instrument related to the sale of such Capital Stock to be paid by the other party or parties thereto directly to Agent for application to the Obligations, (6) such sale is permitted under the Supplemental Loan

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Agreement and is otherwise permitted under any other agreement to which any Borrower or Guarantor is a party or by which it or its assets are bound and Borrowers and Guarantors shall have obtained all consents and approvals to such sale as may be required that shall be in full force and effect and the release of all other security interests, mortgages and liens with respect to the Capital Stock to be sold, including the release of the security interests of Supplemental Loan Agent, and (7) Agent shall have received not less than ten (10) Business Days' prior written notice of any such sale, which notice shall set forth in reasonable detail satisfactory to Agent, the parties to such sale, the purchase price and the manner of payment thereof (and including the Net Proceeds to be received by the seller after deducting commissions, fees, costs and expenses), and the material agreements and documents relating to such sale,

                                        (B) upon the satisfaction of each of the conditions set forth in clause (A) above, including, but not limited to, the receipt by Agent of the Net Proceeds from such sale in immediately available funds in the Agent Payment Account and evidence that Supplemental Loan Agent has on or before the release by Agent of its security interest unconditionally executed and delivered to Lead Borrower a release instrument acceptable to Agent with respect thereto and UCC Financing Statement Amendments with respect to financing statements in which Supplemental Loan Agent is the secured party in form acceptable for recording to release such assets from its collateral (together with a written authorization to file such UCC Financing Statement Amendments in form and substance satisfactory to Agent), Agent shall, at Borrowers' expense, (1) release the security interest of Agent in and up on all of the Capital Stock so sold, and (2) cause to be filed a UCC Financing Statement Amendment in form acceptable for recording with respect to the appropriate financing statements then of record and for which Agent has the recording information with respect to the Capital Stock so sold;

                              (x) the sale by Family Fare of the Capital Stock of MSFC owned by Family Fare pursuant to and in accordance in all material respects with the terms of the Option Agreement between Family Fare and Phillip D. Barnes as in effect on the date hereof, provided, that:

                                        (A) as to such sale, each of the following conditions is satisfied: (1) as of the date of such sale and after giving effect thereto (including the reduction in the Borrowing Base as a result of the assets subject to such sale no longer being included in the Borrowing Base), Excess Availability shall be not less than $15,000,000, (2) as of the date of any such sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, except as Agent may otherwise agree, (3) Agent shall have received true, correct and complete copies of the Option Agreement referred to above and all other agreements, documents and instruments related to the sale of such Capital Stock, (4) all consideration delivered or payable to any Borrower or Guarantor in respect of such sale, including all amounts at any time payable to any Borrower or Guara ntor, and all rights, benefits and remedies of any Borrower and Guarantor pursuant to any agreement, document or instrument related to the sale of such Capital Stock, is and shall continue at all times to be subject to the valid and enforceable, first priority perfected security interest and lien of Agent, and Borrowers and Guarantors shall take such other and further actions as may be required hereunder with respect to any such consideration, (5) Borrowers and Guarantors shall cause the Net Proceeds at any time payable to any Borrower or Guarantor pursuant to any agreement, document or instrument related to the sale of such Capital Stock to be paid by the other party or

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parties thereto directly to Agent for application to the Obligations, (6) such sale is permitted under the Supplemental Loan Agreement and is otherwise permitted under any other agreement to which any Borrower or Guarantor is a party or by which it or its assets are bound and Borrowers and Guarantors shall have obtained all consents and approvals to such sale as may be required that shall be in full force and effect and the release of all other security interests, mortgages and liens with respect to such Capital Stock to be sold, including the release of the security interests, mortgages and liens of Supplemental Loan Agent and (7) Agent shall have received not less than ten (10) Business Days' prior written notice of any such sale, which notice shall set forth in reasonable detail satisfactory to Agent, the parties to such sale, the purchase price and the manner of payment thereof (and including the Net Proceeds to be received by the seller after deducting commissions, fees, costs and expenses), and the mat erial agreements and documents relating to such sale,

                                        (B) upon the satisfaction of each of the conditions set forth in clause (A) above, including, but not limited to, the receipt by Agent of the Net Proceeds from such sale in immediately available funds in the Agent Payment Account and evidence that Supplemental Loan Agent has on or before the release by Agent of its security interest, mortgage and lien unconditionally executed and delivered to Lead Borrower a release instrument acceptable to Agent with respect thereto and UCC Financing Statement Amendments with respect to financing statements in which Supplemental Loan Agent is the secured party in form acceptable for recording to release such assets from its collateral (together with a written authorization to file such UCC Financing Statement Amendments in form and substance satisfactory to Agent), Agent shall, at Borrowers' expense, (1) release the security interest , mortgage and lien of Agent in and upon all of the assets of MSFC, (2) execute and deliver to Lead Borrower a release instrument with respect to such assets included in such assets, in form and substance satisfactory to Agent and (3) cause to be filed a UCC Financing Statement Amendment in form acceptable for recording with respect to the appropriate financing statements then of record and for which Agent has the recording information with respect to the personal property of MSFC;

                              (xi) the subleases by MDC in effect on the date hereof of Real Property subleased by such Borrower to a customer of Borrowers listed on Part II of Schedule 9.7 hereto and leases or subleases entered into after the date hereof by a Borrower or Guarantor of Real Property leased or owned by such Borrower or Guarantor acquired after the date hereof to a customer of a Borrower (other than in connection with the closing or sale of a then existing retail store location of a Borrower or Guarantor which shall be subject to clause (v) above); provided, that, as to leases or subleases entered into after the date hereof, (A) any such lease or sublease shall be entered into in the ordinary course of the business of such Borrower or Guarantor consistent with the current practices of such Borrower or Guarantor as of the date hereof, (B) the aggregate amount of the payments by Borrowers and Guarantors to purchase or o therwise acquire all of such Real Property that is to be leased or subleased to a customer in any fiscal year and the aggregate amount of the rent and other amounts payable by Borrowers and Guarantors to the owner of such Real Property that is to be subleased by such Borrower or Guarantor to a customer in any fiscal year, together with the maximum aggregate amount that Borrowers and Guarantors may be required to pay under the guarantees issued by them permitted under Section 9.9(i) below in such fiscal year, shall not exceed $2,500,000 and after giving effect to any payments for the purchase or other acquisition of any such Real Property, the Excess Availability

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shall be not less than $20,000,000, (C) to the extent applicable, the Borrower or Guarantor acquiring such Real Property shall have complied with the terms of Section 9.23 hereof with respect to such Real Property and the terms of such lease shall in all respects be subordinate to the Mortgage applicable to such Real Property and otherwise subject to the terms with respect thereto set forth in the Mortgage applicable to such Real Property, and (4) as of the date of entering into any such lease or sublease and after giving effect thereto, no Default or Event of Default shall exist or have occurred,

                              (xii) the licensing by a Borrower or Guarantor of Intellectual Property owned by it to another Borrower or Guarantor; provided, that, as to any such license: (A) any rights of such Borrower or Guarantor shall be subject to the rights of Agent in such Intellectual Property (including the rights of Agent to use such Intellectual Property upon an Event of Default), and (B) such license shall not impair, hinder or otherwise adversely affect the rights of Agent;

                              (xiii) the abandonment or cancellation of trademarks or the failure to maintain or not renew, or the allowing to lapse of, any trademarks as registered under the laws of any country which are not material and are no longer used or useful in the business of any Borrower, Guarantor or their Subsidiaries and do not appear on or are not otherwise affixed to or incorporated in any Inventory or Equipment or necessary in connection with the Records and Borrowers and Guarantors have determined in good faith in the ordinary course of its business that such trademark being abandoned or cancelled, or not maintained or renewed, or allowed to lapse, as the case may be, under the laws of the jurisdiction of any country does not have a value in excess of $100,000 as to such trademark in such country, provided, that, no Default or Event of Default shall exist or have occurred; and

                    (c) wind up, liquidate or dissolve, except that any Guarantor (other than Parent) may wind up, liquidate and dissolve, provided, that, each of the following conditions is satisfied, (i) the winding up, liquidation and dissolution of such Guarantor shall not violate any law or any order or decree of any court or other Governmental Authority in any material respect and shall not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or any other agreement or instrument to which any Borrower or Guarantor is a party or may be bound, (ii) such winding up, liquidation or dissolution shall be done in accordance with the requirements of all applicable laws and regulations, (iii) effective upon such winding up, liquidation or dissolution, all of the assets and properties of such Guarantor shall be duly and validly transferred and assigned to a Borrower, free an d clear of any liens, restrictions or encumbrances other than the security interest and liens of Agent (and Agent shall have received such evidence thereof as Agent may require) and Agent shall have received such deeds, assignments or other agreements as Agent may request to evidence and confirm the transfer of such assets of such Guarantor to a Borrower, (iv) Agent shall have received all documents and agreements that any Borrower or Guarantor has filed with any Governmental Authority or as are otherwise required to effectuate such winding up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, or otherwise become liable in respect of any obligations or liabilities of the entity that is winding up, liquidating or dissolving, unless such Indebtedness is otherwise expressly permitted hereunder, (vi) Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Guarantor to wind up, liquidate or dissolve, and

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(vii) as of the date of such winding up, liquidation or dissolution and after giving effect thereto, no Default or Event of Default shall exist or have occurred; or

                    (d) agree to do any of the foregoing.

          9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except:

                    (a) the security interests and liens of Agent for itself and the benefit of Lenders;

                    (b) liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, or Guarantor or Subsidiary, as the case may be and with respect to which adequate reserves have been set aside on its books;

                    (c) non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's or Subsidiary's business to the extent: (i) such liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to claims or liabilities which are fully insured (subject to customary deductibles with respect to such insurance) and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or such Subsidiary, in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books;

                    (d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of such Borrower, Guarantor or such Subsidiary as presently conducted thereon or materially impair the value of the Real Property which may be subject thereto (including any of such zoning restrictions, easements, licenses, covenants and other restrictions that are set forth in the title insurance policies issued to Agent with respect to the Real Property as of the date hereof);

                    (e) purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property in each case arising after the date hereof to secure Indebtedness permitted under Section 9.9(b) hereof;

                    (f) pledges and deposits of cash by any Borrower or Guarantor after the date hereof in the ordinary course of business in connection with workers' compensation, social security, unemployment insurance and other types of social security benefits consistent with the current practices of such Borrower or Guarantor as of the date hereof;

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                    (g) pledges and deposits of cash by any Borrower or Guarantor after the date hereof to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), leases, surety and appeal bonds, statutory obligations and other similar obligations in each case in the ordinary course of business consistent with the current practices of such Borrower or Guarantor as of the date hereof; provided, that, in connection with any performance or surety and appeal bonds issued by a surety or other person, the issuer of such bond shall have waived in writing any rights in or to, or other interest in, any of the Collateral in an agreement, in form and substance satisfactory to Agent and as to any surety and appeal bonds, the judgment for which any such bond or bonds are being provided shall not otherwise constitute an Event of Default hereunder;

                    (h) liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other goods which are not owned by any Borrower or Guarantor located on the premises of such Borrower or Guarantor (but not in connection with, or as part of, the financing thereof), whether pursuant to consignment arrangements or otherwise, from time to time in the ordinary course of business and consistent with current practices of such Borrower or Guarantor and the precautionary UCC financing statement filings in respect thereof;

                    (i) liens or rights of setoff against credit balances of Borrowers with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrowers in the ordinary course of business, but not liens on or rights of setoff against any other property or assets of Borrowers or Guarantors, pursuant to the Credit Card Agreements (as in effect on the date hereof) to secure the obligations of Borrowers to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks;

                    (j) statutory or common law liens or rights of setoff of depository banks with respect to funds of Borrowers or Guarantors at such banks to secure fees and charges in connection with returned items or the standard fees and charges of such banks in connection with the deposit accounts maintained by Borrowers and Guarantors at such banks (but not any other Indebtedness or obligations);

                    (k) judgments and other similar liens arising after the date hereof in connection with court proceedings that do not constitute an Event of Default, provided, that, (i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such liens is in effect and (iv) Agent may establish a Reserve with respect thereto;

                    (l) the security interests in and mortgages and liens upon the Collateral of Supplemental Loan Agent to secure the Supplemental Loan Debt to the extent permitted hereunder, provided, that, the security interests in and mortgages and liens upon the Collateral (other than as to the Supplemental Loan Priority Collateral) of Supplemental Loan Agent are and shall at all times be subject and subordinate to the security interests, mortgages and liens therein of Agent pursuant to the terms of the Supplemental Loan Intercreditor Agreement;

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                    (m) the security interests and liens upon Equipment, Real Property and related assets permitted to secure Refinancing Indebtedness in accordance with the terms of Section 9.9(j) hereof;

                    (n) the rights of use and possession of lessees of Real Property of any Borrower or Guarantor to the extent the lease giving rise to such rights is otherwise permitted hereunder; and

                    (o) the security interests and liens set forth on Schedule 8.4 to the Information Certificate.

          9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness, performance, obligations or dividends of any other Person, except:

                    (a) the Obligations;

                    (b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to the extent secured by purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property not to exceed $10,000,000 incurred in the aggregate during any fiscal year of Borrowers and Guarantors or $25,000,000 in the aggregate at any time outstanding, in each case so long as such security interests and mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property so acquired, and the Indebtedness secured thereby does not exceed the cost of the Equipment or Real Property so acquired, as the case may be;

                    (c) guarantees by any Borrower or Guarantor of the Obligations of the other Borrowers or Guarantors in favor of Agent for the benefit of Lenders;

                    (d) the Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor arising after the date hereof pursuant to loans by any Borrower or Guarantor permitted under Section 9.10(g) hereof;

                    (e) unsecured Indebtedness of any Borrower or Guarantor arising after the date hereof to any third person (but not to any other Borrower or Guarantor), provided, that, each of the following conditions is satisfied as determined by Agent: (i) such Indebtedness shall be on terms and conditions acceptable to Agent and shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior indefeasible payment and satisfaction in full payment of all of the Obligations pursuant to either (A) the terms of an intercreditor agreement between Agent and such third party, which shall be in form and substance satisfactory to Agent, or (B) the terms set forth in the indenture or other agreement or instrument governing the terms of such Indebtedness, which shall be in form and substance satisfactory to Agent, (ii) Agent shall have received not less than ten (10) days prior written notice of the intent ion of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of

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repayments and maturity date with respect thereto and such other information as Agent may request with respect thereto, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree in writing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in such order and manner as Agent may determine or at Agent's option, to be held as cash collateral for the Obligations, except, that, a portion of such proceeds from an issuance of Indebtedness of Borrowers evidenced by a single series of notes at the same time may be applied to the payment in full of all Indebtedness of Borrowers and Guarantors to the Supplemental Loan Agent and Supplemental Loan Lenders so that after giving effect to such payment Borrowers and Guarantors have no further obligations or liabilities t o the Supplemental Loan Agent and Supplemental Loan Lenders and the mortgages, security interests and liens of Supplemental Loan Agent are terminated and released, provided, that, the aggregate amount of the Net Proceeds payable to Borrowers and Guarantors upon the incurrence of such Indebtedness is equal to or greater than $75,000,000, (v) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred, (vi) such Borrower and Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, such Borrower or Guarantor may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to re duce the interest rate or any fees in connection therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted herein), or set aside or otherwise deposit or invest any sums for such purpose, and (vii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

                    (f) Indebtedness of Parent to the Supplemental Loan Agent and Supplemental Loan Lenders evidenced by or arising under the Supplemental Loan Agreement and other Supplemental Loan Lender Agreements (as in effect on the date hereof), provided, that:

                              (i) the aggregate principal amount of such Indebtedness shall not exceed $15,000,000, less the aggregate amount of all repayments or redemptions, whether optional or mandatory, in respect thereof, plus interest thereon at the rate provided for in the Supplemental Loan Agreement as in effect on the date hereof,

                              (ii) as of the date hereof, no event of default, or event which with notice or passage of time or both would constitute an event of default exists, or has occurred under the Supplemental Loan Lender Agreements,

                              (iii) Agent shall have received true, correct and complete copies of all of the Supplemental Loan Lender Agreements, as duly authorized, executed and delivered by the parties thereto and from time to time as Agent may request, Borrowers and Guarantors shall provide to Agent the then current principal amount of the Supplemental Loan Debt,

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                              (iv) Borrowers and Guarantors shall not, directly or indirectly, make, or be required to make, any payments in respect of such Indebtedness, except that to the extent otherwise permitted under the terms of the Supplemental Loan Intercreditor Agreement, Parent may make (A) regularly scheduled payments of principal, interest and fees, if any, in respect of such Indebtedness when due in accordance with the terms of the Supplemental Loan Agreement as in effect on the date hereof, (B) mandatory payments of principal and interest with the net cash proceeds from the sale or other disposition of the Supplemental Loan Priority Collateral, and (C) mandatory prepayments of principal and interest from the proceeds of the other Collateral after the payment in full in cash or other immediately available funds of all of the Obligations and the termination of this Agreement,

                              (v) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or change any of the material terms of such Indebtedness or any of the Supplemental Loan Lender Agreements as in effect on the date hereof, except, that, Borrowers and Guarantors may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness other than pursuant to payments thereof, or to reduce the interest rate or any fees in connection therewith, or to release any liens or security interests in any assets or properties of any Borrower or Guarantor, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, except as permitted in clause (iv) above, and

                              (vi) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

                    (g) Indebtedness consisting of the guarantees by the Supplemental Loan Guarantors set forth in the Supplemental Loan Lender Agreements as in effect on the date hereof of the Indebtedness of Parent evidenced by or arising under the Supplemental Loan Agreement, to the extent that such Indebtedness of Parent is permitted hereunder;

                    (h) Indebtedness of any Borrower or Guarantor entered into in the ordinary course of business pursuant to Interest Rate Protection Agreements; provided, that, (i) such arrangements are either with a Lender or an Affiliate thereof or with banks or other financial institutions that have combined capital and surplus and undivided profits of not less than $250,000,000 and are acceptable to Agent, (ii) are not for speculative purposes and (iii) such Indebtedness shall be unsecured, except as to obligations under Interest Rate Protection Agreements with a Lender or an Affiliate of a Lender or another financial institution, in each case approved by Agent, to the extent of the security interest of Agent in the Collateral as provided herein;

                    (i) Indebtedness of any Borrower or Guarantor arising after the date hereof in the ordinary course of the business of such Borrower or Guarantor pursuant to guarantees in favor of third parties by such Borrower or Guarantor of the obligations of its customers under leases of real or personal property from such third parties by such customers, provided, that, (i) the maximum aggregate amount that Borrowers and Guarantors may be required to pay in any fiscal

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year pursuant to such guarantees, together with the maximum aggregate amount that Borrowers and Guarantors may be required to pay in respect of rent and other amounts to the owners of Real Property as provided in Section 9.7(b)(x) above in such fiscal year, shall not exceed $2,500,000, (ii) as of the date of entering into any such guarantee, the Excess Availability shall be not less than $20,000,000 and (iii) as of the date of entering into any such guarantee and after giving effect thereto, no Default or Event of Default shall exist or have occurred;

                    (j) unsecured Indebtedness of any Borrower or Guarantor arising after the date hereof to any third person (but not to any other Borrower or Guarantor), provided, that, each of the following conditions is satisfied as determined by Agent: (i) such Indebtedness shall be on terms and conditions acceptable to Agent, (ii) Agent shall have received not less than ten (10) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may request with respect thereto, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree in writing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in such order and manner as Agent may determine or at Agent's option, to be held as cash collateral for the Obligations, (v) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred, (vi) the aggregate amount of such Indebtedness shall not exceed $2,500,000, (vii) such Borrower and Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, such Borrower or Guarantor may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted herein), or set aside or otherwise deposit or invest any sums for such purpose, and (viii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

                    (k) Indebtedness of any Borrower or Guarantor arising after the date hereof issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for Indebtedness permitted under Section 9.9(b) and Section 9.9(l) hereof (the "Refinancing Indebtedness"); provided, that, as to any such Refinancing Indebtedness, each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) Business Days' prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent, the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as Agent may reasonably request, (ii) promptly upon Agent's request, Agent shall have received true, correct and complete copies of all agreements, documents and instruments

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evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (iii) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a final maturity equal to or greater than the Weighted Average Life to Maturity and the final maturity, respectively, of the Indebtedness being extended, refinanced, replaced, or substituted for, (iv) the Refinancing Indebtedness shall rank in right of payment no more senior than, and be at least subordinated (if subordinated) to, the Obligations as the Indebtedness being extended, refinanced, replaced or substituted for, (v) the Refinancing Indebtedness shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those included in the Indebtedness so extended, refinanced, replaced or substituted for, (vi) such Indebtedness incurred by any Borrower or Guarantor shall be at rates and with fees or other charges that ar e commercially reasonable, (vii) the incurring of such Indebtedness shall not result in an Event of Default, (viii) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Indebtedness so extended, refinanced, replaced or substituted for (plus the amount of reasonable refinancing fees and expenses incurred in connection therewith outstanding on the date of such event), (ix) the Refinancing Indebtedness shall be secured by substantially the same assets (or less of such assets) that secure the Indebtedness so extended, refinanced, replaced or substituted for, provided, that, such security interests with respect to the Refinancing Indebtedness shall have a priority no more senior than, and be at least as subordinated, if subordinated (on terms and conditions substantially similar to the subordination provisions applicable to the Indebtedness so extended, refinanced, replaced or substituted for or as is otherwise acceptable to Agent) as the security interest with respec t to the Indebtedness so extended, refinanced, replaced or substituted for, (x) Borrowers and Guarantors may only make payments of principal, interest and fees, if any, in respect of such Indebtedness to the extent such payments would have been permitted hereunder in respect of the Indebtedness so extended, refinanced, replaced or substituted for (and except as otherwise permitted below), (xi) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or change any terms of the agreements with respect to such Refinancing Indebtedness, except that Borrowers and Guarantors may, after prior written notice to Agent, amend, modify, alter or change the terms thereof to the extent permitted with respect to the Indebtedness so extended, refinanced, replaced or substituted for, or (B) redeem, retire, defease, purchase or otherwise acquired such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose (other than with Refinancing Indebtedness to the extent permitted herein and to the extent permitted with respect to the Indebtedness so extended, refinanced, replaced or substituted for), and (xii) Borrowers and Guarantors shall furnish to Agent copies of all material notices or demands in connection with Indebtedness received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

                    (l) the Indebtedness set forth on Schedule 9.9 to the Information Certificate; provided, that, (i) Borrowers and Guarantors may only make regularly scheduled payments of principal and interest in respect of such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto as in effect on the date hereof except, that, Borrowers and Guarantors may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the

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maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, and (iii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be.

          9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or a substantial part of the assets or property of any person, or form or acquire any Subsidiaries, or agree to do any of the foregoing, except:

                    (a) the endorsement of instruments for collection or deposit in the ordinary course of business;

                    (b) investments in cash or Cash Equivalents, provided, that, (i) no Loans are then outstanding and (ii) the terms and conditions of Section 5.2 hereof shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

                    (c) the existing equity investments of each Borrower and Guarantor as of the date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor shall have any further obligations or liabilities to make any capital contributions or other additional investments or other payments to or in or for the benefit of any of such Subsidiaries, except Borrowers and Guarantors may after the date hereof make loans to, or investments in, Spartan Insurance Company Ltd. to the extent required for it to comply with applicable laws concerning its solvency, provided, that, the aggregate amount of all such loans and investments shall not exceed $1,000,000 in any fiscal year or if the aggregate amount of all such loans and investments are required to exceed such amount, as of the date of the making of any such loan or investment and after giving effect thereto, the Excess Availability shall be not less than $20,000,000;

                    (d) loans and advances by any Borrower or Guarantor to employees of such Borrower or Guarantor not to exceed the principal amount of $250,000 in the aggregate at any time outstanding for: (i) reasonably and necessary work-related travel or other ordinary business expenses to be incurred by such employee in connection with their work for such Borrower or Guarantor and (ii) reasonable and necessary relocation expenses of such employees (including home mortgage financing for relocated employees);

                    (e) stock or obligations issued to any Borrower or Guarantor by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person; provided, that, the original of any such stock or instrument evidencing such obligations shall be

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promptly delivered to Agent, upon Agent's request, together with such stock power, assignment or endorsement by such Borrower or Guarantor as Agent may request;

                    (f) obligations of Account Debtors to any Borrower or Guarantor arising from Accounts which are past due evidenced by a promissory note made by such Account Debtor payable to such Borrower or Guarantor; provided, that, promptly upon the receipt of the original of any such promissory note by such Borrower or Guarantor, such promissory note shall be endorsed to the order of Agent by such Borrower or Guarantor and promptly delivered to Agent as so endorsed;

                    (g) loans by a Borrower to another Borrower, or loans by a Borrower to a Guarantor, or loans by a Guarantor to a Borrower or another Guarantor after the date hereof, provided, that,

                              (i) as to all of such loans, (A) the Indebtedness arising pursuant to any such loan shall not be evidenced by a promissory note or other instrument, unless the single original of such note or other instrument is promptly delivered to Agent upon its request to hold as part of the Collateral, with such endorsement and/or assignment by the payee of such note or other instrument as Agent may require, and (B) as of the date of any such loan and after giving effect thereto, the Borrower or Guarantor making such loan shall be Solvent,

                              (ii) as to loans by a Guarantor to a Borrower, (A) the Indebtedness arising pursuant to such loan shall be subject to, and subordinate in right of payment to, the right of Agent and Lenders to receive the prior final payment and satisfaction in full of all of the Obligations on terms and conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall have received a subordination agreement, in form and substance satisfactory to Agent, providing for the terms of the subordination in right of payment of such Indebtedness of such Borrower to the prior final payment and satisfaction in full of all of the Obligations, duly authorized, executed and delivered by such Guarantor and such Borrower, and (C) such Borrower shall not, directly or indirectly make, or be required to make, any payments in respect of such Indebtedness prior to the end of the then current term of this Agreement;

                              (iii) as to loans by a Borrower to a Guarantor, (A) the proceeds of any such loans shall only be used by such Guarantor either (1) for the payment of taxes or other actual and necessary reasonable operating expenses of such Guarantor, provided, that, the aggregate amount of all such loans in any fiscal year shall not exceed $1,000,000 or (2) for the making of a contemporaneous loan to another Borrower, provided, that, the proceeds of any such loan by a Borrower to a Guarantor shall be paid directly to the Borrower that is to receive the proceeds of the loan from the Guarantor, (B) the Indebtedness arising pursuant to any such loan shall not be evidenced by a promissory note or other instrument, unless the single original of such note or other instrument is promptly delivered to Agent upon its request to hold as part of the Collateral, with such endorsement and/or assignment by the payee of such note or other instrument as Agent may require, (C) as of the date of any such loan and after giving effect thereto, the Borrower making such loan shall be Solvent, and (D) as of the date of any such loan and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

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                    (h) loans of money or property (other than Collateral) after the date hereof by any Borrower or Guarantor to any Person (other than to a Borrower or Guarantor), including customers of any Borrower or Guarantor consistent with the current practices of Borrowers and Guarantors as of the date hereof (and including advances to customers that are repaid through the purchase of goods by such customers in the ordinary course of the business of Borrowers and Guarantors consistent with the current practices of Borrowers and Guarantors as of the date hereof); provided, that, as to any such loans, each of the following conditions is satisfied as determined by Agent:

                              (i) as of the date of any such loan, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred,

                              (ii) as of the date of any such loan, and in each case after giving effect thereto, the Excess Availability shall have been not less than $20,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any such loan and after giving effect thereto, the Excess Availability shall be not less than $20,000,000,

                              (iii) the aggregate amount of all such loans (including advances to customers) shall not (A) exceed $2,500,000 as to any one party (or group of Persons that are Affiliates) receiving such loans, or with the prior consent of Agent in its determination, $5,000,000 as to any one party (or group of Persons that are Affiliates) receiving such loans or (B) in the case of such loans made after the date hereof exceed $10,000,000 plus the amount equal to all repayments of principal received by Borrowers and Guarantors after the date hereof in cash or other immediately available funds (or repayments of principal in accordance with the terms of the Indebtedness pursuant to the purchase of Inventory) in respect of the existing loans and advances by Borrowers to third parties made prior to the date hereof set forth on Schedule 9.10 to the Information Certificate, and (D) together with the aggregate amount of the ex isting loans and advances by Borrowers to third parties made prior to the date hereof set forth on Schedule 9.10 to the Information Certificate, exceed up to an aggregate of $20,000,000 outstanding at any one time,

                              (iv) the Person receiving such loan shall be engaged in a business related, ancillary or complementary to the business of Borrowers permitted in this Agreement,

                              (v) the original of any promissory note or other instrument evidencing the Indebtedness arising pursuant to such loans shall be delivered, or caused to be delivered, to Agent, at Agent's option, together with an appropriate endorsement, in form and substance satisfactory to Agent,

                              (vi) Agent shall have received (A) not less than ten (10) Business Days' prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (C) such other information with respect thereto as Agent may request, including a report once each month on the outstanding balance of all such loans and advances and including the then outstanding amount of the existing loans and advances by Borrowers to third parties made prior to the date hereof set forth on Schedule 9.10 to the Information Certificate;

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                    (i) the purchase by any Borrower or Guarantor of all or a substantial part of the assets or Capital Stock of any Person located in the United States or investment after the date hereof by an Borrower or Guarantor by capital contribution in any Person (other than a Borrower or Guarantor), provided, that, each of the following conditions is satisfied as determined by Agent in good faith;

                              (i) as of the date of such purchase or investment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,

                              (ii) as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers shall have been not less than $20,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers shall be not less than $20,000,000,

                              (iii) the aggregate amount of all payments in connection with (A) the purchase of all or a substantial part of the assets or Capital Stock of any one Person (or group of Persons that are Affiliates) or investment in any one Person (or group of Persons that are Affiliates) shall not exceed (1) in the aggregate $12,500,000, if as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, Excess Availability shall have been not less than $30,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, the Excess Availability shall be not less than $30,000,000, or (2) in the aggregate $5,000,000, if as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, Excess Availability shall have been less than $30,000,000 but more than $20,000,000 for each of the immediately preceding ten (10) consecutive days and as of the date of any payment in connection with such acquisition or investment and after giving effect thereto, the Excess Availability shall be less than $30,000,000 but more than $20,000,000, (B) all of such purchases and investments in any fiscal year shall not exceed in the aggregate $12,500,000, (C) all of such purchases and investments during the term of this Agreement shall not exceed in the aggregate $40,000,000,

                              (iv) Agent shall have received not less than ten (10) Business Days' prior written notice of the proposed acquisition or any investment in excess of $500,000 and such information with respect thereto as Agent may reasonably request, including (A) the proposed date and amount of the acquisition or investment, (B) a list and description of the assets or Capital Stock to be acquired, or the investment to be made and (C) the total purchase price for the assets or Capital Stock to be purchased (and the terms of payment of such purchase price) or the total amount of such investment (and the terms of the payment for such investment) and the consideration to be received in exchange for such investment,

                              (v) promptly upon Agent's request, the Borrower or Guarantor purchasing such assets or Capital Stock, or making such investment, shall deliver, or cause to be delivered to Agent, true, correct and complete copies of all agreements, documents and instruments relating to such acquisition or investment,

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                              (vi) the assets or Capital Stock being acquired, or investment made, by any Borrower or Guarantor shall be substantially consistent with, and related to, the business of such Borrower or Guarantor permitted in this Agreement,

                              (vii) in the case of an investment by capital contribution, at Agent's option, the original stock certificate or other instrument evidencing such capital contribution (or such other evidence as may be issued in the case of a limited liability company) shall be promptly delivered to Agent, together with such stock power, assignment or endorsement as Agent may request, and promptly upon Agent's request, the Borrower or Guarantor making such investment shall execute and deliver to Agent a pledge and security agreement, in form and substance satisfactory to Agent, granting to Agent a first priority pledge of, security interest in and lien upon all of the issued and outstanding shares of such stock or other instrument or interest (and in the case of a limited liability company take such other actions as Agent shall require with respect to Agent's security interests therein),

                              (viii) the assets, Capital Stock or other consideration acquired by any Borrower or Guarantor pursuant to such purchase or investment shall be free and clear of any security interest, mortgage, pledge, lien, charge or other encumbrance (other than those permitted in this Agreement) and Lender shall have received evidence satisfactory to it of the same,

                              (ix) the acquisition by any Borrower or Guarantor of such assets or Capital Stock, or the making of such investment, shall not violate any law or regulation or any order or decree of any court or Governmental Authority in any material respect and shall not and will not conflict with or result in the breach of, or constitute a default in any respect under, any material agreement, document or instrument to which such Borrower, or Guarantor or any Affiliate is a party or may be bound, or result in the creation or imposition of, or the obligation to grant, any lien, charge or encumbrance upon any of the property of such Borrower, or Guarantor or any Affiliate or violate any provision of the certificate of incorporation, by-laws, certificate of formation, operating agreement or other organizational documentation of such Borrower or Guarantor,

                              (x) such purchase or investment shall be in a bona fide arms' length transaction with a person that is not an Affiliate of any Borrower or Guarantor,

                              (xi) no Borrower or Guarantor shall become obligated with respect to any Indebtedness, nor any of its property become subject to any security interest or lien, pursuant to such acquisition or investment unless such Borrower or Guarantor could incur such Indebtedness or create such security interest or lien hereunder or under the other Financing Agreements,

                              (xii) Agent shall have received, in form and substance satisfactory to Agent, (A) evidence that Agent has valid and perfected security interests in and liens upon all purchased assets to the extent such assets constitute Collateral hereunder, (B) UCC financing statements (or other similar registrations required in any foreign jurisdiction), (C) all Collateral Access Agreements and other consents, waivers, acknowledgments and other agreements from third persons which Agent may reasonably deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the assets purchased, (D) the agreement of the seller consenting to the collateral assignment by the Borrower or Guarantor purchasing

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such assets of all rights and remedies and claims for damages of such Borrower or Guarantor relating to the Collateral under the agreements, documents and instruments relating to such acquisition and (E) such other agreements, documents and instruments as Agent may request in connection therewith,

                              (xiii) in no event shall any Accounts, Inventory, Equipment, Real Property or Prescription Files so acquired by any Borrower pursuant to such acquisition be deemed Eligible Accounts, Eligible Inventory, Eligible Equipment, Eligible Real Property or Eligible Prescription Files, respectively, unless and until Agent shall have conducted a field examination with respect thereto (and at Agent's option, at Borrowers' expense, obtained an appraisal of such Inventory, Equipment, Real Property or Prescription Files by an appraiser reasonably acceptable to Agent and in form, scope and methodology reasonably acceptable to Agent and addressed to Agent and upon which Agent is expressly permitted to rely, which appraisal shall be in addition to any appraisals which Agent may obtain pursuant to its rights under Sections 7.3 or 7.4 hereof) and then only to the extent the criteria for Eligible Accounts, Eligible Invent ory, Eligible Equipment, Eligible Real Property or Eligible Prescription Files set forth herein are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in accordance with this Agreement), and upon the request of Agent, the Accounts, Inventory, Equipment, Real Property or Prescription Files acquired by such Borrower or Guarantor pursuant to such acquisition shall at all times after such acquisition be separately identified and reported to Agent in a manner satisfactory to Agent;

                    (j) the loans and advances set forth on Schedule 9.10 to the Information Certificate; provided, that, as to such loans and advances, (i) Borrowers and Guarantors shall not, directly or indirectly, amend, modify, alter or change the terms of such loans and advances or any agreement, document or instrument related thereto, except that so long as no Default or Event of Default shall exist or have occurred, Borrowers and Guarantors may amend such terms to: (A) extend the term thereof for up to an additional twelve (12) months from the current term thereof or such longer period as Agent may agree, (B) increase the amount or frequency of the payments required from the payee thereunder, (C) obtain any collateral in respect of such loans, or (D) otherwise make the terms thereof more favorable to Borrowers and Guarantors and (ii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such loans an d advances either received by any Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be.

          9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, directly or indirectly, declare or pay any dividends on account of any shares of class of any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration or apply or set apart any sum, or make any other distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do any of the foregoing, except that:

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                    (a) any Borrower or Guarantor may declare and pay such dividends or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock for consideration in the form of shares of common stock (so long as after giving effect thereto no Change of Control or other Default or Event of Default shall exist or occur);

                    (b) Borrowers and Guarantors may pay dividends to the extent permitted in Section 9.12 below;

                    (c) any Subsidiary of a Borrower or Guarantor may pay dividends to a Borrower;

                    (d) Borrowers and Guarantors may repurchase Capital Stock consisting of common stock held by employees pursuant to any employee stock ownership plan thereof upon the termination, retirement or death of any such employee in accordance with the provisions of such plan, provided, that, as to any such repurchase, each of the following conditions is satisfied: (i) as of the date of the payment for such repurchase and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (ii) such repurchase shall be paid with funds legally available therefor, (iii) such repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower or Guarantor or its or their property are bound, and (iv) the aggregate amount of all payments for such repurchases in any calendar year shall not exceed $500,000;

                    (e) Parent may from time to time purchase shares of its Capital Stock to make available to employees (i) participating in the Associate Stock Purchase Plan of Parent who have elected to purchase such shares in accordance with such plan that are to be paid for by such employees with payroll deductions (at a price and otherwise on terms specified in the plan) but not to exceed a maximum of $25,000 for each participating employee and (ii) as performance bonuses included in the compensation for such employees in the ordinary course of the business of Borrowers and Guarantors, provided, that, the aggregate amount of all payments for such purchases of shares for such purpose in any calendar year shall not exceed $1,000,000.

          9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not, directly or indirectly:

                    (a) purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliate of such Borrower or Guarantor, except in the ordinary course of and pursuant to the reasonable requirements of such Borrower's or Guarantor's business (as the case may be) and upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor would obtain in a comparable arm's length transaction with an unaffiliated person, provided that one Borrower may make sales of goods, or render services, to another Borrower on terms more favorable to the Borrower purchasing such goods or receiving the benefit of such services than it would to a person that is not an Affiliate in the ordinary course of business and consistent with the current practices of Borrowers as of the date hereof; or

                    (b) make any payments (whether by dividend, loan or otherwise) of management, consulting or other fees for management or similar services, or of any Indebtedness owing to any

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officer, employee, shareholder, director or any other Affiliate of such Borrower or Guarantor, except reasonable compensation to officers, employees and directors for services rendered to such Borrower or Guarantor in the ordinary course of business.

          9.13 Compliance with ERISA. Each Borrower and Guarantor shall, and shall cause each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) not terminate any of such Plans so as to incur any material liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any non-exempt prohibited transaction involving any of such Plans or any trust created thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or penalty or other liability on non-exempt prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) no t allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such Plan; or (g) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a single employer plan, which termination could result in any material liability to the Pension Benefit Guaranty Corporation.

          9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor shall, for financial reporting purposes, cause its, and each of its Subsidiaries' (a) fiscal years to end on the dates for the end of each such fiscal year set forth on Schedule 9.14 hereto and (b) fiscal quarters to end on the dates for the end of each such fiscal quarter set forth in Schedule 9.14 hereto.

          9.15 Credit Card Agreements. Each Borrower shall (a) observe and perform all material terms, covenants, conditions and provisions of the Credit Card Agreements to be observed and performed by it at the times set forth therein; and (b) at all times maintain in full force and effect the Credit Card Agreements and not terminate, cancel, surrender, modify, amend, waive or release any of the Credit Card Agreements, or consent to or permit to occur any of the foregoing; except, that, (i) any Borrower may terminate or cancel any of the Credit Card Agreements in the ordinary course of the business of such Borrower; provided, that, such Borrower shall give Agent not less than fifteen (15) days prior written notice of its intention to so terminate or cancel any of the Credit Card Agreements; (d) not enter into any new Credit Card Agreements with any new Credit Card Issuer unless (i) Agent shall have received not less than thirty (30) days prior written notice of the intention of such Borrower to enter into such agreement (together with such other information with respect thereto as Agent may request) and (ii) such Borrower delivers, or causes to be delivered to Agent, a Credit Card Acknowledgment in favor of Agent, (e) give Agent immediate written notice of any Credit Card Agreement entered into by such Borrower after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Agent may request; and (f) furnish to Agent, promptly upon the request of Agent, such information and evidence as Agent may require from time to time concerning the observance, performance and compliance by such Borrower or the other party or parties thereto with the terms, covenants or provisions of the Credit Card Agreements.

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          9.16 Change in Business. Each Borrower and Guarantor shall not engage in any business other than the business of such Borrower or Guarantor on the date hereof and any business reasonably related, ancillary or complimentary to the business in which such Borrower or Guarantor is engaged on the date hereof.

          9.17 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any of its properties or assets to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer to exist any lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than encumbrances and restrictions arising under (i) applicable law, (ii) this Agreement, (iii) customary provisions restricting subletting or assignment of an y lease governing a leasehold interest of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) customary restrictions on dispositions of real property interests found in reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (v) any agreement relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the date on which such Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition date, and (vi) the extension or continuation of contractual obligations in existence on the date hereof; provided, that, any such encumbrances or restrictions contained in such extension or continuation are no less favorable to Agent and Lenders than those encumbrances and restrictions under or pursuant to the contractual obligations so extended or continued.

          9.18 Minimum EBITDA. At any time that Excess Availability is less than $30,000,000, the EBITDA of Parent and its Subsidiaries for the twelve (12) or thirteen (13), as applicable, consecutive fiscal four (4) week periods (treated as a single accounting period and with each fiscal four (4) week period determined in accordance with the current accounting practices of Borrowers and Guarantors as in effect on the date hereof) ending on the last day of the most recent fiscal four (4) week period for which financial statements of Parent and its Subsidiaries are available or have been received by Agent shall be not less than the amounts set forth on Schedule 9.18 with respect to such period, provided, that, (a) prior to the effective date of the sale of all or substantially all of the assets of United to the extent permitted hereunder, the amounts set forth in Part I of Schedule 9.18 hereto with respect to such period then ending shall be applicable and (b) on and after the date of the sale of all or substantially all of the assets of United to the extent permitted hereunder, the amounts set forth in Part II of Schedule 9.18 hereto with respect to such period then ending shall be applicable.

          9.19 Capital Expenditures. Borrowers and Guarantors shall not permit the aggregate amount of all Capital Expenditures of Borrowers and Guarantors during any fiscal quarter to exceed the amount indicated for such fiscal quarter set forth on Schedule 9.19 hereto; provided, that, (a) in the event that the actual amount of Capital Expenditures of Borrowers and Guarantors during any fiscal quarter are less than the amount permitted hereunder for such fiscal quarter, Capital Expenditures may be made in any of the next three (3) consecutive fiscal quarters

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immediately thereafter in the amount of such excess, provided, that, such excess amount shall only be used for Capital Expenditures in any of such subsequent three (3) consecutive fiscal quarters, if after giving effect to the payment thereof, there is Excess Availability of not less than $20,000,000 and (b) the limitation on the Capital Expenditures of Borrowers and Guarantors shall only apply in any fiscal quarter if at any time during the immediately preceding quarter, Excess Availability was less than $30,000,000.

          9.20 Minimum Excess Availability. The aggregate amount of the Excess Availability of Borrowers shall at all times be equal to or greater than $10,000,000.

          9.21 License Agreements.

                    (a) With respect to a License Agreement applicable to Intellectual Property that is owned by a third party and licensed to a Borrower or Guarantor and that is affixed to or otherwise used in connection with the manufacture, sale or distribution of any Inventory (other than an off-the-shelf product with a shrink wrap license), each Borrower and Guarantor shall (i) give Agent not less than ninety (90) days prior written notice of its intention to not renew or to terminate, cancel, surrender or release its rights under any such License Agreement, or to amend any such License Agreement or related arrangements to limit the scope of the right of such Borrower or Guarantor to use the Intellectual Property subject to such License Agreement in any material respect, either with respect to product, territory, term or otherwise, or to increase in any material respect the amounts to be paid by such Borrower or Guarantor thereunder or in connection t herewith (and Agent may establish such Reserves as a result of any of the foregoing as Agent may reasonably determine), (ii) give Agent prompt written notice of any such License Agreement entered into by such Borrower or Guarantor after the date hereof, or any material amendment to any such License Agreement existing on the date hereof, in each case together with a true, correct and complete copy thereof and such other information with respect thereto as Agent may in good faith request, (iii) give Agent prompt written notice of any material breach of any obligation, or any default, by the third party that is the licensor or by the Borrower or Guarantor that is the licensee or any other party under any such License Agreement, and deliver to Agent (promptly upon the receipt thereof by such Borrower or Guarantor in the case of a notice to such Borrower or Guarantor and concurrently with the sending thereof in the case of a notice from such Borrower or Guarantor) a copy of each notice of default and any other no tice received or delivered by such Borrower or Guarantor in connection with any such a License Agreement that relates to the scope of the right, or the continuation of the right, of such Borrower or Guarantor to use the Intellectual Property subject to such License Agreement or the amounts required to be paid thereunder.

                    (b) With respect to a License Agreement applicable to Intellectual Property that is owned by a third party and licensed to a Borrower or Guarantor and that is affixed to or otherwise used in connection with the manufacture, sale or distribution of any Inventory (other than an off-the-shelf product with a shrink wrap license), at any time an Event of Default shall exist or have occurred and be continuing or if after giving effect to any Reserves, or the reduction in the applicable Borrowing Base as a result of Eligible Inventory using such licensed Intellectual Property ceasing to be Eligible Inventory, the aggregate amount of the Excess Availability of Borrowers is less than $5,000,000, Agent shall have, and is hereby granted, the irrevocable right and authority, at its option, to renew or extend the term of such License

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Agreement, whether in its own name and behalf, or in the name and behalf of a designee or nominee of Agent or in the name and behalf of such Borrower or Guarantor, subject to and in accordance with the terms of such License Agreement. Agent may, but shall not be required to, perform any or all of such obligations of such Borrower or Guarantor under any of the License Agreements, including, but not limited to, the payment of any or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by Agent shall constitute part of the Obligations.

          9.22 Agricultural Products.

                    (a) Each Borrower shall at all times comply in all material respects with all existing and future Food Security Act Notices during their periods of effectiveness under the Food Security Act, including, without limitation, directions to make payments to the Farm Products Seller by issuing payment instruments directly to the secured party with respect to any assets of the Farm Products Seller or jointly payable to the Farm Products Seller and any secured party with respect to the assets of such Farm Products Seller, as specified in the Food Security Act Notice, so as to terminate or release the security interest in any Farm Products maintained by such Farm Products Seller or any secured party with respect to the assets of such Farm Products Seller under the Food Security Act.

                    (b) Each Borrower shall take all other actions as may be reasonably required, if any, to ensure that any perishable agricultural commodity (in whatever form) or other Farm Products are purchased free and clear of any security interest, lien or other claims in favor of any Farm Products Seller or any secured party with respect to the assets of any Farm Products Seller.

                    (c) Each Borrower shall promptly notify Agent in writing after receipt by or on behalf of such Borrower of any Food Security Act Notice or amendment to a previous Food Security Act Notice, and including any notice from any Farm Products Seller of the intention of such Farm Products Seller to preserve the benefits of any trust applicable to any assets of any Borrower or Guarantor under the provisions of the PSA, PACA or any other statute and such Borrower shall promptly provide Agent with a true, correct and complete copy of such Food Security Act Notice or amendment, as the case may be, and other information delivered to or on behalf of such Borrower pursuant to the Food Security Act.

                    (d) In the event any Borrower receives a Food Security Act Notice, such Borrower shall pay the related invoice within the payment terms specified therein and notify Agent of such receipt; provided,, that, such invoice may remain unpaid if, and only so long as (i) appropriate legal or administrative action has been commenced in good faith and is being diligently pursued or defended by such Borrower, (ii) adequate reserves with respect to such contest are maintained on the books of such Borrower, in accordance with GAAP, (iii) Agent shall have established a Reserve in an amount at least equal to the amount claimed to be due by such vendor under the relevant invoice, (iv) such Borrower shall promptly pay or discharge such contested invoice and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such payment, if such contest is terminated or di scontinued adversely to Borrower or the conditions set forth in this Section 9.21(d) are no longer met.

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                    (e) Each Borrower shall obtain Agent's written consent prior to purchasing any Farm Products from a Person who produces such Farm Products in a state with a central filing system certified by the United States Secretary of Agriculture, and in the event that such Borrower receives such consent, such Borrower shall immediately register, as a buyer, with the Secretary of State of such state (or the designated system operator). Each Borrower shall forward promptly to Agent a copy of such registration as well as a copy of all relevant portions of the master list periodically distributed by any such Secretary of State (or the designated system operator). Each Borrower shall comply with any payment of obligations in connection with the purchase of any Farm Products imposed by a secured party as a condition of the waiver or release of a security interest effective under the Food Security Act or other applicable law whether or not as a result of direct notice or the filing under any applicable central filing system. Each Borrower shall also provide to Agent not later than the fifth (5th) day of each month, true and correct copies of all state filings recorded in any such central filing system in respect of a Person from whom a Borrower has purchased Farm Products within the preceding twelve (12) months.

          9.23 After Acquired Real Property. If any Borrower or Guarantor hereafter acquires any Real Property, fixtures or any other property that is of the kind or nature described in the Mortgages and such Real Property, fixtures or other property is adjacent to, contiguous with or necessary or related to or used in connection with any Real Property then subject to a Mortgage, or if such Real Property is not adjacent to, contiguous with or related to or used in connection with such Real Property, then if such Real Property, fixtures or other property at any location (or series of adjacent, contiguous or related locations, and regardless of the number of parcels) has a fair market value in an amount equal to or greater than $500,000 (or if a Default or Event of Default exists, then regardless of the fair market value of such assets), without limiting any other rights of Agent or any Lender, or duties or obligations of any Borrower or Guarantor, promptly upon Agent's reque st, such Borrower or Guarantor shall execute and deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent may determine, in form and substance substantially similar to the Mortgages and as to any provisions relating to specific state laws satisfactory to Agent and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or other property is located granting to Agent a first and only lien and mortgage on and security interest in such Real Property, fixtures or other property (except as such Borrower or Guarantor would otherwise be permitted to incur hereunder or under the Mortgages or as otherwise consented to in writing by Agent) and such other agreements, documents and instruments as Agent may require in connection therewith.

          9.24 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on demand all costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent's rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable); (b) costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering r eports and inspections, appraisal fees and search

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fees, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Agent's customary charges and fees with respect thereto; (c) charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations; (d) costs and expenses of preserving and protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Agent, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Agent or any Lender arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (f) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and such Borrower's or Guarantor's operations, plus a per diem charge at Agent's then standard rate for Agent's examiners in the field and office (which rate as of the date hereof is $800 per person per day); and (g) the reasonable fees and disbursements of counsel (including legal assistants) to Agent in connection with any of the foregoing.

          9.25 Further Assurances. At the request of Agent at any time and from time to time, Borrowers and Guarantors shall, at their expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements. Agent may at any time and from time to time request a certificate from an officer of any Borrower or Guarantor representing that all conditions precedent to the making of Loans and providing Letter of Credit Accommodations contained herein are satisfied. In the event of such request by Agent, Agent and Lenders may, at Agent's option, cease to make any further Loans or provide any further Letter of Credit Accommodations until Agent has received such certificate and, in addition, Agent has determined that such conditions are satisfied.

SECTION 10 EVENTS OF DEFAULT AND REMEDIES

          10.1 Events of Default. The occurrence or existence of any one or more of the following events are referred to herein individually as an "Event of Default", and collectively as "Events of Default":

                    (a) (i) any Borrower fails to pay any of the Obligations within three (3) Business Days of the date when due or (ii) any Borrower or Obligor fails to perform any of the covenants contained in Sections 9.2, 9.3, 9.4, 9.13, 9.14, 9.15, 9.16, 9.17, 9.21, 9.22 and 9.23 of this Agreement and such failure shall continue for ten (10) days; provided, that, such ten (10) day period shall not apply in the case of: (A) any failure to observe any such covenant which is not capable of being cured at all or within such ten (10) day period or which has been the subject of a prior failure within a six (6) month period or (B) an intentional breach by any Borrower or Obligor of any such covenant or (iii) any Borrower or Obligor fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Financing Agreements other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

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                    (b) any representation, warranty or statement of fact made by any Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise delivered in connection with this Agreement or any of the other Financing Agreements shall when made or deemed made be false or misleading in any material respect;

                    (c) any Obligor revokes or terminates or purports to revoke or terminate or fails to perform any of the terms, covenants, conditions or provisions of any guarantee, endorsement or other agreement of such party in favor of Agent or any Lender;

                    (d) any judgment for the payment of money is rendered against any Borrower or Obligor in excess of $2,500,000 in any one case or in excess of $5,000,000 in the aggregate (to the extent not covered by insurance where the insurer has assumed responsibility in writing for such judgment) and shall remain undischarged or unvacated for a period in excess of thirty (30) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Borrower or Obligor or any of the Collateral having a value in excess of $2,500,000;

                    (e) any Borrower or Obligor makes an assignment for the benefit of creditors;

                    (f) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed against any Borrower or Obligor or all or any material part of the properties of Borrowers (taken as a whole) and such petition or application is not dismissed within forty-five (45) days after the date of its filing or any Borrower or Obligor shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

                    (g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by any Borrower or Obligor or for all or any material part of the properties of Borrowers (taken as a whole);

                    (h) any default by any Borrower or any Obligor under any agreement, document or instrument relating to any Indebtedness for borrowed money owing to any person other than Lenders, or any capitalized lease obligations, contingent indebtedness in connection with any guarantee, letter of credit, indemnity or similar type of instrument in favor of any person other than Lenders, in any case in an amount in excess of $5,000,000, which default continues for more than the applicable cure period, if any, with respect thereto and is not waived in writing, or any default by any Borrower or any Obligor under any Material Contract (including, without limitation, any of the Credit Card Agreements), which default continues for more than the applicable cure period, if any, with respect thereto which default has or could reasonably be expected to have a Material Adverse Effect, or any Credit Card Issuer or Credit Card Processor withholds payment of amoun ts otherwise payable to a Borrower to fund a reserve account or

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otherwise hold as collateral, or shall require a Borrower to pay funds into a reserve account or for such Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, or any Borrower shall provide a letter of credit, guarantee, indemnity or similar instrument to or in favor of such Credit Card Issuer or Credit Card Processor such that in the aggregate all of such funds in the reserve account, other amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar instruments shall exceed $2,500,000;

                    (i) any Credit Card Issuer or Credit Card Processor shall send written notice to any Borrower that it is ceasing to make or suspending payments to any Borrower of amounts due or to become due to any Borrower or shall cease or suspend such payments, or shall send written notice to any Borrower that it is terminating its arrangements with any Borrower or such arrangements shall terminate as a result of any event of default under such arrangements, which continues for more than the applicable cure period, if any, with respect thereto, unless such Borrower shall have entered into arrangements with another Credit Card Issuer or Credit Card Processor, as the case may be, within sixty (60) days after the date of any such notice;

                    (j) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Agent) in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein);

                    (k) an ERISA Event shall occur which results in or could reasonably be expected to result in liability of any Borrower in an aggregate amount in excess of $5,000,000;

                    (l) any Change of Control;

                    (m) the indictment by any Governmental Authority, or as Agent may reasonably and in good faith determine, the threatened indictment by any Governmental Authority of any Borrower or Obligor of which any Borrower, Obligor or Agent receives notice, in either case, as to which there is a reasonable possibility of an adverse determination, in the good faith determination of Agent, under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against such Borrower or Obligor, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture of (i) any of the Collateral having a value in excess of $5,000,000 or (ii) any other property of any Borrower or Guarantor which is necessary or material to the conduct of its business;

                    (n) any event shall occur as a result of which (i) the consolidated revenues of Parent and its Subsidiaries (taken as a whole) in any fiscal quarter are less than the amount for such fiscal quarter set forth on Schedule 10.1 hereto, provided, that, (A) prior to the effective date of the sale of all or substantially all of the assets of United to the extent permitted hereunder, the amounts set forth in Part I of Schedule 10.1 hereto with respect to such period then ending shall be applicable and (B) on and after the date of the sale of all or substantially all of the assets

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of United to the extent permitted hereunder, the amounts set forth in Part II of Schedule 10.1 hereto with respect to such period then ending shall be applicable, (ii) contingent liabilities are incurred by Borrowers and Guarantors in excess of $40,000,000 which would be required to be reflected in the footnotes to a balance sheet prepared in accordance with GAAP (except that any such contingent liabilities that are expressly permitted hereunder shall not be included in the calculation of such amount), (iii) operations are suspended or terminated for thirty (30) days or more at any facility of a Borrower used in generating more than thirty (30%) percent of the consolidated revenues of Borrowers for the immediately preceding fiscal year (but for this purpose a sale of a facility in accordance with the terms hereof shall not be deemed to be a suspension or termination of operations at such facility), (iv) any law, regulation, order, judgement or decree of any Governmental Authority shall exist, or any action, suit, investigation, litigation or proceeding shall be pending or threatened in writing in any court or before any arbitrator or Governmental Authority that could reasonably be expected to result in the loss of the ability to conduct any portion of the business that accounted for more than thirty (30%) of the revenues of Parent and it Subsidiaries (taken as a whole) in the immediately preceding fiscal year, (viii) the loss, suspension, revocation or failure to renew any Permit now held or hereafter acquired by a Borrower required in connection with the sale or distribution of goods the sale of which gave rise to revenues of more than thirty (30%) percent in the immediately preceding fiscal year, (viii) within a ninety (90) day time period, $15,000,000 or more of Inventory (valued at the lower of cost or market) shall be subject to a product recall or similar product defect occurrence (but any such Inventory shall not be included in the calculation of such amount if a Borrower has a valid and enforceable righ t to return such Inventory to the supplier thereof either (A) in exchange for cash or other immediately available funds so long as Agent determines that the supplier has the financial ability to make all of such payments or (B) to the extent that such Borrower has a bona fide and valid right of setoff against amounts otherwise payable by such Borrower to such supplier up to the amounts then owing to such supplier); or

                    (o) there shall be an event of default under any of the other Financing Agreements.

          10.2 Remedies.

                    (a) At any time an Event of Default exists or has occurred and is continuing, Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which rights and remedies may be exercised without notice to or consent by any Borrower or Obligor, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Agent and Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agent's discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Borrower or Obligor of this Agreement or any of the other Financing Agreement s. Subject to Section 12 hereof, Agent may, and at the direction of the Required Lenders shall, at any time or times, proceed directly against any Borrower or Obligor to collect the Obligations without prior recourse to the Collateral.

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                    (b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, at its option and shall upon the direction of the Required Lenders, (i) upon notice to Lead Borrower, accelerate the payment of all Obligations and demand immediate payment thereof to Agent for itself and the benefit of Lenders (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(f) and 10.1(g), all Obligations shall automatically become immediately due and payable), and (ii) terminate the Commitments and this Agreement (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(f) and 10.1(g), the Commitments and any other obligation of the Agent or a Lender hereunder shall automatically terminate).

                    (c) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, in its discretion, and upon the direction of the Required Lenders, shall (i) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (ii) require any Borrower or Obligor, at Borrowers' expense, to assemble and make available to Agent any part or all of the Collateral at any place and time designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (iv) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, ( v) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker's board, at any office of Agent or elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon credit or for future delivery, with the Agent having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of any Borrower or Obligor, which right or equity of redemption is hereby expressly waived and released by Borrowers and Obligors and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by Agent upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Agent. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Agent to Lead Borrower designating the ti me and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Borrowers and Obligors waive any other notice. In the event Agent institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and Obligor waives the posting of any bond which might otherwise be required. At any time an Event of Default exists or has occurred and is continuing, upon Agent's request, Borrowers will either, as Agent shall specify, furnish cash collateral to the issuer to be used to secure and fund Agent's reimbursement obligations to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to Agent for the Letter of Credit Accommodations. Such cash collateral shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Accommodations plus the amount of any expenses payable or to become payable in connection therewith through the end of the latest expiration date of such Letter of Credit Accommodations.

                    (d) At any time or times that an Event of Default exists or has occurred and is continuing, Agent may, in its discretion, enforce the rights of any Borrower or Obligor against

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any Account Debtor, secondary obligor or other obligor in respect of any of the Accounts or other Receivables. Without limiting the generality of the foregoing, Agent may, in its discretion, at such time or times (i) notify any or all Account Debtors, secondary obligors or other obligors in respect thereof that the Receivables have been assigned to Agent and that Agent has a security interest therein and Agent may direct any or all accounts debtors, secondary obligors and other obligors to make payment of Receivables directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Receivables or other obligations included in the Collateral and thereby discharge or release the Account Debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables or such other obligations, but without any duty to do so, and Agent and Lenders shall not be liable for any failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent may deem necessary or desirable for the protection of its interests and the interests of Lenders. At any time that an Event of Default exists or has occurred and is continuing, at Agent's request, all invoices and statements sent to any Account Debtor shall state that the Accounts and such other obligations have been assigned to Agent and are payable directly and only to Agent and Borrowers and Obligors shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Agent may require. In the event any Account Debtor returns Inventory when an Event of Default exists or has occurred and is continuing, Borrowers shall, upon Agent's request, hold the returned Inventory in trust for Agent, segreg ate all returned Inventory from all of its other property, dispose of the returned Inventory solely according to Agent's instructions, and not issue any credits, discounts or allowances with respect thereto without Agent's prior written consent.

                    (e) To the extent that applicable law imposes duties on Agent or any Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), each Borrower and Guarantor acknowledges and agrees that it is not commercially unreasonable for Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by Agent or any Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as any Borrower or Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of as sets in wholesale rather than retail markets, (x) to

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disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Agent or Lenders against risks of loss, collection or disposition of Collateral or to provide to Agent or Lenders a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Borrower and Guarantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent or any Lender would not be commercially unreasonable in the exercise by Agent or any Lender of remedies against the Collateral and that other actions or omissions by Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to any Borrower or Guarantor or to impose any duties on Agent or Lenders that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

                    (f) For the purpose of enabling Agent to exercise the rights and remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable at any time an Event of Default shall exist or have occurred and for so long as the same is continuing) without payment of royalty or other compensation to any Borrower or Obligor, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by any Borrower or Obligor, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

                    (g) At any time an Event of Default shall exist or have occurred and for so long as the same is continuing, Agent may apply the cash proceeds of Collateral actually received by Agent from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due. Borrowers and Guarantors shall remain liable to Agent and Lenders for the payment of any deficiency with interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including attorneys' fees and expenses.

                    (h) Without limiting the foregoing, upon the occurrence of a Default or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon the occurrence of an Event of Default at the direction of the Required Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or arranging for Letter of Credit Accommodations or reduce the lending formulas or amounts of Loans and Letter of Credit Accommodations available to Borrowers and/or (B) terminate any provision of this Agreement providing for any future Loans or Letter of Credit Accommodations to be made by Agent and Lenders to Borrowers and (ii) Agent may, at its option, establish such Reserves as Agent determines, without limitation or restriction, notwithstanding anything to the contrary contained herein.

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SECTION 11 JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
                       GOVERNING LAW

          11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

                    (a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of Illinois but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of Illinois.

                    (b) Borrowers, Guarantors, Agent and Lenders irrevocably consent and submit to the non-exclusive jurisdiction of the Circuit Court of Cook County, Illinois and the United States District Court for the Northern District of Illinois, whichever Agent may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Borrower or Guarantor or its or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Borrower or Guarantor or its or their property).

                    (c) Each Borrower and Guarantor hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent's option, by service upon any Borrower or Guarantor in any other manner provided under the rules of any such courts. Within thirty (30) days after such service, such Borrower or Guarantor shall appear in answer to such process, failing which such Borrower or Guarantor shall be deemed in default and judgment may be entered by Agent against such Borrower or Guarantor for the amount of the claim and other relief requested.

                    (d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL

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WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                    (e) Agent and Lenders shall not have any liability to any Borrower or Guarantor (whether in tort, contract, equity or otherwise) for losses suffered by such Borrower or Guarantor in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, except to the extent resulting from the gross negligence or willful misconduct of Agent or a Lender as determined by a final and non-appealable judgment or court order binding on Agent and such Lender. In any such litigation, Agent and Lenders shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the performance by it of the terms of this Agreement. Each Borrower and Guarantor: (i) certifies that neither Agent, any Lender nor any representative, agent or attorney acting for or on behalf of Agent or any Lender has represented, expressly or otherwise, that Agent and Lenders would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into this Agreement and the other Financing Agreements, Agent and Lenders are relying upon, among other things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.

          11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on any Borrower or Guarantor which Agent or any Lender may elect to give shall entitle such Borrower or Guarantor to any other or further notice or demand to which such Borrower or Guarantor is not otherwise entitled in the same, similar or other circumstances.

          11.3 Amendments and Waivers.

                    (a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent and the Required Lenders or at Agent's option, by Agent with the authorization of the Required Lenders, and as to amendments to any of the Financing Agreements (other than with respect to any provision of Section 12 hereof), by Lead Borrower (for itself and the other Borrowers); except, that, no such amendment, waiver, discharge or termination shall:

                              (i) reduce the interest rate or any fees or extend the time of payment of principal, interest or any fees or reduce the principal amount of any Loan or Letter of Credit Accommodations, in each case without the consent of each Lender directly affected thereby,

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                              (ii) increase the Commitment of any Lender over the amount thereof then in effect or provided hereunder, in each case without the consent of the Lender directly affected thereby,

                              (iii) release any Collateral (except as expressly required hereunder or under any of the other Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof), without the consent of Agent and all of Lenders,

                              (iv) reduce any percentage specified in the definition of Required Lenders, without the consent of Agent and all of Lenders,

                              (v) consent to the assignment or transfer by any Borrower or Guarantor of any of their rights and obligations under this Agreement, without the consent of Agent and all of Lenders,

                              (vi) amend, modify or waive any terms of this Section 11.3 hereof, without the consent of Agent and all of Lenders, or

                              (vii) increase the advance rates constituting part of the Borrowing Base, without the consent of Agent and all of Lenders.

                    (b) Agent and Lenders shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Agent or any Lender of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent or any Lender would otherwise have on any future occasion, whether similar in kind or otherwise.

                    (c) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein as a "Non-Consenting Lender"), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required are obtained, if any, then Congress and Parent shall have the right, but not the obligation, at any time thereafter, and upon the exercise by Congress or Parent of such right, such Non-Consenting Lender shall have the obligation, to sell, assign and transfer to Congress or such Eligible Transferee as Congress may specify, the Commitment of such Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant thereto. Congress or Parent shall provide the Non-Consenting Lende r with prior written notice of its intent to exercise its right under this Section, which notice shall specify on date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Congress, or such Eligible Transferee specified by Congress, shall pay to the Non-Consenting Lender (except as Congress and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the principal balance of the Loans held by the Non-Consenting Lender outstanding as of the close of business on the business day immediately preceding the

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effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed entitled to any early termination fee), minus (iii) the amount of the closing fee received by the Non-Consenting Lender pursuant to the terms hereof or of any of the other Financing Agreements multiplied by the fraction, the numerator of which is the number of months remaining in the then current term of the Credit Facility and the denominator of which is the number of months in the then current term thereof. Such purchase and sale shall be effective on the date of the payment of such amount to the Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall terminate on such date.

                    (d) The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section and the exercise by Agent of any of its rights hereunder with respect to Reserves or Eligible Accounts, Eligible Inventory, Eligible Credit Card Receivables, Eligible Equipment, Eligible Prescription Files or Eligible Real Property shall not be deemed an amendment to the advance rates provided for in this Section 11.3.

          11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

          11.5 Indemnification. Each Borrower and Guarantor shall, jointly and severally, indemnify and hold Agent and each Lender, and its officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an "Indemnitee"), harmless from and against any and all losses, claims, damages, liabilities, costs or expenses (including attorneys' fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including amounts paid in settlement, court costs, and the fees and expenses of counsel except that Borrowers a nd Guarantors shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby to the extent resulting from the gross negligence or wilful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Borrowers or Guarantors as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the maximum portion which it is permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or

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transaction contemplated hereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

SECTION 12 THE AGENT

          12.1 Appointment, Powers and Immunities. Each Lender irrevocably designates, appoints and authorizes Congress to act as Agent hereunder and under the other Financing Agreements with such powers as are specifically delegated to Agent by the terms of this Agreement and of the other Financing Agreements, together with such other powers as are reasonably incidental thereto. Agent (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Financing Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders for any recitals, statements, representations or warranties contained in this Agreement or in any of the other Financing Agreements, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Financing Agreement, or for the value, v alidity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement or any other document referred to or provided for herein or therein or for any failure by any Borrower or any Obligor or any other Person to perform any of its obligations hereunder or thereunder; and (c) shall not be responsible to Lenders for any action taken or omitted to be taken by it hereunder or under any other Financing Agreement or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Without limiting the generality of the foregoing or any of the other rights and duties of Agent provided for herein or in the other Financing Agreements, each Lender hereby specifically irrevocably authorizes and directs Agent to enter into the Supplemental Loan Intercreditor Agreement on be half of such Lender and acknowledges and agrees that such Lender shall be bound thereby and subject to all of the terms and conditions thereof, deemed to make all representations and warranties made by a Revolving Loan Lender (as such term is defined therein) as to itself and Agent shall be irrevocably authorized to take such actions as are provided for on behalf of such Lender thereunder. Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. Agent may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in form and substance satisfactory to Agent shall have been delivered to and acknowledged by Agent.

          12.2 Reliance by Agent. Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Agent. As to any matters not expressly provided for by this Agreement or any other Financing Agreement, Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders or all of Lenders as is required in such circumstance, and such

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instructions of such Agents and any action taken or failure to act pursuant thereto shall be binding on all Lenders.

          12.3 Events of Default.

                    (a) Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or an Event of Default or other failure of a condition precedent to the Loans and Letter of Credit Accommodations hereunder, unless and until Agent has received written notice from a Lender, or a Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is a "Notice of Default or Failure of Condition". In the event that Agent receives such a Notice of Default or Failure of Condition, Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take such action with respect to any such Event of Default or failure of condition precedent as shall be directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, wit h respect to or by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in the best interest of Lenders. Without limiting the foregoing, and notwithstanding the existence or occurrence and continuance of an Event of Default or any other failure to satisfy any of the conditions precedent set forth in Section 4 of this Agreement to the contrary, Agent may, but shall have no obligation to, continue to make Loans and issue or cause to be issued Letter of Credit Accommodations for the ratable account and risk of Lenders from time to time if Agent believes making such Loans or issuing or causing to be issued such Letter of Credit Accommodations is in the best interests of Lenders.

                    (b) Except with the prior written consent of Agent, no Lender may assert or exercise any enforcement right or remedy in respect of the Loans, Letter of Credit Accommodations or other Obligations, as against any Borrower or Obligor or any of the Collateral or other property of any Borrower or Obligor.

          12.4 Congress in its Individual Capacity. With respect to its Commitment and the Loans made and Letter of Credit Accommodations issued or caused to be issued by it (and any successor acting as Agent), so long as Congress shall be a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include Congress in its individual capacity as Lender hereunder. Congress (and any successor acting as Agent) and its Affiliates may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and its Affiliates may accept fees and other consideration from any Borrower or Guarantor and any of its Subsidiaries and Affiliates for se rvices in connection with this Agreement or otherwise without having to account for the same to Lenders.

          12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by Borrowers hereunder and without limiting any obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this

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Agreement or any other Financing Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Agent is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided, that, no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

          12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on Agent or other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrowers and Obligors and has made its own decision to enter into this Agreement and that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Financing Agreements. Agent shall not be required to keep itself informed as to the performance or observance by any Borrower or Obligor of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or provided for herein or therein or to inspect the properties or books of any Borrower or Obligor. Agent will use reasonable efforts to provide Lenders with any information received by Agent from any Borrower or Obligor which is required to be provided to Lenders or deemed to be requested by Lenders hereunder and with a copy of any Notice of Default or Failure of Condition received by Agent from any Borrower or any Lender; provided, that, Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent's own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent hereunder, Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the affairs, financial condition or business of any Borrower or Obligor that may come into the possession of Agent.

          12.7 Failure to Act. Except for action expressly required of Agent hereunder and under the other Financing Agreements, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.5 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

          12.8 Additional Loans. Agent shall not make any Loans or provide any Letter of Credit Accommodations to any Borrower on behalf of Lenders intentionally and with actual knowledge that such Loans or Letter of Credit Accommodations would cause the aggregate amount of the total outstanding Loans and Letter of Credit Accommodations to such Borrower to exceed the Borrowing Base of such Borrower, without the prior consent of all Lenders, except, that, Agent may make such additional Loans or provide such additional Letter of Credit Accommodations on behalf of Lenders, intentionally and with actual knowledge that such Loans or Letter of Credit Accommodations will cause the total outstanding Loans and Letter of Credit Accommodations to such Borrower to exceed the Borrowing Base of such Borrower, as Agent may deem necessary

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or advisable in its discretion, provided, that: (a) the total principal amount of the additional Loans or additional Letter of Credit Accommodations to any Borrower which Agent may make or provide after obtaining such actual knowledge that the aggregate principal amount of the Loans equal or exceed the Borrowing Base, plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof then outstanding, shall not exceed $5,000,000 and shall not cause the total principal amount of the Loans and Letter of Credit Accommodations to exceed the Maximum Credit and (b) no such additional Loan or Letter of Credit Accommodation shall be outstanding more than ninety (90) days after the date such additional Loan or Letter of Credit Accommodation is made or issued (as the case may be), except as the Required Lenders may otherwise agree. Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of any such additional Loans or Letter of Credit Accommodations.

          12.9 Concerning the Collateral and the Related Financing Agreements. Each Lender authorizes and directs Agent to enter into this Agreement and the other Financing Agreements. Each Lender agrees that any action taken by Agent or Required Lenders in accordance with the terms of this Agreement or the other Financing Agreements and the exercise by Agent or Required Lenders of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

          12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders. By signing this Agreement, each Lender:

                    (a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report and report with respect to the Borrowing Base prepared or received by Agent (each field audit or examination report and report with respect to the Borrowing Base being referred to herein as a "Report" and collectively, "Reports"), appraisal and financial statements;

                    (b) expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, appraisal or financial statement or (ii) shall not be liable for any information contained in any Report, appraisal or financial statement;

                    (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or any other party performing any audit or examination will inspect only specific information regarding Borrowers and Guarantors and will rely significantly upon Borrowers' and Guarantors' books and records, as well as on representations of Borrowers' and Guarantors' personnel; and

                    (d) agrees to keep all Reports confidential and strictly for its internal use in accordance with the terms of Section 13.5 hereof, and not to distribute or use any Report in any other manner.

          12.11 Collateral Matters.

                    (a) Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letter of Credit Accommodations hereunder, make such

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disbursements and advances ("Special Agent Advances") which Agent, in its sole discretion, (i) deems necessary or desirable either to preserve or protect the Collateral or any portion thereof or (ii) to enhance the likelihood or maximize the amount of repayment by Borrowers and Guarantors of the Loans and other Obligations, provided, that, the aggregate principal amount of the Special Agent Advances pursuant to this clause (ii), plus the then outstanding principal amount of the additional Loans and Letter of Credit Accommodations which Agent may make or provide as set forth in Section 12.8 hereof, shall not exceed the aggregate amount of $5,000,000 or (iii) to pay any other amount chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement or any of the other Financing Agreements consisting of (A) costs, fees and expenses and (B) payments to any issuer of Letter of Credit Accommodations. Special Agent Advances shall be repayable on demand and together with all interest there on shall constitute Obligations secured by the Collateral. Special Agent Advances shall not constitute Loans but shall otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at the Interest Rate then applicable to Prime Rate Loans and shall be payable on demand. Without limitation of its obligations pursuant to Section 6.10, each Lender agrees that it shall make available to Agent, upon Agent's demand, in immediately available funds, the amount equal to such Lender's Pro Rata Share of each such Special Agent Advance. If such funds are not made available to Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent's option based on the ar ithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans.

                    (b) Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or lien upon, any of the Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations and delivery of cash collateral to the extent required under Section 13.1 below, or (ii) constituting property being sold or disposed of if Lead Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Borrower or Guarantor did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (iv) having a value in the aggregate in any twelve (12) month period of less than $5,000,000, and to the extent Agent may release its security i nterest in and lien upon any such Collateral pursuant to the sale or other disposition thereof, such sale or other disposition shall be deemed consented to by Lenders, or (v) if required or permitted under any other terms hereof or of any of the other Financing Agreements, including any intercreditor agreement, or (vi) approved, authorized or ratified in writing by all of Lenders. Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders. Upon request by Agent at any time, Lenders will promptly confirm in writing Agent's authority to release particular types or items of Collateral pursuant to this Section.

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                    (c) Without in any manner limiting Agent's authority to act without any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under this Section. Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the security interest, mortgage or liens granted to Agent upon any Collateral to the extent set forth above; provided, that, (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such security interest, mortgage or liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest , mortgage or lien upon (or obligations of any Borrower or Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.

                    (d) Agent shall have no obligation whatsoever to any Lender or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Borrower or Guarantor or is cared for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Loans or Letter of Credit Accommodations hereunder, or whether any particular reserves are appropriate, or that the liens and security interests granted to Agent pursuant hereto or any of the Financing Agreements or otherwise have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Fina ncing Agreements, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its discretion, given Agent's own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any other Lender.

          12.12 Agency for Perfection. Each Lender hereby appoints Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral of Agent in assets which, in accordance with Article 9 of the UCC can be perfected only by possession (or where the security interest of a secured party with possession has priority over the security interest of another secured party) and Agent and each Lender hereby acknowledges that it holds possession of any such Collateral for the benefit of Agent as secured party. Should any Lender obtain possession of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.

          12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days' notice to Lenders and Parent. If Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for Lenders. If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Parent, a successor agent from among Lenders. Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such successor agent shall succeed to all of the rights, powers and duties of the retiring Agent and the term "Agent" as used herein and in the other Financing Agreements shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's

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resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days after the date of a retiring Agent's notice of resignation, the retiring Agent's resignation shall nonetheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

          12.14 Co-Agent. Agent may at any time and from time to time determine that a Lender may, in addition, be a "Co-Agent", "Co-Documentation Agent" or similar designation hereunder and enter into an agreement with such Lender to have it so identified for purposes of this Agreement. Agent shall provide written notice to Lead Borrower of any such agreement. Any Lender that is so designated as a Co-Agent, Co-Documentation Agent or such similar designation by Agent shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any of the other Financing Agreements other than those applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall not have or be deemed to have any fiduciary relationship with any Lender and no Lender shall be deemed to have relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent, Co-Documentation Agent or such similar designation in deciding to enter into this Agreement or in taking or not taking action hereunder.

SECTION 13 TERM OF AGREEMENT; MISCELLANEOUS

          13.1 Term.

                    (a) THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS SHALL BECOME EFFECTIVE AS OF THE DATE SET FORTH ON THE FIRST PAGE HEREOF AND SHALL CONTINUE IN FULL FORCE AND EFFECT FOR A TERM ENDING ON THE DATE FOUR (4) YEARS FROM THE DATE HEREOF (THE "RENEWAL DATE"), AND FROM YEAR TO YEAR THEREAFTER, UNLESS SOONER TERMINATED PURSUANT TO THE TERMS HEREOF. AGENT MAY, AT ITS OPTION (OR SHALL AT THE DIRECTION OF ANY LENDER IN WRITING RECEIVED BY AGENT AT LEAST NINETY (90) DAYS PRIOR TO THE RENEWAL DATE OR ANY ANNIVERSARY OF THE RENEWAL DATE, AS THE CASE MAY BE), TERMINATE THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS, OR LEAD BORROWER OR ANY BORROWER MAY TERMINATE THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS, EACH CASE, EFFECTIVE ON THE RENEWAL DATE OR ON ANY ANNIVERSARY OF THE RENEWAL DATE IN ANY YEAR BY GIVING TO THE OTHER PARTY AT LEAST SIXTY (60) DAYS PRIOR WRITTEN NOTICE; PROVIDED, THAT, THIS AGREEMENT AND ALL OTHER FINAN CING AGREEMENTS MUST BE TERMINATED SIMULTANEOUSLY. In addition, Borrowers may terminate this Agreement at any time upon ten (10) days prior written notice to Agent (which notice shall be irrevocable) and Agent may, at its option, and shall at the direction of Required Lenders, terminate this Agreement at any time on or after an Event of Default. Upon the Renewal Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent's option, a letter of credit issued for the account of Borrowers and at Borrowers' expense, in form

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and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or expense, including attorneys' fees and expenses, in connection with any contingent Obligations, including issued and outstanding Letter of Credit Accommodations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement (contingent or otherwise). The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Accommodations shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Accommodations plus the amount of any expenses payable or to become payable in connection therewith through the end of th e latest expiration date of such Letter of Credit Accommodations. Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Lead Borrower for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 noon, Chicago time.

                    (b) No termination of this Agreement or the other Financing Agreements shall relieve or discharge any Borrower or Guarantor of its respective duties, obligations and covenants under this Agreement or the other Financing Agreements until all Obligations have been fully and finally discharged and paid, and Agent's continuing security interest in the Collateral and the rights and remedies of Agent and Lenders hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid. Accordingly, each Borrower and Guarantor waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Agent shall not be required to send such termination statements to Borrowers or Guarantors, or to file them with any filing office, in each case, unless and until this Agreement shall have been terminated i n accordance with its terms and all Obligations paid and satisfied in full in immediately available funds.

                    (c) If for any reason this Agreement is terminated prior to the Renewal Date, in view of the impracticality and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of Agent's and each Lender's lost profits as a result thereof, Borrowers agree to pay to Agent for itself and the ratable benefit of Lenders, upon the effective date of such termination, an early termination fee in the amount equal to

Amount	Period
(i)  1% of Maximum Credit	From the date hereof to and including the first anniversary of the date hereof
(ii) 1/2% of Maximum Credit	From and after the first anniversary of the date hereof to and including June 1, 2006.

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Such early termination fee shall be presumed to be the amount of damages sustained by Agent and Lenders as a result of such early termination and Borrowers and Guarantors agree that it is reasonable under the circumstances currently existing. In addition, Agent and Lenders shall be entitled to such early termination fee upon the occurrence of any Event of Default described in Sections 10.1(f) and 10.1(g) hereof, even if Agent and Lenders do not exercise the right to terminate this Agreement, but elect, at their option, to provide financing to any Borrower or permit the use of cash collateral under the United States Bankruptcy Code. The early termination fee provided for in this Section 13.1 shall be deemed included in the Obligations.

                    (d) Notwithstanding anything to contrary contained in Section 13.1(c) above, in the event of the termination of this Agreement by Borrowers prior to the end of the then current term or renewal term of this Agreement and the full and final repayment of all of the Obligations and the receipt by Lender of cash collateral all as provided in Section 13.1(c) with the proceeds of initial loans and advances to Borrowers pursuant to a credit facility provided by Wachovia Bank National Association or its Affiliates (or for which Wachovia Bank, National Association or any of its Affiliates is acting as agent) to Borrowers to replace the financing arrangements provided for herein, Borrowers shall not be required to pay the early termination fee provided for above.

          13.2 Interpretative Provisions.

                    (a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

                    (b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

                    (c) All references to any Borrower, Guarantor, Agent and Lenders pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

                    (d) The words "hereof", "herein", "hereunder", "this Agreement" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

                    (e) The word "including" when used in this Agreement shall mean "including, without limitation" and the word "will" when used in this Agreement shall be construed to have the same meaning and effect as the word "shall".

                    (f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.3 or is cured in a manner satisfactory to Agent, if such Event of Default is capable of being cured as determined by Agent.

                    (g) All references to the term "good faith" used herein when applicable to Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned and the observance of reasonable commercial standards of fair dealing based on how an asset-based lender with similar rights

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providing a credit facility of the type set forth herein would act in similar circumstances at the time with the information then available to it. Borrowers and Guarantors shall have the burden of proving any lack of good faith on the part of Agent or any Lender alleged by any Borrower or Guarantor at any time.

                    (h) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the financial statements of Parent most recently received by Agent prior to the date hereof or such other method as may be acceptable to Agent. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term "unqualified opinion" as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is not only unqualified (other than by reason of an exception as to consistency related to new accounting pr onouncements or method change under GAAP) but also does not include any explanation, supplemental comment or other comment or note concerning the ability of the applicable person to continue as a going concern.

                    (i) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including", the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including".

                    (j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

                    (k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

                    (l) This Agreement and other Financing Agreements may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

                    (m) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Agent and the other parties, and are the products of all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed against Agent or Lenders merely because of Agent's or any Lender's involvement in their preparation.

          13.3 Notices. All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by

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telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

If to any Borrower or Guarantor:	Spartan Stores, Inc. 850 76th St. SW P.O. Box 8700 Grand Rapids, Michigan 49518-8700 Attention: Mr. David Staples Telephone No.: 616/878-8315 Telecopy No.: 616/878-2775
with a copy to:	Seyfarth Shaw L.L.P. 55 E. Monroe Street Suite 4200 Chicago, Illinois 60603 Attention: Theodore E. Cornell III Telephone No.: 312/269-8907 Telecopy No.: 312/269-8869
If to Agent:	Congress Financial Corporation           (Central) 150 South Wacker Drive Suite 2200 Chicago, Illinois 60606-4202 Attention: Portfolio Administrator Telephone No.:312/739-2210 Telecopy No.: 312/444-9423

          13.4 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

          13.5 Confidentiality.

                    (a) Agent and each Lender shall use all reasonable efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any material non-public information supplied to it by any Borrower pursuant to this Agreement, provided, that, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to bank examiners and other regulators, auditors and/or accountants, in connection with any litigation to which Agent or such Lender is a party, (iii) to any Lender or Participant (or

134

prospective Lender or Participant) or to any Affiliate of any Lender so long as such Lender or Participant (or prospective Lender or Participant) or Affiliate shall have been instructed to treat such information as confidential in accordance with this Section 13.5, or (iv) to counsel for Agent or any Lender or Participant (or prospective Lender or Participant).

                    (b) In the event that Agent or any Lender receives a request or demand to disclose any confidential information pursuant to any subpoena or court order, Agent or such Lender, as the case may be, agrees (i) to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender, Agent or such Lender will promptly notify Lead Borrower of such request so that Lead Borrower may seek a protective order or other appropriate relief or remedy and (ii) if disclosure of such information is required, disclose such information and, subject to reimbursement by Borrowers of Agent's or such Lender's expenses, cooperate with Lead Borrower in the reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which Lead Borrower s o designates, to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender.

                    (c) In no event shall this Section 13.5 or any other provision of this Agreement, any of the other Financing Agreements or applicable law be deemed: (i) to apply to or restrict disclosure of information that has been or is made public by any Borrower, Guarantor or any third party or otherwise becomes generally available to the public other than as a result of a disclosure in violation hereof, (ii) to apply to or restrict disclosure of information that was or becomes available to Agent or any Lender (or any Affiliate of any Lender) on a non-confidential basis from a person other than a Borrower or Guarantor, (iii) to require Agent or any Lender to return any materials furnished by a Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from responding to routine informational requests in accordance with the Code of Ethics for the Exchange of Credit Information promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of credit information. The obligations of Agent and Lenders under this Section 13.5 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter signed prior to the date hereof.

                    (d) Notwithstanding anything to the contrary set forth herein or in any of the other Financing Agreements or any other written or oral understanding or agreement, (i) any obligations of confidentiality contained herein, in any of the other Financing Agreements or any such other understanding or agreement do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated herein (and any related transactions or arrangements), and (ii) each party (and each of its employees, representatives, or other agents) may disclose to any and all persons the tax treatment and tax structuring of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, all within the meaning of Treasury Regulation Section 1.6011-4; provided , that, each party recognizes that the privilege that it may, in its discretion, maintain with respect to the confidentiality of a communication relating to the transactions contemplated herein, including a confidential communication with its attorney or a confidential communication with a federally authorized tax practitioner under Section 7525 of

135

the Internal Revenue Code, is not intended to be affected by the foregoing. Borrowers and Guarantors do not intend to treat the Loans and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event Borrowers or Guarantors determine to take any action inconsistent with such intention, it will promptly notify Agent thereof. Each Borrower and Guarantor acknowledges that one or more of Lenders may treat its Loans as part of a transaction that is subject to Treasury Regulation Section 1.6011-4 or Section 301.6112-1, and the Agent and such Lender or Lenders, as applicable, may file such IRS forms or maintain such lists and other records as they may determine is required by such Treasury Regulations.

          13.6 Successors. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Agent and Lenders. Any such purported assignment without such express prior written consent shall be void. No Lender may assign its rights and obligations under this Agreement without the prior written consent of Agent, except as provided in Section 13.7 below. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agent and Lenders with respect to the transactions contemplated hereby and there s hall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

          13.7 Assignments; Participations.

                    (a) Each Lender may, with the prior written consent of Agent, assign all or, if less than all, a portion equal to at least $5,000,000 in the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one or more Eligible Transferees (but not including for this purpose any assignments in the form of a participation), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Acceptance; provided, that, (i) such transfer or assignment will not be effective until recorded by Agent on the Register and (ii) Agent shall have received for its sole account payment of a processing fee from the assigning Lender or the assignee in the amount of $5,000.

                    (b) The aggregate amount of the Commitments of Congress and its Affiliates shall not be less than $35,000,000, except, that, Congress shall have the right to assign its rights and delegate its obligations as a Lender under the Financing Agreements below such minimum amount (i) to any present and future subsidiaries or affiliates of Congress or (ii) to the extent of the interests of Participants as provided herein, or (iii) upon the merger, consolidation, sale, transfer or other disposition of all or any substantial portion of its business, loan portfolio or other assets or (iv) at any time after an Event of Default shall exist or have occurred and be continuing or (v) with the consent of the Lead Borrower which consent shall not be unreasonably withheld, delayed or conditioned.

                    (c) Agent shall maintain a register of the names and addresses of Lenders, their Commitments and the principal amount of their Loans (the "Register"). Agent shall also

136

maintain a copy of each Assignment and Acceptance delivered to and accepted by it and shall modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and any Borrowers, Guarantors, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Lead Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

                    (d) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and to the other Financing Agreements and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations (including, without limitation, the obligation to participate in Letter of Credit Accommodations) of a Lender hereunder and thereunder and the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement.

                    (e) By execution and delivery of an Assignment and Acceptance, the assignor and assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any of the other Financing Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower, Obligor or any of their Subsidiaries or the performance or observance by any Borrower or Obligor of any of the Obligations; (iii) such assignee confirms that it h as received a copy of this Agreement and the other Financing Agreements, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the assigning Lender, Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Financing Agreements, (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Financing Agreements as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Financing Agreement s are required to be performed by it as a Lender. Agent and Lenders may furnish any information concerning any Borrower or Obligor in the possession of Agent or any Lender from time to time to assignees and Participants.

                    (f) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Financing Agreements (including, without limitation, all or a portion of its Commitments and the Loans owing to it and its participation in the Letter of Credit Accommodations, without the consent of

137

Agent or the other Lenders); provided, that, (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Financing Agreements, and (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be determined as if such Lender had not sold such participation.

                    (g) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal Reserve Bank; provided, that, no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

                    (h) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell assignments or participations under this Section 13.7 in a manner reasonably necessary in order to enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and the delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings and conference calls with, potential Lenders or Participants. Borrowers shall certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Borrowers and Guarantors and their affairs provided, prepared or reviewed by any Borrower or Guarantor that are contained in any selling materials and all other information provided by it and included in such materials.

          13.8 Entire Agreement. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

          13.9 Counterparts, Etc. This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements. Any party delivering an executed counterpart of any such agreement by telefacsimile shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

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          IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these presents to be duly executed as of the day and year first above written.

AGENT		BORROWERS
CONGRESS FINANCIAL CORPORATION           (CENTRAL), as Agent		SPARTAN STORES, INC.
By:	/s/ Richard A. Dickard	By:	/s/ David M. Staples
Title:	Senior Vice President	Title:	Chief Financial Officer
		SPARTAN STORES DISTRIBUTION, LLC UNITED WHOLESALE GROCERY COMPANY MARKET DEVELOPMENT CORPORATION SPARTAN STORES ASSOCIATES, LLC FAMILY FARE, LLC MSFC, LLC SEAWAY FOOD TOWN, INC. THE PHARM OF MICHIGAN, INC. VALLEY FARM DISTRIBUTING CO. GRUBER'S FOOD TOWN, INC. GRUBER'S REAL ESTATE LLC PREVO'S FAMILY MARKETS, INC. CUSTER PHARMACY, INC. BUCKEYE REAL ESTATE MANAGEMENT CO.
		By:	/s/ David M. Staples
		Title:	Treasurer
		GUARANTORS
		JFW DISTRIBUTING COMPANY LLJ DISTRIBUTING COMPANY SPARTAN STORES HOLDING, INC. SI INSURANCE AGENCY, INC.
		By:	/s/ David M. Staples
		Title:	Treasurer

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LENDERS
CONGRESS FINANCIAL CORPORATION           (CENTRAL)
By:	/s/ Richard A. Dickard
Title:	Senior Vice President
Commitment: $170,000,000

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EXHIBIT A

SCHEDULE 1
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE

______, 20__

____________________
____________________
____________________
Attn.:________________

          Re:_____________________________

Ladies and Gentlemen:

          Congress Financial Corporation (Central), in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (in such capacity, "Agent"), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a "Lender" and collectively, "Lenders") have entered or are about to enter into financing arrangements pursuant to which Agent and Lenders may make loans and advances and provide other financial accommodations to ___________, ____________, ____________, and ____________ (collectively, "Borrowers") as set forth in the Loan and Security Agreement, dated ______________, 20__, by and among Borrowers, certain of their affiliates, Agent and Lenders (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the "Loan Agreement"), a nd the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the "Financing Agreements"). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

          1.          We hereby give you notice of, and request your consent to, the assignment by __________________________ (the "Assignor") to ___________________________ (the "Assignee") such that after giving effect to the assignment Assignee shall have an interest equal to _______ (___%) percent of the total Commitments pursuant to the Assignment and Acceptance Agreement attached hereto (the "Assignment and Acceptance"). We understand that the Assignor's Commitment shall be reduced by $____________, as the same may be further reduced by other assignments on or after the date hereof.

          2.          Assignee agrees that, upon receiving the consent of Agent to such assignment, Assignee will be bound by the terms of the Loan Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest under the Loan Agreement.

          3.          The following administrative details apply to Assignee:

B-7

(A)	Notice address:
	Assignee name:
	Address:
	Attention:
	Telephone:
	Telecopier:
(B)	Payment instructions:
	Account No.
	At:
	Reference:
	Attention:

          4.          You are entitled to reply upon the representations, warranties and covenants of each of Assignor and Assignee contained in the Assignment and Acceptance.

B-8

          IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

[NAME OF ASSIGNOR]

By:

Title:

[NAME OF ASSIGNEE]

By:

Title:

ACKNOWLEDGED AND ASSIGNMENTS
CONSENTED TO:

CONGRESS FINANCIAL CORPORATION

(______________), as Agent

By:

Title:

B-9

EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT

Form of Borrowing Base Certificate

000's omitted

Date:            ______________, 200_
Number:___________________

          Pursuant to the Loan and Security Agreement by and among Congress Financial Corporation (Central) as agent ("Agent"), the parties thereto as lenders ("Lenders"), Spartan Stores, Inc. and certain of its subsidiaries, and any amendments thereto (the "Loan Agreement"), each hereby certifies to Agent and Lenders, as of the above date, as follows:

Reconciliation Of Collateral Balance				Spartan Retail Stores	Spartan Distribution	United Wholesale	Corporate	Combined
Accounts Availability
1.	Gross Third Party Trade Accounts (Regular)
2.	Credit Card Receivable
3.	Weekend Sales not in Aging
4.	Sub Total Accounts
5.	Less Ineligibles
		(a)	Past Dues
		(b)	Contras
		(c)	Credits in Prior
		(d)	Cross Aging
		(e)	Intercompany
		(f)	Packer Payables

B-2

Reconciliation Of Collateral Balance				Spartan Retail Stores	Spartan Distribution	United Wholesale	Corporate	Combined
		(g)	Aging to GL Recon.
		(h)	Vendor Billings (Returns)
		(i)	Unapplied Cash
6.	Total Ineligibles
7.	Eligible Accounts
8.	Advance Rate
9.	Net Available:  Accounts
Inventory Availability
10.	Gross Inventory
11.	Transfers to Liquidate (per Hilco)
12.	Sub-Total Inventory
13.	Less Ineligibles:
		(a)	Gen. Merch. Reserve
		(b)	Shrink Reserves
		(c)	Capitalized Cigarette Tax
		(d)	Market Gains
		(e)	Variance between GL and Perpetual
		(f)	Returns, Inv. Adj. & Salvage estimate
14.	Total Ineligibles
15.	Eligible Inventory
16.	Advance Rate
17.	Net Available: Inventory
18.	Prescription File Availability
19.	Fixed Asset Availability
20.	Total Availability

B-3

Reconciliation Of Collateral Balance		Spartan Retail Stores	Spartan Distribution	United Wholesale	Corporate	Combined
Loans and Reserves:
21.	Loan Balance
22.	Outstanding L/Cs
23.	PACA Claims (incl. accruals)
24.	Gift Cards and Certificates
25.	Rent Reserves
26.	Other
27.	Total Loans and Reserves
28.	Excess Availability

As of the date of this Certificate, no Event of Defaults exists or has occurred and is continuing. Each Borrower acknowledges that the Loans and Letter of Credit Accommodations by Agent and Lenders to Borrowers are based upon the reliance of Agent and Lenders on the information contained herein and all representations and warranties with respect to Accounts and Inventory in the Loan Agreement are applicable to the Accounts and Inventory included in this Certificate. The reliance by Agent and Lenders on this Certificate should not be deemed to limit the right of Agent to establish or revise criteria of eligibility or Reserves or otherwise limit, impair, or affect in any manner the rights of Agent under the Loan Agreement. in the event of any conflict between the determination of Agent of the amount of the Loans and Letter of Credit Accommodations available to Borrowers in accordance with the terms of the Loan Agreement and the determination by Borrowers of such amounts, the determination of Agent shall govern. All capitalized terms used in this Certificate shall have the meaning assigned to them in the Loan Agreement.

SPARTAN STORES, INC. (for itself
and its Subsidiaries)

By:

Title:

B-4

EXHIBIT C
INFORMATION CERTIFICATE

GUIDELINES FOR PREPARATION OF INFORMATION CERTIFICATE

          Annexed hereto is a form of Information Certificate which you should complete carefully and accurately.

          Please note:

          1.          The Information Certificate should be completed by you in consultation with your attorneys and accountants.

          2.          To the extent there is insufficient space provided in the Information Certificate for a response to any question, please include additional pages as exhibits to the certificate.

          3.          The Information Certificate should be returned to us as soon as possible since the information in it is necessary for us to prepare the loan documentation.

          4.          The Information Certificate will be included as an exhibit to the Loan and Security Agreement between us. The number of the schedules provided for in the Information Certificate correspond to the sections of the Loan and Security Agreement covering the applicable matter where such schedules are referenced.

          If you have any questions in connection with the preparation of the Information Certificate, please let us know.

          Thank you for your cooperation and we look forward to continuing to work with you.

                                                  CONGRESS FINANCIAL CORPORATION (CENTRAL)

INFORMATION CERTIFICATE
OF
_______________________

Dated: ____________________                   

Congress Financial Corporation (Central),
for itself and as Agent
150 South Wacker Drive
Suite 2200
Chicago, Illinois 60606

In connection with certain financing provided or to be provided by Congress Financial Corporation (Central) and certain other lenders (collectively, "Lenders") and for whom Congress Financial Corporation (Central) will be acting as agent (in such capacity, "Agent"), the undersigned (the "Company") represents and warrants to Agent and Lenders the following information about it, its organizational structure and other matters of interest to Agent and Lenders:

1.	The full and exact name of the Company as set forth in its certificate of incorporation (or its certificate of formation or other organizational document filed with the applicable state governmental authority, as the case may be) is as follows:
2.	The Company uses and owns the following trade name(s) in the operation of its business (e.g. billing, advertising, etc.; note: do not include names which are product names only):
3.	The Company is a registered organization of the following type (for example, corporation, limited partnership, limited liability company, etc.):
	Company	Type
4.	The Company was organized on the date indicated below, under the laws of the State indicated below, and the Company is in good standing under the laws of such State.

1

	Company	Date of Organization	Jurisdiction of Organization
5.	The organizational identification number of the Company issued by its jurisdiction of organization is as set forth below (or if none is issued by the jurisdiction of organization indicate "none"):
	Company	ID No.
6.	The Federal Employer Identification Number of the Company is as follows:
7.	The Company is duly qualified and authorized to transact business as a foreign organization in the following states and is in good standing in such states:
8.	The name of the Company as set forth in its organizational documentation as filed of record with the applicable state authority has been changed as follows:
	Company	Date of Change	Prior Name
9.	Since the date of five (5) years prior to the date hereof, the Company has made or entered into the following mergers or acquisitions:
10.	The chief executive office and mailing address of the Company is located at the address indicated on Schedule 8.2 hereto.
11.	The books and records of the Company pertaining to accounts, contract rights, inventory, and other assets are located at the addresses indicated on Schedule 8.2 hereto.
12.	The Company has other places of business and/or maintains inventory or other assets only at the addresses (indicate whether locations are owned, leased or operated by third parties and if leased or operated by third parties, their name and address) indicated on Schedule 8.2 hereto.

2

13.	The places of business or other locations of any assets used by the Company during the last four (4) months other than those listed above are as indicated on Schedule 8.2 hereto.
14.	The Company's assets are owned and held free and clear of liens, mortgages, pledges, security interests, encumbrances or charges except as set forth on Schedule 8.4 hereto or as otherwise permitted under Section 9.8 of the Loan Agreement.
15.	Except as set forth on Schedule 8.6 hereto, (a) there is no investigation by any Governmental Authority pending or, to the best of the Company's knowledge, threatened against or affecting the Company or its assets or business, and (b) there is no action, suit, proceeding or claim by any Person pending or, to the best of the Company's knowledge, threatened against the Company or its assets or goodwill or against or affecting any transactions contemplated by the Loan Agreement, in each case, which if adversely determined against the Company has or could reasonably be expected to have a Material Adverse Effect (as such term is defined in the Loan Agreement).
16.	The Company is in compliance with all environmental laws applicable to its business or operations where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect, except as set forth on Schedule 8.8 hereto. Except as set forth on Schedule 8.8 hereto, the Company has no material liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handing, production or disposal of any Hazardous Materials.
17.	The Company has no deposit accounts, investment accounts, securities account or similar accounts with any bank, savings or loan or other financial institution, except as set forth on Schedule 8.10 hereto for the purposes and of the types indicated therein.
18.	The Company does not own or license any trademarks, patents, copyrights or other intellectual property, except as set forth on Schedule 8.11 hereto (indicate type of intellectual property and whether owned or licensed, registration number, date of registration, and, if licensed, the name and address of the licensor).
19.	The Company is affiliated with, or has ownership in, the corporations (including subsidiaries) and other organizations set forth on Schedule 8.12 hereto.
20.	The names of the members of the Company and their holdings are as set forth on Schedule 8.12 hereto.

3

21.	The Company is not a party to or bound by any collective bargaining or similar agreement with any union, labor organization or other bargaining agent, except as set forth on Schedule 8.13 hereto (indicate date of agreement, parties to agreement and date of termination).
22.	The Company is not a party to or bound by any "material contract", except as set forth on Schedule 8.15 hereto. For this purpose a "material contract" means (a) any contract or other agreement (other than the Financing Agreements (as defined in the Loan Agreement) or contracts relating to the purchase or sale of inventory in the ordinary course of business), written or oral, of the Company involving monetary liability of or to any person in an amount in excess of $5,000,000 in any fiscal year and (b) any other contract or other agreement (other than the Financing Agreements or contracts relating to the purchase or sale of inventory in the ordinary course of business), whether written or oral, to which the Company is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.
23.	The Company has no "indebtedness", except as set forth on Schedule 9.9 hereto (or as otherwise permitted under Section 9.9 of the Loan Agreement). For this purpose, the term "indebtedness" has the meaning assigned thereto in the Loan Agreement.
24.	The Company has not made any loans or advances, except as set forth on Schedule 9.10 hereto or as otherwise permitted under Section 9.10 of the Loan Agreement, except that Schedule 9.10 sets forth all loans described in Section 9.10(g) of the Loan Agreement outstanding.
25.	The Company has no chattel paper (whether tangible or electronic) or instruments as of the date hereof, except for the indebtedness listed on Schedule 9.10 hereof.
26.	The Company has no commercial tort claims as of the date hereof.
27.	There is no provision in the articles of organization or operating agreement of the Company or the other organizational documents of the Company, or in the laws of the State of its organization, requiring any vote or consent of any party other than the sole member signatory thereto to borrow or to authorize the mortgage or pledge of or creation of a security interest in any assets of the Company or any subsidiary. Such power is vested exclusively in its sole member that is the signatory thereto.

4

28.	The officers of the Company and their respective titles are as follows:
	Company	Title	Name
	The following will have signatory powers as to all transactions of the Company with Agent and Lenders:
29.	The sole member of the Company is:
30.	At the present time, there are no delinquent taxes due (including, but not limited to, all payroll taxes, personal property taxes, real estate taxes or income taxes), except as follows:
31.	Certified Public Accountants for the Company is the firm of:

[SIGNATURE PAGE FOLLOWS]

5

          For purposes of the Information Certificate, unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Loan Agreement.

          The term "Loan Agreement", as used herein, means the Loan and Security Agreement, dated December 23, 2003, by and among the Borrowers, the Guarantors, Agent and Lenders (as amended and supplemented and as the same may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced). Agent and Lenders shall be entitled to rely upon the foregoing in all respects, and the undersigned is duly authorized to execute and deliver this Information Certificate on behalf of the Company.

Very truly yours,

SPARTAN STORES FUEL, LLC

By:

Title:

6

SCHEDULE 8.2
to
INFORMATION CERTIFICATE

Locations

	1.	Chief Executive Office
	2.	Location of Books and Records
	3.	Locations of Inventory, Equipment and Other Assets
Address		Owned/Leased/Third Party	Name/Address of Lessor or Third Party, as Applicable
	4.	Locations of Assets in Prior 4 Months not Listed Above

SCHEDULE 8.4
to
INFORMATION CERTIFICATE

Existing Liens

SCHEDULE 8.6
to
INFORMATION CERTIFICATE

Pending Litigation

SCHEDULE 8.8
to
INFORMATION CERTIFICATE

Environmental Compliance

SCHEDULE 8.10
to
INFORMATION CERTIFICATE

Deposit Accounts; Investment Accounts

A.	Part 1 - Deposit Accounts
B.	Part 2 - Investment and Other Accounts

SCHEDULE 8.11
to
INFORMATION CERTIFICATE

Intellectual Property

SCHEDULE 8.12
to
INFORMATION CERTIFICATE

Subsidiaries; Affiliates; Investments

A. Subsidiaries (More than 50% owned by the Company)

Subsidiary Jurisdiction of
Incorporation Percentage
Owned

B. Affiliates (Less than 50% owned by the Company)

Affiliate Jurisdiction of
Incorporation Percentage
Owned

C. Affiliates (Subject to common ownership with the Company)

Affiliate Jurisdiction of
Incorporation
Parent Percentage
Owned

D. Shareholders (If widely held, only holders with more than 10%)

SCHEDULE 8.13
to
INFORMATION CERTIFICATE

Labor Matters

SCHEDULE 8.15
to
INFORMATION CERTIFICATE

Material Contracts

SCHEDULE .9.9
to
INFORMATION CERTIFICATE

Existing Indebtedness

SCHEDULE 9.10
to
INFORMATION CERTIFICATE

Loans and Advances

EXHIBIT D

FORM OF FINANCIAL STATEMENTS

Spartan Stores, Inc.

Consolidated Financial Statements

Fiscal Year _______

Spartan Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
($000s)

	[Date]	[Date]
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Deferred taxes on income
Property and equipment held for sale
Total current assets
Other assets
Goodwill, net
Other, net
Total other assets
Property and equipment
Land and improvements
Buildings and improvements
Equipment
Total property and equipment
Less accumulated depreciation and amortization
Net property and equipment
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
Accrued payroll and benefits
Other accrued expenses
Current portion of exit costs
Current maturities of long-term debt
Total current liabilities
Other long-term liabilities
Exit costs
Deferred taxes
Postretirement benefits
Long-term debt
Total long-term liabilities
Shareholders' equity
Common stock, voting, no par value
Preferred stock, no par value
Accumulated other comprehensive loss
Retained earnings
Total shareholders' equity
Total liabilities and shareholders' equity

Spartan Stores, Inc. and Subsidiaries
Consolidated Statements of Earnings
(Unaudited)
($000s, except per share amounts)

	[Weeks]
	[Date]	[Date]
Net sales
Cost of sales
Gross margin
Operating expenses
Selling, general and administrative
Depreciation and amortization
(Gain) loss on disposal of assets
Total operating expenses
Operating earnings
Non-operating expense (income)
Interest expense
Other, net
Total non-operating expense, net
Earnings before income taxes and discontinued operations
Income taxes
Earnings from continuing operations
Earnings from discontinued operations, net of taxes
Net earnings
Basic earnings per share:
Earnings from continuing operations
Earnings from discontinued operations
Net earnings
Diluted earnings per share:
Earnings from continuing operations
Earnings from discontinued operations
Net earnings
Weighted average shares outstanding:
Basic
Diluted

Spartan Stores, Inc. and Subsidiaries
Consolidated Statements of Earnings
(Unaudited)

	[Weeks]
	[Date]	[Date]
Net sales
Cost of sales
Gross margin
Operating expenses
Selling, general and administrative
Depreciation and amortization
(Gain) loss on disposal of assets
Total operating expenses
Operating earnings
Non-operating expense (income)
Interest expense
Other, net
Total non-operating expense, net
Earnings before income taxes and discontinued operations
Income taxes
Earnings from continuing operations
Earnings from discontinued operations, net of taxes
Net earnings

Spartan Stores, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
($000s)

		Shares Outstanding	Common Stock	Deferred Stock-Based Compensation	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total
Balance
	Reclassification of deferred stock-based compensation upon adoption of SFAS 123(R)
Comprehensive earnings, net of tax:
	Net earnings
	Minimum pension liability adjustment
	Total comprehensive earnings
	Adjustment to initially apply SFAS
	No. 158, net of taxes
	Dividends
	Stock-based employee compensation
	Issuances of common stock and related
	tax benefit on stock option exercises
	Issuances of restricted stock
	and related tax benefit
	Cancellations of restricted stock
Balance
	Adjustment to initially apply FIN 48,
	net of taxes
Comprehensive earnings, net of tax:
	Net earnings
	Minimum pension liability adjustment
	Total comprehensive earnings
	Dividends
	Stock-based employee compensation
	Issuances of common stock and related
	tax benefit on stock option exercises
	Issuances of restricted stock
	and related tax benefit
	Cancellations of restricted stock
Balance
	Effects of changing the pension plans
	measurement date pursuant to SFAS
	No. 158, net of taxes
Comprehensive earnings, net of tax:
	Net earnings
	Minimum pension liability adjustment
	Total comprehensive earnings
	Dividends
	Stock-based employee compensation
	Issuances of common stock and related
	tax benefit on stock option exercises
	Issuances of restricted stock
	and related tax benefit
	Cancellations of restricted stock
Balance

Spartan Stores, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
($000s)

	[Weeks]
	[Date]	[Date]
Cash flows from operating activities
Net earnings
Earnings from discontinued operations, net of tax
Earnings from continuing operations
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
Postretirement benefits expense
Deferred taxes on income
Stock-based compensation expense
Excess tax benefit on stock compensation
Other
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued payroll and benefits
Postretirement benefits payments
Other accrued expenses and other liabilities
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Net proceeds from the sale of assets
Acquisitions, net of cash acquired
Other
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from (payments on) revolver
Proceeds from long-term borrowings
Repayment of long-term debt
Financing fees paid
Excess tax benefit on stock compensation
Proceeds from sale of common stock
Dividends paid
Net cash provided by financing activities
Discontinued operations:
Net cash (used in) provided by operating activities
Net cash provided by investing activities
Net cash provided by discontinued operations
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Spartan Stores, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Unaudited)
($000s)

	[Weeks]
	[Date]	[Date]
Cash flows from operating activities
Net earnings
Earnings from discontinued operations, net of tax
Earnings from continuing operations
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
Postretirement benefits expense
Deferred taxes on income
Stock-based compensation expense
Excess tax benefit on stock compensation
Gain on disposal of businesses
(Gain) loss on disposal of assets
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued payroll and benefits
Postretirement benefits payments
Other accrued expenses and other liabilities
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Net proceeds from the sale of assets
Acquisitions, net of cash acquired
Proceeds from business divestitures
Other
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from revolver
Repayment of long-term debt
Financing fees paid
Excess tax benefit on stock compensation
Proceeds from sale of common stock
Dividends paid
Net cash provided by financing activities
Discontinued operations:
Net cash (used in) provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by discontinued operations
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Spartan Stores, Inc.
Consolidating Balance Sheets
[Date]

ASSETS	Consolidated	Eliminations	Distribution Segment	Retail Segment	Discontinued Operations
Current assets
Cash and cash equivalents
Accounts receivable
Intercompany accounts receivable
Inventories
Prepaid expenses and other current assets
Deferred taxes on income
Total current assets
Other assets
Goodwill
Other
Total other assets
Property and equipment
Land and improvements
Buildings and improvements
Equipment
Total property and equipment
Less accumulated depreciation and amortization
Net property and equipment
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
Intercompany accounts payable
Accrued payroll and benefits
Other accrued expenses
Current portion of exit costs
Current maturities of long-term debt
Total current liabilities
Other long-term liabilities
Exit costs
Deferred taxes
Postretirement benefits
Long-term debt
Shareholders' equity
Common stock
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings (accumulated deficit)
Total shareholders' equity
Total liabilities and shareholders' equity

Spartan Stores, Inc.
Consolidating Statements of Earnings
Year-to-Date
[Date]

	Consolidated	Eliminations	Distribution Segment	Retail Segment	Discontinued Operations
Net sales
Cost of sales
Gross margin
Operating expenses
Selling, general and administrative
Provision for asset impairments and exit costs
Depreciation and amortization
(Gain) loss on disposal of assets
Total operating expenses
Operating earnings
Non-operating expense (income)
Interest expense
Other, net
Total non-operating expense, net
Earnings (loss) before income taxes and other
Total income taxes
Earnings (loss) from continuing operations
Earnings from discontinued operations
Net earnings (loss)

EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT

Form of Compliance Certificate

To: Congress Financial Corporation
          (Central), as Agent
150 South Wacker Drive
Chicago, Illinois 60606

Ladies and Gentlemen:

          I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as defined below) as follows:

          1.          I am the duly elected Chief Financial Officer of _____________, a ___________ corporation, _____________, a ____________ corporation and ____________, a ____________ corporation (collectively, "Borrowers"). Capitalized terms used herein without definition shall have the meanings given to such terms in the Loan and Security Agreement, dated ______, 20__, by and among Congress Financial Corporation (Central) as agent for the financial institutions party thereto as lenders (in such capacity, "Agent") and the financial institutions party thereto as lenders (collectively, "Lenders"), Borrowers and certain of their affiliates (as such Loan and Security Agreement is amended, modified or supplemented, from time to time, the "Loan Agreement").

          2.          I have reviewed the terms of the Loan Agreement, and have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and the financial condition of Borrowers and Guarantors, during the immediately preceding fiscal four (4) week period.

          3.          The review described in Section 2 above did not disclose the existence during or at the end of such fiscal four (4) week period, and I have no knowledge of the existence and continuance on the date hereof, of any condition or event which constitutes a Default or an Event of Default, except as set forth on Schedule I attached hereto. Described on Schedule I attached hereto are the exceptions, if any, to this Section 3 listing, in detail, the nature of the condition or event, the period during which it has existed and the action which any Borrower or Guarantor has taken, is taking, or proposes to take with respect to such condition or event.

          4.          I further certify that, based on the review described in Section 2 above, no Borrower or Guarantor has at any time during or at the end of the immediately preceding fiscal four (4) week period, except as specifically describe on Schedule II attached hereto or as permitted by the Loan Agreement, done any of the following:

(a) Changed its respective corporate name, or transacted business under any trade name, style, or fictitious name, other than those previously described to you and set forth in the Financing Agreements.

E-1

(b)	Changed the location of its chief executive office, changed its jurisdiction of incorporation, changed its type of organization or changed the location of or disposed of any of its properties or assets (other than pursuant to the sale of Inventory in the ordinary course of its business or as otherwise permitted by Section 9.7 of the Loan Agreement), or established any new asset locations.
(c)	Materially adversely changed the terms upon which it sells goods (including sales on consignment) or provides services.
(d)	Permitted or suffered to exist any security interest in or liens on any of its properties, whether real or personal, other than as specifically permitted in the Financing Agreements.

          5.          Attached hereto as Schedule III are the calculations used in determining, as of the end of such fiscal four (4) week period whether Borrowers and Guarantors are in compliance with the covenants set forth in Section 9.17 and Section 9.18 of the Loan Agreement for such fiscal period.

          6.          The foregoing certifications are made and delivered this day of ____________, 20__.

Very Truly yours,

By:

Title:

E-2

SCHEDULE 1.52
TO
LOAN AND SECURITY AGREEMENT

Existing Lenders

Standard Federal Bank
Aimco CDO Series 2000
Aimco CDO Series 2001
Allstate Life Insurance
Balance High Yield Fund I
Balance High Yield Fund II
Bank One, Michigan
The CIT Group
Comerica Bank
U.S. Bank (Formally Firstar Bank)
Frankin CLO II, LTD.
Frankin CLO I, LTD.
Harris
Heller Financial
KZH Riverside
Mass Mutual Life
Muirfeild Trading LLC/Deerfield
National City
NCB Capital Corp
Fifth Third Bank
Olympic Funding Trust
Rabobank
Saar Holdings CDO Ltd.
Scotia Bank
Sequils Equils-Cumberland
Fleet Bank
TCF Bank
United of Omaha Life Insurance
US Bank
ORIX Financial Services
Bank One NA
RCG Carpathia Master Fund

SCHEDULE 1.53
TO
LOAN AND SECURITY AGREEMENT

Existing Letters of Credit

Letter of Credit No.	Beneficiary	Outstanding Balance	Expiration Date
S452810	Fifth Third Bank	$415,000	11/24/2004
S451367	Discover Reinsurance	$1,650,000	12/31/2003
S451381	Reliance Insurance Co	$8,375,073	12/1/2004
S451339	Old Republic Insurance Co	$2,092,000	12/15/2004
S452351	Jondex Corp	$275,000	5/30/2004
S452107	Dept of Consumer & Industry Services	$1,000,000	1/31/2004
S452269	Traveler's Insurance	$183,000	4/1/2004

SCHEDULE 1.83
TO
LOAN AND SECURITY AGREEMENT

Marion Real Property

          The real property located in the City of Marion, Marion County, Ohio, commonly known as 332 S. Main, Marion, Ohio, and legally described below, together with all improvements, fixtures, easements, hereditaments and appurtenances.

TRACT I:

Situated in the City of Marion, County of Marion, and State of Ohio:

PARCEL I
Known as being a part of Lot No. 1, renumbered 278 in Henry Peter's Second Addition to the City of Marion, Ohio bounded and described as follows: Beginning at a round iron bar located at the intersection of the present East line of South Main Street (an 82 1/2 foot wide street) and the present south line of East Columbia Street (a 60 foot wide street); thence South on the present East line of South Main Street, 60 feet to a round iron bar, the place of beginning; thence East on a line parallel to the present South line of East Columbia Street, 166.34 feet to a round iron bar located in the West line of a 16 1/2 foot alley, 60 feet South of the intersection of the South line of East Columbia Street and the West line of said 16 1/2 foot alley; thence South along the West line of said 16 1/2 foot alley 47 feet to a round iron bar; thence West on a line parallel with the South line of East Columbia Street, 166.30 feet to a round iron bar in the East line of South Main Street, thence North along the East line of South Main Street; 47 feet to a round iron bar, the place of beginning; together with all the appurtenances and hereditaments thereunto belonging but subject to all legal highways; said premises also being known and designated as 308 South Main Street, Marion, Ohio, and to include vacated alleys pertinent thereto.

PARCEL II
Known as being a part of Lot No. 1, renumbered 278, in Henry Peter's Second Addition to the City of Marion, Ohio, bounded and described as follows:

Beginning at a round iron bar located at the intersection of the present East line of South Main Street (an 82 1/2 foot wide street) and the present South line of East Columbia Street (a 60 foot wide street); thence South on the present East line of South Main Street, 107 feet to a round iron bar; the place of beginning; thence East on a line parallel to the present South line of East Columbia Street; 166.30 feet to a round iron bar located in the West line of a 16 1/2 foot alley, 107 feet South of the intersection of the South line of East Columbia Street and the West line of said 16 1/2 foot alley, thence South along the West line of said 16 1/2 foot alley, 64.90 feet to a round iron bar; thence west on a line parallel with the South line of East Columbia Street, and on the North line of a certain 10 foot alley, 166.25 feet to a round iron bar in the East line of South Main Street; thence North along the East line of South Main Street, 64.90 feet to a round iron bar, the place of beginning.

The above description of said real estate being the same as that contained in the report of the Surveyor, with reference to original Tract No. 3, to the Probate Court of Marion County, Ohio,

filed in this cause on November 30, 1937, the same having been surveyed and platted by D. Reed Ours, Registered Surveyor and Civil Engineer, on November 20, 1937, which description was, on motion to approve and confirm the report of the Surveyor, approved and confirmed by order of this court made on November 30, 1937 wherein and whereby the court ordered that the above description be used for all future purposes as the legal description of that part of Tract No. 3 known and designated as 316 South Main Street, Marion, Ohio, and to include vacated alleys pertinent thereto.

PARCEL III:
Known as being part of the Northwest part of Lot 1 (renumbered 278) in Henry Peter's Second Addition to the City of Marion, Ohio, as follows: Beginning at a round iron bar at the intersection of the present East line of South Main Street (an 82 1/2 foot wide street) and the present South line of East Columbia Street (a 60 foot wide street); thence East on the present South line of East Columbia Street 90 feet to a round iron bar; thence South parallel to the East line of South Main Street (60 feet to a round iron bar; thence West parallel to the South line of East Columbia Street 90 feet to a round iron bar in the present East line of South Main Street; thence North on the present East line of South Main Street 60 feet to the place of beginning, together with all the appurtenances and hereditaments thereunto belonging, and 1/2 vacated alley East of said described portion of Lot 278.

TRACT II:

Situated in the City of Marion, County of Marion, and State of Ohio:

Being a part of Lots 392 and 405 in Dumble's Addition and the South part of Lot 278 Peter's 2nd Addition to the City of Marion and vacated alleys appurtaining thereto, and being more particularly described as follows:

Commencing at an old iron bar at the intersection of the East line of South Main Street and the South line of East Columbia Street; thence North 88 degrees 34 minutes East, on said South line of East Columbia Street, a distance of 174.62 feet to a railroad spike, the place of beginning; thence continuing North 88 degrees 34 minutes East on said South line of East Columbia Street, a distance of 162.75 feet to an approved metal survey marker; thence South 64 degrees 56 minutes East, a distance of 13.43 feet to an approved metal survey marker on the West line of South State Street; thence South 1 degree 22 minutes East, along the said West line of South State Street, a distance of 297.00 ft. to an approved metal survey marker; thence South 88 degrees 35 minutes West, a distance of 348.80 feet to a railroad spike on the aforesaid East line of South Main Street; thence North 1 degree 28 minutes West, on said East line of South Main Street, a distance of 126.00 feet to a railroad spike; thence North 88 degrees, 27 minutes East, a distance of 174.58 feet to a railroad spike; thence North 1 degree 29 minutes West, a distance of 177.00 feet to a railroad spike, the place of beginning and containing 1.72 acres of land, more or less.

SCHEDULE 1.92
TO
LOAN AND SECURITY AGREEMENT

Mortgages

A.          Michigan Properties:

Location		County	Owner
1.	330 Ann Street NW Grand Rapids, Michigan 49504	Kent	United Wholesale Grocery Company
2.	6487 Westside Saginaw Road Bay City, Michigan 46706	Bay	United Wholesale Grocery Company
3.	756 Napier Avenue Benton Harbor, Michigan 49002	Benton	Market Development Corporation
4.	5190 Hartshorn Drive Flushing, Michigan 48433	Genesee	United Wholesale Grocery Company
5.	76th Street SW, West of Clyde Park Avenue and East of Burlingame Road Byron Township, Michigan 49518	Kent	Market Development Corporation
6.	850 76th Street, SW Byron Township, Michigan 49518	Kent	Market Development Corporation
7.	993 Butternut Drive, Lot #3 Holland, Michigan 49423	Allegan/Ottawa	Family Fare, LLC
8.	2812 Millcork Street Kalamazoo, Michigan 49001	Kalamazoo	United Wholesale Grocery Company
9.	5505 South Pennsylvania Avenue Lansing, Michigan 48910	Ingham	United Wholesale Grocery Company
10.	2140 East Laketon Avenue Muskegon, Michigan 49442	Muskegon	United Wholesale Grocery Company
11.	124 East Front Street Adrian, Michigan 49221	Lenawee	Gruber's Real Estate, LLC
12.	706 Perry Avenue Big Rapids, Michigan 49307	Mecosta	Market Development Corporation
13.	1054 Mikesell Road Charlotte, Michigan 48813	Eaton	Market Development Corporation

14.	1341 North Routh M-52 Owosso, Michigan 48867	Shiawassee	Market Development Corporation
15.	775 Industrial Court Bloomfield Township, Michigan 48302	Oakland	United Wholesale Grocery Company
16.	14990 East Eleven Mile Road Warren, Michigan 48089	Macomb	United Wholesale Grocery Company
17.	11901 Dixie Street Redford Township, Michigan 48239	Wayne	United Wholesale Grocery Company
18.	26960 Van Born Road Dearborn Heights, Michigan 48125	Wayne	United Wholesale Grocery Company
19.	5539-5559 West US Highway 10 Ludington, Michigan	Mason	Market Development Corporation

B.          Ohio Properties:

Location		County	Owner
1.	3138 Hill Avenue Toledo, Ohio	Lucas	United Wholesale Grocery Company
2.	332 South Main Street Marion, Ohio 43302	Marion	Buckeye Real Estate Management Co.
3.	1020 Ford Street Maumee, Ohio 43537	Lucas	Buckeye Real Estate Management Co./Seaway Food Town, Inc./Valley Farm Distributing Co.
4.	Tracy and Oregon Roads Northwood, Ohio 43619	Wood	Market Development Corporation
5.	410 South Wheeling Street Oregon, Ohio 43616	Lucas	Buckeye Real Estate Management Co.
6.	801 Dixie Highway Rossford, Ohio 43640	Wood	Buckeye Real Estate Management Co.
7.	4223 South Avenue Toledo, Ohio 43607	Lucas	Buckeye Real Estate Management Co.

C.          Indiana Property:

Location		County	Owner
1.	Vacant land located in Plymouth, Indiana	Marshall	Market Development Corporation

SCHEDULE 1.28
TO
LOAN AND SECURITY AGREEMENT

Supplemental Loan Guarantors

1.	Spartan Stores Distribution, LLC
2.	JFW Distributing Company
3.	LLJ Distributing Company
4.	United Wholesale Grocery Company
5.	Market Development Corporation
6.	Spartan Stores Associates, LLC
7.	Family Fare, LLC
8.	MSFC, LLC
9.	Seaway Food Town, Inc.
10.	The Pharm of Michigan, Inc.
11.	Valley Farm Distributing Co.
12.	Gruber's Food Town, Inc.
13.	Gruber's Real Estate, LLC
14.	Prevo's Family Markets, Inc.
15.	Custer Pharmacy, Inc.
16.	Spartan Stores Holding, Inc.
17.	SI Insurance Agency, Inc.
18.	Buckeye Real Estate Management Co.

SCHEDULE 1.131
TO
LOAN AND SECURITY AGREEMENT

Supplemental Loan Lender Agreements

1.          The term loan promissory notes executed by Spartan Stores, Inc. payable to the order of each lender in the amount of each lender's term loan commitment under and in accordance with the term of the Supplemental Loan Agreement.

2.          The revolving loan promissory notes executed by Spartan Stores, Inc. payable to the order of the respective lender in the amount of such lender's revolving loan commitment under and in accordance with the terms of the Supplemental Loan Agreement.

3.          The guaranty executed by each Guarantor (as defined in the Supplemental Loan Agreement) under and in accordance with the terms of the Supplemental Loan Agreement.

4.          The security agreement executed by Spartan Stores, Inc. in favor of Agent (as defined in the Supplemental Loan Agreement) under and in accordance with the terms of the Supplemental Loan Agreement.

5.          The security agreement executed by each Guarantor in favor of Agent under and in accordance with the terms of the Supplemental Loan Agreement.

6.          The pledge agreements executed by Spartan Stores, Inc. with respect to the Guarantor Equity Interests (as defined in the Supplemental Loan Agreement) under and in accordance with the terms of the Supplemental Loan Agreement.

7.          The collateral assignment of the Lease Interests (as defined in the Supplemental Loan Agreement) of Spartan Stores, Inc. executed by Spartan Stores, Inc. in favor of Agent under and in accordance with the terms of the Supplemental Loan Agreement.

8.          The collateral assignment of the Lease Interests of each Guarantor executed by each Guarantor in favor of Agent under and in accordance with the terms of the Supplemental Loan Agreement.

9.          The mortgages and deeds of trust executed by Spartan Stores, Inc. or any Guarantor in favor of Agent pertaining to the Mortgaged Properties (as defined in the Supplemental Loan Agreement) under and in accordance with the terms of the Supplemental Loan Agreement.

10.          The closing certificate signed by Spartan Stores, Inc. and cash Guarantor under and in accordance with the terms of the Supplemental Loan Agreement.

11.          The consolidated solvency certificate of Spartan Stores, Inc. and each Guarantor, taken as a whole, executed by Spartan Stores, Inc. and each Guarantor under and in accordance with the terms of the Supplemental Loan Agreement.

12.          The environmental certificate and indemnity agreement executed by Spartan Stores, Inc. under and in accordance with the terms of the Supplemental Loan Agreement.

13.          The environmental certificate and indemnity agreement executed by each Guarantor under and in accordance with the terms of the Supplemental Loan Agreement.

14.          The post-closing environmental agreement executed by Spartan Stores, Inc. and the applicable Guarantors which are the owners of the Mortgaged Properties located in Ludington, Michigan, Marion, Ohio and Maumee, Ohio in favor of Agent under and in accordance with the terms of the Supplemental Loan Agreement.

15.          The Uniform Commercial Code financing statements required by Agent or Lenders (as defined in the Supplemental Loan Agreement) and such other documents, instruments and agreements as Agent or Lenders may require in connection with the transactions contemplated by the Supplemental Loan Agreement.

SCHEDULE 1.132
TO
LOAN AND SECURITY AGREEMENT

Supplemental Loan Priority Collateral

See Attached List

Lease Dates Review 12/23/03
6:33 PM

Lease Date	Store #	City	State	Address	Landlord's Legal Name	Tenant's Legal Name
5/12/00	100/118	Hudsonville/Distr. Ct.	MI	Distribution Center 3030 Corporate Grove Dr. Hudsonville, MI 49426	Golden Eagle, LLC	Family Fare
5/12/00	100/118	Hudsonville/Retail Support	MI	Retail Support Center 3030 Corporate Grove Dr. Hudsonville, MI 49426	Golden Eagle, LLC	Family Fare
5/12/00	100/112	Hudsonville/Central Bakery	MI	Central Bakery 3030 Corporate Grove Dr. Hudsonville, MI 49426	Golden Eagle, LLC	Family Fare
11/20/01	107	Rogers Plaza	MI	1100 Rogers Plaza, SW Wyoming, MI 49509	Rogers Plaza, LLC c/o The Hutensky Group	Family Fare
12/19/01	108	Zeeland	MI	9479 Riley Street Zeeland, MI 49464	Riley LLC	Family Fare
3/29/99	115	Cutlerville	MI	701-68th St., SW Grand Rapids, MI 49509	68th Street Cutlerville LLC / Geenen DeKock Properties LLC	Family Fare
3/29/99	116	Hudsonville	MI	5221 Cherry Hudsonville, MI 49426	Genzink Investments, LLC	Family Fare
3/29/99	119	Byron Center	MI	2245 84th St. SW Byron Center, MI 49315	84th Street Byron Center LLC	Family Fare
3/29/99	122	Holland	MI	993 Butternut Holland, MI 49423	Butternut Drive Holland LLC	Family Fare
3/29/99	123	Holland	MI	1185 W. Washington Holland, MI 49423	Capital Retail, LLC	Family Fare
3/29/99	128	Holland	MI	716 Chicago Dr. Holland, MI 49423	Capital Retail, LLC	Family Fare
7/12/93	137	Allendale	MI	6101 Lake Michigan Dr., PO 55 Allendale, MI 49401	Grand Valley Properties	Family Fare
3/29/99	239	Georgetown	MI	6480 28th Ave. Hudsonville, MI 49426	Capital Retail, LLC	Family Fare
1/1/95	254	Grand Rapids	MI	1225 Leonard St., NE Grand Rapids, MI 49505	VanderKooy Land Company	Family Fare
3/29/99	261	Grandville	MI	3075 30th St. Grandville, MI 49418	Allendale Investment Realty	Family Fare
4/21/97	265	Kentwood	MI	6127 Kalamazoo, SE Kentwood, MI 49508	Daane's Development	Family Fare
12/4/99	335	Cedar Springs	MI	4175 17 Mile Road Cedar Springs, MI 49319	RBL Investments	Great Day
12/4/99	339	Lake Michigan Drive	MI	2755 Lake Michigan Drive Grand Rapids, MI 49504	RBL Investments	Great Day
10/8/91	408	Sparta	MI	565 S. State Street Sparta, MI 49345	Emmons Development	Great Day
1/31/00	635	Coopersville	MI	1181 W. Randall Coopersville, MI 49404	Casemier Leasing, Inc.	Prevo's
4/21/97	636	GR - Northland	MI	5241 Northland Drive Grand Rapids, MI 49525	Daane's Development Co.	Prevo's
4/21/97	637	GR - Cascade	MI	6797 Cascade Road Grand Rapids, MI 49546	Daane's Development Co.	Prevo's
3/2/01	641	Traverse City - Chum's	MI	4144 US 31 S. Traverse City, MI 49431	DP Properties, LLC	Prevo's
3/2/01	642	Traverse City - 8th St.	MI	905 E. 8th Street Traverse City, MI 49684	DP Properties, LLC	Prevo's
12/31/91	643	Frankfort	MI	1002 Forest Avenue Frankfort, MI 49635	G.D.O. Investments	Prevo's
7/11/89	644	Ludington	MI	5539 W. US-10 Ludington, MI 49431	Market Development Corporation	Prevo's
9/21/03	Assignment Per 2nd Admt. Prevo's Lease	Ludington	MI	5539 W. US-10 Ludington, MI 49431	Market Development Corporation	Shop-N-Save

Lease Dates Review 12/23/03
6:33 PM

Lease Date	Store #	City	State	Address	Landlord's Legal Name	Tenant's Legal Name
3/2/01	645	Bellaire	MI	305 S. Division Box 918 Bellaire, MI 49615	DP Properties, LLC	Prevo's
12/11/78	647	Manistee	MI	1183 Mainstee Highway Manistee, MI 49660	Manistee Investment Group	Prevo's
1/23/94	648/1520	Cadillac	MI	215 S. Mitchell Cadillac, MI 49601	GDO Investments	Glen's (FKA Prevo's)
3/2/94	Parking Lease	Cadillac	MI	215 S. Mitchell Cadillac, MI 49601	GDO Investments	Glen's (FKA Prevo's)
9/1/02	1092	Madison Family Market	MI	1226 Madison Ave., SE Grand Rapids, MI 49507	Tillman Development, LLC	Family Fare
1/15/75	1411	Harrison	MI	4235 North Clare Ave., P.O. Box 608 Harrison, MI 48625	Harrison Area Economic Development, Inc.	United Wholesale
5/10/99	1500	Gaylord (Corp.)	MI	829 W. Main, PO 580 Gaylord, MI 49734	Catts Realty Company	Glen's
5/10/99	1501	Houghton Lake	MI	3561 W. Houghton Lake, PO 699 Houghton, MI 48629	Catts Realty Company	Glen's
5/10/99	1502	Rogers City	MI	100 S. Bradley Highway Rogers City, MI 49779	Catts Realty Company	Glen's
5/10/99	1504	Cheboygan	MI	992 S. Main St. Cheboygan, MI 49721	Universal Land Co.	Glen's
4/5/77	1505	Rose City	MI	2626 N. M-33, P.O. Box 480 Rose City, MI 48654	Jr. J. Gifford & Gladys L. Gifford	Glen's
3/1/77	1506	Charlevoix	MI	103 Captains Corner/M-66 Charlevoix, MI 49720	Captain's Corner, LLC	Glen's
5/10/99	1507	Mancelona	MI	619 N. Williams Mancelona, MI 49659	Catts Realty Company	Glen's
6/28/96	1507a	Mancelona - Brooks Pharmacy	MI	617 N. Williams Mancelona, MI 49659	Catts Realty Company	Glen's
5/10/99	1508	Mio	MI	305 Morenci, PO Box 549 Mio, MI 48647	Catts Realty Company	Glen's
5/10/99	1509	West Branch	MI	2206 S. M-76, P.O. 145 West Branch, MI 48661	Catts Realty Company	Glen's
5/10/99	1510	Gaylord	MI	829 W. Main, PO 580 Gaylord, MI 49734	Catts Realty Company	Glen's
4/26/72	1511	Grayling	MI	2470 s. I-75 Bus. Loop Grayling, MI 49738	Grayling Mini Mall, LLC #1	Glen's
5/1/87	1512	Alma	MI	1700 Wright Ave. Alma, MI 48801	Bobenal Investments, Inc.	Ashcraft's Market
5/10/99	1513	Kalkaska	MI	784 S. Cedar, Box 940 Kalkaska, MI 49646	Catts Realty Company	Glen's
5/10/99	1514	East Jordan	MI	240 S. Lake St. PO Box 873 East Jordan, MI 49727	Catts Realty Company	Glen's
5/10/99	1515	Lewiston	MI	5105 County Rd. 612, Box 40 Lewiston, MI 49756	Catts Realty Company	Glen's
9/25/75	1516	Roscommon	MI	409 North Fifth St., PO B Roscommon, MI 48653	Frederick G. Krauss	Glen's
5/10/99	1517	Boyne City	MI	430 N. Lake St. Box 807 Boyne City, MI 49712	Catts Realty Company	Glen's
12/21/98	1518	Clare	MI	10350 S. Clare Ave. Clare, MI 48617	Chodaka LLC	Ashcraft's Market
5/10/99	1519	Oscoda	MI	5463 N. Huron Rd. Oscoda, MI 48750	Catts Realty Company	Glen's
6/10/83	1522	Standish	MI	533 S. Main St. Standish, MI 48658	Standish Plaza Associates	Ashcraft's Market
1/31/02	1523	Harrison	MI	1570 N. Clare Ave Harrison, MI 48625	Jade Pig Ventures - Harrison, LLC	Glen's
12/21/98	1524	Gladwin	MI	1190 N. State St. Gladwin, MI 48624	Ashcraft - Gladwin, LLC	Ashcraft's Market

Lease Dates Review 12/23/03
6:33 PM

Lease Date	Store #	City	State	Address	Landlord's Legal Name	Tenant's Legal Name
11/1/93	1525	Petoskey (N.)	MI	1163 North US-31 Petoskey, MI 49770	KRW Associates	Glen's
5/10/99	Sublease	Petoskey (N.)	MI	1163 North US-31 Petoskey, MI 49770	Jondex Corp.	Glen's
12/18/89	1526	Petoskey (S.)	MI	1305 Spring St. Petoskey, MI 49770	Agree Limited Partnership	Glen's
5/10/99	Sublease	Petoskey (S.)	MI	1305 Spring St. Petoskey, MI 49770	Jondex Corp.	Glen's
5/10/99	1527	Munising	MI	425 E. M-28 Munising, MI 49862	Universal Land Co.	Glen's
9/29/92	1529	Marion	MI	401 S. Mill Marion, MI 49665	Kibby Co. LLC	Ashcraft's Market
8/8/86	1530	St. Ignace	MI	699 US 2, P.O. Box 188 St. Ignace, MI 49781	Card & Card Investments	Glen's
6/22/92	1531	Sault Ste. Marie	MI	4284 I-75 Buns Spur Sault Ste. Marie, MI 49783	Developers Diversified Realty Corp.	Glen's
2/27/95	1532	Midland	MI	2026 N. Saginaw Rd. Midland, MI 48640	Richmar Properties	Ashcraft's Market
5/10/99	1533	Waters/Distribution Center	MI	1280 Marlette, P.O. Box 218 Waters, MI 49797	Catts Realty Company	Glen's
1/1/00	Sublease	Waters/Distribution Center	MI	1280 Marlette, P.O. Box 218 Waters, MI 49797	Family Fare, LLC	Supply North Central Group
1/20/98	6101	Findlay	OH	1925 Tiffin Ave. Findlay, OH 45840	Isaac Property Holding Company, Ltd.	Food Town
4/29/82	6103	Maumee	OH	127 Goldon Gate Plaza Maumee, OH 43537	Trail Investors c/ Zyndorf/Serchuk	Food Town
7/18/89	6104	Sylvania	OH	5890 Monroe Street Sylvania, OH 53460	KIF Real Estate Partnership	Food Town
1/14/96	6105	Toledo	OH	2725 W. Central Toledo, OH 43606	Shina Properties, LLC	Food Town
1/5/82	6106	Maumee	OH	2527 Parkway Plaza Maumee, OH 43537	Tolson Investments	Food Town
4/7/87	6107	Toledo	OH	3911 Secor Road Toledo, OH 43623	The Shulak Family Limited Partnership	Food Town
11/18/83	6109	Toledo	OH	114 S. Byrne Rd. Toledo, OH 43615	Byrne-Hill Co., Ltd.	Food Town
3/17/78	6110	Toledo	OH	1030 Alexis Road Toledo, OH 43612	The Joseph Brothers Co.	Food Town
2/8/80	6112	Tiffin	OH	710 W Market Street Tiffin, OH 44883	Tiffin Westgate Company	Food Town
8/7/68	6113	Sandusky	OH	904 Milan-Perkins Road Sandusky, OH 44870	Sandusky Properties	Food Town
7/11/89	6115	Toledo	OH	5251 Airport Hwy Toledo, OH 43615	Reed Holdings, LLC	Food Town
6/10/88	6116	Lima	OH	2290 Elida Road Lima, OH 45805	Kamin Realty Company	Food Town
8/1/91	6117	Napoleon	OH	1400 N. Scott Street Napoleon, OH 43545	MTC Properties	Food Town
8/3/78	6120	Port Clinton	OH	1848 E. Perry St. Port Clinton, OH 43452	Port Clinton Realty Company	Food Town
12/26/84	6122	Bowling Green	OH	1044 North Main Street Bowling Green, OH 43402	Isaac Property Holding Company, Ltd.	Food Town
3/1/94	6123	Fostoria	OH	895 North Countyline St. Fostoria, OH 44830	SKC Investments	Food Town
12/8/95	6125	Northwood	OH	2674 Woodville Rd. Northwood, OH 43519	Toledo's Great Eastern	Food Town
11/2/96	6126	Lima	OH	2100 Harding Hwy. Lima, OH 45804	KIMCO Realty	Food Town
9/29/94	537 Whse	Byron Center	MI	537 - 76th Street Grand Rapids, MI 49315	Vienna Holdings, LLC	Mkt. Development
12/20/02	FSS	Kentwood	MI	5262 Eastern Avenue SE Kentwood, MI	New Plan Excel Realty Trust, Inc.	Mkt. Development
12/20/02	MDC/RSD	Kentwood	MI	5262 Eastern Avenue SE Kentwood, MI	New Plan Excel Realty Trust, Inc.	Mkt. Development

Lease Dates Review 12/23/03
6:33 PM

Lease Date	Store #	City	State	Address	Landlord's Legal Name	Tenant's Legal Name
1/26/00	Ply Whse	Plymouth	MI	9075 Haggerty Road Plymouth, MI 48170	Cohen Financial Corp.	Mkt. Development
8/26/97	Relay	Kalkaska	MI	502 Pine Street Kalkaska, MI	500 South Maple, Inc.	Mkt. Development
12/1/74	CLOSED 6003	Maumee	OH	105 Golden Gate Plaza 124 E. Front Street Maumee, OH 43537	Trail Investors c/o Zyndorf/Serchuk	Food Town
10/30/81	CLOSED 6022	Perrysburg	OH	132 East S. Boundary St. Perrysburg, OH 43551	Tolson Investments	Food Town
8/11/87	CLOSED 6028	Toledo	OH	1207 N. Reynolds Road Toledo, OH 43615	R & D Investors	Food Town
10/17/83	CLOSED 6033	Northwood	OH	4662 Woodville Road Northwood, OH 43619	Saba & Saba	Food Town
2/1/90	CLOSED 6045	Temperance	OH	8926 Lewis Ave. Temperance, MI 48182	MS Associates	Food Town
8/17/95	CLOSED 6047	Trenton	OH	3000 VanHorn Road Trenton, MI 48183	Trafford Square	Food Town
3/17/78	CLOSED 6053	Toledo	OH	3045 W. Alexis Rd. Toledo, OH 43613	Joseph Brothers Company, LLC	Food Town
3/17/78	CLOSED 6054	Oregon	OH	3010 Navarre Ave. Oregon, OH 43616	Joseph Brothers Company, LLC	Food Town
10/17/89	CLOSED 6059	Ashland	OH	1971 Baney Street Ashland, OH 44805	New Plan Excel Realty Trust, Inc.	Food Town
4/15/68	CLOSED 6060	Norwalk	OH	265 Benedict Ave. Norwalk, OH 44857	Kathryn Woodward	Food Town
12/8/88	CLOSED 6066	Piqua	OH	1544 Covington Ave. Piqua, OH 45356	New Plan Excel Realty Trust, Inc.	Food Town
7/25/88	CLOSED 6075	Toledo	OH	Monroe Street Market Sq. 5329 Monroe Street Toledo, OH 43623	Monroe St. Market Square, LLC	Food Town
9/13/90	CLOSED 6077	Bowling Green	OH	1080 S. Main Street Bowling Green, OH 43402	Natl Realty & Dev. Corp.	Food Town
5/4/81	CLOSED 6078	Sylvania	OH	6750 Sylvania Ave. Sylvania, OH 43560	MS Associates	Food Town
4/4/89	CLOSED 6114	Fremont	OH	1800 E. State Street Fremont, OH 43420	Aufrecht-Grobman Enterprises	Food Town
3/29/99	CLOSED 127	Lowell	MI	2153 W. Main St. Lowell, MI 49331	Ridgeview Shopping Center, LLC	Family Fare
10/2/89	CLOSED 1520	Cadillac	MI	2100 N. Mitchell Cadillac, MI 49601	Lakeland Square Limited Partnership	Glen's
5/10/99	Sublease	Cadillac	MI	2100 N. Mitchell Cadillac, MI 49601	Jondex Corp.	Glen's
12/21/1998 Terminates 12/31/03	CLOSED 1523	Harrison	MI	158 First St. Harrison, MI 48625	Aschrafts Markets, Inc.	Ashcraft's Market

SCHEDULE 1.136
TO
LOAN AND SECURITY AGREEMENT

United Wholesale Division Assets

          United Distribution Group, L.L.C., a Michigan corporation, United Properties Group, L.L.C., a Michigan limited liability company, and United Wholesale Grocery Company, a Michigan corporation ("United"), intend to enter into an Asset Purchase Agreement in respect of the United Wholesale Division Assets (the "United Purchase Agreement").

          The United Wholesale Division Assets include each of the following:

          (a)          All inventories of food, beverages, general merchandise, cigarettes, tobacco, tobacco products and other products owned by United;

          (b)          All warehouse displays, leasehold improvements, equipment, furniture, office equipment, computer hardware, computer software, and other tangible personal property owned by United, together with all express and implied warranties by the manufacturers or sellers of those items (to the extent transferable), and all available maintenance records, and other documents relating to those items or to the installation or functioning of those items;

          (c)          All of United's right, title, and interest in and to all Contracts (as defined in the United Purchase Agreement), licenses, agreements, and personal property leases used in or related to the Business (as defined in the United Purchase Agreement) and listed on Exhibit B to the United Purchase Agreement if and to the extent they are assignable and any necessary consents are received and any security deposits and similar deposits relating to the Assumed Contracts (as defined in the United Purchase Agreement);

          (d)          All of United's right, title and interest in and to the real property leases listed on Exhibit C to the United Purchase Agreement for the real property leased by United and any security deposits and similar deposits relating to the Real Property Leases (as defined in the United Purchase Agreement);

          (e)          All of United's right, title and interest in and to the real property listed on Exhibit D to the United Purchase Agreement;

          (f)          Inventory (as defined in the United Purchase Agreement) records, supplier lists, payroll, product information, equipment lists, specifications, labels, files and other records and documents specifically relating to the Purchased Assets (as defined in the United Purchase Agreement) and the conduct of the Business, but excluding United's financial statements, corporate records and minute books;

          (g)          Permits, licenses, orders, franchises, certifications and approvals and Governmental Authorizations (as defined in the United Purchase Agreement) specifically

relating to or maintained as part of the Business at the Business Locations (as defined in the United Purchase Agreement), but only if and to the extent legally assignable;

          (h)          All of United's right, title and interest in and to the trade name "United Wholesale Grocery Company" and any trademarks related exclusively to such trade name;

          (i)          All notes and accounts receivable of United (other than receivables from affiliates of United);

          (j)          Those rights relating to deposits and prepaid expenses and claims for refunds and rights to offset in respect thereof; and

          (k)          Any goodwill associated with the Business

SCHEDULE 1.137
TO
LOAN AND SECURITY AGREEMENT

United Wholesale Sale Agreements

1.          The Asset Purchase Agreement, dated October 2, 2003, by and among United Distribution Group, L.L.C., a Michigan corporation ("UDG"), United Properties Group, L.L.C., a Michigan limited liability company ("UPG" and together with UDG, the "Buyer"), and United Wholesale Grocery Company, a Michigan Corporation ("Seller"), as the same may be amended or supplemented from time to time.

2.          Customer Supply Agreement between Buyer and Spartan Stores Distribution, LLC.

3.          Services Agreement between Spartan Stores, Inc. and Buyer.

4.          Assumption Agreement by Buyer in favor of Seller.

5.          Assignment of Trademark by Seller in favor of Buyer.

SCHEDULE 8.9
TO
LOAN AND SECURITY AGREEMENT

Employee Benefits

          1          The Spartan Stores, Inc. Cash Balance Pension Plan has not received a determination letter from the Internal Revenue Service.

          2          Richard Deming v. Spartan Stores, Inc., et al. (Western District of Michigan, (Case No.: 1:03-CV-0449). Mr. Deming, a former executive-level employee, claims that his application for long term disability benefits was improperly denied. Spartan Stores, Inc.'s employee welfare benefit plan contracted with Jefferson Pilot Insurance Co. to provide long term disability benefits, and the insurer concluded that Deming did not meet the policy's definition of a disability.

          3          As previously disclosed in Parent's filings with the Securities and Exchange Commission, the current value of the assets of the Spartan Stores, Inc. Cash Balance Pension Plan are less than the benefit of obligations of such Plan.

          4.          Borrowers may incur withdrawal liability with respect to a multiemployer pension plan on account of the closing and/or sale of certain Seaway Food Town stores, the amount of which, if any, has not yet been determined but is currently estimated to be $350,000 - $400,000.

SCHEDULE 8.16
TO
LOAN AND SECURITY AGREEMENT

Credit Card Agreements

1.          Merchant Services Agreement between Discover Financial Services, Inc. and Spartan Stores, Inc. and certain of its subsidiaries.

2.          Independent Sales Organization Agreement, dated on or about March 21, 1997, by and among ABN AMRO Merchant Services, LLC, Standard Federal Bank and Spartan Stores, Inc. as amended, and arrangements pursuant thereto.

3.          Agreement for American Express Card Acceptance/Supermarket dated November 3, 2002 between American Express Travel Related Services Company, Inc. and Family Fare, Inc. (d/b/a Spartan Retail).

SCHEDULE 8.17
TO
LOAN AND SECURITY AGREEMENT

Business Associates Agreements

1.	Amendment to Coupon Processing Agreement, effective October 1, 2002, by and between Carolina Coupon Clearing, Inc., d/b/a Carolina Services, Inc., and Spartan Stores, Inc., as amended.
2.	Agreement between QS/1 Data Systems and Spartan Stores, dated April 14, 2003.
3.	Agreement between Advanced Innovative Solutions and Spartan Stores, dated April 7, 2003.
4.	Agreement between Shred It and Spartan Stores, dated April 11, 2003.
5.	Agreement between Kitch Drutchas Wagner DeNardis & Valitutti and Spartan Stores, Inc., dated April 17, 2003.

SCHEDULE 8.18
TO
LOAN AND SECURITY AGREEMENT

List of Participation Agreements

1.	Community Pharmacy Network Agreement, undated, by and between Advanced Health System, Inc. and [Pharmacy].
2.	AdvancePCS Supplement Participation Agreement, dated January 7, 2003, by and between AdvancePCS, as drug claim processing agent for Kmart Corporation, and Great Day Pharmacy.
3.	Pharmacy Participation Agreement, dated as of September 24, 2002, by and between Family Fare, LLC and American Health Care.
4.	Provider Agreement Amendment, dated April 22, 2003, by and between AmeriScript, Inc. and Spartan Stores, Inc.
5.	Amendment to the Participating Pharmacy Agreement/Program Conditions, effective August 1, 2000, by and between Anthem Prescription Management, Inc. and Family Fare, Inc.
6.	Confirmation by Family Fare Pharmacies to APB America, of Family Fare Pharmacies' desire to be included on the provider list for ValuScrip (a prescription insurance plan).
7.	Prescription Service Agreement, entered into November 1, 1999 by and between Family Fare Pharmacy/ValuLand Pharmacies and Benefit Administrative Systems, Ltd.
8.	Pharmacy Agreement, dated November 11, 1997, by and between Benescript Services, Inc. and Family Fare Pharmacies.
9.	Chain Agreement for New Pharmacies, dated April 26, 2000, by and between Blue Cross and Blue Shield of Michigan and Family Fare Pharmacies.
10.	Pharmacy Provider Agreement, dated as of February 7, 2003, by and between Catalyst Rx and Spartan Stores, Inc.
11.	Plan sheet, specification sheet and member id card with regard to ClaimsPro providing services (the processing of claims) to OtisSunkmeyer.
12.	Services Agreement, dated September 15, 2003, by and between Express-Med, Inc. and Spartan Stores, Inc.
13.	Pamphlet, dated December 2002, regarding major client additions to Express Scripts.
14.	Net Payment Schedule for PERxCare Network, provided by Express Scripts Pharmacy Network.

15.	Ltr from Family Fare Pharmacies to ESI/Value Rx requesting that ESI/Value Rx add Family Fare Pharmacies to Network 58.
16.	Form of Addendum to the Express Scripts, Inc. Pharmacy Network Manual for Compliance with Medicare Laws and Regulations Applicable to Medicare+Choice Benefit Plans.
17.	Payer Specification Sheets, attached to Memorandum, dated May 23, 2000, from First Health Provider Relation to Michigan Medicaid Providers.
18.	Participating Pharmacy Agreement dated October 16, 2003, by and between First Health Group Corporation and Spartan Stores, Inc. [as participating pharmacy provider].
19.	First Health Remittance Advice Specifications, undated, provided by First Health Services Corporation.
20.	Pharmacy Provider Agreement, effective September 10, 1999, by and between LDI Pharmacy Benefit Management Company and ValuLand Pharmacies.
21.	Authorization to Participate in health plan, by MedImpact Healthcare Systems, Inc. for Family Fare.
22.	Pharmacy Services Agreement, effective as of December 18, 2000, by and between Spartan Retail Pharmacies and MedTrak Services LLC.
23.	Participating Pharmacy Agreement, dated June 29, 1999, by and among National Medical Health Card Systems, Inc., ValuLand Inc. (as owner), and Family Fare and Glen's Pharmacies (as participating pharmacies).
24.	Agreement for Provider Participation between National Prescription Administrators Inc. and Family Fare Pharmacies, dated March 19, 1999.
25.	Packet of information from National Pharmaceutical Services to Pharmacist, dated 1/26/1998, concerning preparation for the arrival of customers utilizing NPS coverage.
26.	Pharmacy Provider Agreement, effective September 21, 1999, by and between Nova Prescription Services, Inc. and ValuLand Pharmacies.
27.	Pharmacy Provider Agreement, dated December 1, 1999, by and between Pacific Healthcare Systems, LLC and Valueland Pharmacies.
28.	Several confirmations confirming Family Fare, Inc.'s participation in numerous Pharmacy Networks, with an attached Schedule of pharmacy listing for Spartan Retail Stores, operated under the "Family Fare, Inc." subsidiary of Spartan Stores, Inc.

29.	Pharmaceutical Care Network Agreement, dated August 25, 1998, by and between PBM Plus, Inc. and Family Fare Pharmacies.
30.	PCS Provider Agreement, undated, by and between PCS Health Systems, Inc., and [Provider].
31.	Participating Pharmacy Agreement, dated December 11, 2000, by and between Pharmaceutical Care Network and Spartan Retail Pharmacies.
32.	Notification to pharmacist that effective December 1, 2000 ClaimsPro Management Services, Inc. will be marketing the PharmaCare PPO Network.
33.	Letter, without attached documents, PHARMA-LINK Preferred Pharmacy to Family Fare Pharmacy concerning Preferred Pharmacy Agreement, Payment Agreement and Application.
34.	Pharmacy Network Participation Agreement, dated as of September 21, 1999, by and between PharmaSure, Inc. and ValuLand, Inc.
35.	Provider Service Agreement, dated June 22, 1998, by and between Family Fare Pharmacies and Prescription Processing Services, Inc.
36.	Pharmacy Providers of Georgia Contract Amendment/Addendum.
37.	Prescription Drug Services Agreement, dated May 5, 2000, by and between Spartan Retail Pharmacies and Pacificare Pharmacy Centers Inc.
38.	Prime Therapeutics Advantage Pharmacy Agreement, dated March 1, 2001, by and between Prime Therapeutics and Spartan Retail Pharmacies.
39.	Pharmacy Participation Agreement, dated as of June 1, 2000, by and between Priority Health Managed Benefits, Inc. and Family Fare Inc.; and Pharmacy Participation Agreement (Medicaid/Michild), by and between Priority Health and Family Fare, Inc.
40.	Execution page and Exhibits to ProCare Pharmacy Network Participation Agreement, dated August 21, 1998, between Family Fare Pharmacies and ProCare PBM, Inc.
41.	Addendum to Participating Pharmacy Agreement, dated March 27, 2001, by and between ValuLand, Inc. and Professional Claims Services, Inc.; and Participating Pharmacy Agreement, dated June 14, 1999, by and between Professional VCLaim Services, Inc. and ValuLand, Inc.
42.	Pharmacy Administrative Manual January 2002, provided by Regence Pharmacy Advantage.

43.	Addendum to Provider Pharmacy Agreement, dated May 10, 1999, by and between RESTAT and ValuLand Inc.
44.	Addendum to Pharmacy Network Agreement, dated February 22, 2000 between RxAmerica L.L.C. and Seaway Food Town, Inc.
45.	Argus Health Systems Inc. Point-of-Sale Information and Participating Pharmacy Agreement, dated June 29, 1999, by and between Connecticut General Life Insurance Company and ValuLand, Inc.
46.	Pharmacy Network Participation Agreement, dated as of February 16, 2003, by and between NetCard Systems and Family Fare LLC.
47.	Pharmacy Provider Agreement, dated June 6, 2002, by and between Spartan Store, Inc. and Sav-RX.
48.	Pharmacy Services Participation Agreement, dated January 10, 2000, by and between Selectcare Networks, Inc. and Family Fare, Inc.
49.	Provider Pharmacy Agreement, dated May 14, 1999, by and between Serv-U Prescription Services Inc. and ValuLand, Inc.
50.	Network Participation Agreement, December 17, 2002, by and between Seaway Food Town, Inc. and SMCRx, Inc.
51.	Tmesys Participating Pharmacy Agreement, dated June 14, 1999, by and between Timesys Inc. and ValuLand, Inc.
52.	Participating Pharmacy Agreement, dated February 28, 1998 by and between Transworld Prescription Network and Family Fare Pharmacies.
53.	Pharmacy Provider Contract, dated March 20, 1998, by and between United Provider Services, Inc. and Family Fare, Inc.
54.	Pharmacy Participation Agreement Amendment, dated October 31, 2002, by and between US Script, Inc. and Foodtown 6040.
55.	WHP Health Initiatives, Inc. Revised Pharmacy Manual, dated March 2000.
56.	Service Agreement, dated February 1, 1999, by and between Family Fare Pharmacy, Inc. and WorkingRx.
57.	Pharmacy Participation Agreement, dated January 17, 2000, by and between USI Prescription Benefits Management Company and Family Fare Inc.

58.	Participating Pharmacy Agreement, dated January 10, 2003, by and between AultCare and Seaway Food Town, Inc.
59.	Participating Agreement for Pharmacy Chain, dated September 27, 2000, by and between Argus Health Systems, Inc. and Spartan Retail Pharmacies.
60.	Provider Pharmacy Agreement, dated March 19, 1999, by and between Advance Paradigm, Inc. and Family Fare Pharmacies.
61.	Provider Pharmacy Agreement, dated June 29, 2000, by and between Advance Paradigm, Inc. and Spartan Retail Pharmacies.
62.	Amendment to Pharmacy Agreement, effective November 1, 1999, by and between Aetna U.S. Healthcare and Family Fare, Inc.
63.	Participating Pharmacy Agreement, dated October 2, 2003, by and between AultCare and Spartan Stores, Inc.
64.	Pharmacy Participation Agreement, dated January 17, 2003, by and between Agelity, Inc. and Seaway Food Town, Inc.
65.	Addendum to Pharmacy Participation Agreement, dated June 4, 2003, by and between Agelity, Inc. and Seaway Food Town, Inc.
66.	Addendum to Pharmacy Participation Agreement, dated June 12, 2003, by and between Agelity, Inc. and Seaway Food Town, Inc.
67.	Several Billing Agent Authorizations signed by Glen's Pharmacies and Great Day Pharmacies (the "Providers"), authorizing certain billing agents to act as agent for the purpose of preparing, processing and submitting claims on behalf of Providers.
68.	Acceptance Letter, dated April 26, 2000 from Blue Cross Blue Shield accepting Family Fare Pharmacy #115 for participation in prescription drug programs.
69.	Chain Agreement, dated April 25, 2000, by and between Blue Cross Blue Shield of Michigan and Family Fare Pharmacy #115.
70.	Preferred Rx Participation Agreement, dated January 1, 2000, by and between Blue Cross Blue Shield of Michigan and Family Fare Pharmacy #115.
71.	Traditional Rx Participation Agreement, dated January 1, 2000, by and between Blue Cross Blue Shield of Michigan and Family Fare Pharmacy #115, with attached, undated amendment.
72.	Participation Agreement, dated October 14, 2003, by and between Express Scripts and Seaway Foodtown.

73.	Participating Pharmacy Agreement, dated May 6, 2003, by and between Caremark, Inc. and Seaway Foodtown, Inc.
74.	Trading Partner Addendum (HIPAA Compliance), effective April 14, 2003, supplements and made part of the Network Participation Agreement, by and between Spartan Stores, Inc. and SMCRx, Inc.
75.	Traditional Rx Pharmacy Participation Agreement, dated July 25, 2001, by and between Blue Cross Blue Shield of Michigan and Spartan Stores, Inc.
76.	Provider Agreement, dated July 29, 2003, by and between AdvancePCS and Spartan Stores, Inc.
77.	Participating Pharmacy Agreement, dated September 15, 2001, by and between First Health Group Corporation and Food Town, Inc.
78.	Participating Pharmacy Agreement, dated September 15, 2001, by and between First Health Group Corporation and Family Fare, Inc.

SCHEDULE 9.7
TO
LOAN AND SECURITY AGREEMENT

Part I

Minimum Proceeds Amounts for Certain Owned Real Property

	Location	Minimum Proceeds Amounts
1.	1020 Ford Street Maumee, Ohio 43537	$8,000,000
2.	Tracy and Oregon Roads Northwood, Ohio 43619	$1,500,000
3.	Vacant land located at 1162 and 1280 76th St. S.W. Byron Township, Michigan	$2,100,000
4.	993 Butternut Drive, Lot #3 Holland, Michigan 49423	$170,000
5.	756 Napier Avenue Benton Harbor, Michigan 49002	$0
6.	Northside of Jefferson Street, West of Columbus Drive Plymouth, Indiana 46563	$275,000

SCHEDULE 9.7
TO
LOAN AND SECURITY AGREEMENT

Part II

Existing Leases of Real Property to Customers

See Attached

SCHEDULE 9.7
PART II
TO LOAN AND SECURITY AGREEMENT

MARKET DEVELOPMENT CORPORATION Market Development Corporation is Sublessor in all Leases. December 18, 2003
MOC Lease Date	Sublease Date	Tenant	Lessor-Prime	Sq. Ft.	Rental	Sublease Rental	Term
7/10/95	7/10/95	Busch's, Inc. 12601 Grafton Road Carleton, Michigan	Maurice & Hana, Inc. Spartan Covenant 50% 6% Rental Override	42,000	$218,400.00	$231,504.00	7/10/95 to 7/10/05
1/9/87	1/9/87	L&L Shop-Rite 2380 N. Cedar Street Holt, Michigan	Delhi Village Partnership Spartan Covenant 6% Rental Override	33,245	$224,410.50	$237,875.28	3/18/88 to 3/18/08
5/18/95	8/15/95	Plumb's, Inc. 33 East M-82 Newaygo, Michigan	River Valley Dev. Co. LLC Spartan Covenant 50% 6% Rental Override	30,788	$267,864.00	$283,935.84	11/95 to 10/31/15
6/25/96	4/8/96	Harding's Market 6330 S. Westnedge Portage, Michigan	Village Green Properties LTD 6% Rental Override	59,868	$225,000.00	$238,500.00	6/1/02 to 5/31/07
5/4/95	5/4/95	J and S Supermarket, Inc. 70920 Van Dyke Romeo, Michigan	Fiddlers Group LLC Spartan Covenant 50% 2% Rental Override	33,706	$303,354.00	$309,421.32	1/30/96 to 1/29/16
9/9/82	9/9/82	Busch's, Inc. 565 East Michigan Saline, Michigan	K&K Development No Spartan Covenant 6% Rental Override	37,350	$135,956.28	$144,113.76	12/1/03 to 11/30/08
8/18/80	10/26/87	Busch's, Inc. 1450 West Chicago Tecumseh, Michigan	Seto, LLC/Tecumseh Plaza Spartan Covenant No Rental-Override	31,600	$119,384.04	$119,384.04	12/1/01 to 11/30/11
1/25/93	1/25/93	Plumb's, Inc. 3251 East Colby Whitehall, Michigan	W. DeLano Living Trust Spartan Covenant 55% 6% Rental Override	34,480	$214,320.00	$228,000.00	1/25/93 to 1/24/08
		TOTALS		303,038	$1,708,688.82	$1,792,734.24

SCHEDULE 9.14
TO
LOAN AND SECURITY AGREEMENT

End of Fiscal Quarters

 

Period	FY 2004 End Date	FY 2005 End Date	FY 2006 End Date	FY 2007 End Date	FY 2008 End Date	FY 2009 End Date
1st 2nd 3rd (1st Qtr.)	4/26/2003 5/24/2003 6/21/2003	4/24/2004 5/22/2004 6/18/2004	4/23/2005 5/21/2005 6/18/2005	4/22/2006 5/20/2006 6/17/2006	4/28/2007 5/26/2007 6/23/2007	4/26/2008 5/24/2008 6/21/2008
4th 5th 6th (2nd Qtr.)	7/19/2003 8/16/2003 9/13/2003	7/17/2004 8/14/2004 9/11/2004	7/16/2005 8/13/2005 9/10/2005	7/15/2006 8/12/2006 9/9/2006	7/21/2007 8/18/2007 9/15/2007	7/19/2008 8/16/2008 9/13/2008
7th 8th 9th 10th (3rd Qtr.)	10/11/2003 11/8/2003 12/6/2003 1/3/2004	10/9/2004 11/6/2004 12/4/2004 1/1/2005	10/8/2005 11/5/2005 12/3/2005 12/31/2005	10/7/2006 11/4/2006 12/2/2006 12/30/2006	10/13/2007 11/10/2007 12/8/2007 1/5/2008	10/11/2008 11/8/2008 12/6/2008 1/3/2009
11th 12th 13th (4th Qtr - Y/E)	1/31/2004 2/28/2004 3/27/2004	1/29/2005 2/26/2005 3/26/2005	1/28/2006 2/25/2006 3/25/2006	1/27/2007 2/24/2007 3/31/2007	2/2/2008 3/1/2008 3/29/2008	1/31/2009 2/28/2009 3/28/2009

Note: The above schedule represents the end of financial periods for all Spartan entities except for Market Development Corporation ("MDC"), Spartan Insurance Company, Ltd. ("SICL"), and SI Insurance Agency, Inc. ("SII"). MDC and SICL are on calendar month ends with year ends on 3/31 of each year. SII fiscal periods coincide with the above schedule with the exception of their year end and 13th period which always ends on 3/31.

SCHEDULE 9.18
TO
LOAN AND SECURITY AGREEMENT

Minimum EBITDA

See Attached

SCHEDULE 9.18
TO
LOAN AND SECURITY AGREEMENT

Spartan Stores, Inc.
Covenant Summary
EBITDA
(In Millions of Dollars)

	With United	Without United
Fiscal 04
Opening EBITDA Covenant Trailing 13 through P9	27.00	24.50
Trailing 13 through p10	27.75	25.25
Trailing 13 through p11	28.50	26.00
Trailing 13 through p12	29.25	26.50
Trailing 13 through p13	30.00	28.40
Fiscal 05
Trailing 13 through p1	30.00	28.40
Trailing 13 through p2	30.50	28.90
Trailing 13 through p3	31.00	29.40
Trailing 13 through p4	32.00	30.40
Trailing 13 through p5	33.00	31.40
Trailing 13 through p6	33.50	31.90
Trailing 13 through p7	34.00	32.40
Trailing 13 through p8	35.00	33.40
Trailing 13 through p9	35.50	33.90
Trailing 13 through p10	36.00	34.40
Trailing 13 through p11	36.50	34.90
Trailing 13 through p12	37.00	35.40
Trailing 13 through p13	37.50	35.90
Fiscal 06
Trailing 13 through p1	37.50	35.90
Trailing 13 through p2	38.00	36.40
Trailing 13 through p3	38.50	36.90
Trailing 13 through p4	39.00	37.40
Trailing 13 through p5	39.50	37.90
Trailing 13 through p6 and thereafter	40.00	38.40

SCHEDULE 9.19
TO
LOAN AND SECURITY AGREEMENT

Capital Expenditures

Fiscal Quarter	Maximum Capital Expenditures
Quarter 1 of Fiscal Year 2004	$1,800,000
Quarter 2 of Fiscal Year 2004	2,400,000
Quarter 3 of Fiscal Year 2004	5,000,000
Quarter 4 of Fiscal Year 2004	7,300,000
Quarter 1 of Fiscal Year 2005	5,500,000
Quarter 2 of Fiscal Year 2005	6,000,000
Quarter 3 of Fiscal Year 2005	5,500,000
Quarter 4 of Fiscal Year 2005	5,000,000
Quarter 1 of Fiscal Year 2006	6,000,000
Quarter 2 of Fiscal Year 2006	6,700,000
Quarter 3 of Fiscal Year 2006	6,500,000
Quarter 4 of Fiscal Year 2006	5,000,000
Quarter 1 of Fiscal Year 2007	6,300,000
Quarter 2 of Fiscal Year 2007	7,300,000
Quarter 3 of Fiscal Year 2007	7,000,000
Quarter 4 of Fiscal Year 2007	6,000,000
Quarter 1 of Fiscal Year 2008	6,900,000
Quarter 2 of Fiscal Year 2008	8,000,000
Quarter 3 of Fiscal Year 2008 and    for each fiscal quarter thereafter	7,700,000

SCHEDULE 10.1
TO
LOAN AND SECURITY AGREEMENT

Revenues

See Attached

SCHEDULE 10.1
TO
LOAN AND SECURITY AGREEMENT

Spartan Stores, Inc
Covenants
(In millions $)

PART I
Minimum Revenue By Quarter With United
Qtr 1	Qtr 2	Qtr 3	Qtr 4
$          351.4	$          373.7	$          474.0	$          334.0

PART II
Minimum Revenue By Quarter Without United
Qtr 1	Qtr 2	Qtr 3	Qtr 4
$          323.8	$          343.1	$          437.9	$          307.3

EX-10.7

EXHIBIT 10.7

[Execution]

AMENDMENT NO. 6 TO
LOAN AND SECURITY AGREEMENT

          AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT, dated as of May 22, 2007, by and among Spartan Stores, Inc., a Michigan corporation ("Parent"), Spartan Stores Distribution, LLC, a Michigan limited liability company ("Stores Distribution"), Market Development Corporation, a Michigan corporation ("MDC"), Spartan Stores Associates, LLC, a Michigan limited liability company ("Associates"), Family Fare, LLC, a Michigan limited liability company ("Family Fare"), MSFC, LLC, a Michigan limited liability company ("MSFC"), Seaway Food Town, Inc., a Michigan corporation ("Seaway"), The Pharm of Michigan, Inc. ("Pharm"), a Michigan corporation, Valley Farm Distributing Co., an Ohio corporation ("Valley Farm"), Gruber's Real Estate, LLC, a Michigan limited liability company ("Gruber RE"), Prevo's Family Markets, Inc., a Michigan corporation ("Prevo"), Buckeye Real Estate Management Co., an Ohio corporation ("Buckeye"), Spartan Stores Fuel, LLC, a Michigan limited liability compa ny (together with Lead Borrower, Stores Distribution, United, MDC, Associates, Family Fare, MSFC, Seaway, Pharm, Valley Farm, Gruber RE, Prevo and Buckeye, each individually a "Borrower" and collectively, "Borrowers"), Spartan Stores Holding, Inc., a Michigan corporation ("Holding"), SI Insurance Agency, Inc., a Michigan corporation ("SI", together with Holding, each individually a "Guarantor" and collectively, "Guarantors"), the parties to the Loan Agreement (as hereinafter defined) from time to time as lenders (each individually, a "Lender" and collectively, "Lenders") and Wachovia Capital Finance Corporation (Central), formerly known as Congress Financial Corporation (Central), an Illinois corporation, in its capacity as agent for Lenders (in such capacity, "Agent").

W I T N E S S E T H :

          WHEREAS, Borrowers and Guarantors have entered into financing arrangements with Agent and Lenders pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated December 23, 2003, by and among Borrowers, Guarantors, Agent and Lenders, as amended and supplemented by Amendment No. 1 to Loan and Security Agreement, dated as of July 29, 2004, Amendment No. 2 to Loan and Security Agreement, dated as of December 22, 2004, Amendment No. 3 to Loan and Security Agreement, dated as of December 9, 2005, Amendment No. 4 to Loan and Security Agreement, dated as of March 17, 2006 and Amendment No. 5 to Loan and Security Agreement, dated as of April 5, 2007 (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the "Loan A greement") and the other Financing Agreements (as defined therein); and

          WHEREAS, Borrowers and Guarantors have requested Agent and Lenders agree to certain amendments to the Loan Agreement, and Agent and Lenders are willing to agree to such amendments, subject to the terms and conditions herein; and

          WHEREAS, by this Amendment No. 6, Borrowers, Guarantors, Agent and Lenders desire and intend to evidence such amendments;

          NOW THEREFORE, in consideration of the foregoing, the mutual agreements and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

          1.   Definitions.

                    1.1   Additional Definition.

                              (a) As used herein, the following terms shall have the meanings given to them below, and the Loan Agreement and the other Financing Agreements shall be deemed and are hereby amended to include, in addition and not in limitation, the following definitions:

                                        (i) "Amendment No. 6" shall mean this Amendment No. 6 to Loan and Security Agreement by and among Borrowers, Guarantors, Agent and Lenders, as amended, modified, supplemented, extended, renewed, restated or replaced.

                                        (ii) "Convertible Note Indenture" shall mean an Indenture by and between Parent, as issuer, and a trustee, with respect to the Convertible Notes, to be entered into, in all material respects, substantially on the terms set forth in the Description of Notes attached hereto as Exhibit A, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.

                                        (iii) "Convertible Notes" shall mean, collectively, the Senior Unsecured Convertible Notes issued by Parent in the original aggregate principal amount not to exceed $125,000,000 pursuant to the Convertible Note Indenture, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.

                    1.2   Amendment to Definitions. The definition of "Change of Control" set forth in Loan Agreement is hereby amended by adding the following new subsection (f) at the end thereof: ", or (f) the occurrence of a "fundamental change" as such term is defined in the Convertible Notes or the Convertible Note Indenture at all times that any Indebtedness or other obligations evidenced by any Convertible Notes are outstanding."

                    1.3   Interpretation. For purposes of this Amendment No. 6, unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Loan Agreement.

          2.   Encumbrances. Section 9.8 of the Loan Agreement is hereby amended by adding the following new subsection (p) at the end thereof:

          "(p) pledges of stock of third parties acquired by Borrowers in the ordinary course of business in connection with investments permitted under Section 9.10(k) hereof."

          3.   Indebtedness.

                    (a) Section 9.9(e) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

2

          "(e) unsecured Indebtedness of any Borrower or Guarantor arising after the date hereof to any third person (but not to any other Borrower or Guarantor), provided, that, each of the following conditions is satisfied as determined by Agent: (i) such Indebtedness shall be on terms and conditions acceptable to Agent, (ii) Agent shall have received not less than ten (10) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may request with respect thereto, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree in writing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in such order and manner as Agent may determine, (v) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred, (vi) such Borrower and Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, such Borrower or Guarantor may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or (B) without Agent's prior written consen t, redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted herein), or set aside or otherwise deposit or invest any sums for such purpose; and (vii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;"

                    (b) Section 9.9 of the Loan Agreement is hereby amended by adding the following new subsections (m) and (n) at the end thereof:

          "(m) unsecured Indebtedness of Parent evidenced by the Convertible Notes as in effect on the date of their issuance or as permitted to be amended pursuant to the terms hereof, provided, that:

                    (i) the aggregate principal amount of all such Indebtedness evidenced by the Convertible Notes shall not exceed $125,000,000 less the aggregate amount of all repayments or redemptions, whether optional or mandatory, in respect thereof, plus interest thereon calculated in the manner provided for in the Convertible Notes as in effect on the date of the issuance thereof,

                    (ii) Borrowers and Guarantors shall not, directly or indirectly, make any payments in respect of such Indebtedness, except that Parent may make (A) regularly scheduled payments of interest and fees (which interest rate on the principal amount of

3 the Convertible Notes, excluding contingent interest and additional amounts payable upon a Registration Default as defined in Exhibit A to Amendment No. 6, shall not exceed 5% per annum), if any, in respect of such Indebtedness when due in accordance with the terms of the Convertible Notes as in effect on the date of the issuance thereof, (B) payments of principal in respect of such Indebtedness when scheduled to mature in accordance with the terms of the Convertible Note Indenture as in effect on the date thereof and any other mandatory prepayments as required under the terms of the Convertible Note Indenture as in effect on the date thereof, and (C) payments to the extent permitted under Section 9.9(m)(iv) below,

                    (iii) Borrowers and Guarantors shall not, directly or indirectly, amend, modify, alter or change in any material respect any terms of such Indebtedness or any of the Convertible Notes or the Convertible Note Indenture or any related agreements, documents and instruments, except that Parent may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness other than pursuant to payments thereof, or to reduce the interest rate or any fees in connection therewith,

                    (iv) Borrowers and Guarantors shall not, directly or indirectly, redeem, retire, defease, purchase, convert Convertible Notes to cash or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, except, that, (A) Parent may convert Convertible Notes to cash or purchase such Indebtedness in accordance with and to the extent required by the terms of the Convertible Note Indenture, so long as Agent shall have received not less than one (1) Business Day prior written notice of the intention of Parent to so convert Convertible Notes to cash or purchase such Indebtedness if such conversion or purchase requires payments in excess of $5,000,000, or the aggregate amount of all such payments prior thereto has been in excess of $20,000,000, which notice shall specify the date of the proposed purchase or conversion, the amount to be paid by Parent in respect thereof and the amount of t he Convertible Notes to be so purchased or converted, (B) Parent may make optional prepayments or redemptions of the Convertible Notes, so long as, as of the date of any such optional prepayment or redemption or any payment in respect thereof and after giving effect thereto, (1) Agent shall have received not less than three (3) Business Days' prior written notice of the intention of Parent to so redeem or prepay such Indebtedness, which notice shall specify the date of the proposed prepayment or redemption, the amount to be paid by parent in respect thereof and the amount of the Convertible Notes to be so prepaid or redeemed, (2) the aggregate amount of the Excess Availability of Borrowers for each of the immediately preceding ten (10) consecutive days shall have been not less than $25,000,000 and as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers shall be not less than $25,000,000, and (3) as of the date of any such payment and af ter giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (C) nothing contained herein shall be construed to limit the right of Parent to convert Convertible Notes to shares of common stock of Parent in accordance with the terms thereof as in effect on the date of the issuance thereof and (D) Parent may make payments to the extent permitted under Section 9.9(m)(ii) above;

4

                    (v) the Convertible Notes and the Convertible Note Indenture shall each be , in all material respects, substantially on the terms set forth in the Description of Notes attached hereto as Exhibit A to Amendment No. 6, and Agent shall have received true, correct and complete copies of the Convertible Notes and the Convertible Note Indenture promptly after the issuance of the Convertible Notes (and Agent shall receive copies of drafts thereto promptly after they are distributed to Parent), and

                    (vi) Borrowers and Guarantors shall furnish to Agent all written notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be;

          (n) guarantees by any Borrower of any Indebtedness of any other Borrower otherwise permitted to be incurred under this Agreement."

          4.   Loans, Investments, Etc. Section 9.10 of the Loan Agreement is hereby amended by adding the following new subsections (k) and (l) at the end thereof:

          "(k) investments in the ordinary course of business of Borrowers not otherwise permitted in Section 9.10 hereof, provided, that, the aggregate amount of all such investments shall not exceed $1,000,000 in any fiscal year;

          (l) the purchase or repurchase by Parent of Indebtedness evidenced by the Convertible Notes to the extent permitted in Section 9.9(m)(iv) hereof."

          5.   Events of Default. Section 10.1 of the Loan Agreement is hereby amended by adding the following new subsection (p) at the end thereof:

          "(p) the conversion by Parent of any of the Convertible Notes to cash, and either (i) as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers for any of the immediately preceding ten (10) consecutive days shall have been less than $25,000,000 or (ii) as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers is less than $25,000,000,"

          6.   Representations and Warranties. Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Amendment No. 6), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:

                    6.1   This Amendment No. 6 and each other agreement or instrument (including the Convertible Notes and Convertible Note Indenture) to be executed and delivered by the Borrowers and Guarantors pursuant hereto have been duly authorized, executed and delivered by all necessary action on the part of each of the Borrowers and Guarantors which is a party hereto and thereto and, if necessary, their respective stockholders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each of the Borrowers and Guarantors, as the case may be, contained herein and therein, constitute the legal, valid and binding obligations of each of the Borrowers and Guarantors, respectively, enforceable against

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them in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

                    6.2   The execution, delivery and performance of this Amendment No. 6 are all within each Borrower's and Guarantor's corporate or limited liability company powers and are not in contravention of law or the terms of any Borrower's or Guarantor's certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound.

                    6.3   No Default or Event of Default exists or has occurred and is continuing.

          7.   Condition Precedent. The effectiveness of the amendments contained herein shall only be effective upon the following:

                    7.1   Agent shall have received an executed original or executed original counterparts of this Amendment No. 6 (as the case may be), duly authorized, executed and delivered by the parties hereto (including all Lenders required for the consent and amendments provided for herein); and

                    7.2   Agent shall have received a true and correct copy of any consent, waiver or approval (if any) to or of this Amendment No. 6, which any Borrower is required to obtain from any other Person.

          8.   Effect of this Amendment. Except as expressly amended pursuant hereto, no other changes or modifications to the Financing Agreements are intended or implied, and, in all other respects, the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof. To the extent that any provision of the Loan Agreement or any of the other Financing Agreements are inconsistent with the provisions of this Amendment No. 6, the provisions of this Amendment No. 6 shall control.

          9.   Further Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes of this Amendment No. 6.

          10.   Governing Law. The validity, interpretation and enforcement of this Amendment No. 6 and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of Illinois but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of Illinois.

          11.   Binding Effect. This Amendment No. 6 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

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          12.   Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 6.

          13.   Counterparts. This Amendment No. 6 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 6 by telefacsimile shall have the same force and effect as the delivery of an original executed counterpart of this Amendment No. 6. Any party delivering an executed counterpart of this Amendment No. 6 by telefacsimile shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 6 to be duly executed and delivered by their authorized officers as of the day and year first above written.

AGENT WACHOVIA CAPITAL FINANCE CORPORATION (Central), f/k/a Congress Financial Corporation (Central), as Agent		BORROWERS SPARTAN STORES, INC.
By:	/s/ Vicky Geist	By:	/s/ David M. Staples
Title:	Director	Title:	EVP, CFO and Treasurer
		SPARTAN STORES DISTRIBUTION, LLC MARKET DEVELOPMENT CORPORATION SPARTAN STORES ASSOCIATES, LLC FAMILY FARE, LLC MSFC, LLC SEAWAY FOOD TOWN, INC. THE PHARM OF MICHIGAN, INC. VALLEY FARM DISTRIBUTING CO. GRUBER'S REAL ESTATE LLC PREVO'S FAMILY MARKETS, INC. BUCKEYE REAL ESTATE MANAGEMENT CO. SPARTAN STORES FUEL, LLC
		By:	/s/ David M. Staples
		Title:	Treasurer
		GUARANTORS SPARTAN STORES HOLDING, INC. SI INSURANCE AGENCY, INC.
		By:	/s/ David M. Staples
		Title:	Treasurer

LENDERS WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL), f/k/a Congress Financial Corporation (Central)
By:	/s/ Vicky Geist
Title:	Director
KEY BANK NATIONAL ASSOCIATION
By:	/s/ Nadine M. Eames
Title:	Vice President
BANK OF AMERICA N.A. (successor by merger to Fleet Capital Corporation)
By:	/s/ Vice President
Title:	Vice President
NATIONAL CITY BUSINESS CREDIT, INC.
By:	/s/ Vice President
Title:	Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Rebecca A. Ford
Title:	Duly Authorized Signatory
FIFTH THIRD BANK, a Michigan Banking Corporation
By:	/s/ Vice President
Title:	Vice President

EXHIBIT A
TO
AMENDMENT NO. 6

Description of Notes

See attached

Draft - April 6, 2007

DESCRIPTION OF NOTES

          We will issue the notes under an indenture, to be dated as of                 , 2007, between us and [                             ], as trustee. The notes and the common stock issuable upon conversion of the notes, if any, will be covered by a registration rights agreement. Each holder may request a copy of the indenture and the registration rights agreement from the trustee at the address provided herein.

          The following description is a summary of the material provisions of the notes, the indenture and the registration rights agreement and does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the notes and the indenture, including the definitions of certain terms used in the indenture, and to all provisions of the registration rights agreement. Wherever particular provisions or defined terms of the indenture or the notes are referred to, these provisions or defined terms are incorporated in this offering memorandum by reference. We urge you to read the indenture because it, and not this description, defines each holder's rights as a holder of the notes.

          As used in this "Description of Notes" section, references to "Spartan," the "company," "we," "us" and "our" refer only to Spartan Stores, Inc. and do not include its subsidiaries.

General

          We are offering $[75,000,000] aggregate principal amount of notes ($[90,000,000] aggregate principal amount if the initial purchaser exercises in full its option to purchase additional notes to cover over-allotments, if any).

          The notes will mature on May 1, 2027 unless earlier converted, redeemed or repurchased. Each holder of notes has the option, subject to certain qualifications and the satisfaction of certain conditions, to convert its notes into cash and shares, if any, of our common stock at an initial conversion rate of                 shares per $1,000 principal amount of notes. This is equivalent to an initial conversion price of approximately $               per share of common stock. The conversion rate is subject to adjustment if certain events occur.

          Upon a surrender of a holder's notes for conversion, unless we have previously exercised our option to satisfy all of our future conversion obligations entirely in common stock as described below under "- Conversion Rights - Option to Irrevocably Elect to Satisfy Future Conversion Obligations in Common Stock," we will deliver cash equal to the lesser of the aggregate principal amount of notes to be converted and our total conversion obligation. We will deliver shares of our common stock in respect of the remainder, if any, of our conversion obligation, as described below under "- Conversion Rights - Payment Upon Conversion." If we deliver common stock upon conversion of a note, a holder will not receive fractional shares but a cash payment to account for any such fractional share, as described below. A holder will not receive any cash payment for interest (or contingent interest or additional amounts, if any) accrued and unpaid to the conversion date except under the lim ited circumstances described below, including under "- Registration Rights" below.

          The notes will be our senior, unsecured obligations and will rank equal in right of payment to all of our existing and future unsecured and unsubordinated indebtedness. The notes will be issued only in denominations of $1,000 principal amount and integral multiples thereof. References to "a note" or "each note" in this offering memorandum refer to $1,000 principal amount of the notes.

          As used in this offering memorandum, "business day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New York.

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          Any reference to "common stock" means our common stock, no par value.

          Each holder will be deemed to have agreed in the indenture, for United States federal income tax purposes, to treat the notes as "contingent payment debt instruments" and to be bound by our application of the U.S. Treasury regulations that govern contingent payment debt instruments, including our determination that the rate at which interest will be deemed to accrue for United States federal income tax purposes will be           %, which is the comparable yield, or the rate at which we would have borrowed on a non-contingent, nonconvertible basis at the issue date of the notes.

          Accordingly, each holder will be required to accrue interest on a constant yield to maturity basis at that rate, with the result that a holder will recognize taxable income significantly in excess of cash received while the notes are outstanding. See "United States Federal Income Tax Considerations." YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE TAX TREATMENT OF AN INVESTMENT IN THE NOTES AND WHETHER AN INVESTMENT IN THE NOTES IS ADVISABLE IN LIGHT OF THE AGREED UPON TAX TREATMENT AND YOUR PARTICULAR TAX SITUATION.

Interest and Contingent Interest

          The notes will bear interest at a rate of        % per year. In addition, we will pay contingent interest to holders of the notes during the period commencing [                      , 2012] and ending on [                       , 2012] and for any six-month period thereafter, from and including an interest payment date up to, but excluding, the next interest payment date, if the average contingent interest trading price (as defined below) per $1,000 principal amount of the notes for the five-trading-day (as defined below) period ending on the third trading day immediately preceding the first day of such interest period equals 120% or more of the principal amount of the notes.

          During any interest period in which contingent interest shall be payable, the contingent interest payable per $1,000 principal amount of the notes will equal [0.25]% per annum of the average contingent interest trading price of $1,000 principal amount of notes during the five-trading-day measuring period ending on the third trading day immediately preceding the applicable interest period used to determine whether contingent interest must be paid.

          For so long as the notes are held in book-entry only form, interest (including contingent interest and additional amounts, if any) will be payable on each payment date to the person in whose name a given note is registered at the close of business on the business day before the interest payment date (each, a "record date"). In the event that the notes do not remain in book-entry only form or are not in the form of a global certificate, we will have the right to select record dates, which will be at least one business day before an interest payment date. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months and will accrue from                      , 2007 or from the most recent date to which interest has been paid or duly provided for. We will pay interest (including contingent interest and additional amounts, if any) semi-annua lly, in arrears on May 1 and November 1 of each year, commencing on November 1, 2007.

          Contingent interest, if any, will accrue from the first day of any relevant interest period and be payable on the interest payment date at the end of the relevant six-month period to holders of the notes as of the record date relating to such interest payment date. In the event of any determination that holders will be entitled to receive contingent interest with respect to an interest period, we will promptly (i) issue a press release and use our reasonable efforts to post such information on our website or otherwise publicly disclose this information or (ii) provide notice to the holders of the notes in a manner contemplated by the indenture, including through the facilities of DTC.

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          If, in connection with a payment of contingent interest, we determine that United States withholding tax may be required as described under "United States Federal Income Tax Considerations - Non-United States Holders," we will provide this information through a press release disseminated as provided above.

          "Contingent interest trading price" means, on any date of determination, the average of the secondary bid quotations per note obtained by the conversion agent for $5,000,000 principal amount of the notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select; provided that, if at least three such bids cannot reasonably be obtained, but two such bids can reasonably be obtained, then the average of these two bids shall be used; provided, further, that, if at least two such bids cannot reasonably be obtained, but one such bid can reasonably be obtained, this one bid shall be used. If on any date of determination the conversion agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the notes from an independent nationally recognized securities dealer or, in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the notes, then the contingent interest trading price of the notes on such date of determination will be (a) the applicable conversion rate of the notes (as defined below) multiplied by (b) the closing sale price of our common stock on such determination date.

          Upon conversion of a note, a holder will not receive any cash payment of interest (including contingent interest and additional amounts, if any) unless, as described below, such conversion occurs after a record date and prior to the interest payment date to which that record date relates or such conversion occurs during a registration default as described under "- Registration Rights" below. If we deliver common stock upon surrender of a note for conversion, we will not issue fractional common stock. Instead, we will pay cash in lieu of fractional shares based on the closing sale price of the common stock on the trading day immediately prior to the conversion date. Our delivery to a holder of the full amount of cash and common stock, if any, as described below under "- Payment upon Conversion," together with any cash payment for any fractional share, will be deemed to satisfy our obligation to pay:

• the principal amount of the note; and

• accrued but unpaid interest (including contingent interest and additional amounts, if any) to but excluding the conversion date.

As a result, accrued but unpaid interest (including contingent interest and additional amounts, if any) up to but excluding the conversion date will be deemed to be paid in full rather than cancelled, extinguished or forfeited. For a general discussion of the U.S. federal income tax treatment upon receipt of our common stock upon conversion, see "Material U.S. Federal Income Tax Considerations."

          Notwithstanding the preceding paragraph, if notes are converted after the close of business on a record date but prior to the opening of business on the interest payment date to which that record date relates, holders of such notes at the close of business on the record date will receive the interest (including contingent interest and additional amounts, if any) payable on the notes on the corresponding interest payment date notwithstanding the conversion. Such notes, upon surrender for conversion, must be accompanied by funds equal to the amount of interest (including contingent interest and additional amounts, if any) payable on the notes so converted on the next succeeding interest payment date. However, no such payment need be made:

• in connection with any conversion following the regular record date immediately preceding the maturity date;

• if we have specified a redemption date that is after a record date and on or prior to the corresponding interest payment date;

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• if we have specified a repurchase date or a fundamental change purchase date that is after a record date and on or prior to the corresponding interest payment date; or

• to the extent of any overdue interest (including overdue contingent interest and additional amounts, if any) if overdue interest, contingent interest or additional amounts exist at the time of conversion with respect to such note.

          If any interest payment date, maturity date, redemption date, repurchase date or settlement date (including upon the occurrence of a fundamental change, as described below) falls on a day that is not a business day, then the required payment will be made on the next succeeding business day with the same force and effect as if made on the date that the payment was due, and no additional interest will accrue on that payment for the period from and after the interest payment date, maturity date, redemption date or repurchase date, as the case may be, to that next succeeding business day.

Conversion Rights

General

          Subject to the qualifications and the satisfaction of the conditions and during the periods described below, holders will have the right to convert their notes prior to the close of business on the business day immediately preceding stated maturity, initially at a conversion rate of                   shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $                 per share of common stock based on the issue price per note. Upon a surrender of a holder's notes for conversion, unless we have previously exercised our option to satisfy all of our future conversion obligations entirely in common stock as described below under "- Option to Irrevocably Elect to Satisfy Future Conversion Obligations in Common Stock," we will deliver cash equal to the lesser of the aggregate principal amount of notes to be converted and our total conversion obligation. We will deliver shares of our common stock in respect of the remainder, if any, of our conversion obligation, as described below under "- Payment Upon Conversion."

          The conversion rate in effect at any given time is referred to in this offering memorandum as the "applicable conversion rate" and will be subject to adjustments as described under "-Conversion Rate Adjustments," but it will not be adjusted for accrued interest. The "applicable conversion price" at any given time is equal to the principal amount of a note divided by the applicable conversion rate. Holders will be entitled to convert notes in denominations of $1,000 principal amount or multiples thereof. Upon surrender of a note for conversion, we will deliver cash and shares of our common stock, if any, as described below under "- Payment upon Conversion."

          A holder may convert its notes in whole or in part only in the following circumstances, which are described in more detail below, and to the following extent:

• upon satisfaction of the sale price condition;

• upon satisfaction of the trading price condition;

• if we have called notes for redemption, until the close of business one business day prior to the redemption date for such notes;

• at any time on or after [                   ,          ]; or

• upon the occurrence of specified corporate transactions.

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          Upon any determination by us or the trustee that holders are or will be entitled to convert their notes into shares of our common stock in accordance with the foregoing provisions, we will issue a press release and publish the information on our website.

          If a holder converts notes, we will pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of our common stock upon the conversion, unless the tax is due because a holder requests the shares to be issued or delivered to another person, in which case that holder will pay that tax.

Conversion upon Satisfaction of Sale Price Condition

          Prior to [                  ,           ], a holder may surrender its notes for conversion during any fiscal quarter after the fiscal quarter ending June [   ], 2007 if the closing sale price per share of our common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the previous fiscal quarter is more than [130]% of the applicable conversion price per share of our common stock on such last trading day. Upon surrender by a holder of its notes for conversion, we will deliver cash and common stock, if any, as described below under "- Payment upon Conversion."

          The "closing sale price" of our common stock on any date means the closing sale price per share (or, if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on such date as reported by the Nasdaq Global Market or, if our common stock is not reported by the Nasdaq Global Market, in composite transactions for the principal U.S. national securities exchange on which our common stock is traded. If our common stock is not listed for trading on a U.S. national or regional securities exchange and not reported by the Nasdaq Global Market on the relevant date, the closing sale price will be the last quoted bid price for our common stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau Incorporated or similar organization. If our common stock is not so quoted, the closing sale price will be the average of the mid-po int of the last bid and asked prices for our common stock on the relevant date from each of at least three independent nationally recognized investment banking firms selected by us for this purpose.

          The conversion agent, which initially will be [insert name of trustee], will, on our behalf, determine daily whether the notes are convertible as a result of the sale price of our common stock and notify us and the trustee.

Conversion upon Satisfaction of Trading Price Condition

          A holder may surrender any of its notes for conversion during the five business days immediately following any five-consecutive-trading-day period in which the trading price per $1,000 principal amount of the notes (as determined following a request by a holder of the notes in accordance with the procedures described below) for each day of that period was less than 98% of the product of the closing sale price of our common stock and the applicable conversion rate of the notes on each such day.

          The "trading price" of the notes on any date of determination means the average of the secondary market bid quotations obtained by the bid solicitation agent for $5.0 million aggregate principal amount of the notes at approximately 3:30 p.m., New York City time, on the determination date from three independent nationally recognized securities dealers we select, provided that if:

• three such bids cannot reasonably be obtained by the bid solicitation agent, but two such bids are obtained, then the average of the two bids shall be used, and

• only one such bid can reasonably be obtained by the bid solicitation agent, that one bid shall be used;

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provided further if no bids are received, then for purposes of determining whether the trading price condition has been met the trading price per $1,000 principal amount of the notes will be deemed to be less than 98% of the product of the closing sale price of our common stock and the applicable conversion rate of the notes on that day.

          The trustee will have no obligation to determine the trading price of the notes as described in this section unless we have requested such determination; and we shall have no obligation to make such request unless a holder provides us with reasonable evidence that the trading price per $1,000 principal amount of notes would be less than 98% of the product of the closing sale price of our common stock and the applicable conversion rate of the notes on that day. At such time, we will instruct the trustee to determine the trading price of the notes beginning on the next trading day and on each successive trading day until the trading price per $1,000 principal amount of notes is greater than or equal to 98% of the product of the closing price of our common stock and the applicable conversion rate of the notes.

Conversion Upon Notice of Redemption

          Holders may surrender for conversion any notes called for redemption at any time prior to the close of business one business day prior to the redemption date for such notes, even if those notes are not otherwise convertible at that time.

Conversion On or After [                             ,              ]

          A holder may surrender any of its notes for conversion at any time on or after [                     ,        ] until the close of business on the business day immediately preceding the maturity date.

Conversion upon Specified Corporate Transactions

Certain Distributions

          If we elect to:

• distribute to all or substantially all holders of our common stock certain rights or warrants entitling them to purchase, for a period expiring within 60 days after the date of the distribution, shares of our common stock at less than the closing sale price of a share of our common stock on the trading day immediately preceding the announcement date of the distribution; or

• distribute to all or substantially all holders of our common stock, assets (including cash), debt securities or rights or warrants to purchase our securities, which distribution has a per-share value as determined by our board of directors exceeding 10% of the closing sale price of our common stock on the trading day immediately preceding the announcement date for such distribution,

we must notify holders of the notes at least 20 business days prior to the ex-dividend date for such distribution. Once we have given such notice, holders may surrender their notes for conversion at any time until the earlier of the close of business on the business day immediately prior to the ex-dividend date or any announcement that such distribution will not take place. No holder may exercise this right to convert if the holder otherwise could participate in the distribution without conversion. The "ex-dividend" date is the first date upon which a sale of the common stock does not automatically transfer the right to receive the relevant distribution from the seller of the common stock to its buyer.

Fundamental Change Transactions

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          If a fundamental change occurs, regardless of whether a holder has the right to put the notes as described under "- Repurchase of Notes by Us at Option of Holder upon a Fundamental Change," a holder may surrender notes for conversion at any time from and after the date which is 35 days prior to the anticipated effective date of the transaction until and including the close of business on the business day prior to the fundamental change repurchase date. We will notify holders and the trustee at the same time we publicly announce such transaction (but in no event less than 35 days prior to the anticipated effective date of such transaction).

          If a holder elects to convert its notes in connection with certain fundamental changes described below under "- Conversion Rate Adjustments - Make Whole Amount", we will deliver upon conversion of the notes an additional number of shares as described below under "- Conversion Rate Adjustments - Make Whole Amount."

          If a transaction described above occurs, a holder may also have the right to require us to repurchase all or a portion of its notes, as described under "- Repurchase of Notes by Us at Option of Holder upon a Fundamental Change."

Conversion Procedures

          To convert a note, a holder must do each of the following:

• complete and manually sign the conversion notice on the back of the note, or a facsimile of the conversion notice, and deliver this irrevocable notice to the conversion agent;

• surrender the note to the conversion agent;

• if required, furnish appropriate endorsements and transfer documents;

• if required, pay all transfer or similar taxes; and

• if required, pay funds equal to interest payable on the next interest payment date.

          The date a holder complies with these requirements is the "conversion date" under the indenture. The notes will be deemed to have been converted immediately prior to the close of business on the conversion date and the converting holder will be treated as a shareholder of record of Spartan as of that time. If a holder's interest is a beneficial interest in a global note, to convert, a holder must comply with the last three requirements listed above and comply with the depositary's procedures for converting a beneficial interest in a global note.

          The conversion agent will initially be the trustee. The conversion agent will, on a holder's behalf, convert the notes into cash and shares, if any, of common stock at an initial conversion rate of shares per $1,000 principal amount of notes. A holder may obtain copies of the required form of the conversion notice from the conversion agent. Payments of cash and, if common stock is to be delivered, a stock certificate or certificates will be delivered to the holder, or a book-entry transfer through DTC will be made, by the conversion agent for the number of shares of common stock determined as set forth below under "- Payment upon Conversion."

Payment upon Conversion

          In connection with any conversion, we will satisfy our obligation to convert the notes (the "conversion obligation") by delivering to holders in respect of each $1,000 aggregate principal amount of notes being converted a "settlement amount" equal to the sum of the daily settlement amounts for each of the 20 consecutive trading days of the cash settlement averaging period.

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          The "daily settlement amount" for each of the 20 consecutive trading days of the cash settlement averaging period, shall consist of:

(1)

cash equal to the lesser of $50 and the daily conversion value; and

(2)

to the extent the daily conversion value exceeds $50, a number of shares equal to, (A) the difference between the daily conversion value and $50 (such difference being referred to as the "daily excess amount"), divided by (B) the closing sale price of our common stock for such day (or the consideration into which our common stock has been converted in connection with certain corporate transactions).

          We will not issue fractional shares of common stock upon conversion of the notes. Instead, we will pay the cash value of such fractional shares based upon the closing sale price of our common stock on the trading day immediately preceding the conversion date. Upon conversion of a note, a holder will not receive any cash payment of interest (including contingent interest and additional amounts, if any) unless such conversion occurs between a record date and the interest payment date to which that record date relates. We will deliver the settlement amount on the third business day following the date the settlement amount is determined.

          The "daily conversion value" means, for each of the 20 consecutive trading days during the cash settlement averaging period, one-twentieth (1/20^th) of the product of (1) the applicable conversion rate and (2) the closing sale price of our common stock (as defined above under "- Conversion upon Satisfaction of Trading Price Condition") on such day.

          The "cash settlement averaging period" with respect to any notes means the 20 consecutive trading days beginning:

• on the redemption date if prior to the relevant conversion date we have called the notes delivered for redemption,

• on the maturity date if the relevant conversion date is on or after [                     ], 2027, and

• on the second trading day after the relevant conversion date.

          If a holder tenders notes for conversion and the daily conversion value is being determined at a time when the notes are convertible into other property in addition to or in lieu of our common stock, the conversion value of each note will be determined based on the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of our common stock equal to the conversion rate would have owned or been entitled to receive in such transaction and the value thereof during the cash settlement averaging period.

Option to Irrevocably Elect to Satisfy Future Conversion Obligations in Common Stock

          Notwithstanding the provisions described above under "- Payment upon Conversion", at any time on or prior to [                        ], 2012 we may irrevocably elect, in our sole discretion without the consent of the holders of the notes, to satisfy all of our future conversion obligations entirely in common stock. If we elect to satisfy our conversion obligation entirely in our common stock, we will deliver to you, in respect of any notes that you convert, a number of shares equal to (i) the aggregate principal amount of notes to be converted (ii) divided by $1,000 and (iii) multiplied by the applicable conversion rate (which will include any increase to reflect any additional shares which you may be entitled to receive as described under "- Make-Whole Amount). We will deliver such shares on the third trading day after the conversion date.

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Conversion Rate Adjustments

          The applicable conversion rate will be subject to adjustment, without duplication, upon the occurrence of any of the following events:

(1) If we issue our common stock as a dividend or distribution on our common stock, or if we effect a share split or share combination, the conversion rate will be adjusted based on the following formula:

CR1 = CR0 x	OS1
	OS0

where

CR₀ = the conversion rate in effect immediately prior to the ex-dividend date for such dividend or distribution, or the effective date of such share split or share combination;

CR₁ = the new conversion rate in effect immediately after the ex-dividend date for such dividend or distribution, or the effective date of such share split or share combination;

0S₀ = the number of shares of our common stock outstanding immediately prior to such ex-dividend date, or effective date; and

OS₁ = the number of shares of our common stock outstanding immediately prior to such ex- dividend date, or effective date but after giving effect to such dividend, distribution, share split or share combination.

If any dividend or distribution described in this paragraph (1) is declared but not so paid or made, the new conversion rate shall be readjusted to the conversion rate that would then be in effect if such dividend or distribution had not been declared.

(2) If we distribute to all, or substantially all, holders of our common stock any rights, warrants or options entitling them for a period of not more than 60 days after the date of issuance thereof to subscribe for or purchase our common stock at an exercise price per share of our common stock less than the average of the closing sale prices of our common stock for the 10-consecutive-trading day period ending on the business day immediately preceding the time of announcement of such issuance, the conversion rate will be adjusted based on the following formula:

CR1 = CR0 x	(OS0 + X)
	(OS0 + Y)

where

CR₀ = the conversion rate in effect immediately prior to the ex-dividend date for such distribution;

CR₁ = the new conversion rate in effect immediately after the ex-dividend date for such distribution;

OS₀ = the number of shares of our common stock outstanding immediately prior to the ex-dividend date for such distribution;

X = the number of shares of our common stock issuable pursuant to such rights, warrants or options; and

Y = the number of shares of our common stock equal to the quotient of (A) the aggregate price payable to exercise such rights, warrants or options and (B) the average of the closing sale prices of our

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common stock for the 10 consecutive trading days ending on the trading day immediately preceding the date of announcement for the issuance of such rights, warrants or options.

If any right, warrant or option described in this paragraph (2) is not exercised or converted prior to the expiration of the exercisability or convertibility thereof, the new conversion rate shall be readjusted to the conversion rate that would then be in effect if such right, warrant or option had not been so issued.

(3) If we distribute shares of our capital stock, evidences of indebtedness or other assets or property to all, or substantially all, holders of our common stock, excluding:

(A) dividends, distributions, rights, warrants or options referred to in clause (1) or (2) above;

(B) dividends or distributions paid exclusively in cash; and

(C) Spin-Offs described below in this paragraph (3),

then the conversion rate will be adjusted based on the following formula:

CR1 = CR0 x	SP0
	(SP0 - FMV)

where

CR₀ = the conversion rate in effect immediately prior to the ex-dividend date for such distribution;

CR₁ = the new conversion rate in effect immediately after the ex-dividend date for such distribution;

SP₀ = the average of closing sale prices of our common stock over the 10 consecutive trading day period ending on the trading day immediately preceding the ex-dividend date for such distribution; and

FMV = the fair market value (as determined in good faith by our board of directors) of the shares of capital stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of our common stock on the earlier of the record date or the ex-dividend date for such distribution.

With respect to an adjustment pursuant to this clause (3), where there has been a payment of a dividend or other distribution of our common stock or shares of capital stock of any class or series, or similar equity interest, of or relating to our subsidiary or other business unit (a "Spin-Off"), the conversion rate in effect immediately before close of business on the effective date of the Spin-Off will be adjusted based on the following formula:

CR1 = CR0 x	(FMV0 + MP0)
	(MP0)

where

CR₀ = the conversion rate in effect immediately prior to the effective date of the Spin-Off;

CR₁ = the new conversion rate after the Spin-Off;

FMV₀ = the average of the closing sale prices of the capital stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock over the first 10 consecutive trading days after, and including, the effective date of the Spin-Off; and

MP₀ = the average of the closing sale prices of our common stock over the first 10 consecutive trading days after the effective date of the Spin-Off.

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An adjustment to the conversion rate made pursuant to the immediately preceding paragraph will occur on the 10th trading day from and including the effective date of the Spin-Off; provided that in respect of any conversion within the 10 trading days following, and including, the effective date of any Spin-Off, references within this paragraph (3) to 10 trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the effective date of such Spin-Off and the conversion date in determining the applicable conversion rate.

If any such dividend or distribution described in this clause (3) is declared but not paid or made, the new conversion rate shall be readjusted to be the conversion rate that would then be in effect if such dividend or distribution had not been declared.

(4) If we make any cash dividend or distribution to all, or substantially all, holders of our outstanding common stock, other than regular quarterly cash dividends that do not exceed $0.05 per share (the "reference dividend"), the conversion rate will be adjusted based on the following formula:

CR1 = CR0 x	SP0
	(SP0 - C)

where

CR₀ = the conversion rate in effect immediately prior to the ex-dividend date for such distribution;

CR₁ = the new conversion rate immediately after the ex-dividend date for such distribution;

SP₀ = the closing sale price of our common stock on the trading day immediately preceding the earlier of the record date and the day immediately preceding the ex-dividend date for such distribution; and

C = the amount in cash per share that we distribute to holders of our common stock that exceeds the reference dividend.

If any dividend or distribution described in this paragraph (4) is declared but not so paid or made, the new conversion rate shall be readjusted to the conversion rate that would then be in effect if such dividend or distribution had not been declared.

The reference dividend amount is subject to adjustment in a manner inversely proportional to adjustments to the conversion rate; provided that no adjustment will be made to the reference dividend amount for any adjustment made to the conversion rate under this clause (4).

Notwithstanding the foregoing, if an adjustment is required to be made under this paragraph as a result of a distribution that is not a regular quarterly dividend, the reference dividend amount will be deemed to be zero.

(5) If we or any of our subsidiaries makes a payment in respect of a tender offer or exchange offer for our common stock to the extent that the cash and value of any other consideration included in the payment per share of our common stock exceeds the closing sale price of a share of our common stock on the trading day following the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the conversion rate will be adjusted based on the following formula:

CR1 = CR0 x	(AC + (SP1 x OS1))
	(SP1 x OS0)

where

CR₀ = the conversion rate in effect on the day immediately following the date such tender or exchange offer expires;

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CR₁ = the conversion rate in effect after such tender or exchange offer expires;

AC = the aggregate value of all cash and any other consideration (as determined by our board of directors) paid or payable for our common stock purchased in such tender or exchange offer;

0S₀ = the number of shares of our common stock outstanding immediately prior to the date such tender or exchange offer expires;

OS₁= the number of shares of our common stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase or exchange of shares pursuant to such tender or exchange offer); and

SP₁ = the average closing sale prices of our common stock over the 10-consecutive-trading-day period commencing on the trading day following the date such tender or exchange offer expires.

The adjustment to the conversion rate under the preceding paragraph will occur on the 10th trading day from, and including, the trading day following the date such tender or exchange offer expires; provided that in respect of any conversion within 10 trading days immediately following, and including, the expiration date of any tender or exchange offer, references with respect to 10 trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the expiration date of such tender or exchange offer and the conversion date in determining the applicable conversion rate.

          In addition to these adjustments, we may in our sole discretion increase the conversion rate as our board of directors deems advisable to avoid or diminish any income tax to holders of our notes resulting from any dividend or distribution of capital stock issuable upon conversion of the notes (or rights to acquire capital stock) or from any event treated as such for income tax purposes. We may also, from time to time, to the extent permitted by applicable law, increase the conversion rate by any amount for any period of at least 20 business days if our board of directors has determined that such increase would be in our best interests. If our board of directors makes that determination, it will be conclusive. We will give holders of notes at least 15 days' prior notice of such an increase in the conversion rate. For a general discussion of the U.S. federal income tax treatment of an adjustment to the conversion rate of the notes, see "Material U.S. Federal Income Tax Con siderations - U.S. Holders Dividends and Constructive Dividends."

          To the extent that we have a rights plan in effect upon any conversion of the notes into common stock, a holder will receive, in addition to the common stock, the rights under the rights plan, unless, prior to any conversion, the rights have separated from the common stock, in which case the conversion rate will be adjusted at the time of separation as described in clause (3) above. A further adjustment will occur as described in clause (3) above, if such rights become exercisable to purchase different securities, evidences of indebtedness or assets, subject to readjustment in the event of the expiration, termination or redemption of such rights.

          Following:

• any reclassification of our common stock;

• a consolidation, merger, binding share exchange or combination involving us; or

• a sale or conveyance to another person or entity of all or substantially all of our property or assets;

the conversion value and the amounts received in settlement of our conversion obligation will be computed as set forth under "- Payment upon Conversion" above, based on the kind and amount of shares of stock, securities, asset or other property (including cash or any combination thereof) that a holder of a number of shares of our common stock equal to the conversion rate multiplied by the number of notes owned would have owned or been entitled to receive in such transaction (the "reference property") and reference property

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will be delivered in lieu of an common shares that would have otherwise been deliverable upon conversion. If holders of common stock would be entitled to elect the consideration for their common stock received in any transaction described in the previous sentence, we will make adequate provisions so that upon conversion the holders of the notes will be entitled to elect, voting as a class, the consideration for common stock upon which the reference property will be based.

          The applicable conversion rate will not be adjusted:

• upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in shares of our, common stock under any plan;

• upon the issuance of any shares of our common stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by us or any of our subsidiaries;

• upon the issuance of any shares of our common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet and outstanding as of the date the notes were first issued;

• for a change in the par value of the common stock; or

• for accrued and unpaid interest (including contingent interest and additional amounts, if any).

          Adjustments to the applicable conversion rate will be calculated to the nearest 1/10,000th of a share.

          We will not take any action that would result in an adjustment pursuant to the above provisions without complying with the Nasdaq's shareholder approval rules.

Make-Whole Amount

          If the effective date or anticipated effective date of a transaction described under clause (1) or (3) of the definition of "fundamental change" occurs (regardless of whether the holder has the right to require us to repurchase the notes) and 10% or more of the consideration for our common stock in the transaction consists of consideration other than common stock that is traded or scheduled to be traded immediately following such transaction on a U.S. national securities exchange for the notes surrendered for conversion in connection with such transaction, or if any other fundamental change occurs, we will increase the conversion rate by a number of additional shares (the "additional shares") as described below. We will notify holders at least 35 days prior to the anticipated effective date of such corporate transaction.

          The number of additional shares will be determined by reference to the table below, based on the date on which the transaction becomes effective (the "effective date") and the price (the "stock price") paid per share of our common stock in the transaction. If holders of our common stock receive only cash in the corporate transaction, the stock price will be the cash amount paid per share. Otherwise, the stock price will be the average of the closing sale prices (as defined under "- Conversion upon Satisfaction of Sale Price Condition" above) of our common stock on the five trading days immediately prior to but not including the effective date of the transaction.

          The stock prices set forth in the first row of the table below (i.e., column headers) will be adjusted as of any date on which the conversion rate of the notes is adjusted, as described above under "- Conversion Rate Adjustments." The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of

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which is the conversion rate as so adjusted. The number of additional shares will be adjusted in the same manner as the conversion rate as set forth under "- Conversion Rate Adjustments."

          The following table sets forth the stock price, effective date and number of additional shares per $1,000 principal amount of notes:

Effective Date	Stock Price
, 2007
, 2008
, 2009
, 2010
, 2011
, 2012
, 2013
, 2014

          The maximum amount of additional shares is                   per $1,000 principal amount of notes, subject to adjustment in the same manner as in the conversion rate as set forth under "- Conversion Rate Adjustments."

          Notwithstanding the foregoing, in no event will the total number of shares of common stock issuable upon conversion exceed              per $1,000 principal amount of notes, subject to adjustment in the same manner as the conversion rate as set forth under "- Conversion Rate Adjustments."

          The exact stock prices and effective dates may not be set forth in the table above, in which case:

• If the stock price is between two stock price amounts in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by straight-line interpolation between the number of additional shares set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year.

• If the stock price is in excess of $               per share (subject to adjustment), no additional shares will be added to the conversion rate.

• If the stock price is less than $                  per share (subject to adjustment), no additional shares will be added to the conversion rate.

Redemption at our Option

          Prior to [                  ], 2012, we will not have the right to redeem the notes. We will have the right to redeem the notes in whole or in part, at any time or from time to time, on or after [                       ], 2012 upon not less than 30 nor more than 60 days prior notice by mail, for a cash price equal to the percentage of principal amount of the notes specified in the table below plus accrued and unpaid interest (including contingent interest and additional amounts, if any), if any, up to, but not including, the redemption date.

Period Commencing	Redemption Price
, 2012
, 2013
, 2014

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          If we decide to redeem fewer than all of the outstanding notes, the trustee will select the notes to be redeemed by lot, on a pro rata basis or by another method the trustee considers appropriate. If the trustee selects a portion of a holder's notes for partial redemption and that holder converts a portion of the same notes the converted portion will be deemed first to be from the portion selected for redemption. In the event of any redemption in part, we will not be required to:

• issue, register the transfer of or exchange any note during a period beginning at the opening of business 15 days before any selection of notes, for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of notes to be so redeemed, or

• register the transfer of or exchange any note so selected for redemption, in whole or in part, except the unredeemed portion of any note being redeemed in part.

Repurchase Rights

          Holders have the right to require us to repurchase the notes on [                   ], 2014, [      ], 2017 and [                    ], 2022, each of which we refer to as a "repurchase date." We will be required to repurchase any outstanding notes for which a holder delivers a written repurchase notice to the paying agent. This notice must be delivered during the period beginning at the opening of business on the date that is 20 business days prior to the relevant repurchase date until the close of business on the last day prior to the repurchase date. If the repurchase notice is given and withdrawn during the period, we will not be obligated to repurchase the related notes. Also, our ability to satisfy our repurchase obligations may be affected by t he factors described in "Risk Factors - Risks Relating to this Offering - We may not be able to repurchase the notes upon a fundamental change or upon the exercise of a holder's option to require us to repurchase the notes, or pay cash upon conversion of the notes."

          The repurchase price will be payable in cash and will be equal to 100% of the principal amount of notes to be repurchased, plus accrued and unpaid interest (including contingent interest and additional amounts, if any), if any, on such repurchase date. To exercise this right, the holder must deliver a written notice to the paying agent prior to the close of business on the business day prior to the repurchase date. The required repurchase notice shall state:

• if certificated notes have been issued, the certificate number of the notes (or if the notes are not certificated, the notice must comply with appropriate DTC procedures);

• the portion of the principal amount of notes to be repurchased, which portion must be $1,000 or an integral multiple of $1,000; and

• that we are to repurchase such notes pursuant to the applicable provisions of the notes and the indenture. A holder may withdraw any repurchase notice by delivering to the paying agent a written notice of withdrawal prior to the close of business on the business day prior to the repurchase date.

          The notice of withdrawal shall state:

• the principal amount being withdrawn;

• the certificate numbers of the notes being withdrawn (or, if the notes are not certificated, the notice must comply with appropriate DTC procedures); and

• the principal amount, if any, of the notes that remain subject to the repurchase notice.

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          Our obligation to pay the repurchase price for a note for which a repurchase notice has been delivered and not validly withdrawn is conditioned upon delivery of the note, together with all necessary endorsements and compliance by the holder with all DTC procedures, as applicable, to the paying agent at any time after the delivery of such repurchase notice. Payment of the repurchase price for such note will be made on the business day following the later of the repurchase date or the time of delivery of such note. If the paying agent holds money sufficient to pay the repurchase price of the note on the business day following the repurchase date in accordance with the terms of the indenture, then, immediately after the repurchase date, interest (including, contingent interest and additional amounts, if any) on such note will cease to accrue, whether or not the note is delivered to the paying agent, and all other rights of the holder shall terminate, other than the right to receive the repurchase price upon delivery of the note.

          In connection with any repurchase at the option of the holders, we will:

• to the extent applicable, comply with the provisions of Rule 13e-4, Rule 14e-1 and comply with any other tender offer rules under the Exchange Act that may then be applicable; and

• otherwise comply with all federal and state securities laws as necessary under the indenture to effect a repurchase of notes by us at the option of a holder.

Repurchase of Notes by Us at Option of Holder upon a Fundamental Change

          If a fundamental change, as defined below, occurs, each holder will have the right on the fundamental change repurchase date to require us to repurchase for cash all of its notes or any portion of those notes that is equal to $1,000 in principal amount or integral multiples thereof, at a fundamental change repurchase price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest (including contingent interest and additional amounts, if any) on the notes to but not including the fundamental change repurchase date. If the fundamental change repurchase date is on a date that is after a record date and on or prior to the corresponding interest payment date, we will pay such interest (including contingent interest and additional amounts, if any) to the person to whom principal is payable.

          Within 15 days after the occurrence of a fundamental change, we must give notice to each holder and the trustee of each holder's resulting repurchase right, specifying the fundamental change repurchase date and the procedures that each holder must follow to require us to repurchase its notes as described below. Simultaneously with providing such notice, we will issue a press release and publish the information on our website. The fundamental change repurchase date specified by us will be 30 days after the date on which we give this notice.

          The fundamental change repurchase notice given by a holder electing to require us to repurchase its notes shall be given so as to be received by the paying agent no later than the close of business on the business day prior to the fundamental change repurchase date and must state:

• if certificated notes have been issued, the certificate numbers of the holder's notes to be delivered for repurchase (or, if the notes are not issued in certificated form, the fundamental change repurchase notice must comply with appropriate DTC procedures);

• the portion of the principal amount of notes to be repurchased, which must be $1,000 or an integral multiple thereof; and

• that the notes are to be repurchased by us pursuant to the applicable provisions of the indenture.

          A holder may withdraw its fundamental change repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the business day prior to the fundamental change repurchase date. The notice of withdrawal shall state:

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• the principal amount of notes being withdrawn;

• if certificated notes have been issued, the certificate numbers of the notes being withdrawn (or, if the notes are not issued in certificated form, the notice of withdrawal must comply with appropriate DTC procedures); and

• the principal amount of the notes, if any, that remain subject to the fundamental change repurchase notice.

          A "fundamental change" will be deemed to have occurred at such time after the original issuance of the notes as:

(1)	a, "person" or "group" (each within the meaning of Section 13(d)(3) of the Exchange Act) files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect "beneficial owner," as defined in Rule 13d-3 under the Exchange Act, of shares of our common stock representing more than 50% of the voting power of our common stock entitled to vote generally in the election of directors; or
(2)	the first day on which a majority of the members of our board of directors does not consist of continuing directors; or
(3)	a consolidation, merger or binding share exchange, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of our properties and assets to another person, other than:

• any transaction:

(i)	that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock; and
(ii)	pursuant to which holders of our capital stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in elections of directors of the continuing or surviving or successor person immediately after giving effect to such issuance; or

• any merger, share exchange, transfer of assets or similar transaction solely for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding common stock, if at all, solely into common stock, ordinary shares or American Depositary Shares of the surviving entity or a direct or indirect parent of the surviving corporation; or

• any consolidation or merger with or into any of our subsidiaries, so long as such merger or consolidation is not part of a plan or a series of transactions designed to or having the effect of merging or consolidating with any other person; or

(4) a termination of trading.

          A "continuing director" means a director who either was a member of our board of directors on the date of original issuance of the notes or who becomes a member of our board of directors subsequent to that date and whose appointment, election or nomination for election by our shareholders is duly approved by a majority of the continuing directors on our board of directors at the time of such approval, either by specific vote or by approval of the proxy statement issued by us on behalf of the board of directors in which such individual is named as nominee for director.

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          A "termination of trading" will be deemed to have occurred if our common stock (or other common stock into which the notes are then convertible) is not listed for trading on a U.S. national securities exchange.

          The definition of change of control includes a phrase relating to the conveyance, transfer, sale, lease or disposition of "all or substantially all" of our assets. There is no precise, established definition of the phrase "substantially all" under applicable law. Accordingly, a holder's ability to require us to repurchase its notes as a result of a conveyance, transfer, sale, lease or other disposition of less than all our assets may be uncertain.

          Notwithstanding the foregoing, a holder will not have the right to require us to repurchase its notes upon a fundamental change described in clause (3) above if more then 90% of the consideration in the transaction or transactions consists of common stock traded or to be traded immediately following a change of control on a U.S. national securities exchange, and, as a result of the transaction or transactions, the notes become convertible into that common stock (and any rights attached thereto).

          Rule 13e-4 under the Exchange Act requires the dissemination of certain information to security holders if an issuer tender offer occurs and may apply if the repurchase option becomes available to holders of the notes. We will comply with this rule and file Schedule TO (or any similar schedule) to the extent required at that time.

          If the paying agent holds money sufficient to pay the fundamental change repurchase price of the notes which holders have elected to require us to repurchase on the business day following the fundamental change repurchase date in accordance with the terms of the indenture, then, immediately after the fundamental change repurchase date, those notes will cease to be outstanding and interest (including contingent interest and additional amounts, if any) on the notes will cease to accrue, whether or not the notes are transferred by book entry or delivered to the paying agent. Thereafter, all other rights of the holders shall terminate, other than the right to receive the fundamental change repurchase price upon book-entry transfer of the notes or delivery of the notes.

          The term "fundamental change" is limited to specified transactions and does not include other events that might adversely affect our financial condition or business operations. The foregoing provisions would not necessarily protect holders of the notes if highly leveraged or other transactions involving us occur that may affect holders adversely. We could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a fundamental change with respect to the fundamental change repurchase feature of the notes but that would increase the amount of our (or our subsidiaries') outstanding indebtedness.

          Our ability to repurchase notes for cash upon the occurrence of a fundamental change is subject to important limitations. Our ability to repurchase the notes for cash may be limited by restrictions on our ability to obtain funds for such repurchase through dividends from our subsidiaries, the terms of our then existing borrowing arrangements or otherwise.

          The fundamental change purchase feature of the notes may in certain circumstances make it more difficult or discourage a takeover of our company. The fundamental change purchase feature, however, is not the result of our knowledge of any specific effort:

• to accumulate shares of our common stock;

• to obtain control of us by means of a merger, tender offer solicitation or otherwise; or

• by management to adopt a series of anti-takeover provisions.

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          Instead, the fundamental change repurchase feature is a standard term contained in securities similar to the notes.

Merger or Sale of Assets

          The indenture provides that we may not consolidate with or merge with or into any other person or convey, transfer or lease all or substantially all our assets to another person, unless:

• the resulting, surviving or transferee person (the "successor company") will be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the successor company (if not us) will expressly assume, by a supplemental indenture, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all of our obligations under the notes and the indenture;

• immediately after giving effect to such transaction (and treating any indebtedness which becomes an obligation of the successor company as a result of such transaction as having been incurred by the successor company at the time of such transaction), no default under the indenture shall have occurred and be continuing; and

• we shall have delivered to the trustee an officers' certificate and an opinion of counsel, each stating that the consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture.

          The successor company will succeed to, and be substituted for, and may exercise every right and power of us under the indenture, but in the case of a conveyance, transfer or lease of all or substantially all our assets, we will not be released from the obligation to pay the principal of and interest on the notes.

Events of Default; Notice and Waiver

          The following will constitute defaults under the indenture, subject to any additional limitations and qualifications included in the indenture:

• a default in the payment of the principal amount, redemption price, repurchase price or fundamental change purchase price when due at maturity, upon redemption, upon repurchase at the option of a holder upon a fundamental change or on any other repurchase date or otherwise;

• a default in the payment of any interest (including contingent interest and additional amounts, if any) on the notes when due and such failure continues for a period of 30 days past the applicable due date;

• we fail to provide notice of the occurrence of a fundamental change as required by the indenture;

• a default in our obligation to deliver the settlement amount upon conversion of the notes, together with cash in lieu thereof in respect of any fractional shares, upon conversion of any notes;

• the failure by us to perform or observe any of our other covenants or warranties in the indenture or in the notes for 30 days after written notice to us from the trustee or to us and the trustee from the holders of at least 25% in principal amount of the outstanding notes has been received by us;

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• a failure to pay when due at maturity or a default that results in the acceleration of any indebtedness for borrowed money of us or our subsidiaries in an aggregate amount of $5.0 million or more;

• the failure by us or any of our subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; and

• certain events of bankruptcy, insolvency and reorganization of us or any of our significant subsidiaries.

          The foregoing will constitute events of default whatever the reason for any such event of default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

          If a default under the indenture occurs and is continuing and is known to the trustee, the trustee must mail to each holder of the notes notice of the default within 90 days after it occurs. The trustee may withhold notice to the holders of the notes of a default, except defaults in non-payment of principal or interest (including contingent interest and additional amounts, if any) on the notes. However, the trustee must consider it to be in the interest of the holders of the notes to withhold this notice.

          If an event of default (other than an event of default relating to certain events of bankruptcy, insolvency or reorganization of us) occurs and continues, the trustee or the holders of at least 25% in principal amount of the outstanding notes may declare the principal and accrued and unpaid interest (including contingent interest and additional amounts, if any) on the outstanding notes to be immediately due and payable. In case of certain events of bankruptcy, insolvency or reorganization as describe above, the principal and accrued and unpaid interest (including contingent interest and additional amounts, if any) on the notes will automatically become immediately due and payable. Under certain circumstances, the holders of a majority in principal amount of the outstanding notes may rescind such acceleration with respect to the notes and, as is discussed below, waive these past defaults.

          The holders of a majority in principal amount of outstanding notes will have the right to direct the time, method and place of any proceedings for any remedy available to the trustee or of exercising any trust or power conferred on the trustee, subject to limitations specified in the indenture. The trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the trustee determines is unduly prejudicial to the rights of any other holder of the notes or that would involve the trustee in personal liability. Prior to taking any action under the indenture, the trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

          The holders of a majority in principal amount of outstanding notes may waive any past defaults under the indenture, except a default due to the non-payment of principal or interest (including contingent interest and additional amounts, if any) a failure to convert any notes into common stock, a default arising from our failure to repurchase any notes when required pursuant to the terms of the indenture or a default in respect of any covenant that cannot be amended without the consent of each holder affected.

          No holder of the notes may pursue any remedy under the indenture, except in the case of a default due to the non-payment of principal or interest (including contingent interest and additional amounts, if any) unless:

• the holder has given the trustee written notice of a default;

• the holders of at least 25% in principal amount of outstanding notes make a written request to the trustee to pursue the remedy;

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• the trustee does not receive an inconsistent direction from the holders of a majority in principal amount of outstanding notes, and;

• the trustee fails to comply with the request within 60 days after receipt of the request and offer of indemnity.

          The indenture will require us (i) every year to deliver to the trustee a statement as to performance of our obligations under the indenture and as to any default, and (ii) to deliver to the trustee prompt notice of any default.

          A default in the payment of the notes, or a default with respect to the notes that causes them to be accelerated, may give rise to a cross-default under our existing borrowing arrangements.

Legal Defeasance and Covenant Defeasance

          The notes will not be subject to any defeasance provisions under the indenture.

Amendment and Modification

          The consent of the holders of a majority in principal amount of the outstanding notes (voting as a single class) is required to modify or amend the indenture. However, a modification or amendment requires the consent of the holder of each outstanding note affected by such modification or amendment if it would:

• reduce the principal amount of or change the stated maturity of any note;

• reduce the rate or extend the time for payment of interest (including contingent interest and additional amounts, if any) on any note;

• make any change that adversely affects the right to require us to purchase a note, reduce any amount payable upon repurchase of any note (including upon the occurrence of a fundamental change) or change the time at which or circumstances under which the notes may or shall be repurchased;

• adversely change the terms upon which the notes may be redeemed;

• impair the right to receive payment with respect to the notes or the right to institute suit for the enforcement of any payment with respect to, or conversion of, any note;

• change the currency in which any note is payable;

• impair the right of a holder to convert any note or reduce the number of shares of common stock or amount of any other property receivable upon conversion;

• reduce the quorum or voting requirements under the indenture;

• change our obligation to maintain an office or agency in the places and for the purposes specified in the indenture;

• subject to specified exceptions, amend or modify certain of the provisions of the indenture relating to amendment or modification or waiver of provisions of the indenture; or

• reduce the percentage of notes required for consent to any amendment or modification of the indenture.

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          We and the trustee may modify certain provisions of the indenture without the consent of the holders of the notes, including to:

• add guarantees with respect to the notes or secure the notes;

• evidence the assumption of our obligations by a successor person under the provisions of the indenture relating to consolidations, mergers and sales of assets;

• surrender any of our rights or powers under the indenture;

• add covenants or events of default for the benefit of the holders of notes;

• cure any ambiguity or correct any inconsistency in the indenture, so long as such action will not materially adversely affect the interests of holders;

• modify or amend the indenture to permit the qualification of the indenture or any supplemental indenture under the Trust Indenture Act of 1939 as then in effect;

• establish the forms or terms of the notes;

• evidence the acceptance of appointment by a successor trustee;

• provide for uncertificated notes in addition to or in place of certificated notes; provided, however, that the uncertificated notes are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code of 1986, or in a manner such that the uncertificated notes are described in Section 163(f)(2)(B) of the Internal Revenue Code of 1986;

• conform, as necessary, the indenture and the form or terms of the notes, to the "Description of Notes" as set forth in this offering memorandum; and

• make other changes to the indenture or forms or terms of the notes, provided no such change individually or in the aggregate with all other such changes has or will have a material adverse effect on the interests of the holders of the notes.

Calculations in Respect of Notes

          We will be responsible for making all calculations called for under the notes, unless otherwise set forth above. These calculations include, but are not limited to, determinations of the market prices of our common stock, the amount of accrued interest (including contingent interest and additional amounts, if any) payable on the notes and the conversion price of the notes. We will make all these calculations in good faith, and, absent manifest error, our calculations will be final and binding on holders of notes. We will provide a schedule of our calculations to each of the trustee and the conversion agent, and each of the trustee and the conversion agent is entitled to rely upon the accuracy of our calculations without independent verification. The trustee will forward our calculations to any holder of notes upon the request of that holder.

Trustee, Paying Agent and Conversion Agent

          We have appointed [                                    ], the trustee under the indenture, as paying agent, conversion agent, note registrar and custodian for the notes. The trustee or its affiliates may also provide banking and other services to us in the ordinary course of their business.

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Notices

          Except as otherwise described herein, notices to registered holders of the notes will be given by mail to the addresses as they appear in the security register. Notices will be deemed to have been given on the date of mailing.

Rule 144A Information Request

          We will furnish to the holders or beneficial holders of the notes or the common stock issuable upon conversion of the notes and prospective purchasers of the notes, upon their request, the information, if any, required under Rule 144A(d)(4) under the Securities Act until such time as these securities are no longer "restricted securities" within the meaning of Rule 144 under the Securities Act, assuming these securities have not been owned by an affiliate of ours.

Governing Law

          The notes and the indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

Registration Rights

          Prior to or on the closing of this offering, we will enter into a registration rights agreement with the initial purchaser pursuant to which we will agree for the benefit of the holders of the notes and the common stock issuable upon conversion of the notes that we will, at our cost:

• (x) file a shelf registration statement with the SEC covering resales of the notes and the shares of our common stock issuable on conversion of the notes (which shall be an automatic shelf registration statement if we are eligible to use an automatic shelf registration at the time of filing) no later than 90 days after the first date of original issuance of the notes and (y) (if we are not eligible to use an automatic shelf registration statement) use our reasonable best efforts to cause the shelf registration statement to become effective under the Securities Act no later than 180 days after the first date of original issuance of the notes; and

• use reasonable best efforts to keep the shelf registration statement effective until the earliest of:

(1)	the date when the holders of notes and holders of the common stock issuable upon conversion of the notes are able to sell such notes and such shares immediately without restriction pursuant to Rule 144(k) under the Securities Act; and
(2)	the date when all of the notes and the common stock issuable upon conversion thereof have been sold either pursuant to the shelf registration statement or pursuant to Rule 144 under the Securities Act or any similar provision then in force or the notes and the common stock issuable upon conversion of the notes cease to be outstanding.

          We may suspend the effectiveness of the shelf registration statement or the use of the prospectus that is part of the shelf registration statement during specified periods under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events. Any suspension period may not exceed an aggregate of:

• 30 days in any 90-day period; or

• 90 days in any 360-day period.

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          We need not specify the nature of the event giving rise to a suspension in any notice to holders of the notes of the existence of such a suspension. Each holder, by its acceptance of the notes, agrees to hold any communication by us in response to a notice of a proposed sale in confidence.

          Each of the following is a registration default:

• the registration statement has not been filed prior to or on the 90th day following the first date of original issuance of any of the notes; or

• the registration statement has not been declared effective prior to or on the 180th day following the first date of original issuance of any of the notes, which is referred to as the "effectiveness target date"; or

• we do not, through our omission, name a holder as a selling stockholder in the prospectus through a prospectus supplement or file a post-effective amendment within the required time periods as described below; or

• any post-effective amendment required to be filed as described below has not been declared effective prior to the 45th day following the date such post-effective amendment is required to be filed; or

• at any time after the effectiveness of the shelf registration statement, the registration statement ceases to be effective or is not usable and (1) we do not cure the registration statement within 10 business days by a post-effective amendment, prospectus supplement or report filed pursuant to the Exchange Act (other than in the case of a suspension period described in the preceding paragraph), (2) if applicable, we do not terminate the suspension period, described in the preceding paragraph, by the 30th day or (3) a suspension period, when aggregated with other suspension periods during the prior 360-day period, continues, unterminated, for more than 90 days.

          If a registration default occurs, predetermined "additional amounts" will accrue on the notes from and including the day following the registration default to but excluding the earlier of (1) the day on which the registration default has been cured and (2) the date the registration statement is no longer required to be kept effective. The additional amounts will be paid to those entitled to interest payments on such dates semiannually in arrears on each May 1 and November 1 and will accrue at a rate per year equal to:

• 0.25% of the principal amount of a note to and including the 90th day following such registration default; and

• 0.50% of the principal amount of a note from and after the 91st day following such registration default.

          In no event will additional amounts exceed 0.50% per year. If a holder converts some or all of its notes into common stock when there exists a registration default with respect to the common stock, the holder will not be entitled to receive additional amounts on such common stock. However, that holder will receive, on the settlement date for any notes submitted for conversion during a registration default, accrued and unpaid additional amounts to the conversion date relating to such settlement date. If a registration default with respect to the common stock occurs after a holder has converted its notes into common stock, that holder will not be entitled to any compensation with respect to such common stock. In addition, in no event will additional interest be payable in connection with a registration default relating to a failure to register the common stock deliverable upon a conversion of the notes. For the avoidance of doubt, if we fail to register both the notes and the common stock deliverable upon conversion of the notes, the

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additional amounts will be payable in connection with the registration default relating to the failure to register the notes.

          A holder who elects to sell securities pursuant to the shelf registration statement will:

• be required to be named as a selling security holder in the related prospectus;

• be required to deliver a prospectus to purchasers;

• be subject to the civil liability provisions under the Securities Act in connection with any sales; and

• be subject to the provisions of the registration rights agreement, including indemnification provisions.

• Under the registration rights agreement we will:

• pay all expenses of the shelf registration statement;

• provide each registered holder with copies of the prospectus;

• notify holders when the shelf registration statement has become effective; and

• take other reasonable actions as are required to permit unrestricted resales of the notes and common stock issued upon conversion of the notes in accordance with the terms and conditions of the registration rights agreement.

          The plan of distribution contained in the shelf registration statement will permit resales of registrable securities by selling security holders through brokers and dealers.

          Attached as Annex A to this offering memorandum is a form of notice and questionnaire to be completed and delivered by a holder interested in selling notes or common stock pursuant to the shelf registration statement. In order to be named as a selling security holder in the prospectus at the time of effectiveness of the shelf registration statement, a holder must complete and deliver the questionnaire to us on or prior to the 10th business day before the anticipated effective date of the registration statement. Upon receipt of a completed questionnaire after that time, together with any other information we may reasonably request from a security holder, we will, within 10 business days after receipt, file any amendments to the shelf registration statement or supplements to the related prospectus as are necessary to permit the holder to deliver a prospectus to purchasers of such notes or common stock, subject to our right to suspend the use of the prospectus. We will pay the predetermined additional amounts described above to the holder if we fail to make the filing in the time required or, if such filing is a post-effective amendment to the shelf registration statement required to be declared effective under the Securities Act, if such amendment is not declared effective within 45 days after the date on which the amendment was required to be filed.. If a holder does not timely complete and deliver a questionnaire or provide the other information we may request, that holder will not be named as a selling security holder in the prospectus and will not be permitted to sell its securities pursuant to the shelf registration statement.

Form, Denomination, Exchange, Registration and Transfer

          The notes will be issued:

• in fully registered form;

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• without interest coupons; and

• in denominations of $1,000 principal amount and integral multiples of $1,000. Holders may present notes for conversion, registration of transfer and exchange at the office maintained by us for such purpose, which will initially be the Corporate Trust Office of the trustee in The City of New York.

Payment and Paying Agent

          We will maintain an office or agent in the Borough of Manhattan, The City of New York, where we will pay the principal on the notes and a holder may present the notes for conversion, registration of transfer or exchange for other denominations, which shall initially be an office or agency of the trustee.

          Payments on the notes represented by the global note referred to below will be made to The Depository Trust Company, New York, New York, which is referred to herein as DTC, or its nominee, as the case may be, as the registered owner thereof, in immediately available funds. We expect that DTC or its nominee, upon receipt of any payment on the notes represented by a global note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the global note as shown in the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in the global note held through such participants will be governed by standing instructions and customary practice as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. The participants will be responsible for those payments. Transfers between participants in DTC will be e ffected in accordance with DTC's rules and will be settled in immediately available funds.

Book-Entry Delivery and Settlement

          We will issue the notes in the form of one or more permanent global notes in definitive, fully registered, book-entry form. The global notes will be deposited with or on behalf of DTC and registered in the name of Cede & Co., as nominee of DTC.

          DTC has advised us as follows:

• DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under Section 17A of the Securities Exchange Act of 1934.

• DTC holds securities that its participants deposit with DTC and facilitates the settlement among participants of securities transactions, such as transfers and pledges, in deposited securities, through electronic computerized book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates.

• Direct participants include securities brokers and dealers, trust companies, clearing corporations and other organizations.

• DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities Dealers, Inc.

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• Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly.

• The rules applicable to DTC and its participants are on file with the Securities and Exchange Commission.

          We are providing the following descriptions of the operations and procedures of DTC to the holders solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change by DTC from time to time. None of us, the initial purchaser nor the trustee takes any responsibility for these operations or procedures, and each holder is urged to contact DTC or its participants directly to discuss these matters.

          We expect that under procedures established by DTC:

• Upon deposit of the global notes with DTC or its custodian, DTC will credit on its internal system the accounts of direct participants designated by the initial purchaser with portions of the principal amounts of the global notes.

• Ownership of the notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC or its nominee, with respect to interests of direct participants, and the records of direct and indirect participants, with respect to interests of persons other than participants.

          The laws of some jurisdictions require that purchasers of securities take physical delivery of those securities in definitive form. Accordingly, the ability to transfer interests in the notes represented by a global note to those persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person having an interest in notes represented by a global note to pledge or transfer those interests to persons or entities that do not participate in DTC's system, or otherwise to take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

          So long as DTC or its nominee is the registered owner of a global note, DTC or that nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture and under the notes. Except as provided below, owners of beneficial interests in a global note will not be entitled to have notes represented by that global note registered in their names, will not receive or be entitled to receive physical delivery of certificated notes and will not be considered the owners or holders thereof under the indenture or under the notes for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee. Accordingly, each holder owning a beneficial interest in a global note must rely on the procedures of DTC and, if that holder is not a direct or indirect participant, on the procedures of the participant through which that holder owns its interest, to exercise any rights of a holder of notes under the indenture or the global note.

          Notes represented by a global note will be exchangeable for registered certificated securities with the same terms only if: (1) DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed by us within 90 days; (2) we decide to discontinue use of the system of book-entry transfer through DTC (or any successor depositary); or (3) a default under the indenture occurs and is continuing.

          Neither we, nor the trustee, will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to the notes.

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EX-10.24

EXHIBIT 10.24

AMENDED AND RESTATED
LEASE

OF SPARTAN WAREHOUSE

at 9075 Haggerty Road, Plymouth, Michigan

Between:

PLYMOUTH INVESTORS LIMITED LIABILITY
COMPANY, an Illinois limited liability company

as Lessor

SPARTAN STORES, INC.

as Lessee

AMENDED AND RESTATED
LEASE

          THIS AMENDED AND RESTATED LEASE is made and entered into as of January 26, 2000, by and between:

PLYMOUTH INVESTORS LIMITED LIABILITY COMPANY, an Illinois limited liability company ("LESSOR"),

and

SPARTAN STORES, INC., a Michigan corporation, 1111 - 44^th Street, SE, Grand Rapids, Michigan ("LESSEE").

          WHEREAS, Connecticut Mutual Life Insurance Company, a Connecticut corporation ("Original Lessor") and Lessee have entered into a Lease Agreement dated October 14, 1975 and First Amendment thereto dated March 23, 1977 and Second Amendment thereto dated April 30, 1979 (the "Lease") pertaining to certain real estate located in the Township of Plymouth, County of Wayne, State of Michigan and certain buildings, improvements, fixtures, machinery, equipment and personal property located thereon or therein; and

          WHEREAS, Lessor has succeeded to the interest of Original Lessor with respect to the Lease; and

          WHEREAS, Lessor and Lessee desire to amend and restate the Lease as hereinafter provided.

          NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained and for other good and valuable consideration, the receipt whereof is hereby acknowledged, Lessor and Lessee do hereby covenant and agree that the Lease shall be amended and restated as hereinafter set forth.

Article 1 - PROPERTY TO BE LEASED

                    1.1          Lessor hereby leases to Lessee, and Lessee hereby hires from Lessor, the real property described in Exhibit "A" attached hereto and made a part hereof, together with the buildings, improvements, and fixtures now erected thereon (sometimes hereinafter referred to as the "Improvements") including but not limited to the truck repair garage, storage shed, fuel island and asphalt parking areas upon that portion of said premises outlined in red on Exhibit "A-1" attached hereto and made a part hereof and the warehouse facility and asphalt parking area upon that portion of said premises outlined in red on Exhibit "A-2" attached hereto, herein collectively referred to as the "leased premises", and together with easements or other rights which may now exist or may be hereafter created for the benefit of such property, and the machinery, equipment and personal property located on the leased premises listed in Exhibit "B attached hereto and made a part hereof and the machinery, equipment and personal property

1

located in the leased premises listed in Exhibit "B-2" attached hereto and made a part hereof which in combination with the "leased premises" are referred to herein as the "leased property". Wherever reference is made to the "leased property" in this lease, as amended, such reference shall mean the "leased property" as defined herein, subject to the following:

                              1.1.1          The Lessee represents that the leased property, the title thereto, the possession and occupancy thereof, the buildings and improvements thereon, the adjoining sidewalks and structures, any surface and any subsurface thereof, and the present uses thereof, have been examined by it and that it accepts the same in the condition or state in which they now are, without representation, covenant, or warranty, express or implied, in fact or in law, by the Lessor, and without recourse to the Lessor as to the title thereto, possession or occupancy thereto, possession or occupancy thereof, encumbrances thereon, appurtenances, nature, condition, or usability thereof, or uses to which the leased property may be put.

                              1.1.2          Rights, if any, of others relating to streets, water, gas, electric and other utility lines, wires, pipes and conduits and maintenance thereof, easements of record and the agreement between Chesapeake and Ohio Railway Company and Lessee dated September 5, 1967, involving side tracks.

                              1.1.3          Any reciprocal easement agreements involving adjacent lands.

                              1.1.4          Rights of parties in possession and any leases or subleases involving said leased property.

                              1.1.5          If, by law, or in consequence of the action of any authority or by title paramount, the possession or use of any easement or appurtenance to any buildings now or hereafter erected on the leased premises outside the boundaries of the land owned by the Lessor shall be discontinued, such discontinuance shall in no way affect the liability of the Lessee to pay the full rent and perform all of the covenants contained in this Lease.

                              1.1.6          The mortgage from Lessor, as mortgagor to American National Bank and Trust Company of Chicago, or Mortgagee, recorded 5-30-91 as document No. 97121528 LS in the Wayne County Register of Deeds Office (which mortgage is hereinafter referred to as the "First Mortgage"). The term "First Mortgage" shall also mean any first mortgage encumbering Landlord's interest in the leased property together with any assignment of rents and leases given to secure the repayment of the indebtedness secured by any First Mortgage. Further, the term "First Mortgagee" shall mean the owner and holder of any First Mortgage.

Article 2 - TERM

                    2.1          The term of the Lease shall commence on the date hereof and shall end on October 31, 2005, unless sooner terminated or extended as herein set forth.

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Article 3 - USE OF LEASED PREMISES.

                    3.1          Lessee shall use and occupy the leased premises as and for a warehouse and office and shall not use the leased premises for any other purpose without the prior written consent of Lessor, which consent shall not be unreasonably withheld.

                    3.2          Lessee shall not use or allow the property or any part thereof to be used or occupied for any unlawful purpose or in violation of any certificate of occupancy or certificate of compliance covering or affecting the use of the leased premises or any part thereof. Lessee shall not suffer any act to be done or any condition to exist on the leased premises or any part thereof which may in law constitute a nuisance, public or private, or which may make void or voidable any insurance with respect thereto. Lessee shall not use, treat, store, or dispose of hazardous or toxic materials in the leased premises except: (a) the storage of inventory; (b) the use and storage of customary quantities of routine cleaning, maintenance, and repair supplies; (c) the use and storage of vehicle fuels, lubricants, and supplies; (d) the use and storage of lift truck batteries and other equipment or supplies used in the ordin ary course of Lessee's business; and (e) as otherwise disclosed to Lessor in writing; provided, however, that Lessee shall comply with applicable law with respect to items (a) through (e) above.

                    3.3          Lessee may use and occupy the leased premises incidentally as and for a truck repair garage and automatic truck wash.

Article 4 - RENT

                    4.1          Lessee agrees to pay Lessor as rent for the leased property at such place or places as Lessor may designate from time to time, without notice or demand and without abatement, deduction or setoff, fixed rent of $793,875.00 per annum to November 1, 2000, which sum shall be payable in equal consecutive monthly installments of $66,156.25 each, on or before the first day of each month in advance. Commencing on November 1, 2000, Lessee agrees to pay to Lessor as rent for the leased property at such place or places as Lessor may designate from time to time, without notice or demand and without abatement, deduction or setoff, fixed rent payable in equal, consecutive monthly installments on or before the first day of each month. The annual amount of fixed rent and each monthly installment thereof, commencing on November 1, 2000, shall be as follows:

Period	Annual Fixed Rent	Monthly Installments
November 1, 2000 to and including October 31, 2001	$1,451,450.00	$120,954.17
November 1, 2001 to and including October 31, 2002	$1,480,479.00	$123,373.25

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November 1, 2002 to and including October 31, 2003	$1,510,088.58	$125,840.72
November 1, 2003 to and including October 31, 2004	$1,540,290.35	$128,353.53
November 1, 2004 to and including October 31, 2005	$1,571,096.16	$130,924.68

Lessor and Lessee stipulate and agree that for the purpose of annual fixed rent, the buildings and other improvements contain 414,700 square feet. Should the term of this Lease commence on a day other than the first day of a calendar month or end on a day other than the last day of a calendar month, then the fixed rent for such partial month shall be prorated on a daily basis based upon a thirty (30) day calendar month and shall be payable upon the date hereof or thereof.

                    4.2          It is intended that the rent provided for in this Lease shall be an absolute net return to Lessor for the term of this Lease, free from any loss, expenses or charges with respect to the leased property, including maintenance, repairs, cost of replacement of buildings or improvements, insurance, taxes and assessments now imposed upon or related to the leased property, or with respect to any easements or rights appurtenant thereto, except Lessor's income taxes and except the mortgage payments under any First Mortgage or subordinate mortgage.

                    4.3          All taxes, charges, costs and expenses which the Lessee is required to pay hereunder, together with all interest and penalties that may accrue thereon in the event of the Lessee's failure to pay such amounts, and all damages, costs and expenses which the Lessor may incur by reason of any default of the Lessee or failure on the Lessee's part to comply with the terms of this lease shall be deemed to be "additional rent" and in the event of nonpayment by the Lessee the Lessor shall have all of the rights and remedies with respect thereto as the Lessor has for the nonpayment of the fixed rent. "Fixed rent" and "additional rent" are hereinafter sometimes referred to as "rent".

                    4.4          If Lessee shall fail to pay any rent or other sums or charges payable by Lessee under this Lease when and as the same become due and payable, and such failure shall continue for a period of ten (10) days thereafter, such unpaid amounts shall bear interest at a rate per annum equal to two (2%) percent in excess of the announced base rate of interest of American National Bank and Trust Company of Chicago in effect on the due date of such payment, from the date when the same is payable under the terms of this Lease until the same shall be paid.

Article 5 - TAXES AND ASSESSMENTS

                    5.1          Lessee will pay when due, before any penalties or interest accrue, all taxes, assessments and other charges of any kind levied or assessed prior to or during the continuance of this Lease against the leased property or any part thereof, including any and all taxes imposed by the United States of America, any state or municipality or any political subdivision thereof.

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Should the State of Michigan or any political subdivision thereof or any governmental authority having any jurisdiction there over impose a tax and/or assessment (other than an income or franchise tax) upon or against the rentals payable hereunder by Lessee to Lessor, either by way of substitution for the taxes and assessments levied or assessed against such land and such buildings, or in addition thereto, such tax and/or assessments shall be deemed to constitute a tax and/or assessment against such land and improvements for the purpose of this Section.

                    5.2          Lessee will pay when due all of Lessee's franchise and other corporate taxes, and within thirty (30) days after request therefor by Lessor, Lessee shall furnish to Lessor official receipts or other satisfactory proof of payment thereof.

                    5.3          Lessee shall have the right upon the prior written approval of the First Mortgagee, at Lessee's own expense, to contest by legal proceedings, or otherwise, the validity of any such tax, assessment or other charge payable by it which it deems to have been unlawfully or excessively levied, and for such purpose shall have the right to institute such contest or proceedings in its own name, or in the name of Lessor, or in both names, as Lessee shall deem necessary, provided however that Lessee must still either make timely payment of such contested taxes and/or assessments and seek a refund thereof, or Lessee, at its election may postpone or defer payment of the same if Lessee, shall deposit with Lessor the amount so contested and unpaid, together with all interest and penalties in connection therewith and all charges that may or might be assessed but become a charge on the leased property or any part th ereof, or in lieu thereof, shall have furnished security reasonably satisfactory to Lessor.

                    5.4          If by law any such taxes or assessments may at the option of the taxpayer be paid in installments, Lessee may, provided no event of default shall then exist, exercise the option to pay the same in installments, and in such event shall pay such installments as may become due during the term before any fine, penalty, further interest or cost may be added thereto, so long as Lessee is not in default under this Lease, but if Lessee does default under this Lease, then Lessor shall have the right to thereupon demand that Lessee shall pay in full any or all outstanding taxes and/or assessments. Notwithstanding the aforesaid, Lessee shall be required to pay such taxes and/or assessments in full at least one (1) year before the expiration of the term or in the event of earlier termination hereof Lessee shall pay such taxes and/or assessments in full prior to such termination.

                    5.5          Any taxes or assessments (except those which have been converted into installment payments by Lessee) relating to a fiscal period of a taxing authority, a part of which is included in a period of time after the expiration of the term, shall (whether or not such tax shall be assessed, levied, confirmed, imposed upon or in respect of or become a lien upon the property or shall become due and payable during the term) be pro-rated between Lessor and Lessee as of the expiration of the term, based upon the taxable year. This clause shall not apply in the event of an early termination of this Lease due to default by Lessee.

                    5.6          The Lessee shall furnish to the Lessor official receipts or other satisfactory proof of payment upon receipt thereof by Lessee.

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                    5.7          In the event of any of the following:

                              5.7.1.          The Lessee defaults under any of the terms of this Lease and fails to cure such default within the period after notice is herein provided; or

                              5.7.2          Lessee defaults under any of the terms of this Lease and as a result thereof the Lessor gives written notice of such defaults to the Lessee twice within any period of twelve (12) consecutive months during the term of this Lease (notwithstanding that such defaults shall have been cured within the period after notice as herein provided); or

                              5.7.3          Lessee fails to pay any taxes or assessments levied against the leased property within thirty (30) days after the due date for payment; or

                              5.7.4          In accordance with the provisions of the First Mortgage, in the event that the First Mortgagee requests that the Lessee make the following payments;

then Lessor shall have the right to thereupon demand that Lessee shall pay in addition to each monthly payment of rent to be paid hereunder, a sum equivalent to one-twelfth of the amount estimated by Lessor to be sufficient to enable Lessor to pay at least thirty (30) days before they become due, all such taxes, assessments and other charges. Such additional payments may be commingled with the general funds of Lessor and no interest shall be payable in respect thereof. Upon demand by Lessor, Lessee will deliver and pay over to Lessor such additional sums as are necessary to make up any deficiency in the amount necessary to enable Lessor to fully pay such taxes, assessments and other charges.

Article 6 - RISK ALLOCATION AND INSURANCE

                    6.1          Allocation of Risks. The parties desire, to the extent permitted by law, to allocate certain risks of personal injury, bodily injury and property damage, and risks of loss of real or personal property by reason of fire, explosion or other casualty, and to provide for the responsibility for insuring those risks. It is the intent of the parties that, to the extent any event is insured for or required herein to be insured for, any loss, cost, damage or expense arising from such event, including, without limitation, the expense of defense against claims or suits, be covered by insurance, without regard to the fault of Lessee, its officers, employees or agents ('Lessee Protected Parties'), and without regard to the fault of Lessor, its respective partners, shareholders, members, agents, directors, officers and employees ('Lessor Protected Parties'). As between Lessor Protected Parties and Lessee P rotected Parties, such risks are allocated as follows:

                                        (a)          Lessee shall bear the risk of bodily injury, personal injury or death, or damage to the property, of third persons, occasioned by events occurring on or about the leased premises, regardless of the party at fault. Said risks shall be insured as provided in Section 6.2(a); and

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                                        (b)          Lessee shall bear the risk of damage to the improvements on the leased premises and to Lessee's contents, trade fixtures, machinery, equipment, furniture and furnishings in the leased premises arising out of loss by the events required to be insured against pursuant to Sections 6.2(b), (d) and (e).

Notwithstanding the foregoing, provided Lessee does not default in its obligation to carry insurance under Section 6.2(a), if and to the extent that any loss occasioned by any event of the type described in Section 6.1(a) exceeds the coverage or the amount of insurance required to be carried under said Section or such greater coverage or amount of insurance as is actually carried, or results from an event not required to be insured against or not actually insured against, the party at fault shall pay the amount not actually covered.

                    6.2          Lessee's Insurance. Lessee shall procure and maintain policies of insurance, at its own cost and expense, insuring:

                                        (a)          The Lessor Protected Parties (as "named insureds"), and the First Mortgagee, and Lessee Protected Parties, from all claims, demands or actions made by or on behalf of any person or persons, firm or corporation and arising from, related to or connected with the leased premises, for bodily injury to or personal injury to or death of any person, or more than one (1) person, or for damage to property in an amount of not less than $2,000,000.00 combined single limit per occurrence/aggregate. Said insurance shall be written on an "occurrence" basis and not on a "claims made" basis. If at any time during the term of this Lease, Lessee owns or rents more than one location, the policy shall provide that the aggregate limit in the policy shall apply separately to each location owned or rented by Lessee. Lessor shall have the right, exercisa ble by giving written notice thereof to Lessee, to require Lessee to increase such limit if, in Lessor's reasonable judgment, the amount thereof is insufficient to protect the Lessor Protected Parties and Lessee Protected Parties from judgments which might result from such claims, demands or actions;

                                        (b)          The Improvements at any time situated upon the leased premises ("Improvements") against loss or damage by fire, lightning, wind, storm, hail storm, aircraft, vehicles, smoke, explosion, sewer back-up, riot or civil commotion as provided by the Standard Fire and Extended Coverage Policy and all other risks of direct physical loss as insured against under Special Form ('all risk" coverage). Such coverage shall be provided under the blanket policy maintained by Lessee. The insurance coverage shall be for not less than 100% of the full replacement cost of such Improvements and will include building ordinance coverage to include demolition and increased loss of construction, which building ordinance coverage endorsement shall be in an amount as Lessor shall reasonably require, all subject only to such deductibles as Lessor shall reason ably approve in writing. If, in Lessor's reasonable judgment, the amount thereof is insufficient to protect the Improvements, by an agreed amount endorsement covering the Improvements, the full replacement cost of the Improvements shall be designated annually by Lessor, in the good faith exercise of Lessor's judgment. In the event that Lessee does not agree with Lessor's designation, Lessee shall have the right to submit the matter to an insurance appraiser reasonably selected by Lessor and paid for by Lessee. The insurance appraiser shall submit a written report of his appraisal and if said report discloses that the

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Improvements are not insured as therein required, Lessee shall promptly obtain the insurance required. Lessor shall be named as an additional insured and Lessee shall direct its insurer to pay all proceeds for loss or damage to the Improvements only to Lessor. Said insurance shall contain a policy provision waiving the insurer's right of subrogation against any Lessor Protected Party or any Lessee Protected party, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that either party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such waiver in full force and effect);

                                        (c)          Lessor's business income, protecting Lessor from loss of rents and other charges during the period while the leased premises are unleaseable due to fire or other casualty (for a twelve (12) month period);

                                        (d)          Intentionally Omitted;

                                        (e)          All contents and Lessee's trade fixtures, machinery, equipment, furniture and furnishings in the leased premises to the extent of at least ninety percent (90%) of their replacement cost under Standard Fire and Extended Coverage Policy and all other risks of direct physical loss as insured against under Special Form ("all risk" coverage). Said insurance shall contain an endorsement waiving the insurer's right of subrogation against any Lessor Protected Party, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that Lessor shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereby keeping such waiver in full force and effect);

                                        (f)          Lessee Protected Parties from all worker's compensation claims;

                                        (g)          Intentionally Omitted; and

                                        (h)          Insurance against loss or damage to the Improvements from external explosion of boilers, air conditioning equipment and miscellaneous electrical apparatus, if any, in the leased premises. Lessor shall be named as an additional insured and Lessee shall direct its insurer to pay all proceeds for loss or damage to the Improvements only to Lessor. Said insurance shall contain an endorsement waiving the insurer's right of subrogation against any Lessor Protected Party or any Lessee Protected Party, provided that such waiver or right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (except that either party shall have the right, within thirty (30) days following written notice, to pay such increased costs, thereby keeping such waiver in full force and effect.

                    6.3          Form of Insurance. All of the aforesaid insurance shall be in responsible companies. The insurer and the form, substance and amount (where not stated above) shall be satisfactory from time to time to Lessor and the First Mortgagee, and shall unconditionally provide that it is not subject to cancellation or non-renewal except after at least thirty (30) days

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prior written notice to Lessor and the First Mortgagee (except that such period shall be reduced to ten (10) days in the event of cancellation for nonpayment of premiums). The insurance specified in Section 6.2(b) shall contain a mortgage clause satisfactory to the First Mortgagee and the insurance specified in Sections 6.2(c), (d) and (h) shall also insure the First Mortgagee as required by the First Mortgagee. Originals of Lessee's insurance policies (or certificates thereof satisfactory to Lessor), together with satisfactory evidence of payment of the premiums thereon, shall be deposited with Lessor not less than thirty (30) days prior to the end of the term of such coverage.

                    6.4          Fire Protection. Lessee shall conform with all applicable fire codes of any governmental authority, and with the rules and regulations of Lessor's fire underwriters and their fire protection engineers, including, without limitation, the installation of adequate fire extinguishers. In the event that the leased premises are served by a sprinkler system, Lessee will, at all times during the entire Lease term, cause the same to be served by a sprinkler monitoring system connected to the local Fire department or to a qualified monitoring service approved by Lessor; provided, however, that Lessee may self monitor such systems if it certifies to Lessor that its systems meet NFPA 72 Standard for Proprietary Protective Signaling System.

Article 7 - COMPLIANCE WITH LAWS

                    7.1          Lessee will, in its use and occupancy of the leased premises, at its sole cost and expense, comply with, and shall cause all subtenants and other occupants of the leased property to comply with, all Federal, State, county, municipal and other governmental statutes, laws, rules, orders, regulations and ordinances affecting the leased premises or any part thereof or the use thereof. This shall include without limitation obtaining and paying for any and all permits in connection with the use and occupation of the property and shall also pertain to any required structural changes, subject however to Article 10, "Alterations and Additions".

                    7.2          After first having obtained the Lessors' prior written approval, which shall not be unreasonably withheld, and also first having obtained the First Mortgagee's prior written approval, and also having first provided the Lessor with whatever security Lessor may deem necessary under the circumstances, Lessee may thereafter have the right, at its own expense, to contest or review by legal proceedings, or otherwise, any such statutes, laws, rules, orders, regulations, or ordinances, in its own name, or in the name of Lessor or in both names as Lessee shall deem necessary. During the period of any such contest or review, Lessee shall not be deemed in default under this lease for noncompliance with any such statutes, laws, rules, orders, regulations or ordinances.

Article 8 - MECHANIC'S LIENS

                    8.1          Lessee will not create or permit to be created, or to remain, and will promptly discharge, at its sole cost and expense, any lien, encumbrance or charge upon the leased property or any part thereof, or upon Lessee's leasehold interest therein, except such as are created by the Lessor or the First Mortgagee. Provided however that, after first having obtained First Mortgagee's prior written approval, Lessee shall have the right, at its own expense, to

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contest by legal proceedings or otherwise, any such lien, encumbrance or charge upon the leased premises, or the underlying claim giving rise to any such lien, encumbrance or charge, in its own name, or in the name of Lessor or in both names, as Lessee shall deem necessary. During the period of any such contest or proceedings, Lessee shall not be deemed in default under this Lease solely because of the existence of any such lien, encumbrance or charge upon the leased premises. Nothing in this lease contained shall be construed as constituting the consent or request of Lessor, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor to or for the performance of any labor or construction, alteration, addition, repair or demolition of or to the leased premises or any part thereof. Notice is hereby given that Lessor will not be liable for any labor, services or materials furnished or to be furnished to Lessee, or to anyone holding the leased premises or any part thereof through or u nder Lessee, and that no mechanic's or other liens for any such labor or materials shall attach to or affect the interest of Lessor or the First Mortgagee in and to the leased premises. Lessor shall have the right to require Lessee to remove any mechanic's lien, on twenty (20) days notice, by providing a bond at Lessee's expense.

Article 9 - REPAIRS AND MAINTENANCE

                    9.1          Lessee shall keep the leased property, including pipes, heating systems, plumbing systems, sprinkler systems, window glass, fixtures and all other appliances and appurtenances, all equipment and other property located thereon, and all alleyways, passageways, sidewalks, curbs and vaults adjoining the leased property in good and clean order and condition, ordinary wear and tear excepted, shall not make or suffer any waste or damage thereto, and shall make all necessary repairs, replacements and renewals thereof, interior and exterior, structural and non-structural, ordinary and extraordinary and foreseen and unforseen. The Lessee shall also maintain all portions of the leased property and adjoining areas, in a clean and orderly condition, free of dirt, rubbish, snow, ice and unlawful obstructions. The necessity for and adequacy of the maintenance, repairs and replacements to the property made or requi red to be made pursuant to this Section shall be measured by the standards which are appropriate for first-class buildings of similar construction containing similar facilities and which are necessary to maintain the property at all times as a first-class project in a good state of repair.

Article 10 - ALTERATIONS AND ADDITIONS

                    10.1          Lessee, may, at any time, at its sole cost and expense, make all alterations and additions to existing structures and may make other improvements to the leased property, provided that Lessee is not in default under any of the terms or provisions of this Lease, subject to the further provisions of this Article and to all other applicable provisions of this Lease.

                    10.2          No alteration or addition shall be made without Lessor's prior written consent (which consent shall not be unreasonably withheld) if:

                              10.2.1          The proposed alteration or addition would change the type or character of the Improvements; or

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                              10.2.2          The proposed alteration or addition would reduce the size of the Improvements or diminish the area thereof; or

                              10.2.3          If, in any single instance, the estimated cost of any proposed alteration or addition is $50,000.00 or more.

                    10.3          In the event the Lessee should at any time intend to make an addition to the Improvements and if the Lessee intends to obtain a loan to finance the same, then the Lessee shall deliver to the Lessor a written notice to that effect including: (i) plans and specifications; (ii) an itemization of all costs involving such construction; (iii) a copy of the construction contract, if any; and (iv) a copy of any bona fide loan commitment which Lessee has received, and/or a copy of any offer of proposed financing which Lessee has received, if any. The Lessor shall have the right and option for a period of sixty (60) days after receipt of such notice and data to elect to finance such construction upon the same terms as were stated in such prior loan commitment, if any, or in such offer of proposed financing (iv above) by written notice by Lessor to Lessee, or upon any other mutually agreeable terms. If Lessor does not elect to exercise such option and if such proposed loan is effected within ninety (90) days after the termination of such option in the manner and upon the terms set forth in said prior loan commitment, or said prior offer or proposed financing, as the case may be, then the said loan may be consummated, provided however the terms of this Section shall have equal application to any new such lender. If the Lessor does not elect to exercise such option and if the proposed loan is not effected within ninety (90) days after the termination of such option, then such construction may not be financed by a party other than Lessor without again giving the notice to Lessor and the Lessor again shall have the option to loan as herein provided.

                    10.4          Except for alterations and additions not requiring Lessor's prior consent, each alteration or addition shall be made under the supervision of an architect or engineer selected by Lessee and approved by Lessor, which approval shall not be unreasonably withheld; and shall be made in accordance with detailed plans and specifications prepared by such architect or engineer. Copies of all such plans and specifications shall be delivered by Lessee to Lessor, and shall be subject to Lessor's prior approval.

                    10.5          No alteration or addition shall be made except in compliance by Lessee with each of the following provisions:

                              10.5.1          All alterations and additions shall be made with reasonable diligence and dispatch (subject to unavoidable delays) in a first-class manner and with first-class workmanship and materials comparable to or better than those existing.

                              10.5.2          Before any changes or alterations are begun, Lessee shall procure, at its expense, all necessary licenses, permits, approvals and authorizations from all governmental authorities and shall upon demand deliver photocopies thereof to Lessor. Upon Lessee's request, Lessor shall join in the application for such license, permits, approvals and authorizations whenever such action is necessary and Lessee covenants that Lessor will not suffer, sustain or incur any cost, expense or liability by reason thereof.

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                              10.5.3          Promptly after the completion of any change or alteration, Lessee shall procure at Lessee's expense all such approvals by governmental authorities, if any, of the completed change or alteration as may be required by any applicable law or ordinance or any applicable rule or regulation of governmental authorities and all such insurance organizations' approvals, if any, as may be required or customary in connection therewith, and on written demand shall promptly deliver photocopies thereof to Lessor.

                              10.5.4          No alteration or addition shall create any encroachment upon any street or upon any adjacent premises.

                              10.5.5          Unless performed entirely within the enclosure walls of any building then existing on the premises, Lessee shall on written demand promptly deliver to Lessor a copy of a final survey of the premises showing the completed alteration or addition.

                              10.5.6          No alteration or addition shall be made which would render title to the leased premises or any part thereof unmarketable or objectionable to Lessor.

                              10.5.7          No alteration or addition shall be made which would tie-in or connect any building or structure on the premises with any other building or structure located outside of the boundary lines of the premises without the written consent of Lessor, which consent shall not be unreasonably withheld.

                              10.5.8          At all times when any alteration or addition is in progress there shall be maintained, at the Lessee's expense, workmen's compensation insurance in accordance with the law covering all persons employed in connection with the alteration or addition and general liability insurance for the mutual benefit of and insuring the Lessee, Lessor and First Mortgagee, expressly covering the additional hazards due to the addition or alteration, and the Lessee shall provide the Lessor with a copy of such insurance policies upon demand.

                    10.6          The Lessor shall in no event be required to maintain or make any alteration, rebuilding, replacement, change, addition, improvement or repair upon the leased property during the term.

                    10.7          All buildings, alterations, rebuildings, replacements, changes, additions, improvements, equipment and appurtenances on or in the leased property which were placed thereon after December 31, 1975 or which may hereafter be placed thereon shall immediately become the sole and absolute property of the Lessor and shall be deemed to be part of the leased property except that all moveable equipment and trade fixtures installed by the Lessee or others holding under or through the Lessee, shall be and remain the property of the Lessee or such other parties. The Lessor may designate by written notice to Lessee those alterations and additions which shall be removed by Lessee at the expiration or termination of the Lease and Lessee shall promptly remove the same and repair any damage to the leased premises caused by such removal, except as to such alterations and/or additions to which the Lessor (or the Origi nal Lessor) has previously given the Lessee its written consent that the same need not be removed by Lessee at the expiration or termination of this Lease.

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Article 11 - INDEMNITY

                    11.1          Indemnity. Lessee will protect, indemnify and save harmless Lessor (for the purpose of this Article 11 only, the term "Lessor" shall also include the First Mortgagee and the agents of the First Mortgagee and any purchaser of the leased property) Protected Parties (as defined in Section 6.1) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against the Lessor Protected Parties or any of them of which Lessee is given written notice by reason of (i) any failure on the part of Lessee to perform or comply with any of the terms of this Lease; or (ii) performance of any labor or services or the furnishing of any materials or other property in respect of the leased premises or any part thereof. In case any action, su it or proceeding is brought against the Lessor Protected Parties, of which Lessee is given written notice by reason of any occurrence described in this Section 11.1, Lessee will, at Lessee's expense, by counsel approved by Lessor, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of Lessee under this Section 11.1 shall survive the expiration or earlier termination of this Lease. Lessee warrants, covenants and represents to Lessor that Lessee will perform, in a timely and proper manner, all of Lessee's obligations under the agreement between Buckeye Pipeline Company and Lessee recorded in Liber 16467, page 203 and under the agreement between Chesapeake and Ohio Railway Company and Lessee dated September 5, 1967, involving side tracks.

Article 12 - UTILITIES

                    12.1          Charges for utilities, including without limitation gas, electricity, light, heat, power, water, sewage and telephone or other communication services, shall be paid by Lessee as they are incurred. The Lessee shall furnish to the Lessor receipts or other satisfactory proof of payment of such premiums within a reasonable time after demand by the Lessor.

                    12.2          Lessee shall have the right to use the utility facilities which are presently existing on the leased premises, however, Lessor shall not be required to furnish any service to the leased premises, including, but not limited to, heat, water and power. The Lessor shall not be liable for any failure of water supply or electric current or any service by any utility, for injury to persons (including death) or damage to property resulting from steam, gas, electricity, water, rain or snow which may flow or leak from any part of the leased property or from any pipes, appliances or plumbing works from the street or subsurface or from any other place, or for interference with light or other easements, however caused, except if due to the affirmative negligence of the Lessor.

                    12.3          If the existing facilities are required to be modified or replaced for any reason by any utility company or authorized agency, governmental or otherwise, then Lessee shall comply with the same at its own cost and shall save Lessor harmless therefrom, all subject to Article 10, "Alterations and additions".

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Article 13 - RESTORATION

                    13.1          In case of any damage to or destruction of the leased property or any part thereof, Lessee shall give immediate notice thereof to Lessor and First Mortgagee, and Lessee shall, at Lessee's expense, repair, restore, or rebuild the leased premises or the part thereof so damaged, as nearly as possible to the value, condition and character the same was in immediately prior to such damage or destruction, with such changes or alterations as may be made at Lessee's election pursuant to and subject to the conditions of Article 10, Alterations and Additions, (such repair, restoration, rebuilding, changes and alterations, together with any temporary repairs and property protecting pending completion of the work being herein called "restoration") all in accordance with plans and specifications therefor first approved by Lessor, unless Lessor shall have waived its right of approval in writing.

                    13.2          If, by reason of any damage or destruction mentioned in Sec. 13.1, any sums are to be paid under any insurance policy mentioned in Article 6 hereof, after receiving First Mortgagee's prior written approval, such sum shall be paid as follows:

                              13.2.1          Such sums, other than rent insurance proceeds paid pursuant to Section 6.2(c), shall be paid as provided in Sec. 13.3 except that if the aggregate insurance proceeds received by reason of any single instance of damage or destruction shall be less than $50,000 Dollars, such insurance proceeds (all of Lessor's right, title and interest to which proceeds are hereby assigned to Lessee) shall be paid over to Lessee, and Lessee shall hold the same as a trust fund to be used first for the payment of the entire cost of restoration before using the same for any other purpose; provided however, that if any event of default by Lessee shall exist hereunder at the time such proceeds are so to be paid over to Lessee, such proceeds shall be held and applied as provided for in Sec. 13.3.

                              13.2.2          Rent insurance proceeds paid pursuant to Section 6.2(c), if payable, shall be applied to the payment of, when and as due and payable, the installments of rent and other payments due under this Lease until restoration has been completed. The balance, if any, of such proceeds shall be paid to Lessee or as Lessee may direct. Furthermore, if Lessee shall have escrowed funds with Lessor to be used for the payment of future taxes (under Sec. 5.6 hereof) and/or to be used for the payment of future insurance premiums (under Sec. 6.5 hereof) such insurance proceeds pertaining to taxes and/or insurance shall belong to the Lessee to the extent of such prepaid escrowed funds.

                    13.3          If the aggregate insurance proceeds (other than rent insurance proceeds paid pursuant to Section 6.2(c)) received by reason of any single instance of damage or destruction shall be $50,000 Dollars or more, such insurance proceeds shall be paid over to the Lessor or the First Mortgagee as a Depositary, which shall hold the same as a trust fund to be used for the payment of the cost of restoration as hereinafter provided. Upon receipt by the Depositary of:

                              13.3.1          A certificate of Lessee dated not more than thirty (30) days prior to the date of such receipt (i) requesting the payment of a specified amount of such money; (ii)

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describing in reasonable detail the work and materials applied to the restoration since the date of the last certificate of Lessee; (iii) stating that such specified amount does not exceed the cost of such work and material; (iv) stating that such work and materials have not previously been made the basis of any request for any withdrawal of money;

                              13.3.2          A certificate of an independent engineer or independent architect designated by Lessee, who shall be approved by Lessor (which approval shall not be unreasonably withheld) stating (i) that the work and materials described in the accompanying certificate of Lessee were satisfactorily performed and furnished and were necessary, appropriate and desirable to the restoration in accordance with the plans and specifications therefor approved by Lessor, unless Lessor shall have waived its right of approval in writing; (ii) that the amount specified in such certificate of Lessee is not in excess of the cost of such work and materials; (iii) the additional amount, if any, required to complete the restoration;

                              13.3.3          Evidence satisfactory to the First Mortgagee, and Lessor, that the cost of such work and materials have been paid in full or will be paid in full out of such advance; and

                              13.3.4          Either (i) a written opinion of counsel satisfactory to Lessor, or (ii) the certification of a title company satisfactory to Lessor, in either case that as of a date not more than two (2) days prior to the date of payment described below there exists no filed or recorded lien, encumbrance or change prior to or on a parity with the estate, rights and interest of Lessor (except for the First Mortgage and permitted exceptions); that the leased premises are not subject to any filed or recorded mechanic's, laborer's, materialmen's or other similar lien, encumbrance or charge, and that the fixtures and equipment are not subject to any title retention agreement, security agreement, lien or other encumbrance except those permitted herein; and

                              13.3.5          First Mortgagee's prior written consent to make the following payments in the manner and sums as provided for herein;

Then the Depositary shall pay to the Lessee the amount of such insurance monies specified in such certificate of Lessee, provided that the balance of funds then held by the Depositary will be sufficient for the completion of the restoration as determined by the certificate required by Subsection 13.3.2. Any balance of insurance proceeds after the completion of restoration, as evidenced by a certificate of such independent engineer or independent architect shall be paid to Lessee.

                    13.4          Except in the event of a default by Lessee hereunder, upon the completion of the term of this Lease as specified by Sec. 2.1, or sooner termination of this Lease by condemnation, and so long as Lessee is not in default hereunder, after receiving First Mortgagee's prior written approval, any insurance proceeds not theretofore applied to the cost of restoration, but required therefor, shall be paid to Lessor, and any excess insurance proceeds shall be paid to Lessee; provided however, that if such termination occurs pursuant to Article 14, "Condemnation", such insurance proceeds shall be deemed to be part of the condemnation award and shall be disposed of as provided in said Article.

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                    13.5          Notwithstanding the foregoing provisions of this Article 13, if, within eighteen (18) months prior to the expiration of the term, the Improvements shall be damaged or destroyed to any extent greater than fifty (50%) percent of then full replacement cost thereof (as determined pursuant to Section 6.2(b) hereof), either party shall have the option within sixty (60) days from the date of said damage or destruction to terminate this Lease by giving notice to the other party, which termination shall be effective not less than thirty (30) days after the giving of such notice and thereupon this Lease shall expire and terminate on the date specified in such notice, and Lessee shall thereupon make payment of all net rent and other sums and charges payable by Lessee hereunder as justly apportioned to the date of such termination, except for any then unpaid installments of the assessments which Lessee has ele cted to pay in installments pursuant to Subsection 5.3 hereof, all of which installments shall forthwith be paid in full by Lessee to Lessor or the taxing authority. In the event of such termination Lessee shall not be required to repair the damage and all insurance monies payable as a result of such damage or destruction shall belong and be paid to Lessor. Notwithstanding the foregoing, Lessee shall not be entitled to exercise its aforesaid "option to terminate" (and any purported exercise thereof shall be void) if at the time:

                              13.5.1          Lessee shall then be in default hereunder; or

                              13.5.2          Any First Mortgage is in effect. In the event all conditions precedent to Lessee's right to exercise its option are satisfied, except the condition in this Subsection 13.5.2, Lessee may exercise its option, provided the hazard insurance proceeds are sufficient to pay off the First Mortgage in full.

                    13.6          Except as otherwise expressly provided in Section 13.5 hereof, no destruction of or damage to the leased premises or any part thereof, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Lessee to surrender or terminate this Lease or shall relieve Lessee from its liability to pay in full the rent and other sums and charges payable by Lessee hereunder or from any of its other obligations under this Lease and Lessee waives any rights now or hereafter conferred upon it by statute or otherwise to surrender this Lease or quit or surrender the leased premises or any part thereof or to receive any suspension, diminution, abatement or reduction of the rent or other sums and charges payable by Lessee hereunder on account of any such destruction or damage except that to the extent to which the Lessor shall have received and retained a sum as proceeds of any rent insur ance pursuant to Subsection 13.2.2 hereof, Lessee shall be entitled to a credit therefor against its obligations under this Lease to pay the rent and such other sums and charges.

Article 14 - CONDEMNATION

                    14.1          Taking of Whole. If the whole of the leased premises shall be taken or condemned for a public or quasi public use or purpose by a competent authority, or if such a portion of the leased premises shall be so taken that as a result thereof the balance cannot be used for the same purpose and with substantially the same utility to Lessee as immediately prior to such taking (including a taking of any portion of the parking area such that the remaining land will not reasonably permit a relocation and reconstruction of the parking area which will permit

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the building located on the leased premises to be used as a warehouse), and Lessee elects to terminate this Lease, which election shall be made by giving written notice thereof to Lessor within thirty (30) days after Lessee receives notice of such taking from Lessor or the condemning authority, then in such event, this Lease shall terminate upon delivery of possession to the condemning authority, and any award, compensation or damages hereinafter sometimes called the "Award") shall be paid to and be the sole property of Lessor whether the Award shall be made as compensation for diminution of the value of the leasehold estate or the fee of the leased premises or otherwise and Lessee hereby assigns to Lessor all of Lessee's right, title and interest in and to any and all of the Award. Notwithstanding the foregoing, Lessee shall be entitled to participate in such proceedings at Lessee's expense, and shall have the right to claim and recover from the condemning authority, but not from Lessor, such compensation a s may be separately awarded or recoverable by Lessee in Lessee's own right on account of any and all damage to Lessee's business by reason of the condemnation and for or on account of any cost or loss to which Lessee might be put in removing Lessee's merchandise, furniture, trade fixtures, equipment, and personal property, but in no event shall Lessee be entitled to any claim or payment based upon the value of any expired term of this Lease. Lessee shall continue to pay rent until the Lease is terminated and any impositions under Article 5 (Taxes and Assessments) and insurance premiums prepaid by Lessee or any unpaid impositions or other charges which accrue prior to the termination, shall be adjusted between the parties.

                    14.2          Partial Taking. If only a part of the leased premises shall be so taken or condemned, but the Lease is not terminated pursuant to Section 14.1 hereof, Lessee, at its sole cost and expense (subject to Lessee's right to use the Award for such purpose as described below), shall repair and restore the leased premises and all Improvements thereon. Should the building which forms a part of the leased premises be reduced, then the annual fixed rent to be paid by Lessee to Lessor in accordance with Article 4 of this Lease shall be reduced by an amount equal to 10.875% percent of the "Net Award" actually received by Lessor (after payment of reasonable expenses of collection, including attorneys' fees, and deducting therefrom any other amounts paid by Lessor to Lessee in accordance with this Article and further deducting any amount the First Mortgagee requires to be paid against the mortgage in debtedness), provided, however, that the annual fixed rent shall not be reduced as herein provided unless the "Net Award" as herein defined exceeds the sum of $25,000.00. Lessee shall promptly and diligently proceed to make a complete architectural unit of the remainder of the improvements, complying with the procedure set forth in Article 13 for such purpose, and provided Lessee is not then in default hereunder, the amount of the Award relating to the improvements shall be deposited with the Depositary (as defined in Article 13 hereof) which shall disburse the Award to apply on the cost of said repairing or restoration in accordance with the procedure set forth in Section 13.3. If Lessee does not make a complete architectural unit of the remainder of the improvements within a reasonable period after such taking or condemnation, not to exceed one hundred eighty (180) days, then, in addition to whatever other remedies Lessor may have either under this Lease, at law or in equity, the money received by and then remaining in the custody of the Depositary shall, at Lessor's election be paid to and retained by Lessor, as liquidated damages resulting from failure of Lessee to comply with the provisions of this Section. Any portion of the Award as may not have to be expended for such repairing or restoration shall be paid to Lessor."

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Article 15 ASSIGNMENT AND SUBLETTING

                    15.1          Consent Required

                                        (a)          Lessee shall not, without Lessor's prior written consent, (i) assign or convey this Lease or any interest under it; (ii) sublet the leased premises or any part thereof; (iii) amend a sublease previously consented to by Lessor; or (iv) permit the use or occupancy of the leased premises or any part thereof by anyone other than Lessee. If Lessee proposes to assign the Lease or enter into any sublease of the leased premises, Lessee shall deliver written notice thereof to Lessor, together with a copy of the proposed assignment or sublease agreement at least thirty (30) days prior to the effective date of the proposed assignment, or the commencement date of the term of the proposed sublease. Any proposed assignment or sublease shall be expressly subject to all of the terms, conditions and covenants of this Lease. Any proposed assignment shall contain an express written assumption by assignee of all of Lessee's obligations under this Lease. Any proposed sublease shall (i) provide that the sublessee shall procure and maintain policies of insurance as required of Lessee under the terms of Section 6.2 hereof, (ii) provide for a copy to Lessor of notice of default by either party, and (iii) otherwise be reasonably acceptable in form to Lessor.

                                        (b)          Lessor's consent to any assignment or subletting shall not unreasonably be withheld. In making its determination as to whether to consent to any proposed assignment or sublease, Lessor may consider, among other things, the creditworthiness and business reputation of the proposed assignee or sublessee, the intended manner of use of the leased premises by the proposed assignee or sublessee, the estimated vehicular traffic on or about the leased premises which would be generated by the proposed assignee or sublessee or by its manner of use of the leased premises, and any other factors which Lessor may reasonably deem relevant. Lessee's remedy, in the event that Lessor shall unreasonably withhold its consent to an assignment or subletting, shall be limited to injunctive relief or declaratory judgment and in no event shall Lessor be li able for damages resulting therefrom. Lessor agrees to promptly stipulate to the facts in any such proceedings for injunctive relief or declaratory judgment. No consent by Lessor to any assignment or subletting shall be deemed to be a consent to any further assignment or subletting or to any sub-subletting.

                                        (c)          In the event that Lessee proposes to assign the Lease or to enter into a sublease of all or substantially all of the leased premises, Lessor shall have the right, so long as the First Mortgagee shall consent in writing thereof, in lieu of consenting thereto, to terminate this Lease, effective as of the effective date of the proposed assignment or the commencement date of the proposed sublease, as the case may be. Lessor may exercise said right by giving Lessee written notice thereof within twenty (20) days after receipt by Lessor of Lessee's notice, given in compliance with Article 20 hereof, of the proposed assignment or sublease. In the event that Lessor exercises such right, Lessee shall surrender the leased premises on the effective date of the termination and this Lease shall thereupon terminate. Lessor may, in the event of s uch termination, enter into a lease with any proposed assignee or sublessee for the leased premises.

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                                        (d)          In the event that Lessee subleases only a portion of the leased premises, Lessee shall pay to Lessor monthly, as additional rent hereunder, fifty percent (50%) of the amount calculated by subtracting from the rent and other charges and consideration payable from time to time by the sublessee to Lessee for said space, the amount of rent payable by Lessee to Lessor under this Lease, allocated (based on the relative rentable square foot area of the total leased premises and of that portion of the leased premises so subleased by Lessee) to the subleased portion of the leased premises.

                                        (e)          No permitted assignment shall be effective and no permitted sublease shall commence unless and until any default by Lessee hereunder shall have been cured. No permitted assignment or subletting shall relieve Lessee from Lessee's obligations and agreements hereunder and Lessee shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment or subletting had been made.

                    15.2          Permitted Assignments. Notwithstanding anything to the contrary contained in this Lease, Lessee may, without Lessor's consent, grant a mortgage or security interest in this Lease, provided that such mortgage or security interest shall apply only to Lessee's leasehold interest in the leased premises. Notwithstanding anything to the contrary contained in this Lease, Lessee may, without Lessor's consent, assign this Lease to any corporation resulting from a merger or consolidation of the Lessee or to any corporation or other entity that acquires all or substantially all of the assets of Lessee upon the following conditions: (a) that the tangible net worth of such assignee after such consolidation or merger shall be equal to or more than that of Lessee immediately prior to such consolidation or merger; (b) that Lessee is not at such time in default hereunder; and (c) that such assignee or successor shall execute an instrument in writing fully assuming all of the obligations and liabilities imposed upon Lessee hereunder and deliver the same to Lessor prior to the effective date of such assignment. Lessor's right to terminate this Lease as provided in Section 15.1(c) above shall not apply to any permitted assignment under this Section 15.2.

                    15.3          Other Transfer of Lease. Lessee shall not allow or permit any transfer of this Lease, or any interest hereunder, by operation of law, or mortgage, pledge, encumber or permit a lien on this Lease or any interest herein.

                    15.4          Lessor's Rights. The Lessor may assign, mortgage, sell or otherwise transfer its right, title and interest in the leased property without Lessee's consent.

                    15.5          Assignment of Rents. Should Lessee sublet all or any portion of the leased premises, the interest of the Lessee in any such subleases and all rents from any such sublessees and all other rents and profits of and from the leased premises are hereby collaterally assigned to Lessor effective upon default by Lessee hereunder and shall be payable under such assignment to Lessor. Each sublease hereinafter executed by Lessee will include provisions and forms satisfactory to Lessor, (a) in which the sublessee acknowledges the superior rights of Lessor under the terms of this Lease and (b) the sublessee, upon request of Lessor, shall agree that in the event of the termination of the leasehold estate created by this Lease, its sublease shall

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continue in full force and effect and the sublessee shall upon request from Lessor attorn to and acknowledge Lessor, its successors and assigns, as Lessor under the sublease."

Article 16 - CURING OF LESSEE'S DEFAULT

                    16.1          If Lessee shall at any time fail to make any payment or perform any act on its part to be made or performed hereunder, then Lessor, after ten (10) days' notice to Lessee, except when other notice is expressly provided for in this Lease (or upon such shorter or immediate notice as may be reasonable in case of an emergency situation which physically threatens the leased property), and without waiving or releasing Lessee from the obligations of Lessee contained in this Lease, may (but shall be under no obligation to) make such payment or perform such act, and may enter upon the leased premises for any such purpose, and take all such action thereon as may be necessary therefor.

                    16.2          All sums paid by Lessor and all costs and expenses incurred by Lessor in connection with the performance of any such act, together with interest thereon at a rate per annum equal to two (2%) percent in excess of the announced base rate of interest of American National Bank and Trust Company of Chicago in effect on the respective dates of Lessor's making of such payment or incurring of such cost and expense until the same shall be paid, together with any consequential damages Lessor may suffer by reason of the failure of Lessee to make such payment or perform such act, and counsel fees incurred by Lessor in connection therewith or in enforcing its rights hereunder, shall be paid by Lessee to Lessor on demand as addition rent hereunder.

                    16.3          Lessee agrees to hold Lessor harmless from any inconvenience or interference with Lessee's operation of its business as a result of Lessor having to cure a default of Lessee hereunder.

Article 17 - REMEDIES

                    17.1          Defaults. Lessee agrees that any one or more of the following events shall be considered Events of Default as said term is used herein:

                              (a)          Lessee shall be adjudged an involuntary bankrupt, or a decree or order approving, as properly filed, a petition or answer filed against Lessee asking reorganization of Lessee under the Federal bankruptcy laws as now or hereafter amended, or under the laws of any state, shall be entered, and any such decree or judgment or order shall not have been vacated or set aside within sixty (60) days from the date of the entry or granting thereof; or

                              (b)          Lessee shall file or admit the jurisdiction of the court and the material allegations contained in any petition in bankruptcy or any petition pursuant or purporting to be pursuant to the Federal bankruptcy laws as now or hereafter amended, or Lessee shall institute any proceeding or shall give its consent to the institution of any proceedings for any relief of Lessee under any bankruptcy or insolvency laws or any laws relating to the relief of

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debtors, readjustment of indebtedness, reorganization, arrangements, composition or extension; or

                              (c)          Lessee shall make any assignment for the benefit of creditors or shall apply for or consent to the appointment of a receiver for Lessee or any of the property of Lessee; or

                              (d)          The leased premises are levied upon by any revenue officer or similar officer; or

                              (e)          A decree or order appointing a receiver of the property of Lessee shall be made and such decree or order shall not have been vacated or set aside within sixty (60) days from the date of entry or granting thereof; or

                              (f)          Lessee shall abandon the leased premises during the term hereof; or

                              (g)          Lessee shall default in any payment of Rent or in any other payment required to be made by Lessee hereunder when due as herein provided (all of which other payments shall be deemed 'additional rent' payable hereunder), or shall default under Section 6.2 hereof, and any such default shall continue for five (5) days after notice thereof in writing to Lessee; or

                              (h)          Lessee shall fail to contest the validity of any lien or claimed lien and give security to Lessor to assure payment thereof, or, having commenced to contest the same and having given such security, shall fail to prosecute such contest with diligence, or shall fail to have the same released and satisfy any judgment rendered thereon, and such default continues for ten (10) days after notice thereof in writing to Lessee; or

                              (i)          Lessee shall default in keeping, observing or performing any of the other covenants or agreements herein contained to be kept, observed and performed by Lessee, and such default shall continue for thirty (30) days after notice thereof in writing to Lessee or shall exist at the expiration of the Lease term; or

                              (j)          Lessee shall default in keeping, observing or performing any covenant or agreement herein contained to be kept, observed and performed by Lessee, which default may result in an imminent risk of damage to property (including without limitation the leased premises or the Improvements thereon) or injury to or death of persons, and such default shall not be cured immediately upon notice thereof to Lessee (which notice may be oral); or

                              (k)          Intentionally Omitted; or

                              (l)          Lessee shall repeatedly be late in the payment of rent or other charges required to be paid hereunder or shall repeatedly default in the keeping, observing, or performing of any other covenants or agreements herein contained to be kept, observed or

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performed by Lessee (provided notice of such payment or other defaults shall have been given to Lessee, but whether or not Lessee shall have timely cured any such payment or other defaults of which notice was given). For purposes of this subsection, the term "repeatedly" shall mean that a late payment or default occurs at least three (3) times during a twelve (12) month period.

                    17.2          Remedies. Upon the occurrence of any one or more Events of Default, Lessor may at its election terminate this Lease or terminate Lessee's right to possession only, without terminating the Lease. Upon termination of the Lease, or upon any termination of Lessee's right to possession without termination of the Lease, Lessee shall surrender possession and vacate the leased property immediately, and deliver possession thereof to Lessor, and hereby grants to Lessor the full and free right, without demand or notice of any kind to Lessee (except as hereinabove expressly provided for), to enter into and upon the leased property in such event with process of law and to repossess the leased property as Lessor's former estate and to expel or remove Lessee and any others who may be occupying or within the leased property without being deemed in any manner guilty of trespass, eviction, or forcible entry or detainer, without incurring any liability for any damage resulting therefrom and without relinquishing Lessor's rights to rent or any other right given to Lessor hereunder or by operation of law. Upon termination of the Lease, Lessor shall be entitled to recover as damages all rent and other sums due and payable by Lessee on the date of termination, plus (a) an amount equal to the value, on an annual basis, of the excess (discounted to present value at eight percent (8%) annually) of (i) the rent and other sums provided herein to be paid by Lessee for the residue of the stated term hereof over (ii) the fair rental value of the leased property for the residue of the stated term taking into account the time and expenses necessary to obtain a replacement lessee or lessees, including expenses hereinafter described relating to recovery of the leased property, preparation for reletting and for reletting itself), and (b) the cost of performing any other covenants to be performed by Lessee. If Lessor e lects to terminate Lessee's right to possession only without terminating the Lease, Lessor may, at Lessor's option, enter on to the leased property, remove Lessee's signs and other evidences of tenancy, and take and hold possession thereof as hereinafter provided, without such entry and possession terminating the Lease or releasing Lessee, in whole or in part, from Lessee's obligations to pay the rent and other sums provided herein to be paid by Lessee for the full term or from any other of its obligations under this Lease. Lessor may relet all or any part of the leased property for such rent and upon such terms as shall be satisfactory to Lessor (including the right to relet the leased property as a part of a larger area the right to change the character or use made of the leased property). For the purpose of such reletting, Lessor may decorate or make any repairs, changes, alterations or additions in or to the leased property that may be necessary or convenient. If Lessor does not relet the leased property , Lessee shall pay to Lessor on demand damages equal to the amount of the rent, and other sums provided herein to be paid by Lessee for the remainder of the Lease term. If the leased property is relet and a sufficient sum shall not be realized from such reletting after paying all of the expenses of such decorations, repairs, changes, alterations, additions, the expenses of such reletting and the collection of the rent accruing therefrom (including, but not by way of limitation, attorneys' fees and brokers' commissions), to satisfy the rent and other sums herein provided to be paid for the remainder of the Lease term, Lessee shall pay to Lessor on demand any deficiency and Lessee agrees that Lessor may file suit to recover any rent or other sums falling due under the terms of this Section from time to time. Lessor shall use reasonable efforts

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to mitigate defaults; Lessor shall not be deemed to have failed to use such reasonable efforts by reason of the fact that Lessor has sought to relet the leased property at a rental rate higher than that payable by Lessee under this Lease (but not in excess of the then current market rental rate).

                    17.3          Lessee's Opportunity to Cure. If Lessee defaults under Section 19.1(i), and such default cannot with due diligence be cured within a period of thirty (30) days, and if notice thereof in writing shall have been given to Lessee, and if Lessee, prior to the expiration of thirty (30) days from and after the giving of such notice, commences to eliminate the cause of such default and proceeds diligently and with reasonable dispatch to take all steps and do all work required to cure such default and does so cure such default, then an Event of Default shall not be deemed to have occurred; provided, however, that Lessee's right to cure hereunder shall not extend beyond the expiration of the Lease term, and provided further that the curing of any default in such manner shall not be construed to limit or restrict Lessor's remedies for any other default which becomes an Event of Default.

                    17.4          Intentionally Omitted.

                    17.5          Remedies Cumulative. No remedy herein or otherwise conferred upon or reserved to Lessor shall be considered to exclude or suspend any other remedy but the same shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease to Lessor may be exercised from time to time and so often as occasion may arise or as may be deemed expedient.

                    17.6          No Waiver. No delay or omission of Lessor to exercise any right or power arising from any default shall impair any such right or power or be construed to be a waiver of any such default or any acquiescence therein. No waiver of any breach of any of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach, or as a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. The acceptance by Lessor of any payment of Rent after the termination by Lessor of this Lease or of Lessee's right to possession hereunder shall not, in the absence of agreement in writing to the contrary by Lessor, be deemed to restore this Lease or Lessee's right to possession hereunder, as the case may be, but shall be construed as a payment on account, and not in satisfaction of damages due from Lessee to Lessor.

Article 18 - SUBORDINATION OR SUPERIORITY

                    18.1          Subordination or Superiority. If any First Mortgagee shall agree that, if it becomes the owner of the leased premises by foreclosure or deed in lieu of foreclosure, it will recognize the rights and interest of Lessee under the Lease and not disturb Lessee's use and occupancy of the leased premises if and so long as no Event of Default of Lessee has occurred (which agreement may, at such mortgagee's option, require attornment by Lessee), then all or a portion of the rights and interests of Lessee under this Lease shall be subject and subordinate to the First Mortgage and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof. Any First Mortgagee may elect that,

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instead of making this Lease subject and subordinate to its first mortgage or first trust deed, the rights and interest of Lessee under this Lease shall have priority over the lien of the First Mortgage. Lessee agrees that it will, within ten (10) days after demand in writing, execute and deliver whatever instruments may be reasonably required, either to make this Lease subject and subordinate to the First Mortgage, or to give the Lease priority over the lien of the First Mortgage, whichever alternative may be elected by the First Mortgagee. Should Lessor request that Lessee execute any document in accordance with this Section 18.1 more than one time during a twelve (12) month period, Lessor shall pay the reasonable costs and expenses of Lessee resulting therefrom.

Article 19 - QUIET ENJOYMENT & RIGHT OF ENTRY

                    19.1          Lessee, upon performing the covenants herein on Lessee's part to be performed, shall and may peaceably and quietly have, hold and enjoy the leased premises during the term hereof free of any claim or other action by Lessor or First Mortgagee or anyone claiming by, through, or under Lessor or First Mortgagee. Lessor warrants that Lessor has the full right to lease the leased premises for the term and in the manner herein provided.

                    19.2          Upon twenty-four (24) hour prior written notice to Lessee (or upon such shorter or immediate notice as may be reasonable in case of an emergency situation which physically threatens the leased property), Lessor or its agents shall have the right to enter the leased premises at all reasonable times to examine the same and to show them to prospective purchasers.

Article 20 - NOTICES

                    20.1          All notices and communications by either party to the other shall be in writing. All notices shall be sent by United States registered or certified mail, postage prepaid, addressed to Lessee at the address of the leased premises or at such other place as Lessee may from time-to-time designate in a written notice to Lessor; and addressed to Lessor at c/o Cohen Financial, 2 North LaSalle Street, Suite 800, Chicago, Illinois 60602 Attention: Legal Department, or at such other place that may from time-to-time be designated in a written notice to Lessee. In addition, Lessee shall be required to furnish the First Mortgagee with a copy of any notice to Lessor which specifies a default by Lessor of any of its obligations hereunder, which notice shall be addressed to First Mortgagee at Bank One, 200 S. Wacker Dr., 6^th Floor, Mail Code IL-1-0950, Chicago, IL 60606, or at such other place as may fr om time-to-time be designated in a written notice to Lessee. Notice shall be deemed to be given when deposited in United States mail, with postage fully prepaid.

Article 21 - ESTOPPEL CERTIFICATES

                    21.1          Each party agrees that from time-to-time upon not less than ten (10) days' prior notice from the other to execute, acknowledge and deliver without charge to the other party or to any person designated by the other party a statement (but not more than one in any thirty (30) day period) in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications identifying the same by the date thereof and specifying the

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nature thereof), that to the knowledge of such party no uncured event of default exists hereunder (or if any such uncured event of default does exist, specifying the same), the dates to which the rent and other sums and charges payable hereunder have been paid, and with respect to Lessee that Lessee to its knowledge has no claims against Lessor hereunder (or if Lessee has any such claims, specifying the same). Should Lessor request that Lessee execute any document in accordance with this Section 21.1 more than one time during a twelve (12) month period, Lessor shall pay the reasonable costs and expenses of Lessee resulting therefrom.

Article 22 - SURRENDER OF THE PROPERTY

                    22.1          Upon the termination of this Lease, Lessee shall quit and surrender the leased premises, broom-clean, to Lessor without delay and in good order, condition and repair, ordinary wear and tear excepted, free and clear of all lettings and occupancies, and free and clear of all liens and encumbrances, except that part of the premises which have been taken through eminent domain, if any, after the delivery hereof, without any payment therefor by Lessor. Upon such termination, title to (1) all the "leased property" as defined in Sec. 1.1 hereof, and (2) title to all buildings, alterations, rebuildings, replacements, changes, additions, improvements, fixtures, equipment and appurtenances which have been erected, installed or fixed on or in the leased property during the term of this Lease (not including moveable equipment and trade fixtures owned by Lessee), shall automatically vest in Lessor without the e xecution of any further instrument and this instrument shall be a conveyance of Lessee's interest in said properties as of such date of termination. Lessee shall, however, on demand execute, acknowledge and deliver to Lessor any further assurances of title to said improvements and properties as Lessor may request, and Lessee hereby irrevocably constitutes and appoints Lessor as Lessee's attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver any such instrument in the name and on behalf of Lessee in the event Lessee shall for any reason fail to execute, acknowledge and deliver the same promptly after demand is made therefore by Lessor. Any personal property owned by Lessee or other occupant of the property which shall remain on the property after the termination of this Lease, and the removal of Lessee or other occupant from the property, may at the option of Lessor, be deemed to have been abandoned and may be disposed of without accountability, as Lessor may see fit, without prejudic e to the rights of any such other occupant as against the Lessee.

          Lessor shall have the right to require Lessee to remove any alterations or additions constructed under Article 10 hereof that were constructed after 1978, subject to the terms of Section 10.7 above. Said rights shall be exercised by Lessor giving written notice to Lessee on or before ninety (90) days' after such termination. If Lessor requires removal of any such alterations or additions, and Lessee does not make such removal in accordance with this section at the time of such termination, or within ten (10) days after such request, whichever is later, Lessor may remove the same (and repair any damage occasioned thereby), and dispose thereof or, at its election, deliver the same to any other place of business of Lessee or warehouse the same. Lessee shall pay the costs of such removal, repair, delivery and warehousing to Lessor on demand. Upon termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Lessee's right to possession of the leased premises, Lessee shall remove articles of personal property incident to its business; "Trade Fixtures"; provided, however, that

25

Lessee shall repair any injury or damage to the leased premises which may result from such removal. If Lessee does not remove Lessee's Trade Fixtures from the leased premises prior to the expiration or earlier termination of the lease term, Landlord may, at its option, remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Lessee or warehouse the same and Lessee shall pay the cost of such removal, repair, delivery and warehousing to Lessor on demand or Lessor may treat such Trade Fixtures as having been conveyed to Lessor with this Lease being a bill of sale, without further payment or credit by Lessor to Lessee.

                    22.2          Holding Over. Lessee shall have no right to occupy the leased premises or any portion thereof after the expiration of the Lease or after termination of the Lease or of Lessee's right to possession pursuant to Section 17.2 hereof. In the event Lessee or any party claiming by, through or under Lessee holds over, Lessor may exercise any and all remedies available to it at law or in equity to recover possession of the leased premises, and for damages. For each and every month or partial month that Lessee or any party claiming by, through or under Lessee remains in occupancy of all or any portion of the leased premises after the expiration of the Lease or after termination of the Lease or Lessee's right to possession, Lessee shall pay, as minimum damages and not as a penalty, monthly rental at a rate equal to 150% the rate of rent payable by Lessee hereunder immediately prior to the expira tion or other termination of the Lease or of Lessee's right to possession. The acceptance by Lessor of any lesser sum shall be construed as a payment on account and not in satisfaction of damages for such holding over. If the holding over occurs at the expiration of the Lease term or by reason of a termination by mutual agreement of the parties, Lessor may, as an alternative remedy, elect that such holding over shall constitute a renewal of this Lease on a month-to-month basis at a rental equal to 150% of the rate of annual fixed rent payable hereunder immediately prior to the expiration of the Lease, and upon all of the other covenants and agreements contained in this Lease.

Article 23 - INTENTIONALLY OMITTED.

Article 24 - ENVIRONMENTAL CONDITIONS

                    24.1          "Environmental Condition" Defined. As used in this Lease, the phrase "Environmental Condition" shall mean: (a) the presence of any substance in soil, groundwater, surface water, or other environmental medium in excess of applicable, legally binding criteria, and includes, without limitation, air, land and water pollution, noise, vibration, and odors, or (b) any condition which affords a basis for a claim of liability under the Comprehensive Environment Response Compensation and Liability Act, as amended ("CERCLA"), or the Resource Conservation and Recovery Act ("RCRA"), or any claim of violation of the Clean Air Act, the Clean Water Act, the Toxic Substance Control Act ("TSCA"), or any claim of liability or of violation under any federal statute hereafter enacted dealing with the protection of the environment or with the health and safety of employees or members of the general public, or under any rule, regulation, or permit under any of the foregoing, or under any law, rule or regulation now or hereafter promulgated by the state in which the leased premises are located, or any political subdivision thereof, relating to such matters (collectively "Environmental Laws").

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                    24.2          Compliance by Lessee. Lessee shall, at all times during the Lease term, comply with all Environmental Laws applicable to its use of the leased premises and shall not, in the use and occupancy of the leased premises, cause or contribute to any Environmental Condition on or about the leased premises. Without limiting the generality of the foregoing, Lessee shall not, without first notifying Lessor in writing, receive, keep, maintain or use on or about the leased premises any substance in a quantity as to which a filing with a local emergency planning committee, the State Emergency Response Commission or the fire department having jurisdiction over the leased premises is required pursuant to § 311 and/or § 312 of CERCLA, as amended by the Superfund Amendment and Reauthorization Act of 1986 ("SARA") (which latter Act includes the Emergency Planning and Community Right-to-Know Ac t of 1986).

                    24.3          Environmental Indemnity. Lessee will protect, indemnify and save harmless the Lessor Protected Parties (as defined in Article 6), and all of their respective agents, members, directors, officers and employees, and First Mortgagee, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) of whatever kind or nature, contingent or otherwise, known or unknown, incurred or imposed, based upon Lessee's noncompliance with any Environmental Laws or resulting from any Environmental Condition on or about the leased premises which is caused by Lessee prior to or during the Lease term, or which is contributed to by Lessee prior to or during the Lease term, but only to the extent of such contribution. In case any action, suit or proceeding is brought against any of the pa rties indemnified herein by reason of Lessee's noncompliance with any Environmental Laws or any Environmental Condition on or about the leased premises which is caused by Lessee prior to or during the Lease term, Lessee will, at Lessee's expense, by counsel approved by Lessor, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of Lessee under this Section 24.3 shall survive the expiration or earlier termination of this Lease.

                    24.4          Testing and Remedial Work. In the event that Lessee experiences a spill or release of any hazardous substance or otherwise causes an Environmental Condition or about the leased premises, Lessee shall promptly notify Lessor of the event or condition and shall promptly and at its sole cost and expense, take any and all steps necessary to remedy the same, complying with all provisions of applicable law.

Article 25 - LAWS OF MICHIGAN TO GOVERN

                    25.1          This Lease shall be interpreted under and governed by the laws of the State of Michigan.

Article 26 - SECTION TITLES

                    26.1          The section titles as to contents as to particular sections herein are inserted for convenience only and are in no way to be construed as part of this Lease or as in limitation on the scope of the particular section to which they refer.

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Article 27 - WAIVER OF BREACH

                    27.1          No waiver by either party of any breach or default by the other party of any covenant or condition of this Lease shall be effective unless it is in writing and signed by the parties so waiving and any such waiver shall not constitute a waiver as to any future breach of default.

Article 28 - SEVERABILITY AND SAVINGS

                    28.1          Each covenant, term and condition of this Lease shall be severable from the remainder. If any provision shall be held illegal or unenforceable, the remainder shall be enforced according to its terms.

Article 29 - MODIFICATION AND AMENDMENT

                    29.1          This Lease may not be modified or amended except in writing signed by the parties hereto or their respective successors and heirs or assigns.

Article 30 - LESSEE'S STATEMENT

                              Lessee shall furnish to Lessor, within ten (10) days after written request therefore from Lessor, a copy of the then most recent annual report of Lessee. It is mutually agreed that Lessor may deliver a copy of such statement to any mortgagee or prospective mortgagee of Lessor, or any prospective purchaser of the leased premises, but otherwise Lessor shall treat such statements and information contained therein as confidential.

Article 31 - COVENANTS BINDING ON SUCCESSORS

                              All of the covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto, the same as if they were in every case specifically named, and wherever in this Lease reference is made to either of the parties hereto, it shall be held to include and apply to, wherever applicable, the heirs, executors, administrators, successors and assigns of such party. Nothing herein contained shall be construed to grant or confer upon any person or persons, firm, corporation or governmental authority, other than the parties hereto, their heirs, executors, administrators, successors and assigns, any right, claim or privilege by virtue of any covenant, agreement, condition or undertaking in this Lease contained.

Article 32 - LANDLORD MEANS OWNERS

                              The term "Lessor" as used in this Lease, so far as covenants or obligations on the part of the Lessor are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the leased premises, and in the event of any transfer or transfers of the title to such fee, Lessor herein named (and in case of any subsequent transfer or conveyances, the then grantor) shall be automatically freed and relieved, from and after the

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date of such transfer or conveyance, of all liability as respects the performance of any covenants or obligations on the part of Lessor contained in this Lease thereafter to be performed; provided that any funds in the hands of such Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be turned over to the grantee, and any amount then due and payable to Lessee by Lessor or the then grantor under any provisions of this Lease shall be paid to Lessee.

Article 33 - EXCULPATION

                              Any obligation of Lessor under this Lease shall be enforceable against and payable out of Lessor's interest in the leased property, and Lessee hereby agrees that, with respect to any obligation of Lessor under this Lease, neither Lessee nor any other person shall have or may assert any right, recourse or remedy to or against Lessor or any assets of Lessor, except to the extent (if any) of their respective interests in the leased property and no officer, shareholder, director, employee, partner, trustee, beneficiary, member or manager of Lessor assumes or shall have any personal liability of any kind whatsoever hereunder.

Article 34 - OPTION TO EXTEND

                              Provided that no Event of Default shall have occurred which remains uncured and provided that Lessee shall be in possession of the leased property, Lessee shall have the right, exercisable by given written notice ("First Renewal Notice") thereof to Lessor at least nine (9) months but not before twelve (12) months prior to the expiration of the original term of this Lease, to extend the term of this Lease for an additional term of thirty-six (36) calendar months ("First Renewal Period") upon all of the terms, covenants and conditions contained in this Lease, except that the annual fixed rent shall be Market Rent.

                              Market Rent for the First Renewal Period shall be determined as follows:

                                        (i)          After timely receipt by Lessor of the First Renewal Notice, Lessor and Lessee shall have a period which will end sixty (60) days prior to the expiration of the original term of this Lease ("Initial Rent Determination Period") in which to agree on Market Rent for the First Renewal Period. If Lessor and Lessee agree on Market Rent for the First Renewal Period, then they shall immediately execute an amendment to this Lease stating and incorporating such agreed upon Market Rent.

                                        (ii)          If Lessor and Lessee are unable to agree on Market Rent for the First Renewal Period, subject to the limitation set forth in subsection (iv) below, Lessor and Lessee shall proceed as follows:

                                                  (1)          Not later than ten (10) days after the expiration of the Initial Rent Determination Period, each party shall appoint an appraiser ("Appraiser") and notify the other party of such appointment by identifying the appointee; provided, however, that if either party fails to give notice of its designation of an Appraiser within such ten (10) day period, the appraiser designated by the other party shall act as the sole Appraiser and shall

29

determine Market Rent for the First Renewal Period. For purposes of this Lease, an "Appraiser" means a Michigan licensed MAI appraiser who (i) shall be an independent, disinterested party (i.e. the appraiser shall not be an affiliate of any party and the total fees paid to the appraiser by any party and affiliates of any party during the preceding five (5) years shall not exceed one (1%) percent of the appraiser's gross income for such period), and (ii) shall have not less than five (5) years experience in appraising properties comparable to the leased premises.

                                                  (2)          Not later than twenty (20) days after both Appraisers are appointed, the two appraisers shall determine, in accordance with standard appraisal practices and procedures and the requirement of this Lease, the Market Rent for the First Renewal Period, and their decision shall be final and binding upon the parties.

                                                  (3)          If the two Appraisers are unable to agree on Market Rent for the First Renewal Period within twenty (20) days after appointment, then the Appraisers shall inform the parties. Unless the parties shall both otherwise then direct, the appraisers shall select a third Appraiser, not later than ten (10) days after the expiration of said twenty(20) day period. If no third Appraiser is selected within such ten (10) day period, then either party may request the then president of the board of realtors for the Plymouth, Michigan, area (or any similar organization) to appoint the third appraiser. The third Appraiser shall have the qualifications set forth in subsection (ii) (1) above. Within twenty (20) days after appointment, the third appraiser shall determine Market Rent for the First Renewal Period in ac cordance with standard appraisal practices and procedures and the requirements of this Lease and the Market Rent shall be the average of the two closest appraisals.

                                                  (4)          Each party shall be responsible for the costs, charges and/or fees of its Appraiser and the parties shall share equally in the costs, charges and/or fees of the third Appraiser. The decision of the Appraiser(s) shall be stated and incorporated into an amendment to this Lease, which shall be executed by both parties.

                                        (iii)          The term "Market Rent" shall mean the annual amount of fixed rent that a willing, comparable, non-equity, non-expansion tenant would pay and a willing, comparable owner of an warehouse facility in Plymouth, Michigan comparable to the leased premises would accept, at arm's length, on a "net lease" basis, giving appropriate consideration to brokerage commissions, if any, length of lease term, size and location of the leased premises, and any other generally applicably terms and conditions for tenancy of industrial facilities similar to the leased premises.

                                        (iv)          The parties agree that the Market Rent for the First Renewal Period shall not be less than $1,571,096.16 per year.

                              Provided that no Event of Default shall have occurred which remains uncured provided that the term hereof has been extended for the First Renewal Period and provided that Lessee shall be in possession of the leased property, Lessee shall have the right, exercisable by given written notice ("Second Renewal Notice") thereof to Lessor at least nine (9) months but not before twelve (12) months prior to the expiration of the First Renewal Period, to

30

extend the term of this Lease for an additional term of twenty-four (24) calendar months ("Second Renewal Period") upon all of the terms, covenants and conditions contained in this Lease, except that the annual fixed rent shall be Market Rent.

                              Market Rent for the Second Renewal Period shall be determined as follows:

                                        (i)          After timely receipt by Lessor of the Second Renewal Notice, Lessor and Lessee shall have a period which will end sixty (60) days prior to the expiration of the First Renewal Period ("Initial Rent Determination Period") in which to agree on Market Rent for the Second Renewal Period. If Lessor and Lessee agree on Market Rent for the Second Renewal Period, then they shall immediately execute an amendment to this Lease stating and incorporating such agreed upon Market Rent.

                                        (ii)          If Lessor and Lessee are unable to agree on Market Rent for the Second Renewal Period, subject to the limitation set forth in subsection (iv) below, Lessor and Lessee shall proceed as follows:

                                                  (1)          Not later than ten (10) days after the expiration of the Initial Rent Determination Period, each party shall appoint an appraiser ("Appraiser") and notify the other party of such appointment by identifying the appointee; provided, however, that if either party fails to give notice of its designation of an Appraiser within such ten (10) day period, the appraiser designated by the other party shall act as the sole Appraiser and shall determine Market Rent for the Second Renewal Period. For purposes of this Lease, an "Appraiser" means a Michigan licensed MAI appraiser who (i) shall be an independent, disinterested party (i.e. the appraiser shall not be an affiliate of any party and the total fees paid to the appraiser by any party and affiliates of any party during the preceding five (5) years shall not exceed one (1%) percent of the appraiser's gross income for such period), and (ii) shall have not less than five (5) years experience in appraising properties comparable to the leased premises.

                                                  (2)          Not later than twenty (20) days after both Appraisers are appointed, the two appraisers shall determine, in accordance with standard appraisal practices and procedures and the requirement of this Lease, the Market Rent for the Second Renewal Period, and their decision shall be final and binding upon the parties.

                                                  (3)          If the two Appraisers are unable to agree on Market Rent for the Second Renewal Period within twenty (20) days after appointment, then the Appraisers shall inform the parties. Unless the parties shall both otherwise then direct, the appraisers shall select a third Appraiser, not later than ten (10) days after the expiration of said twenty(20) day period. If no third Appraiser is selected within such ten (10) day period, then either party may request the then president of the board of realtors for the Plymouth, Michigan, area (or any similar organization) to appoint the third appraiser. The third Appraiser shall have the qualifications set forth in subsection (ii) (1) above. Within twenty (20) days after appointment, the third appraiser shall determine Market Rent for the Second Renewal Period in< BR>

31

accordance with standard appraisal practices and procedures and the requirements of this Lease and the Market Rent shall be the average of the two closest appraisals.

                                                  (4)          Each party shall be responsible for the costs, charges and/or fees of its Appraiser and the parties shall share equally in the costs, charges and/or fees of the third Appraiser. The decision of the Appraiser(s) shall be stated and incorporated into an amendment to this Lease, which shall be executed by both parties.

                                        (iii)          The term "Market Rent" shall mean the annual amount of fixed rent that a willing, comparable, non-equity, non-expansion tenant would pay and a willing, comparable owner of an warehouse facility in Plymouth, Michigan comparable to the leased premises would accept, at arm's length, on a "net lease" basis, giving appropriate consideration to brokerage commissions, if any, length of lease term, size and location of the leased premises, and any other generally applicably terms and conditions for tenancy of industrial facilities similar to the leased premises.

                                        (iv)          The parties agree that the Market Rent for the Second Renewal Period shall not be less than the Market Rent for the First Renewal Period.

PLYMOUTH INVESTORS LIMITED LIABILITY COMPANY, an Illinois limited liability company
By:	Haggerty Road Limited Liability Company, an Illinois limited liability company, its managing member
	By:
		/s/ Benjamin B. Cohen
		Benjamin B. Cohen, as Trustee of the Benjamin B. Cohen Revocable Trust U/A/D 5/8/87

SPARTAN STORES, INC., a Michigan corporation
By:	/s/ Charles B. Fosnaugh
Its:	Vice President - Development

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EXHIBIT "A"

Part of the S.E. 1/4 of Section 35, T. 1 S., R. 8 E., and part of the S.W. 1/4 of Section 36, T. 1 S., R. 8 E., Plymouth Township, Wayne County, Michigan, described as: Beginning at a point on the West line of said Section 36, distant S. 0E 08' 45" E., 1043.25 feet from the West 1/4 Corner of said Section 36, Running thence S. 89E 59' 53" E., 1318.46 feet to the center line of Haggerty Road; thence along said center line of Haggerty Road S. 0E 03' 45" W., 1093.37 feet; thence S. 89E 37' 13" W., 1140.88 feet to the Easterly line of Chesapeake & Ohio Railroad; thence along said easterly line No. 29E 32' 53" W., 1265.59 feet; thence S. 89E 59' 53" E., 447.72 feet to the POINT OF BEGINNING; Except the Easterly 60 feet deeded to the Wayne County Road Commission for highway purposes, and containing 35.13 Acres of land more or less.

EXHIBIT "B"

A.	Items of property owned by Lessor and leased to Lessee hereunder:
	1.	Two (2) overhead cranes in maintenance room
	2.	Miscellaneous fire extinguishers
	3.	Tracks and towline in floor
	4.	Freezer Room and Cooler Room
	5.	Five (5) underground fuel tanks
	6.	Flag pole with light
	7.	Fence gates
	8.	Scale pit and hoist
	9.	Weight scales
	10.	Exhaust and vent system
	11.	Truck canopy and lights
	12.	Lube reels, lifts and tanks.
B.	Items of property owned by Lessee:
	1.	Hi-Lows
	2.	Shelving
	3.	Carts
	4.	Suspended meat racks
	5.	Free-standing meat rails located in cooler area
	6.	Two (2) meat scales
	7.	Truck washers
	8.	Two (2) pumps and ticket dispensers
	9.	Two (2) units of Graco lubrication equipment and compressors

          The lists of items in this Exhibit are not intended to be all-inclusive, but rather to clarify certain items which are owned by Lessor (and leased under the Lease) and other items which are owned by Lessee and are not "leased property" as defined in Sec. 1.1 of the Lease.

EXHIBIT "B-2"

The buildings and improvements including, but not limited to, the warehouse facilities and asphalt-paved area located on that portion of the real estate in the Township of Plymouth, County of Wayne and State of Michigan outlined in red on Exhibit "A-2" attached hereto, together with all fixtures and personal property necessary for or used in the operation and maintenance of said buildings and improvements, including, but not limited to, the following:

One overhead crane
Towline extension and track.

EX-12.1

Exhibit 12.1

SPARTAN STORES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In thousands, except ratios)	Fiscal Year Ended
	March 28, 2009			March 29, 2008			March 31, 2007			March 25, 2006			March 26, 2005
Earnings:
Earnings before income    taxes and discontinued    operations	$	62,087		$	50,776		$	37,181		$	28,299		$	27,238
Fixed charges		21,690			21,374			21,134			14,995			16,548
Amortization of    capitalized interest		224			260			314			342			294
Capitalized interest		(116	)		(195	)		(202	)		(181	)		(293	)
Earnings available for    fixed charges	$	83,885		$	72,215		$	58,427		$	43,455		$	43,787
Fixed charges:
Interest expense	$	10,998		$	11,133		$	12,132		$	7,138		$	8,557
Capitalized interest		116			195			202			181			293
Interest component of    rent expense		10,576			10,046			8,800			7,676			7,698
Total fixed charges	$	21,690		$	21,374		$	21,134		$	14,995		$	16,548
Ratio of earnings to    fixed charges		3.87			3.38			2.76			2.90			2.65

EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES OF SPARTAN STORES, INC. Direct subsidiaries of Spartan Stores, Inc.:
1.	SPARTAN STORES DISTRIBUTION, LLC Jurisdiction of Formation: Names under which business is conducted:	Michigan Spartan Stores Distribution, LLC
2.	MARKET DEVELOPMENT CORPORATION Jurisdiction of Incorporation: Names under which business is conducted:	Michigan Market Development Corporation Ludington Plaza Ludington Corner Westland of Three Rivers Jefferson Square (in IN) Market Street Plaza (in IN)
3.	SEAWAY FOOD TOWN, INC. (see this entity's subsidiaries below) Jurisdiction of Incorporation: Names under which business is conducted:	Michigan Seaway Food Town, Inc. (in OH) The Pharm (in OH)
4.	SPARTAN STORES ASSOCIATES, LLC Jurisdiction of Formation: Names under which business is conducted:	Michigan Spartan Stores Associates, LLC
5.	SI INSURANCE AGENCY, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Michigan SI Insurance Agency, Inc.
6.	SPARTAN INSURANCE COMPANY LTD. Jurisdiction of Incorporation: Names under which business is conducted:	Bermuda Spartan Insurance Company Ltd.

Indirect subsidiaries of Spartan Stores, Inc.:

Subsidiaries of Seaway Food Town, Inc.

7.	SPARTAN STORES FUEL, LLC Jurisdiction of Formation: Names under which business is conducted:	Michigan Spartan Stores Fuel, LLC Glen's Quick Stop Family Fare Quick Stop
8.	FAMILY FARE, LLC (see this entity's subsidiary below) Jurisdiction of Formation: Names under which business is conducted:	Michigan Family Fare, LLC Family Fare Pharmacy Family Fare Supermarket Glen's Markets Glen's Pharmacy 32nd Street Baking Co. Café Creations Felpausch Food Center D&W Fresh Market D&W Pharmacy VG's Food Center VG's Pharmacy

Subsidiary of Family Fare, LLC:

9. PREVO'S FAMILY MARKETS, INC.
(see this entity's subsidiary below)

Jurisdiction of Incorporation:
Names under which business is conducted:


Michigan
Prevo's Family Markets, Inc.
D & W Fresh Market
D & W Pharmacy
Felpausch Food Center

Subsidiary of Prevo's Family Markets, Inc.:

10. MSFC, LLC
(see this entity's subsidiary below)

Jurisdiction of Formation:
Names under which business is conducted:


Michigan
MSFC, LLC
 

Subsidiaries of Seaway Food Town, Inc.:

11.	THE PHARM OF MICHIGAN, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Michigan The Pharm of Michigan, Inc. The Pharm
12.	SPARTAN PROPERTIES MANAGEMENT, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Ohio Spartan Properties Management, Inc.

- -2-

13.	VALLEY FARM DISTRIBUTING CO. Jurisdiction of Incorporation: Names under which business is conducted:	Ohio Valley Farm Distribution Co. VFD (in MI, OH and PA) Valley Farm Foods (in OH)
14.	PORT CLINTON REALTY COMPANY (General partnership owned 32% by Seaway Food Town, Inc.) Jurisdiction of Incorporation: Names under which business is conducted:	Ohio Port Clinton Realty Company
15.	CUSTER PHARMACY, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Michigan Custer Pharmacy, Inc. Food Town Pharmacy
16.	GRUBER'S REAL ESTATE, LLC Jurisdiction of Formation: Names under which business is conducted:	Michigan Gruber's Real Estate, LLC

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EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-110952, 333-110593, 333-65802, 333-66430, 333-72010, 333-75810, 333-100794, 333-145432, 333-96615, 333-71774, 333-49448, 333-129156 on Form S-8, Registration Statement No. 333-53672 and 333-145494 on Form S-3, and Registration Statement No. 333-37050 on Form S-4 of our reports dated June 5, 2009, relating to the financial statements of Spartan Stores, Inc. and subsidiaries (the "Company") and the effectiveness of the Company's internal control over financial reporting, appearing in the Annual Report on Form 10-K of the Company for the year ended March 28, 2009.

Grand Rapids, Michigan
June 5, 2009

EX-24

EXHIBIT 24

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ M. Shân Atkins
Print Name:	M. Shân Atkins
Title:	Director
Date:	April 10, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Frank M. Gambino
Print Name:	Frank M. Gambino
Title:	Director
Date:	April 20, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Elizabeth A. Nickels
Print Name:	Elizabeth A. Nickels
Title:	Director
Date:	April 15, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Timothy J. O'Donovan
Print Name:	Timothy J. O'Donovan
Title:	Director
Date:	April 8, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Kenneth T. Stevens
Print Name:	Kenneth T. Stevens
Title:	Director
Date:	April 7, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ James F. Wright
Print Name:	James F. Wright
Title:	Director
Date:	April 6, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Frederick J. Morganthall II
Print Name:	Frederick J. Morganthall II
Title:	Director
Date:	April 7, 2009

POWER OF ATTORNEY

          The undersigned in his or her capacity as a director or officer, or both, of Spartan Stores, Inc., does hereby appoint DENNIS EIDSON, DAVID M. STAPLES, or Alex J. Deyonker, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of Spartan Stores, Inc. on Form 10-K for its fiscal year ended March 28, 2009, and any amendments to that report, and to file it with the Securities and Exchange Commission or other regulatory authority. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Signature:	/s/ Craig C. Sturken
Print Name:	Craig C. Sturken
Title:	Executive Chairman
Date:	April 10, 2009

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Dennis Eidson, certify that:

          1.          I have reviewed this annual report on Form 10-K of Spartan Stores, Inc.;

          2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

          3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

          4.          The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

                    a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

                    b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

                    c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

                    d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

          5.          The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

                    a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

                    b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:  June 5, 2009	/s/ Dennis Eidson
	Dennis Eidson President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, David M. Staples, certify that:

          1.          I have reviewed this annual report on Form 10-K of Spartan Stores, Inc.;

          2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

          3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

          4.          The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

                    a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

                    b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

                    c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

                    d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

          5.          The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

                    a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

                    b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:  June 5, 2009	/s/ David M. Staples
	David M. Staples Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION

Solely for the purpose of complying with 18 U.S.C. § 1350, each of the undersigned hereby certifies in his capacity as an officer of Spartan Stores, Inc. (the "Company") that the Annual Report of the Company on Form 10-K for the year ended March 28, 2009 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

/s/ Dennis Eidson

Dennis Eidson
President and
Chief Executive Officer

/s/ David M. Staples

David M. Staples
Executive Vice President and
Chief Financial Officer