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 31, 2007.
	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 The NASDAQ Global 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       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      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        

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, or a non-accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act).

Large accelerated filer ___ Accelerated filer   X  Non-accelerated filer ____

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

Yes       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 Market on September 8, 2006 (which was the last trading day of the registrant's second quarter in the fiscal year ended March 31, 2007) was $350,434,731.

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 15, 2007: 21,672,388 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Part III, Items 10, 11,
12, 13 and 14 Proxy Statement for Annual Meeting to be held August 15, 2007

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," "projects," "plans," "believes," "estimates," "intends," is "optimistic" or "confident" that a particular occurrence "will," "may," "could," "should" or "will likely" result or that a particular event "will," "may," "could," "should", or "will likely" occur or "continue" in the future, that the "outlook" or "trend" is toward a particular result or occurrence, that a development is a "priority" or similarly stated expectations. Accounting estimates, such as those described under the heading "Critical Accounting Estimates" in Item 7 of this Annual Report on Form 10-K, are inherently forward-looking. Our as set impairment and exit cost provisions are estimates 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 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. 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 in Michigan, Ohio and Indiana. We operate two primary business segments: Distribution and Retail. We are the tenth largest wholesale distributor to supermarkets in the United States and the largest wholesale distributor to supermarkets in Michigan. Our distribution and retail operations hold a combined #1 or #2 market share in many of the key Michigan markets we serve. For the fiscal year ended March 31, 2007 ("fiscal 2007"), we generated net sales of $2.4 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 Global Market under the symbol "SPTN." With approximately 7,300 employees, Spartan Stores distributes a wide variety of products to nearly 400 independent supermarkets and operates 68 conventional supermarkets and 19 deep-discount food and drug stores.

          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: Leverage investments in fuel centers and pharmacy operations to drive adjacent supermarket comparable sales, continue to focus on category management initiatives, specifically focusing on perishables offerings and continue with our capital plan focusing on remodels, adjacent acquisitions, expansions and new stores to fill in existing markets.

• Distribution sales growth: Focus on increased penetration of existing customers, attract new customers due to competitive activities, continue to share "best retail practices" with customers and provide a value-added relationship.

• Margin enhancement: Continued focus on retail shrink improvement, increased penetration of private label programs, improved offerings in our perishables department and continued focus on improving the cost of merchandise through vendor partnerships.

• SG&A expense cost containment: Continue to focus on improving efficiency to help offset inflationary pressures on SG&A expenses.

          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 47,000 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 nearly 400 independent grocery stores and our 87 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, were $1.8 billion for fiscal 2007.

          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.

          On April 24, 2007, we announced a significant expansion to our existing distribution supply relationship with Martin's Super Markets, an independent supermarket retailer with twenty retail grocery stores in Southwest Michigan and North Central Indiana. The relationship expanded to include dry groceries, dairy, frozen and our portfolio of corporate private label brands in addition to the existing health and beauty care products, general

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merchandise and pharmacy products. This expanded distribution relationship represents our first major move to distribute outside the state of Michigan and begins to fulfill our stated strategy of expanding our distribution customer base to contiguous Midwestern states.

          Our Distribution customer base is very diverse, with no single customer exceeding 11% of Distribution net sales, excluding corporate-owned stores. Our five largest Distribution customers (excluding corporate-owned stores) accounted for approximately 30% of our fiscal 2007 Distribution net sales. In addition, approximately 60% of Distribution net sales, including corporate-owned stores, are covered under supply agreements with our Distribution customers.

          Distribution Functions. Our Distribution business utilizes approximately 1.9 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 2007, we added voice-activated selection technology to our Fresh warehouse, which completed implementation of this capability in all of our warehouse facilities. Voice selection technology has proven to be a valuable investment through a substantial reduction in warehouse selection errors and significant improvement in inventory accuracy. For fiscal 2008, our focus in our distribution centers will be to optimize product slotting in order to reduce travel time and increase productivity, which should allow us to further reduce costs.

          To supply our Distribution customers, we operate a fleet of approximately 100 tractors, 200 conventional trailers and 170 refrigerated trailers, substantially all of which are leased. In fiscal 2007, we replaced 56 tractors and 43 refrigerated trailers, as we continue to place emphasis on investing, updating and developing the fleet as our wholesale distribution business expands. This allows us to continue to reduce vehicle maintenance costs, while ensuring that our fleet has a world class appearance on the road. Also in fiscal 2007, we centralized our dispatch operations through the elimination of our Ohio transfer hub, which has resulted in streamlined delivery operations, and improved load density and equipment and labor resource utilization. For fiscal 2008, we will focus on increased cube utilization of our trailers which should allow us to improve our sales dollar delivered per mile, hence reducing cost to deliver.

          In fiscal 2007 we negotiated a five-year labor agreement with our Grand Rapids union associates. The contract is a good compromise that includes benefits for both parties and demonstrates our long-standing history of favorable labor relations with our valued associates.

          We have developed a safe and participative work environment, resulting in a considerable reduction of worker compensation claims at our distribution centers. Critical success factors include coordination of the Health and Safety and Distribution departments to develop and execute safety and sanitation audit processes.

          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	•	Merchandising
•	Accounting and tax preparation	•	Real estate services
•	Human resource services	•	Construction management services

Retail Segment

          Our retail supermarkets maintain a #1 or #2 market share position in most of the Michigan markets they serve. We believe that our strong market share positions result from our distinct "neighborhood market" focus and the favorable name recognition of our banners. Our neighborhood market strategy distinguishes our stores from

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supercenters and limited assortment stores by emphasizing convenient locations, demographically targeted merchandise selections, strong perishables offerings, customer service, value pricing and community involvement.

          On March 27, 2006, we acquired certain assets and assumed certain liabilities related to 20 stores of D&W Food Centers, Inc. and D&W Associate Resources, LLC (together "D&W"). We continue to operate 16 of the 20 locations. This acquisition positioned us as the leading conventional supermarket operator in the metro Grand Rapids, Michigan market and provided significant synergies to our operations. Our Retail segment now operates 68 retail supermarkets and 19 deep-discount food and drug stores predominantly in midsize metropolitan, tourist and lake communities of Michigan and Ohio. Our retail supermarkets are operated under the banners Family Fare Supermarkets, Glen's Markets and D&W Fresh Markets and our 19 deep-discount food and drug stores operate under the banner The Pharm.

          During the third quarter of fiscal 2007, we 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 our retail grocery stores. The acquisition was made to allow us to better coordinate in-store operations and improve our overall customer service at these locations.

          Our 68 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. Forty-two of our supermarkets also offer pharmacy services. In addition to nationally advertised products, the stores carry private label items, including our Spartan brand, President's Choice, Aroma Street Bakery and three private label brands that result from our strategic relationship with Topco Associates LLC: 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 20,0 00 to 62,000 total square feet and average approximately 40,000 total square feet per store.

          Our 19 deep-discount food and drug stores, which operate under the banner The Pharm, offer a unique combination of a full-service pharmacy, general merchandise products and basic food offerings. These stores operate under a deep discount format that emphasizes everyday low prices that are competitive with supercenter offerings and are less than those of a traditional supermarket or drug store. The Pharm stores range in size from approximately 17,000 to 37,000 total square feet and average approximately 28,000 total square feet per store.

          During fiscal 2007, we opened four fuel centers in Michigan operating under the banners Family Fare Quick Stop and D&W Fresh Markets Quick Stop. We now operate a total of ten 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 900 square feet in size and are located adjacent to our supermarkets. We expect that the location of the fuel center along with cross-merchandising initiatives will attract customers to the adjacent supermarket, resulting in increased supermarket sales. We are planning to continue to open several additional fuel centers over the next few years. We also plan to include fuel centers with certain acquired stores and any newly constructed stores, where possible.

          We acquired our stores as a result of seven acquisitions from January 1999 to March 2006. The following chart details the changes in the number of our retail stores over the last five fiscal years:

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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
2003	127	3	28	*	102
2004	102	-	27	*	75
2005	75	-	-		75
2006	75	-	2		73
2007	73	16	2		87

      *    Represents closure/sale of Foodtown stores.

          During fiscal 2007, we reset and/or performed limited remodels on 17 of our stores, which brings the total number of stores that have been reset and/or remodeled in the last four years to 76. During fiscal 2008, we plan to reset and/or perform remodels on approximately 10 additional stores, and begin construction on one to two new stores and approximately six new fuel centers. Capital expenditures, excluding the Felpausch acquisition, are expected to approximate $35 million to $40 million per year as we continually maintain and update our store base. 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 i mprovements. We believe that focusing on such measures provides us with an appropriate level of discipline in our capital expenditures process.

          On March 19, 2007, we entered into an asset purchase agreement to acquire certain assets and assume certain liabilities related to 20 retail grocery stores, two fuel centers and three convenience stores from G&R Felpausch Company ("Felpausch"), a privately-held retail grocery operator and current customer of our Distribution segment. The retail grocery stores include the operations of nine in-store pharmacies. The transaction is expected to close in June 2007.

Operating Segment Financial Data

          More detailed information about our operating segments may be found in Note 12 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

          Our former convenience distribution operations, insurance operations and certain of our retail, distribution and real estate 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 information in this Annual Report on Form 10-K has been adjusted and the discontinued operations information is excluded, unless otherwise noted.

Convenience Distribution Operations

          Discontinued convenience distribution operations consists of the operations of our former subsidiaries: United Wholesale Grocery Company, LLJiroch Distributing Company and JFW Distributing Company.

Insurance Operations

          At March 31, 2007, we had approximately $1.3 million in insurance reserves for open claims liabilities related to policies that were not ceded (transferred) to an unrelated third party. We will remain obligated under these policies until all claims are closed. We have retained an independent third party administrator to manage these claims.

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Retail Operations

          Discontinued retail operations consist of 59 stores, including all former Food Town stores.

Distribution Operations

          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. Spartan Stores continues to distribute to its The Pharm stores in Ohio from its distribution facilities in Michigan.

Real Estate Operations

          Discontinued real estate operations include properties either held for sale or previously sold.

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 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. 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 specialty warehouse in our Distribution segment to the addition of fuel centers and Starbucks Coffee shops in our "neighborhood market" retail stores. In addition, during fiscal 2006 we began a fresh food initiative in our Distribution segment, with a focus on produce, in order to accommodate current and forecasted new produce customers, to enhance the quality and freshness of the fruit we offer the consumer, and to enable our distribution customers and corporate-owned stores to offer increased variety in certain product categories. Through this initiative, we have realized a significant increase in produce business over the past year, and we expect to continue to leverage this investment going forward in anticipation of higher incremental produce sales volumes from new customers and expanded contracts with existing custo mers. In fiscal 2007, we expanded the fresh food initiative to our corporate-owned stores by expanding and fine-tuning our fresh department consumer offerings at our recently acquired D&W Fresh Markets stores and by incorporating many of these merchandising enhancements into our existing conventional stores.

          We expanded our consumer offerings by adding new premium beef offerings to our fresh meat cases. Through our Star Ranch Natural Angus Beef and Preferred Angus Beef offerings in our D&W Fresh Markets stores and our Tender Ridge Angus beef offering at our Glen's Markets and Family Fare Supermarkets stores, we now offer our customers fine quality Angus beef with all the quality characteristics customers want in beef including all-natural, tender, juicy and flavorful. We also offer these programs to our distribution customers.

          We have also embarked on a pharmacy initiative with a healthy living emphasis. As noted above, we recently acquired the operations of 12 in-store pharmacies bringing the total of our supermarkets that offer pharmacy services to 42. We believe the pharmacy service offering is an important part of the consumer experience, and we have begun an initiative to link our pharmacies with our center store product offerings in order to promote wellness and healthy living, and improve overall customer service.

          Corporate Brands. We currently market and distribute approximately 3,000 private label brand items including our Spartan brand, President's Choice, Aroma Street Bakery and three private label brands that result

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from our strategic relationship with Topco Associates LLC: Top Care, a health and beauty care brand label, Valu Time, a value brand label, and Full Circle, a natural and organic brand label.

          During fiscal 2004, we began the process of reenergizing our Spartan brand and rolled out an award-winning redesigned label and many new product categories. Conversion to the redesigned label continued throughout fiscal 2005 and 2006 and is now being used on all of our private label products. We believe the new label has been well received by consumers and that this brand is one of the most valuable strategic assets of the Company, demonstrated through customer loyalty and profitability. Indeed, the brand repositioning has led to increased private label penetration with our corporate stores and distribution customers, and we now surpass the national average for private label penetration in our retail stores.

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. Three additional openings are expected to occur during fiscal 2008 against our corporate-owned stores. As a result of these openings we believe the majority of our supermarkets compete with at least one supercenter.

          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. Those two quarters can also be affected by the timing of the Easter holiday, which results in a strong sales week. 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. 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.

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 13% 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.

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Intellectual Property

          We own valuable intellectual property, including trademarks and other proprietary information, including "Spartan," "Family Fare," "Glen's," "D&W", "The Pharm" and other related trademarks, 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 and improving service to our customers. Our focus has been to refine our reporting, business processes and data integrity to provide a base for continuous improvement and seamless information flow.

          Supply Chain. During fiscal 2007, we completed deployment of voice selection technology in all of our distribution centers. We also upgraded our onboard transportation management system, and improved our perishable product tracking ability. Our customer website was enhanced with many new features, including a new ordering system for seasonal merchandise.

          Retail Systems. During fiscal 2007, we began piloting implementation of computer-assisted ordering and perpetual inventory in two of our corporate-owned stores for the grocery, frozen and dairy departments. We installed ten additional "self-checkout" systems in our retail supermarkets, and one system for an independent customer. We upgraded all of the electronic payment terminals in our corporate-owned stores and began installing terminals for our independent customers. We also completed the implementation of an improved front-end auditing system for our retail locations to further enhance our cash and shrink controls.

          Financial Systems. During fiscal 2007, we enhanced our budgeting and forecasting system for internal financial management. We also upgraded our human resource and payroll system to the vendor's latest software version. We developed an in-house coupon tracking and reconciliation system for coupons redeemed in our customer and corporate-owned stores.

          Information Technology. We completed a facilities upgrade and hardware upgrades of our backup data center in support of our disaster recovery strategy.

Subsidiaries

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

Associates

          We currently employ approximately 7,300 associates, 4,000 of which are full-time and 3,300 of which are part-time.

          Unions represent approximately 17% of our associates. A contract covering 170 distribution center and transportation associates expires in April 2010. Contracts covering approximately 600 distribution center and transportation associates expire in October 2011. Contracts covering approximately 450 retail associates expire between March 2008 and June 2009.

          We consider our relations with our union and non-union associates to be good and have not had any material work stoppages in the last 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

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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

          The Company's business faces many risks. These risks include those described below and may include additional risks and uncertainties not presently known to the Company or risks that the Company currently deems immaterial or unlikely. If any of the events or circumstances described in the following risk factors occurs, the Company's financial condition or results of operations may suffer, and the trading price of the Company's common stock could decline. This discussion of risk factors should be read in conjunction with the other information in this Form 10-K Annual Report. 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. This discussion of risk factors is not exhaustive, and we do not undertake to revise any forward-looking statement to reflect events or circumstanc es that occur after the date the statement is made.

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.

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          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. 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.

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.

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We may not be able to complete the acquisition of Felpausch or, if the transaction is completed, we may be unable to integrate the acquired assets successfully and achieve expected synergies.

          Our ability to complete the proposed acquisition of the assets of Felpausch depends on the satisfaction of a variety of contractual conditions, not all of which are entirely within the controls of the Company or Felpausch. We have invested significant resources in the acquisition process, but there is no guarantee that the transaction will be completed. Even if the transaction is completed, realization of increased sales and earnings depends on our ability to integrate the acquired assets successfully and to implement our plans and business practices at the acquired locations. Combining the operations of Felpausch with our existing operations may require significant effort and expense. If we are unable to integrate the Felpausch assets, we may not realize the synergies, business opportunities, and growth prospects anticipated in connection with this transaction.

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

          Our business is dependent upon the sale of groceries and related products to our customers. Most of our sales are to customers located in Michigan, Ohio and Indiana. Adverse economic conditions or reduction in the populations of or the loss of purchasing power by residents in those areas could reduce the amount of groceries purchased, which could adversely affect our revenues and profitability. Further adverse developments in the automotive and auto supply industries in Michigan 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.

          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 higher fuel costs in these areas could result in decreased sales by our retail grocery stores and decreased sales to our distribution customers, adversely affecting our business.

A new business tax in Michigan may significantly affect our future expenses.

          The majority of our business operates in Michigan and we are subject to the Michigan Single Business Tax ("MSBT"). The MSBT will be discontinued as of December 31, 2007. The State of Michigan has not yet determined how the revenues generated from this tax will be replaced.

We may be unable to retain our key management personnel.

          Our success depends to a significant degree upon the continued contributions of senior management, including Craig C. Sturken, our President and Chief Executive Officer. The loss of any key member of our management team may prevent us from implementing our business plans in a timely manner. While succession planning is a priority for our board of directors, we cannot assure you that a successor Chief Executive Officer of comparable ability will be identified and appointed or that departures of other executives will not adversely affect our business.

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

          Certain of our associates, particularly those in our distribution business segment, are covered by collective bargaining agreements, most of which expire at various times over the course of the next 4 years. 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.

Post-retirement obligations could increase future expenses.

          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, we expect that contributions to these plans may increase. 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

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regulations, the actual return on assets held in the plan, 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 or closing 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.

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 31, 2007. 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 carefully 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.

Unavailability of our information systems could harm our business.

          We have large, complex information technology systems that are important to our business operations. Although we have installed security programs and disaster recovery facilities and procedures, security could be compromised and systems disruptions 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.

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
General office		Maumee, OH	29,802	Owned
Transportation and salvage		Grand Rapids, MI	78,760	Owned
Warehouse and office		Grand Rapids, MI	85,001	Leased
Dry grocery		Plymouth, MI	414,700	Leased
Total			1,860,300

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 and deep-discount food and drug stores:

Retail Banner	Number of Stores	Geographic Region	Total Square Feet	Average Store Size	Ownership
Family Fare Supermarkets	24	Western Michigan	1,018,405	42,434	Leased
Glen's Markets	34	Northern and Central Michigan	1,216,716	35,786	Leased
D&W Fresh Markets	10	Western Michigan	476,339	47,634	Leased
The Pharm	16	Northwestern and Central Ohio	450,834	28,177	Leased
The Pharm	3	Northwestern and Central Ohio and Southeastern Michigan	77,897	25,966	Owned
Total	87		3,240,191	37,244

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          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 fuel centers:

Retail Banner	Number of Stores	Geographic Region	Total Square Feet	Average Store Size	Ownership
Family Fare Quick Stop	4	Western Michigan	3,760	940	Land lease
Family Fare Quick Stop	2	Western Michigan	5,093	2,547	Owned
D&W Fresh Markets Quick Stop	2	Western Michigan	1,880	940	Land lease
Glen's Quick Stop	2	Northern Michigan	3,754	1,877	Land lease
Total	10		14,487	1, 449

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 2007 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 Market under the trading symbol "SPTN."

          Stock sale prices are based on transactions reported on The NASDAQ Market. Information on quarterly high and low sales prices for Spartan Stores' common stock appears in Note 13 to the consolidated financial statements and is incorporated herein by reference. At May 15, 2007 there were approximately 616 shareholders of record of Spartan Stores common stock.

          During fiscal 2006, the board of directors approved a change to the Company's dividend policy. Under the new policy, the Company paid a quarterly cash dividend of $0.05 per common share in the fiscal 2006 fourth quarter, and in each quarter of fiscal 2007. 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 faciliti es.

          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 2007.

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)	609,397	$9.44	1,447,941
Equity compensation plans    not approved by security    holders	0	Not applicable	0
Total	609,397	$9.44	1,447,941

(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 (1,139,000 shares), the 2001 Stock Incentive Plan (127,533 shares) and the 2001 Stock Bonus Plan (181,408 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.

          The following table provides information regarding the Company's purchases of its own common stock during the fourth quarter. The Company has no public stock repurchase plans or programs. All transactions reported are with associates under stock compensation plans. These include: (1) shares of Spartan Stores, Inc. stock

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delivered in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options who exercised options, and (2) shares withheld to satisfy tax withholding obligations that occur upon the vesting of the restricted shares. Under the Company's associate stock compensation plans, the value of the shares delivered or withheld is the average of the high and low price of the Company's common stock on the date the relevant transaction occurs.

Spartan Stores, Inc. Purchases of Equity Securities

Period	Total Number of Shares Purchased	Average Price Paid per Share
Period 1 (December 31, 2006 - January 27, 2007)
Employee Transactions	-		-
Period 2 (January 28 - February 24, 2007)
Employee Transactions	15,021	$	24.05
Period 3 (February 25 - March 31, 2007)
Employee Transactions	-		-
Total for Fourth Quarter ended March 31, 2007	15,021	$	24.05

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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 29, 2003 through March 31, 2007. As noted elsewhere in this Form 10-K, for all years presented, all 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 fifty-three weeks. All other years presented consisted of fifty-two weeks.

(In thousands, except per share data)

	Year Ended
	March 31, 2007 (E)			March 25, 2006			March 26, 2005			March 27, 2004			March 29, 2003
Statements of Operations Data:
Net sales	$	2,370,428		$	2,039,926		$	2,043,187		$	2,054,977		$	1,975,677
Cost of sales		1,903,258			1,657,742			1,656,516			1,679,478			1,612,142
Gross margin		467,170			382,184			386,671			375,499			363,535
Selling, general and administrative    expenses		411,279			344,095			349,174			362,937			354,182
Provision for asset impairments and exit    costs (A)		4,464			1,057			- -			- -			47,711
Operating earnings (loss)		51,427			37,032			37,497			12,562			(38,358	)
Interest expense		12,751			7,669			9,315			13,146			17,322
Debt extinguishment (B)		-			-			561			8,798			-
Other, net		(647	)		(1,306	)		(924	)		(275	)		(730	)
Earnings (loss) before income taxes,    discontinued operations and    cumulative effect of a change    in accounting principle		39,323			30,669			28,545			(9,107	)		(54,950	)
Income taxes		13,748			10,307			8,682			(3,187	)		(19,159	)
Earnings (loss) from continuing    operations		25,575			20,362			19,863			(5,920	)		(35,791	)
Loss from discontinued    operations, net of taxes (C)		(415	)		(2,190	)		(1,037	)		(778	)		(51,164	)
Cumulative effect of a change in    accounting principle, net of taxes (D)		- -			- -			- -			- -			(35,377	)
Net earnings (loss)	$	25,160		$	18,172		$	18,826		$	(6,698	)	$	(122,332	)
Basic weighted average shares    outstanding		20,913			20,796			20,439			20,016			19,896
Basic earnings (loss) from continuing    operations per share	$	1.22		$	0.98		$	0.97		$	(0.30	)	$	(1.80	)
Basic earnings (loss) per share		1.20			0.87			0.92			(0.33	)		(6.15	)
Cash dividends declared per share		0.20			0.05			-			-			-
Balance Sheet Data:
Total assets	$	487,499		$	378,597		$	384,457		$	392,864		$	556,306
Property and equipment, net		143,213			115,178			108,879			108,437			120,072
Working capital		27,213			20,736			30,258			38,125			87,164
Long-term obligations		106,341			64,015			91,946			124,616			183,817
Shareholders' equity		172,741			145,417			125,410			105,667			109,632

(A)	See Note 5 to Consolidated Financial Statements
(B)	We recorded non-cash pre-tax charges of $0.6 million and $8.8 million during fiscal 2005 and fiscal 2004, respectively, for the write-off of unamortized financing fees as a result of refinancing activities.
(C)	See Note 4 to Consolidated Financial Statements

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(D)	A $35.4 million charge was recorded in fiscal 2003 for the cumulative effect of the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
(E)	For information regarding the D&W acquisition, refer to Note 2 to the consolidated financial statements set forth in Part II, Item 8 of this report.

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, Ohio 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 nearly 400 independently owned grocery stores and our 87 corporate owned stores. Our Retail segment operates 68 retail supermarkets in Michigan under the banners Family Fare Supermarkets, Glen's Markets and D&W Fresh Markets, 19 deep-discount food and drug stores in Ohio and Michigan under the banner The Pharm, and ten fuel centers under the banners Family Fare Quick Stop, Glen's Quick Stop and D&W Fresh Markets Quick Stop which are typically located adjacent to one of our supermarkets. Our retail supermarkets have a "neighborhood market" focus to distinguish them from supercenters and limited assortment stores. Our deep-discount food and drug stores offer a unique combination of full-service pharmacy, ge neral merchandise products and basic food offerings.

          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. 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. 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.

          On March 27, 2006, we acquired certain assets and assumed certain liabilities of sixteen operating and four non-operating supermarkets from 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 acquired stores have generally operated according to our plans, however, certain stores still have opportunities to improve performance to our longer-term expectations.

          During the third quarter of fiscal 2007, Spartan Stores acquired certain equipment at five closed grocery stores from Carter's Inc. under a Chapter 7 federal bankruptcy liquidation. Store lease obligations were assumed for two of the store locations which remain closed. 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 pharmacies located in 12 of the retail grocery stores acquired from D&W. The acquisition was made to allow us to better coordinate in-store operations and improve our overall customer service at these locations.

          During the fourth quarter of fiscal 2007, Spartan Stores entered into a purchase agreement to acquire 20 retail grocery stores, two fuel centers and three convenience stores, from G&R Felpausch Company ("Felpausch"), a privately held Hastings, Michigan-based retail grocery operator serving South and Central Michigan. The retail stores include the operations of nine in-store pharmacies. The transaction, anticipated to be finalized late in the fiscal 2008 first quarter, 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 Felpausch stores serve many communities where we currently have no retail presence. They also provide an outstanding geographic fit with our current retail store footprint, while providing expansion into central Michigan.

          Upon completion, the transaction is expected to increase annual retail segment sales by approximately $200 million but annual consolidated sales are expected to increase by approximately $100 million as Felpausch is an

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existing distribution customer. The Company expects to realize many operational synergies from the transaction, but the gains are expected to be more than offset by transition expenditures of approximately $5.0 million to $6.0 million. These transitional expenses are for marketing and promotional activities associated with merchandising, product and branding initiatives, as well as initial employee training and other costs associated with integrating the acquired operations and are expected to be incurred over the first 15 months of operation. The acquisition is expected to be accretive to net earnings during the second year of operation. The first year expenditures, in addition to planned capital expenditures, are expected to improve sales volumes at the acquired stores and to strengthen Spartan's retail market position in Western and Central Michigan.

          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:

1.	Retail sales growth: Leverage investments in fuel centers and pharmacy operations to drive adjacent supermarket comparable sales, continue to focus on category management initiatives, specifically focusing on perishables offerings and continue with our capital plan focusing on remodels, expansions, adjacent acquisitions and new stores to fill in existing markets.
2.	Distribution sales growth: Focus on increased penetration of existing customers, attract new customers due to competitive activities, continue to share "best retail practices" with customers and provide a value-added relationship.
3.	Margin enhancement: Continued focus on retail shrink improvement, increased penetration of private label programs, improved offerings in our perishables department and continued focus on improving the cost of merchandise through vendor partnerships.
4.	SG&A expense cost containment: Continue to focus on improving efficiency to help offset inflationary pressures on SG&A expenses.

          Significant progress has been made towards achieving these longer-term priorities over the past few years and we continue to remain focused on them over time.

          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.

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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 31, 2007		March 25, 2006		March 26, 2005		2007/2006		2006/2005
Net sales	100.0		100.0		100.0		16.2		(0.2	)
Gross margin	19.7		18.7		18.9		22.2		(1.2	)
Selling, general and administrative    expenses	17.3		16.8		17.1		19.5		(1.5	)
Provision for asset impairments and exit    costs	0.2		0.1		- -		*		*
Operating earnings	2.2		1.8		1.8		38.9		(1.2	)
Other income and expenses	0.5		0.3		0.5		90.2		(28.9	)
Earnings before income taxes and    discontinued operations	1.7		1.5		1.3		28.2		7.4
Income taxes	0.6		0.5		0.4		33.4		18.7
Earnings from continuing operations	1.1		1.0		0.9		25.6		2.5
Loss from discontinued operations, net of    taxes	(0.0	)	(0.1	)	(0.0	)	(81.1	)	111.2
Net earnings	1.1		0.9		0.9		38.5		(3.5	)
* Percentage change is not meaningful

          Results of Continuing Operations for the Fiscal Year Ended March 31, 2007 Compared to the Fiscal Year Ended March 25, 2006

          Net Sales. Net sales increased $330.5 million, or 16.2%, from $2,039.9 million in fiscal 2006 to $2,370.4 million in fiscal 2007. The sales increase was due primarily to incremental sales from the D&W acquisition, new distribution customer business, increased sales to existing distribution customers, an extra week in fiscal 2007 (a 53 week year), higher fuel center sales, incremental sales from the acquired PrairieStone pharmacies and comparable store sales growth in our supermarkets. The sales increase was partially offset by lost sales associated with the ending of two customer relationships in the third quarter, negative comparable store sales at our The Pharm stores and lost sales from two corporate-owned stores closed near the end of the first quarter.

          Net sales in our Distribution segment, after intercompany eliminations, increased $82.2 million, or 7.1%, from $1,155.9 million to $1,238.1 million primarily due to new distribution customer business of $46.4 million, increased sales to existing customers of $24.8 million and additional sales from the extra week in fiscal 2007 totaling $22.9 million, partially offset by lost sales associated with the ending of relationships with two unprofitable customers totaling $11.9 million. Annual net sales to these two customers for fiscal 2006 totaled approximately $19 million, or less than two percent of annual distribution net sales. In April of 2007, we reached an agreement to significantly expand our supply agreement with a customer. As a result, we expect annual distribution sales to increase by approximately $100 million after we have fully transitioned the customer.

Net sales in our Retail segment increased $248.3 million, or 28.1%, from $884.0 million to $1,132.3 million. The sales increase was due primarily to incremental sales from the acquired D&W retail stores of $200.5 million, higher fuel center sales of $26.2 million, additional sales from the extra week in fiscal 2007 totaling $19.4 million, incremental sales from the acquired PrairieStone pharmacies of $9.3 million, and comparable supermarket stores sales growth. Partially offsetting the sales increase were lost sales of $12.5 million from two stores closed near the end of the first quarter as part of our store base rationalization effort, and lower sales at The Pharm retail stores due to the closure of two stores in the prior year and lower comparable store sales. Total retail comparable store sales increased 5.9 percent in fiscal 2007. Excluding sales from fuel centers and the extra week, comparable store sales increased 1.4 percent. We define a retail store as comparable when it is in operatio n for 14 accounting

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

          During the past three fiscal years, 13 competitor supercenters opened in markets where we operate corporate-owned stores. Three additional openings are expected in our owned store markets during fiscal 2008. The new competitor supercenter openings are expansions of existing discount stores or are in markets already served by a supercenter; therefore, we believe that our practices and the continued weakening of conventional food competitors will allow us to sustain our growth, but at rates closer to industry averages.

          Gross Margin. Gross margin represents 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 $85.0 million, or 22.2%, from $382.2 million to $467.2 million. As a percent of net sales, gross margin increased from 18.7% to 19.7%. The gross margin rate increase was primarily due to a higher concentration of higher-margin retail sales in fiscal 2007, partially offset by an increase in lower-margin pharmacy and fuel sales. We expect to continue to add supermarket fuel centers, which generate lower profit margins but allow us to increase sales in the adjacent supermarket, as well as, offer the consumer a convenience alternative.

          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 $67.2 million, or 19.5%, from $344.1 million to $411.3 million, and were 17.3% of net sales compared to 16.8% last year. The net increase in SG&A is due primarily to the following:

• Incremental expenses associated with the acquired stores of $56.4 million, including $1.1 million of training and other start-up related costs related to the D&W acquisition in the first quarter

• Increased compensation and benefits of $13.0 million, including increases driven by increased sales volume and inflation, incentive compensation, stock compensation and a union contract signing bonus

• Incremental expenses associated with the extra week in fiscal 2007 of $2.3 million

• The costs of operating additional fuel centers of $1.4 million

• Increased fuel costs of $0.7 million

• A contract termination fee received in the prior year of $0.6 million

• Reduction in expenses due to the closure of two stores in the first quarter and two stores in the prior year totaling $4.3 million

• Reduction in legal and professional fees associated with the conclusion of the review of strategic alternatives and a contract dispute resolution in the prior year of $1.4 million

          Provision for Asset Impairments and Exit Costs. In the first quarter, the Retail segment recognized charges of $4.5 million for asset impairment and lease and related ancillary costs related to the closure of two Family Fare Supermarkets stores and moving the central bakery operation into individual retail stores. The store base rationalization and associated charge was incurred due to the proximity of acquired stores to our existing store base. This limited reduction of our store network was based on an evaluation of stores that were best positioned to provide customers with the highest quality overall shopping experience. The central bakery decision was based on the desire to move the production of bakery products closer to the consumer, and the economics of the central bakery operation.

          Asset impairments and exit costs were $1.1 million for the prior fiscal year. In fiscal 2006, an asset impairment charge of $0.3 million was incurred related to banana ripening equipment that was replaced and the exit cost reserve was increased $0.5 million due to changes in real estate market conditions and resulting estimated sublease income. The prior year amount also included charges related to the closure of two The Pharm stores.

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          Interest Expense. Interest expense increased $5.1 million, or 66.3%, from $7.7 million to $12.8 million, and was 0.5% of net sales compared to 0.4% last year. Interest expense increased principally due to an increase in total average borrowings as a result of acquisitions and multiple rate increases by the Federal Reserve. Total average borrowings increased $40.9 million from $81.1 million in the prior year to $122.0 million.

          The weighted average interest rate, including financing fee amortization, increased to 9.73% for fiscal 2007 from 8.65% for fiscal 2006.

          Other, net. Other, net decreased $0.7 million, from $1.3 million to $0.6 million. Fiscal 2007 includes a gain on the sale of land and a building facility not used in operations of $0.5 million. Fiscal 2006 included a gain on the sale of land not used in operations of $1.4 million.

          Income Taxes. The effective tax rate is 35.0% and 33.6% for fiscal 2007 and fiscal 2006, respectively. The difference from the statutory rate in fiscal 2006 is due to tax credits and reserve adjustments totaling $0.4 million.

Results of Continuing Operations for the Fiscal Year Ended March 25, 2006 Compared to the Fiscal Year Ended March 26, 2005

          Net Sales. Net sales decreased $3.3 million, or 0.2%, from $2,043.2 million in fiscal 2005 to $2,039.9 million in fiscal 2006. Higher sales in the Distribution segment to new and existing customers and increased fuel center sales were offset by lower retail segment sales due to closed stores, the sale of a retail-store joint venture, the shift in the Easter holiday sales to fiscal 2007 and an increase in competitive store openings during fiscal 2006 and fiscal 2005.

          Net sales in our Distribution segment, after intercompany eliminations, increased $35.2 million, or 3.1%, from $1,120.6 million to $1,155.9 million primarily due to new customer sales of $21.9 million and increased sales to existing customers of $17.7 million, net of a shift in the timing of the Easter holiday, partially offset by the transition of a distribution customer to a new supplier of $4.4 million.

          Net sales in our Retail segment decreased $38.5 million, or 4.2%, from $922.6 million to $884.0 million. The sales decline included reductions of $15.2 million from the sale of a retail-store joint venture, $11.4 million from two closed stores, and $3.0 million from the shift in the Easter holiday. The influence of higher energy costs on consumer spending and the 6 competitor retail store openings during fiscal 2006 coupled with the 4 competitive openings in fiscal 2005 also contributed to the sales decline. Partially offsetting these items were higher fuel sales of $18.0 million and new in-store pharmacy sales. Comparable store sales decreased by 1.8%, including the positive contribution of 1.5% by fuel center sales, partially offset by 0.7% for the shift in the Easter holiday.

          Gross Margin. Gross margin represents 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 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 decreased by $4.5 million, or 1.2%, from $386.7 million to $382.2 million. As a percent of net sales, gross margin decreased from 18.9% to 18.7%. The gross margin rate decline was primarily due to a higher concentration of distribution and fuel sales in fiscal 2006. We expect to continue to add supermarket fuel centers, which generate lower profit margins but significant sales.

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

          SG&A expenses decreased $5.1 million, or 1.5%, from $349.2 million to $344.1 million, and were 16.8% of net sales compared to 17.1% last year. The decrease in SG&A is due primarily to the following:

• The sale of a single-store joint venture which had SG&A expenses of $4.2 million

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• Reduced store labor costs of $2.5 million due to productivity improvements and $1.2 million due to lower sales

• Lower advertising expenses of $1.0 million

• The closure of two The Pharm stores which decreased SG&A by $0.8 million

• Reduced Michigan Single Business Tax of $0.9 million at the Distribution segment primarily due to the favorable conclusion of an audit

• Reduced depreciation and amortization of $0.7 million primarily due to the completion of depreciable lives on a large number of acquisition-related store assets purchased more than five years ago

• A contract termination payment received of $0.6 million

          These decreases are largely offset by the following:

• Increased utilities expense of $1.9 million

• Legal and professional fees associated with the conclusion of the review of strategic alternatives and a contract dispute resolution of $1.4 million

• The termination and penalty payments received in the prior year from a former Distribution customer of $1.3 million

• Increases in compensation and benefits of $1.0 million due to increases in sales volume at the Distribution segment

• The costs of operating additional fuel centers of $1.0 million

• Increased transportation fuel costs of $1.0 million

• Increased credit card fees of $0.7 million

          Provision for Asset Impairments and Exit Costs. Asset impairments and exit costs were $1.1 million for fiscal 2006. An asset impairment charge of $0.3 million was incurred related to banana ripening equipment that was replaced. We upgraded this equipment to the latest technology and expanded our produce storage facility in anticipation of higher incremental produce sales volumes from new customers and expanded contracts with existing customers. We also increased the exit cost reserve $0.5 million due to changes in real estate market conditions and recorded a $0.3 million charge for the closure of two The Pharm stores.

          Interest Expense. Interest expense decreased $1.6 million, or 17.7%, from $9.3 million to $7.7 million, and was 0.4% of net sales in fiscal 2006 compared to 0.5% in fiscal 2005 due to lower total average borrowings partially offset with market driven rate increases. Total average borrowings decreased $27.5 million from $108.6 million to $81.1 million as a result of debt repayments resulting primarily from cash flow from operations and the use of our net operating loss tax carryforward.

          The weighted average interest rate, including financing fee amortization, increased to 8.65% for fiscal 2006 from 8.16% for fiscal 2005.

          Debt Extinguishment. We recorded a $0.6 million non-cash charge for the write-off of unamortized financing fees during the third quarter of fiscal 2005 as result of refinancing activities.

          Other, net. Other, net increased $0.4 million, from $0.9 million to $1.3 million. Fiscal 2006 included a gain on the sale of land not used in operations of $1.4 million and fiscal 2005 included a gain of $0.8 million on the sale of a retail store joint venture.

          Income Taxes. The effective tax rate is 33.6% and 30.4% for fiscal 2006 and fiscal 2005, respectively. Companies are regularly audited by federal and state tax authorities, which may result in proposed assessments or adjustments. During the fourth quarter of fiscal 2005, the Internal Revenue Service concluded its audit of the fiscal 2001 through 2003 tax returns. As a result of the audit, we released $2.0 million in tax reserves that were no longer required with respect to those years, of which $1.3 million is reflected in continuing operations and reduced our effective tax rate to 30.4% for fiscal 2005. The remaining $0.7 million is included in the Loss from discontinued operations on the Consolidated Statements of Earnings.

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Discontinued Operations

          Our former convenience distribution operations, insurance operations and certain of our retail, grocery distribution and real estate 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.

          Discontinued operations had no sales during the fiscal years ended March 31, 2007, March 25, 2006 and March 26, 2005. The operating losses in discontinued operations for the fiscal years ended March 31, 2007, March 25, 2006 and March 26, 2005 of $0.7 million, $3.8 million and $2.6 million were partially offset by income tax benefits of $0.3 million, $1.6 million and $1.6 million, respectively.

          Total assets of discontinued operations were $4.4 million at March 31, 2007 and $6.1 million at March 25, 2006. Total liabilities of discontinued operations decreased from $12.8 million at March 25, 2006 to $9.1 million at March 31, 2007.

          We anticipate that we will be subject to a partial withdrawal liability from a multi-employer pension plan related to the 2003 closures of certain of our discontinued Food Town stores when a final determination is made based on the June 30, 2006 financial condition of the plan. Previous estimates provided by the trustees of the multi-employer pension plan indicate that there is an underfunded liability which we believe to have resulted from a change in actuarial assumptions, investment performance, other employers' withdrawals, or a combination of these factors, occurring subsequent to the closure of these stores. We intend to challenge such a determination prior to settling the partial withdrawal liability if, and when, assessed after actuarial work is complete for the June 30, 2006 date. At this time, we do not know when the June 30, 2006 actuarial work will be completed. We have estimated our liability based on available preliminary information and recorded an after-t ax charge of approximately $1.1 million in Discontinued Operations in the fiscal 2006 third quarter.

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.

          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. Fair value is determined based on the discounted cash flows and comparable market values of the segment. 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. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different assumptions could result in different outcomes. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, including capital expenditures and a 3% long-term assumed growth rate of cash flows for periods after the five-year forecast. We generally develop these forecasts based on recent sales data for existing operations and other factors. Based on our annual review during fiscal years 2007, 2006 and 2005, 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.

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          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 2007, 2006 and 2005.

          Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value, less costs to sell. Fair values are determined by independent appraisals, quotes or expected sales prices developed by internal licensed 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.

          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 31, 2007 exit costs of $32.7 million are recorded net of appr oximately $0.4 million of estimated sublease rentals. The following table provides the activity of exit costs for fiscal years 2007, 2006 and 2005:

(In thousands)	Lease and Ancillary Costs
Balance at March 28, 2004	$	18,338
Provision for lease and related ancillary costs, net of estimated sublease recoveries		1,400
Provision for pension withdrawal liability		1,700
Payments, net of interest accretion		(5,918	)
Balance at March 26, 2005		15,520
Provision for lease and related ancillary costs, net of estimated sublease recoveries		2,719
Provision for pension withdrawal liability		1,654
Payments, net of interest accretion		(4,576	)
Balance at March 25, 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

          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 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 2007 pension expense was 5.75%. A lower discount rate increases the present value of benefit obligations and generally increases pension expe nse. 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

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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 2007, our assumed rate of return was 8.50%. Over the ten-year period ended March 31, 2007, the average return was approximately 10.0%. We maintained 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 one point increase in the discount rate would have decreased fiscal 2007 pension expense by $0.4 million and a one point decrease in the discount rate would have increased fiscal 2007 pension expense by $0.5 million. A one point increase/decrease in the expected return on plan assets would have decreased/increased fiscal 2007 pension expense by $0.4 million.

          In September 2006, the Financial Accounting Standards Board ("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 No. 158 requires employers that sponsor a defined benefit postretirement plan to recognize the overfunded or underfunded status of the plan in their balance sheets and to recognize changes in funded status through comprehensive income in the year in which the changes occur. We adopted these provisions of SFAS No. 158 effective March 31, 2007, as required. Adoption of SFAS No. 158 resulted in an increase of $0.3 million to Shareholders' Equity. For additional information, refer to Note 9 to the consolidated financial statements.

          The unfunded portion of our defined benefit plans was $2.5 million and $5.5 million for fiscal 2007 and fiscal 2006, respectively. The decrease in the unfunded balance during fiscal 2007 is a result of actual return on plan assets of 13.4% and Company contributions exceeding service and interest costs by $4.0 million, offset by an actuarial loss of $1.0 million. Plan assets increased by 14.0% primarily due to market gains on assets and company contributions of $3.5 million partially offset by benefit payments during the year of $3.7 million. Pension expense was $2.0 million and $2.1 million in fiscal 2007 and fiscal 2006, respectively.

Liquidity and Capital Resources

          The following table summarizes our consolidated statements of cash flows for fiscal years 2007, 2006 and 2005:

(In thousands)

	March 31, 2007			March 25, 2006			March 26, 2005
Net cash provided by operating activities	$	64,182		$	54,746		$	60,630
Net cash used in investing activities		(79,274	)		(27,983	)		(21,784	)
Net cash provided by (used in) financing activities		20,370			(29,437	)		(33,814	)
Net cash used in discontinued operations		(870	)		(4,551	)		(3,404	)
Net increase (decrease) in cash and cash equivalents		4,408			(7,225	)		1,628
Cash and cash equivalents at beginning of year		7,655			14,880			13,252
Cash and cash equivalents at end of year	$	12,063		$	7,655		$	14,880

          Net cash provided by operating activities increased during fiscal 2007 primarily due to an increase in net earnings and favorable changes in working capital related to certain operating assets and the timing of benefit accruals. The decrease during fiscal 2006 was primarily due to unfavorable changes in working capital related to certain operating assets and the timing of benefit accruals.

          As of March 31, 2007, we have available a Federal income tax net operating loss carryforward of approximately $8.3 million. As a result, no regular Federal income taxes have been paid in fiscal years 2007, 2006 and 2005; however, we did pay approximately $0.6 million and $0.2 million in Alternative Minimum Tax in fiscal years 2007 and 2006, respectively. No Alternative Minimum Tax was paid in fiscal 2005.

          Net cash used in investing activities increased in fiscal 2007 and fiscal 2006 compared to the prior year primarily due to acquisitions and increased capital expenditure activity. We paid a total cash purchase price of $53.8 million, including $6.1 million for inventories, for the acquisitions in fiscal 2007, which is reflected in investing activities. Excluding the acquisitions, our Distribution and Retail segments utilized 22.2% and 77.8%, respectively,

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of our capital expenditure dollars. Expenditures were used for store remodels and refurbishments, new fuel centers, new equipment and software. Under the terms of our credit facility, should our available borrowings fall below certain levels, our capital expenditures would be restricted each fiscal year. We are not currently governed by these restrictions, as discussed below. Excluding the anticipated Felpausch acquisition, we expect capital expenditures to range from $35.0 million to $40.0 million for fiscal 2008, which would be allowed even if the restriction applied. Our planned capital expenditures for fiscal 2008 include new stores and store remodels, fuel centers, new equipment and software.

          On March 19, 2007, we entered into an asset purchase agreement to acquire certain assets and assume certain liabilities related to 20 retail grocery stores, two fuel centers and three convenience stores from G&R Felpausch Company ("Felpausch"), a privately-held retail grocery operator and current customer of our Distribution segment. The retail grocery stores include the operations of nine in-store pharmacies. The transaction is expected to close in June 2007. We expect to pay a cash purchase price of $38.5 million plus up to $14 million for inventories.         

          Net cash provided by (used in) financing activities includes cash paid and received from our long-term borrowings, proceeds from the issuance of common stock and dividends paid. The increase in cash from financing activities was due to borrowings on our revolving credit facility that were used to finance the acquisitions and common stock proceeds, partially offset by dividend payments of $4.3 million and debt repayments. In the fiscal 2006 fourth quarter, as permitted by amendment to our credit facility, our board of directors approved a change to our dividend policy and we began paying a quarterly cash dividend of $0.05 per common share. 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 in its discretion. Whether the board of directors continues to declare dividends depends on a nu mber 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 31, 2007 are $2.5 million. Our ability to borrow additional funds is governed by the terms of our credit facilities.

          Net cash used in discontinued operations contains the net cash flows of our discontinued operations and consists primarily of the payment of store exit cost reserves, insurance run-off claims and other liabilities and proceeds from the sale of assets. Fiscal 2007 proceeds on the sale of assets were $3.1 million. We expect the cash usage of our discontinued operations will be approximately $4.0 million to $6.0 million in fiscal 2008.

          Our principal sources of liquidity are cash flows generated from operations and our amended $225.0 million senior secured revolving credit facility. The credit facility matures December 2012, and is secured by substantially all of our assets. As of March 31, 2007, we had outstanding borrowings of $78.2 million, available borrowings of $86.7 million and maximum availability of $96.7 million, which exceeds the minimum excess availability levels, as defined in the credit agreement. Subject to final appraisals related to the amended credit facility, we expect to increase our availability under the credit agreement by an additional $10 million to $15 million.

          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 includes a $15.0 million Term B loan as part of the total $225.0 million credit facility, which may be drawn at Spartan Stores' option through October 1, 2007, and thereafter by agreement with the lenders as set forth in the credit agreement. As of this date no borrowings are outstanding under the Term B loan. Also, at our option, we may increase the maximum amount available under the credit facility up to $275.0 million through the addition of new lenders. Additional borrowing would be subject to existing asset levels.

          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 the maintenance of minimum EBITDA, a minimum fixed charge coverage ratio and maximum capital expenditures, as defined in the credit agreement. These covenants will not be 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 $10.0 million were outstanding and unused as of March 31, 2007. 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 6.75% at March 31, 2007), and borrowings under the Term B loan would bear interest at LIBOR plus 2.50%.

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          Our current ratio increased slightly to 1.17:1.00 at March 31, 2007 from 1.14:1.00 at March 25, 2006 and our investment in working capital was $27.2 million at March 31, 2007 versus $20.7 million at March 25, 2006. Our debt to total capital ratio at March 31, 2007 was 0.39:1.00 versus 0.31:1.00 at March 25, 2006. The change in these ratios was primarily due to funds drawn under the credit facility and capital lease obligations assumed related to the acquisitions.

          Our total capital structure includes borrowings under our credit facility, 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 Spartan Stores' 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 31, 2007 ⁽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	$	82,481	$	686	$	3,221	$	82	$	78,492
Estimated interest on long-    term debt		40,106		7,160		13,870		13,730		5,346
Capital leases (2)		26,354		1,808		3,484		3,903		17,159
Interest on capital leases		17,144		2,329		4,175		3,505		7,135
Operating leases (2)		139,906		25,565		43,509		29,596		41,236
Lease and ancillary costs    of closed stores,    including imputed interest		37,098		9,051		13,119		6,922		8,006
Purchase obligations    (merchandise) (3)		53,471		25,751		12,518		9,626		5,576
Purchase obligations    (building, equipment,    services and other)		803		803		- -		- -		- -
Self-insurance liability		8,082		4,583		2,059		725		715
Total	$	405,445	$	77,736	$	95,955	$	68,089	$	163,665

(1) Excludes funding of pension and other postretirement benefit obligations, which totaled approximately $4.4 million in fiscal 2007. We expect to contribute $2.5 million to our defined benefit plans in fiscal 2008 to meet the minimum funding requirements. For additional information, refer to Note 9 to the consolidated financial statements.
(2) Operating and capital lease obligations do not include common area maintenance, insurance or tax payments for which the Company is also obligated. In fiscal 2007, these charges totaled approximately $7.8 million.
(3) 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. The purchase obligations shown in this table represent the amount of product we are contractually obligated to purchase to earn $3.6 million in advanced contract monies received 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.

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Off-Balance Sheet Arrangements

          Letters of Credit. We had letters of credit of $10.0 million outstanding and unused at March 31, 2007. 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

          Effective March 26, 2006, we adopted the provisions of SFAS No. 123(R), "Share-Based Payment", using the modified-prospective transition method. SFAS No. 123(R) addresses the accounting for share-based payments to employees, including grants of employee stock options and other forms of share-based compensation, and requires all share-based payments to be recognized in the financial statements as compensation cost based on the fair value on the date of grant. Prior to adoption of SFAS No. 123(R), we accounted for share-based awards under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations, as permitted by SFAS No. 123, "Accounting for Stock-Based Compensation." Under this method, no stock-based compensation cost was reflected in the Consolidated Statements of Earnings for stock options as all options granted under the plan had an exercise price equal to the m arket value of the underlying common stock on the date of grant. Adoption of SFAS No. 123(R) resulted in additional compensation expense of $0.3 million net of tax for the year ended March 31, 2007. Basic and diluted earnings per share decreased $0.02 and $0.01, respectively, as a result of adopting SFAS 123(R). As of March 31, 2007, total unrecognized compensation cost related to nonvested share-based awards granted under the stock incentive plans was $1.0 million for stock options and $4.8 million for restricted stock. The remaining compensation costs not yet recognized are expected to be recognized over a weighted average period of 2.4 years for stock options and approximately 3.6 years for restricted stock. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, as described in Part II, Item 8, Note 11.

          In June 2006, the 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 is effective at the beginning of our fiscal year 2008. We expect that the adoption of FIN 48 will increase retained earnings by approximately $1.0 million as of the beginning of fiscal year 2008.

          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 No. 158 requires employers that sponsor a defined benefit postretirement plan to recognize the overfunded or underfunded status of defined benefit postretirement plans, including pension plans, in their balance sheets and to recognize changes in funded status through comprehensive income in the year in which the changes occur. 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. The Statement 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 are currently evaluating the impact of the measurement date aspect of SFAS No. 158 on our financial statements. See Note 9 to the consolidated financial statements for further discussion of the effect of adopting SFAS No. 158 on our consolidated financial statements.

          In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements for the purpose of a materiality assessment. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material.

- -31-

Effective March 31, 2007, we adopted SAB 108. Our adoption of SAB 108 did not have a material impact on our financial statements.

          In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS No. 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 No. 157 will become effective for us at the beginning of our fiscal year 2009. The provisions of the Statement are to be applied prospectively, except for limited retrospective application permitted for certain items. We are currently evaluating the impact, if any, that SFAS No. 157 will have on our 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 6.75% at March 31, 2007) on the revolving credit portion of the facility. An additional $0.5 million of our long-term debt is subject to fluctuations in the prime rate. The weighted average interest rates including loan fee amortization for fiscal years 2007, 2006 and 2005 were 9.73%, 8.65% and 8.16%, respectively.

          The estimated carrying value of long-term debt approximates its fair value at March 31, 2007 and March 25, 2006 due to variable interest rates that cover a majority of the long-term debt and a comparison of fixed rate debt to estimated rates that would currently be available for debt with similar terms and maturities. 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 31, 2007:

(In thousands)

Fiscal Year	Principal Cash Flow		Average Interest Rate
2008	$	2,494	8.8%
2009		4,847	8.8%
2010		1,858	8.8%
2011		1,928	8.8%
2012		2,057	8.8%
Thereafter		95,651	8.9%
	$	108,835

          The balance outstanding on the revolving credit facility is due in fiscal 2013.

- -32-

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Spartan Stores, Inc. and subsidiaries (the "Company") as of March 31, 2007 and March 25, 2006, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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 31, 2007 and March 25, 2006, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2007, 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 31, 2007, 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 May 11, 2007, expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
May 11, 2007

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CONSOLIDATED BALANCE SHEETS

Spartan Stores, Inc. and Subsidiaries
(In thousands)

Assets	March 31, 2007		March 25, 2006
Current assets
Cash and cash equivalents	$	12,063	$	7,655
Accounts receivable, net		45,347		45,280
Inventories, net		106,854		95,892
Prepaid expenses and other current assets		7,122		5,433
Deferred taxes on income		10,214		6,801
Property and equipment held for sale		3,595		6,634
Total current assets		185,195		167,695
Other assets
Goodwill		142,888		72,555
Deferred taxes on income		-		9,061
Other, net		16,203		14,108
Total other assets		159,091		95,724
Property and equipment
Land and improvements		12,677		13,513
Buildings and improvements		140,092		120,851
Equipment		239,884		216,082
Total property and equipment		392,653		350,446
Less accumulated depreciation and amortization		249,440		235,268
Property and equipment, net		143,213		115,178
Total assets	$	487,499	$	378,597

See notes to consolidated financial statements.

- -34-

CONSOLIDATED BALANCE SHEETS (continued)

Spartan Stores, Inc. and Subsidiaries
(In thousands)

Liabilities and Shareholders' Equity	March 31, 2007			March 25, 2006
Current liabilities
Accounts payable	$	93,729	$	90,992
Accrued payroll and benefits		33,367		29,423
Other accrued expenses		19,503		18,356
Current portion of exit costs		8,889		6,513
Current maturities of long-term debt and capital lease obligations		2,494		1,675
Total current liabilities		157,982		146,959
Long-term liabilities
Postretirement benefits		9,208		8,702
Other long-term liabilities		17,413		4,700
Exit costs		23,814		8,804
Long-term debt and capital lease obligations		106,341		64,015
Total long-term liabilities		156,776		86,221
Commitments and contingencies (Note 7)
Shareholders' equity
Common stock, voting, no par value; 50,000 shares        authorized; 21,658 and 21,023 shares outstanding		126,447		123,256
Preferred stock, no par value, 10,000        shares authorized; no shares outstanding		- -		- -
Deferred stock-based compensation		-		(2,873	)
Accumulated other comprehensive income (loss)		126		(276	)
Retained earnings		46,168		25,310
Total shareholders' equity		172,741		145,417
Total liabilities and shareholders' equity	$	487,499	$	378,597

See notes to consolidated financial statements.

- -35-

CONSOLIDATED STATEMENTS OF EARNINGS

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

	Year Ended
	March 31, 2007			March 25, 2006			March 26, 2005
Net sales	$	2,370,428		$	2,039,926		$	2,043,187
Cost of sales		1,903,258			1,657,742			1,656,516
Gross margin		467,170			382,184			386,671
Operating expenses
Selling, general and administrative		411,279			344,095			349,174
Provision for asset impairments and exit costs		4,464			1,057			-
Total operating expenses		415,743			345,152			349,174
Operating earnings		51,427			37,032			37,497
Other income and expenses
Interest expense		12,751			7,669			9,315
Debt extinguishment		-			-			561
Other, net		(647	)		(1,306	)		(924	)
Total other income and expenses		12,104			6,363			8,952
Earnings before income taxes and     discontinued operations		39,323			30,669			28,545
Income taxes		13,748			10,307			8,682
Earnings from continuing operations		25,575			20,362			19,863
Loss from discontinued operations, net of taxes		(415	)		(2,190	)		(1,037	)
Net earnings	$	25,160		$	18,172		$	18,826
Basic earnings per share:
Earnings from continuing operations	$	1.22		$	0.98		$	0.97
Loss from discontinued operations		(0.02	)		(0.11	)		(0.05	)
Net earnings	$	1.20		$	0.87		$	0.92
Diluted earnings per share:
Earnings from continuing operations	$	1.20		$	0.96		$	0.96
Loss from discontinued operations		(0.02	)		(0.10	)		(0.05	)
Net earnings	$	1.18		$	0.86		$	0.91
Weighted average shares outstanding:
Basic		20,913			20,796			20,439
Diluted		21,408			21,174			20,743

See notes to consolidated financial statements.

- -36-

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 (Accumulated Deficit)			Total
Balance - March 28, 2004		20,092		$  116,666		$	(179	)	$	(182	)	$	(10,638	)	$	105,667
Comprehensive income, net of tax:
	Net earnings	-		-		-			-			18,826			18,826
	Minimum pension liability adjustment	-		-		-			(21		)	-			(21		)
	Total comprehensive income	-		-		-			-			-			18,805
	Issuances of common stock	209		748		-			-			-			748
	Issuances of restricted stock	248		811		(811		)	-			-			-
	Cancellations of restricted stock	(25	)	(81	)	81			-			-			-
	Amortization of restricted stock	-		-		190			-			-			190
Balance - March 26, 2005		20,524		118,144		(719		)	(203		)	8,188			125,410
Comprehensive income, net of tax:
	Net earnings	-		-		-			-			18,172			18,172
	Minimum pension liability adjustment	-		-		-			(73		)	-			(73		)
	Total comprehensive income	-		-		-			-			-			18,099
	Dividends - $.05 per share	-		-		-			-			(1,050		)	(1,050		)
	Issuances of common stock and related    tax benefit on stock option exercises	294		1,703		- -			- -			- -			1,703
	Issuances of restricted stock and related    income tax benefits	252		3,616		(3,121		)	- -			- -			495
	Cancellations of restricted stock	(47	)	(207	)	126			-			-			(81		)
	Amortization of restricted stock	-		-		841			-			-			841
Balance - March 25, 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	-		-		-			89			-			89
	Total comprehensive income	-		-		-			-			-			25,249
	Adjustment to initially apply SFAS    No. 158, net of tax	- -		- -		- -			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

See notes to consolidated financial statements.

- -37-

CONSOLIDATED STATEMENTS OF CASH FLOWS

Spartan Stores, Inc. and Subsidiaries
(In thousands)

	Year Ended
	March 31, 2007			March 25, 2006			March 26, 2005
Cash flows from operating activities
Net earnings	$	25,160		$	18,172		$	18,826
Loss from discontinued operations		415			2,190			1,037
Earnings from continuing operations		25,575			20,362			19,863
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Provision for asset impairments and exit costs		4,464			1,057			-
Debt extinguishment		-			-			561
Depreciation and amortization		22,153			21,392			22,582
Postretirement benefits expense		2,260			2,458			2,463
Deferred taxes on income		12,774			9,677			8,426
Stock-based compensation expense		1,906			760			190
Gain on disposal of assets		(255	)		(1,135	)		(748	)
Other		-			367			64
Change in operating assets and liabilities:
Accounts receivable		(561	)		(1,871	)		(4,590	)
Inventories		(4,845	)		96			91
Prepaid expenses and other assets		(565	)		678			4,263
Accounts payable		2,063			6,259			7,547
Accrued payroll and benefits		5,011			(547	)		3,921
Postretirement benefits payments		(3,695	)		(3,246	)		(813	)
Other accrued expenses and other liabilities		(2,103	)		(1,561	)		(3,190	)
Net cash provided by operating activities		64,182			54,746			60,630
Cash flows from investing activities
Purchases of property and equipment		(28,365	)		(29,498	)		(25,354	)
Net proceeds from the sale of assets		2,573			2,370			3,897
Acquisitions, net of cash acquired		(53,773	)		-
Other		291			(855	)		(327	)
Net cash used in investing activities		(79,274	)		(27,983	)		(21,784	)

- -38-

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

	Year Ended
	March 31, 2007			March 25, 2006			March 26, 2005
Cash flows from financing activities
Net proceeds (payments) from revolving credit facility	$	23,884		$	(26,498	)	$	(15,187	)
Repayment of long-term debt		(2,330	)		(2,324	)		(18,883	)
Financing fees paid		(90	)		(447	)		(492	)
Proceeds from sale of common stock		3,208			882			748
Dividends paid		(4,302	)		(1,050	)		-
Net cash provided by (used in) financing activities		20,370			(29,437	)		(33,814	)
Cash flows from discontinued operations
Net cash used in operating activities		(4,012	)		(4,042	)		(3,895	)
Net cash provided by investing activities		3,142			-			565
Net cash used in financing activities		-			(509	)		(74	)
Net cash used in discontinued operations		(870	)		(4,551	)		(3,404	)
Net increase (decrease) in cash and cash equivalents		4,408			(7,225	)		1,628
Cash and cash equivalents at beginning of year		7,655			14,880			13,252
Cash and cash equivalents at end of year	$	12,063		$	7,655		$	14,880
Supplemental Cash Flow Information:
Cash paid for interest	$	12,259		$	7,740		$	8,859
Cash paid for income taxes	$	595		$	215		$	17

See notes to consolidated financial statements.

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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 year ended March 31, 2007 consisted of 53 weeks, and the fiscal years ended March 25, 2006 and March 26, 2005 each consisted of 52 weeks.

Revenue Recognition: The Retail segment recognizes revenues from the sale of products at the point of sale. Sales and excise taxes are excluded from revenue. The Distribution segment recognizes revenues when products are delivered or ancillary services are provided.

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 Disclosures 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 and notes payable approximate fair value at March 31, 2007 and March 25, 2006 because of the short-term nature of these financial instruments. The estimated carrying value of long-term debt approximates its fair value at March 31, 2007 and March 25, 2006 due to variable interest rates that cover a majority of the long-term debt and a comparison of fixed rate debt to estimated rates that would currently be available for debt with similar terms and maturities.

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

Accounts Receivable: Accounts receivable are shown net of allowances for credit losses of $3.0 million in fiscal 2007 and $2.6 million in fiscal 2006. 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 $0.2 million, $0.2 million, and $0.4 million for fiscal years 2007, 2006 and 2005, 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 $42.6 million and $42.1 million higher at March 31, 2007 and March 25, 2006, respectively. During fiscal years 2007, 2006 and 2005, 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 2007, 2006 and 2005 by $2.0 million, $0.9 million and $0.6 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

- -40-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 consists of land, buildings and equipment that Spartan Stores expects to sell within 12 months. The assets are included in the following segments:

(in thousands)

	2007		2006
Distribution	$	154	$	1,567
Retail		3,053		3,278
Discontinued operations		388		1,789
Total	$	3,595	$	6,634

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 at least annually for impairment using a discounted cash flow model.

Other Assets: Included in Other assets are intangibles and debt issuance costs. Intangible assets primarily consist of favorable lease agreements, prescription lists, non-compete agreements, and franchise fees. Favorable leases are amortized on a straight-line basis over the lease terms of 8 to 20 years. Prescription lists are amortized on a straight-line basis over 7 to 15 years. Non-compete agreements are amortized on a straight-line basis over the length of the agreement of 3 to 15 years. Franchise fees are amortized on a straight-line basis over the term of the franchise agreement of 2 to 10 years. Debt issuance costs are amortized over the term of the related financing agreement.

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 10 years

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

Gains on the disposal of property and equipment totaled $0.3 million, $1.1 million and $0.8 million in fiscal years 2007, 2006 and 2005, 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.

Accounts Payable: Accounts payable also include checks that have been issued and have not cleared Spartan Stores' controlled disbursement bank accounts.

Insurance Reserves: Insurance reserves include provisions for workers' compensation, health and property insurance for which Spartan Stores is self-insured. 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.

- -41-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

(In thousands)	March 31, 2007			March 25, 2006			March 26, 2005
Beginning balance	$	8,782		$	11,252		$	12,838
Expense		2,290			2,450			3,565
Claim payments		(2,990	)		(4,920	)		(5,151	)
Ending balance		8,082			8,782			11,252
Less current portion		4,583			5,024			5,370
Long-term portion	$	3,499		$	3,758		$	5,882

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.

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 7,058 in fiscal 2007, 618,593 in fiscal 2006 and 1,018,889 in fiscal 2005.

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". 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 11.

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 31, 2007, there were no shares of preferred stock outstanding.

Advertising Costs: Spartan Stores' advertising costs are expensed as incurred and are included in selling, general and administrative expenses. Advertising expenses were $11.1 million in fiscal 2007, $8.6 million in fiscal 2006 and $9.9 million in fiscal 2005.

Recently Issued Accounting Standards: Effective March 26, 2006, Spartan Stores adopted the provisions of SFAS No. 123(R), "Share-Based Payment", that addresses the accounting for share-based payments to employees, including grants of employee stock options and other forms of share-based compensation. Under SFAS No. 123(R), it is no longer acceptable to account for share-based payments to employees using the intrinsic value method in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Instead, SFAS No. 123(R) requires that share-based payment transactions be accounted for using a fair value method and the related compensation cost recognized in the consolidated financial statements over

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the period that an employee is required to provide services in exchange for the award. The adoption of SFAS No. 123(R) and its effects are more fully described in Note 11.

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 is effective at the beginning of Spartan Stores' fiscal year 2008. Spartan Stores expects that the adoption of FIN 48 will increase retained earnings by approximately $1.0 million as of the beginning of fiscal year 2008.

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 No. 158 requires employers that sponsor a defined benefit postretirement plan to recognize the overfunded or underfunded status of defined benefit postretirement plans, including pension plans, in their balance sheets and to recognize changes in funded status through comprehensive income in the year in which the changes occur. 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. The Statement also requires that employers measure plan assets and obligations as of the date of their year-end financial statements beginning with Spartan Stores' fiscal year ending March 28, 2009. Spartan Stores is currently evaluating the i mpact of the measurement date aspect of SFAS No. 158 on the consolidated financial statements. See Note 9 for further discussion of the effect of adopting SFAS No. 158 on Spartan Stores' consolidated financial statements.

In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements for the purpose of a materiality assessment. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. Effective March 31, 2007, Spartan Stores adopted SAB 108. The adoption of SAB 108 did not have a material impact on Spartan Stores' consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS No. 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 No. 157 will become effective for Spartan Stores at the beginning of fiscal year 2009. The provisions of the Statement are to be applied prospectively, except for limited retrospective application permitted for certain items. Spartan Stores is currently evaluating the impact, if any, that SFAS No. 157 will have on the consolidated financial statements.

Reclassifications: Reclassifications of certain current liabilities have been made to the fiscal 2006 and fiscal 2005 financial statements to conform to the fiscal 2007 presentation.

Note 2
Acquisitions of Assets

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

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 Spartan Stores' existing bank credit facilities.

The following table summarizes the estimated 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. Goodwill of $67.9 million is expected to be deductible for tax purposes.

Additionally, $1.1 million in costs directly related to the acquisition have been included in goodwill.

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.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Unaudited Pro Forma Condensed Combined Financial Information

The following tables provide unaudited pro forma condensed combined financial information for Spartan Stores after giving effect to the acquisition described above and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. This information is based on adjustments to the historical consolidated financial statements of Spartan Stores and D&W using the purchase method of accounting for business combinations. The pro forma adjustments do not include any of the cost savings and other synergies anticipated to result from the acquisition. These pro forma results are based on assumptions considered appropriate by management and include all material adjustments as considered necessary. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of results that would have actually been reported as of the date or for the year presented had the acquisition taken place on such date or a t the beginning of the year indicated, or to project Spartan Stores' financial position or results of operations which may be reported in the future.

The following unaudited pro forma condensed combined balance sheet as of March 25, 2006 is based upon the historical consolidated financial statements of Spartan Stores and D&W as of that period. The following unaudited pro forma condensed combined statement of earnings for the year ended March 25, 2006 is based upon the historical consolidated financial statements of Spartan Stores and D&W for that period. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the audited historical financial statements of Spartan Stores included in this report and the audited historical financial statements of D&W found in Exhibit 99 of our fiscal 2006 Annual Report on Form 10-K.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Unaudited Pro Forma Condensed Combined Balance Sheet
March 25, 2006

(In thousands)	Spartan Stores1			D&W 2			Pro Forma Adjustments3				Pro Forma Combined
ASSETS
Current assets
Cash and cash equivalents	$	7,655		$	2,225		$	(2,221	)	(a)	$	7,659
Accounts receivable, net		45,280			3,730			(4,212	)	(a) (b)		44,798
Inventories		95,892			7,984			(3,459	)	(a) (c)		100,417
Other current assets		18,868			425			1,437		(a) (d) (f)		20,730
Total current assets		167,695			14,364			(8,455	)			173,604
Other assets
Goodwill, net		72,555			852			68,064		(a) (g)		141,471
Other, net		23,169			751			(419	)	(a) (d) (e) (f)		23,501
Total other assets		95,724			1,603			67,645				164,972
Property and equipment
Land, buildings and improvements		134,364			35,160			(18,856	)	(a) (h)		150,668
Equipment		216,082			62,216			(57,240	)	(a) (h)		221,058
Total property and equipment		350,446			97,376			(76,096	)			371,726
Less accumulated depreciation and        amortization		235,268			75,691			(75,691	)	(a) (h)		235,268
Net property and equipment		115,178			21,685			(405	)			136,458
Total assets	$	378,597		$	37,652		$	58,785			$	475,034
LIABILITIES AND SHAREHOLDERS'   EQUITY
Current liabilities
Accounts payable	$	90,992		$	15,072		$	(15,042	)	(a) (b) (j)	$	91,022
Accrued payroll and benefits		29,423			2,887			(2,548	)	(a) (j)		29,762
Other accrued expenses		24,869			5,129			(2,548	)	(a) (i)		27,450
Current maturities of long-term debt        and capital lease obligations		1,675			10,464			(9,803	)	(k)		2,336
Total current liabilities		146,959			33,552			(29,941	)			150,570
Other long-term liabilities		22,206			5,122			19,641		(a) (e) (i)		46,969
Long-term debt and capital lease     obligations		64,015			18,170			49,893		(k)		132,078
Shareholders' equity
Common stock		123,256			5			(5	)	(l)		123,256
Other		(3,149	)		186			(186	)	(l)		(3,149	)
Retained earnings (accumulated deficit)		25,310			(19,383	)		19,383		(l)		25,310
Total shareholders' equity (deficiency)		145,417			(19,192	)		19,192				145,417
Total liabilities and shareholders' equity	$	378,597		$	37,652		$	58,785			$	475,034

See accompanying notes to unaudited pro forma condensed combined financial statements.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Unaudited Pro Forma Condensed Combined Statement of Earnings
Year ended March 25, 2006

(In thousands, except per share amounts)	Spartan Stores, Inc.4			D&W 5			Pro Forma Adjustments6				Pro Forma Combined
Net sales	$	2,039,926		$	244,773		$	(40,865	)	(m) (n)	$	2,243,834
Cost of goods sold		1,657,742			172,581			(39,899	)	(m) (n) (r)		1,790,424
Gross margin		382,184			72,192			(966	)			453,410
Operating expenses
Selling, general and administrative		344,095			72,371			(12,786	)	(m) (o) (p) (r)		403,680
Provision for asset impairment and exit costs		1,057										1,057
Total operating expenses		345,152			72,371			(12,786	)			404,737
Operating earnings (loss)		37,032			(179	)		11,820				48,673
Other income and expenses
Interest expense		7,669			3,579			2,009		(q)		13,257
Other, net		(1,306	)		(204	)		204				(1,306	)
Other income and expenses, net		6,363			3,375			2,213		(m)		11,951
Earnings (loss) before income taxes and    discontinued operations		30,669			(3,554	)		9,607				36,722
Income taxes		10,307						3,732		(s) (t)		14,039
Earnings (loss) from continuing operations	$	20,362		$	(3,554	)	$	5,875			$	22,683
Basic earnings per share from continuing    operations:	$	0.98									$	1.09
Diluted earnings per share from continuing    operations:	$	0.96									$	1.07
Weighted average shares outstanding:
Basic		20,796										20,796
Diluted		21,174										21,174

See accompanying notes to unaudited pro forma condensed combined financial statements.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1.	Represents the historical audited balance sheet of Spartan Stores as of March 25, 2006.
2.	Represents the historical audited balance sheet of D&W as of December 25, 2005.
3.	Represents the pro forma adjustments required to account for the acquisition as a purchase as of March 25, 2006, including the following:
		(a)	To eliminate D&W assets and liabilities not acquired or assumed.
		(b)	To eliminate receivable and payable between Spartan Stores and D&W.
		(c)	To record inventories at fair market value, including the elimination of the LIFO reserve.
		(d)	To record deferred taxes on assets acquired and liabilities assumed.
		(e)	To record favorable and unfavorable leases assumed.
		(f)	To adjust other assets acquired to fair value.
		(g)	To record goodwill in connection with the acquisition including legal and professional fees directly related to the acquisition.
		(h)	To adjust property and equipment acquired to fair value and eliminate historical accumulated depreciation.
		(i)	To record exit costs related to acquired closed store locations and estimated future restructurings.
		(j)	To record other liabilities assumed.
		(k)	To reflect the financing transactions related to the acquisition. Such financing was presented assuming borrowings under Spartan Stores' revolving credit facility.
		(l)	To eliminate D&W's historical shareholders' equity.
4.	Represents the historical audited statement of earnings of Spartan Stores for the year ended March 25, 2006.
5.	Represents the historical audited statement of operations of D&W for the year ended December 25, 2005. Certain reclassifications have been made to the historical Statement of Operations of D&W to conform to the classifications used by Spartan Stores.
6.	Represents the pro forma adjustments required to account for the acquisition as a purchase as of March 27, 2005, including the following:
		(m)	To eliminate certain business operations of D&W not acquired.
		(n)	To eliminate sales and purchases transactions between Spartan Stores and D&W.
		(o)	To adjust rent expense for changes resulting from the fair valuation of leases assumed.
		(p)	To adjust depreciation expense for changes resulting from the fair valuation of property and equipment acquired.
		(q)	To record interest expense associated with borrowings incurred in connection with the acquisition and to eliminate interest expense related to D&W debt not assumed.
		(r)	To record incremental gross profit and selling, general and administrative expenses to the Distribution segment due to increased volume resulting from the acquisition.
		(s)	To record provision for federal income taxes as a "C" corporation based on D&W's historical results as D&W was a Subchapter S corporation.
		(t)	To record provision for federal income taxes on the pro forma adjustments.

In the first quarter of fiscal 2007, Spartan Stores incurred approximately $1.1 million, $0.7 million after-tax, in start-up costs related to training, remerchandising and rebranding the stores. These charges are included in "Selling, general and administrative expenses".

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Other Acquisitions

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 us to better coordinate in-store operations and improve our 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 transaction were drawn under Spartan Stores' existing bank credit facilities. The estimated fair value of assets acquired consisted of $1.6 million for inventory, $0.9 mil lion 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 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.

On March 19, 2007, we entered into an asset purchase agreement to acquire certain assets and assume certain liabilities related to 20 retail grocery stores, two fuel centers and three convenience stores from G&R Felpausch Company ("Felpausch"), a privately-held retail grocery operator and current customer of our Distribution segment. The retail supermarkets include the operations of nine in-store pharmacies. The purchase price is expected to be $38.5 million plus up to $14.0 million for inventory. The transaction is expected to close in June 2007.

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 March 27, 2005	$	41,969	$	30,346	$	72,315
Other		240		-		240
Balance at March 25, 2006		42,209		30,346		72,555
D&W acquisition (Note 2)		45,772		23,224		68,996
Carter's, Inc. and PrairieStone Pharmacy, LLC    acquisitions (Note 2)		1,125		137		1,262
Other		75		-		75
Balance at March 31, 2007	$	89,181	$	53,707	$	142,888

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

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands)	March 31, 2007				March 25, 2006
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Non-compete agreements	$	3,234	$	2,096	$	3,206	$	1,811
Favorable leases		4,025		1,655		2,660		1,360
Customer lists		3,293		239		405		53
Franchise fees and other		1,201		347		1,071		243
Total	$	11,753	$	4,337	$	7,342	$	3,467

The weighted average amortization period of non-compete agreements, favorable leases, customer lists, franchise fees and other, and intangible assets in total is 8.9 years, 10.4 years, 7.5 years, 11.0 years and 8.9 years, respectively. Amortization expense for intangible assets was $0.9 million, $0.7 million, and $0.7 million for fiscal years 2007, 2006, and 2005, respectively. Estimated amortization expense for each of the five succeeding fiscal years is as follows:

(In thousands)	Fiscal Year		Amortization Expense
	2008	$	1,240
	2009		1,099
	2010		972
	2011		933
	2012		808

Note 4
Discontinued Operations

Spartan Stores' former convenience distribution operations, insurance operations and certain of its retail, grocery distribution and real estate operations have been recorded as discontinued operations. Results of the discontinued operations are excluded from the accompanying notes to the consolidated financial statements for all periods presented, unless otherwise noted.

Discontinued operations had no sales during fiscal years 2007, 2006 and 2005. The operating losses in discontinued operations for fiscal years 2007, 2006 and 2005 of $0.7 million, $3.8 million and $2.6 million were partially offset by income tax benefits of $0.3 million, $1.6 million and $1.6 million for fiscal 2007, 2006 and 2005, respectively. Spartan Stores continually monitors specific market conditions for its discontinued operations real estate. During fiscal 2006 and fiscal 2005 Spartan Stores recorded an additional liability of $2.2 million and $1.4 million, respectively, for changes in its estimated sublease income due to revised estimates of such offsets to its closed store lease liabilities.

Total assets of discontinued operations were $4.4 million at March 31, 2007 and $6.1 million at March 25, 2006. Total liabilities of discontinued operations decreased from $12.8 million at March 25, 2006 to $9.1 million at March 31, 2007.

Spartan Stores anticipates that it will be subject to a partial withdrawal liability from a multi-employer pension plan related to the 2003 closures of certain of its discontinued Food Town stores when a final determination is made based on the June 30, 2006 financial condition of the plan. Previous estimates provided by the trustees of the multi-employer pension plan indicate that there is an underfunded liability which we believe to have resulted from a change in actuarial assumptions, investment performance, other employers' withdrawals, or a combination of these factors, occurring subsequent to the closure of these stores. Spartan Stores intends to challenge such a determination prior to settling the partial withdrawal liability if, and when, assessed after actuarial work is complete for the June 30, 2006 date. At this time, Spartan Stores does not know when the June 30, 2006 actuarial work will be completed. Spartan Stores has estimated its liability based on available preliminary information and rec orded an after-tax charge of approximately $1.1 million in Discontinued Operations in the third quarter of fiscal 2006.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 5
Asset Impairments and Exit Costs

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 on March 27, 2006, its desire to move the production of bakery products closer to the consumer, and the economics of its central bakery operation. In fiscal 2006, the Retail segment recognized charges of $0.7 million for asset impairment and store and office facility exit costs, which include 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 th e end of the remaining lease term, net of estimated sublease recoveries, as well as severance benefits.

The following table provides the activity of exit costs for our Retail segment for fiscal years 2007, 2006 and 2005. 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 28, 2004	$	18,338
Provision for lease and related ancillary costs, net of estimated    sublease recoveries		1,400	(a)
Provision for pension withdrawal liability		1,700	(b)
Payments, net of interest accretion		(5,918	)
Balance at March 26, 2005		15,520
Provision for lease and related ancillary costs, net of estimated    sublease recoveries		2,719	(c)
Provision for pension withdrawal liability		1,654	(b)
Payments, net of interest accretion		(4,576	)
Balance at March 25, 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

(a)	Recorded in discontinued operations.
(b)	Represents pension withdrawal liabilities from multi-employer pension plans affiliated with the former discontinued Food Town supermarkets. The $1.7 million charge in fiscal 2005 is being paid over seven years. The $1.7 million charge in fiscal 2006 is discussed in Note 4. Both charges were recorded in discontinued operations.
(c)	Includes $2.2 million of charges recorded in discontinued operations.

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SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 6
Long-Term Debt

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

(In thousands)	March 31, 2007		March 25, 2006
Senior secured revolving credit facility, due December 2012	$	78,182	$	55,538
Notes payable, 8.00%, due May 2008, monthly principal    payments of variable amounts		3,272		3,835
Capital lease obligations (Note 8)		26,354		5,154
Other, 7.00% - 9.25%, due 2009 - 2021		1,027		1,163
		108,835		65,690
Less current portion		2,494		1,675
Total long-term debt	$	106,341	$	64,015

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. In addition, a $15.0 million Term B loan is included as part of the total $225.0 million credit facility, which may be drawn upon at Spartan's option through October 1, 2007, and thereafter by agreement with the lenders as set forth in the credit agreement. Also at Spartan Stores' option, the maximum amount under the credit facility may be increased up to $275.0 million through the addition of new 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.

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 the maintenance of minimum EBITDA, a minimum fixed charge coverage ratio and maximum capital expenditures, as defined in the credit agreement. These covenants will not be effective as long as Spartan Stores maintains minimum excess availability levels of $20.0 - $25.0 million. Spartan Stores had available borrowings of $86.7 million at March 31, 2007 and maximum availability of $96.7 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 $10.0 million were outstanding and unused as of March 31, 2007. Borrowings under the revolving credit portion of the facility bear interest at LIBOR plus 1.25% or the prime ra te (weighted average interest rate of 6.75% at March 31, 2007), and borrowings under the Term B loan bear interest at LIBOR plus 2.50%.

The weighted average interest rates including loan fee amortization for fiscal 2007, 2006 and fiscal 2005 were 9.73%, 8.65% and 8.16%, respectively.

- -52-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At March 31, 2007, long-term debt was due as follows:

(In thousands)	Fiscal Year
	2008	$	2,494
	2009		4,847
	2010		1,858
	2011		1,928
	2012		2,057
	Thereafter		95,651
		$	108,835

Note 7
Commitments and Contingencies

Spartan Stores subleases property at certain locations and received rental income of $1.4 million in fiscal 2007. 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 8.

Unions represent approximately 17% of our associates. Contracts covering approximately 450 retail associates expire between March 2008 and June 2009. A contract covering 170 distribution center and transportation associates expires in April 2010. Contracts covering an additional 600 distribution center and transportation associates expire in October 2011.

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 8
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)	2007			2006			2005
Minimum rentals	$	27,622		$	24,487		$	24,642
Contingent payments		962			780			1,109
Sublease income		(1,408	)		(1,335	)		(1,830	)
	$	27,176		$	23,932		$	23,921

- -53-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Total future lease commitments of Spartan Stores under capital and operating leases in effect at March 31, 2007 are as follows:

(In thousands)	Capital									Operating
Fiscal Year	Used in Operations			Subleased to Others			Total			Used in Operations		Subleased to Others		Total
2008	$	3,770		$	367		$	4,137		$	24,651	$	914	$	25,565
2009		3,826			-			3,826			22,328		869		23,197
2010		3,833			-			3,833			19,534		778		20,312
2011		3,732			-			3,732			16,619		612		17,231
2012		3,676			-			3,676			11,837		528		12,365
Thereafter		24,294			-			24,294			40,112		1,124		41,236
Total		43,131			367			43,498		$	135,081	$	4,825	$	139,906
Interest		(17,125	)		(19	)		(17,144	)
Present value of minimum    lease obligations		26,006			348			26,354
Current portion		1,460			348			1,808
Long-term obligations    at March 31, 2007	$	24,546		$	- -		$	24,546

Amortization expense for property under capital leases was $1.7 million, $0.5 million and $0.5 million in fiscal years 2007, 2006 and 2005, respectively.

Assets held under capital leases consisted of the following:

(In thousands)	March 31, 2007		March 25, 2006
Buildings and improvements	$	20,299	$	6,132
Equipment		889		379
		21,188		6,511
Less accumulated depreciation		4,098		2,701
Net property	$	17,090	$	3,810

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 our leases provide for minimum and contingent rentals based upon stipulated sales volumes and contain renewal options. Certain of our leases contain escalation clauses.

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

(In thousands)	March 31, 2007		March 25, 2006
Land and improvements	$	1,644	$	2,480
Buildings		5,527		4,686
		7,171		7,166
Less accumulated depreciation		3,010		2,800
Net property	$	4,161	$	4,366

- -54-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Future minimum rentals to be received under operating leases in effect at March 31, 2007 are as follows:

(In thousands)

Fiscal Year		Owned Property		Leased Property		Total
2008	$	1,067	$	1,514	$	2,581
2009		258		1,168		1,426
2010		-		1,075		1,075
2011		-		874		874
2012		-		586		586
Thereafter		-		1,250		1,250
Total	$	1,325	$	6,467	$	7,792

Note 9
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 ("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 are also added at Spartan Stores' discretion to certain participants' accounts until the year 2007 if certain age and years-of-service requirements are 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. At March 25, 2006 Company Plan assets included shares of Spartan Stores common stock valued at $2.4 millio n, respectively. At March 31, 2007, no shares of Spartan Stores common stock were held by the Company Plan.

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 $2.2 million, $2.0 million and $2.0 million in fiscal years 2007, 2006 and 2005, 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 $6.8 million in fiscal 2007, $6.5 million in fiscal 2006 and $6.5 million in fiscal 2005.

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.

- -55-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

Effective March 31, 2007, Spartan Stores adopted the recognition and disclosure provisions of SFAS No. 158 which required the Company to recognize the funded status of its pension plan and other postretirement benefits in the March 31, 2007 Consolidated Balance Sheet, with a corresponding adjustment to accumulated other comprehensive income, net of tax.

The incremental effect of adopting the provisions of SFAS No. 158 on the year-end Consolidated Balance Sheet is presented in the following table. SFAS No. 158 has no effect on the Consolidated Statements of Earnings.

(In thousands)	Prior to Adopting SFAS No. 158			Effect of Adopting SFAS No. 158			As Reported at March 31, 2007
Pension Benefits
Current liabilities	$	(2,258	)	$	2,258		$	-
Noncurrent liabilities		134			(1,524	)		(1,390	)
Accumulated other comprehensive income		-			(734	)		(734	)
SERP Benefits
Current liabilities		-			(61	)		(61	)
Noncurrent liabilities		(349	)		3			(346	)
Accumulated other comprehensive income		187			58			245
Postretirement Benefits
Current liabilities		-			(346	)		(346	)
Noncurrent liabilities		(4,274	)		(17	)		(4,291	)
Accumulated other comprehensive income		-			363			363

- -56-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 of each year.

(In thousands, except percentages)	Pension Benefits						SERP Benefits						Postretirement Benefits
	March 31, 2007			March 25, 2006			March 31, 2007			March 25, 2006			March 31, 2007			March 25, 2006
Change in benefit obligation
Benefit obligation at beginning of year	$	46,944		$	43,807		$	670		$	578		$	7,609		$	6,821
Service cost		3,084			3,011			45			16			224			214
Interest cost		2,438			2,307			35			31			409			383
Actuarial (gain) loss		1,085			1,763			(33	)		135			(488	)		518
Benefits paid		(3,623	)		(3,944	)		(74	)		(90	)		(621	)		(327	)
Benefit obligation at measurement date	$	49,928		$	46,944		$	643		$	670		$	7,133		$	7,609
Change in plan assets
Plan assets at fair value at beginning of year	$	42,164		$	39,548		$	-		$	-		$	-		$	-
Actual return on plan assets		6,047			3,777			-			-			-			-
Company contributions		3,470			2,783			74			90			621			327
Benefits paid		(3,623	)		(3,944	)		(74	)		(90	)		(621	)		(327	)
Plan assets at fair value at measurement date	$	48,058		$	42,164		$	-		$	-		$	-		$	-
Funded status	$	(1,870	)	$	(4,780	)	$	(643	)	$	(670	)	$	(7,133	)	$	(7,609	)
Unrecognized net gain		-			8,147			-			453			-			1,889
Unrecognized prior service cost		-			(7,902	)		-			(16	)		-			(840	)
Contributions during fourth quarter		741			463			17			15			-			-
Net amount recognized in financial position		(1,129	)		(4,072	)		(626	)		(218	)		(7,133	)		(6,560	)
Components of net amount recognized in    financial position:
Noncurrent assets		-			-			-			-			-			-
Current liabilities		-			(2,965	)		(61	)		-			(346	)		-
Noncurrent liabilities		(1,129	)		(1,107	)		(565	)		(642	)		(6,787	)		(6,560	)
	$	(1,129	)	$	(4,072	)	$	(626	)	$	(642	)	$	(7,133	)	$	(6,560	)
Amounts recognized in accumulated    other comprehensive income:
Net actuarial loss (gain)	$	6,082		$	-		$	392		$	453		$	1,334		$	-
Prior service cost (credit)		(7,212	)		-			(15	)		(16	)		(776	)		-
Future pay increases		-			-			-			(13	)		-			-
Net transition obligation		-			-			-			-			-			-
	$	(1,130	)	$	-		$	377		$	424		$	558		$	-
Weighted average assumptions at    Measurement date
Discount rate		5.75%			5.50%			5.75%			5.50%			5.75%			5.50%
Expected return on plan assets		8.50%			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

- -57-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 $49.5 million and $46.9 million at December 31, 2006 and 2005, respectively.

Components of net periodic benefit cost

(In thousands)	Pension Benefits									SERP
	March 31, 2007			March 25, 2006			March 26, 2005			March 31, 2007			March 25, 2006			March 26, 2005
Service cost	$	3,084		$	3,011		$	3,438		$	45		$	16		$	20
Interest cost		2,438			2,307			2,605			35			31			33
Expected return on plan assets		(3,207	)		(2,892	)		(3,438	)		-			-			-
Amortization of net transition    obligation		-			5			5			-			-			-
Amortization of prior service cost		(690	)		(690	)		(691	)		(1	)		(1	)		(1	)
Amortization of unrecognized net loss		310			295			139			27			17			16
Net periodic benefit cost	$	1,935		$	2,036		$	2,058		$	106		$	63		$	68

	Postretirement Benefits
	March 31, 2007			March 25, 2006			March 26, 2005
Service cost	$	224		$	214		$	227
Interest cost		409			383			389
Amortization of prior service cost		(63	)		(63	)		(64	)
Amortization of unrecognized net loss		66			43			38
Net periodic benefit cost	$	636		$	577		$	590

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 2008 are as follows:

(In thousands)	Pension Benefits			SERP Benefits			Postretirement Benefits
Net actuarial loss	$	290		$	27		$	39
Prior service credit		(690	)		(1	)		(64	)
	$	(400	)	$	26		$	(25	)

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 8.50% as of March 31, 2007. 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

- -58-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

10.50% (decreasing .50% per year to 5.00%) for fiscal 2007, 11.00% (decreasing .50% per year to 5.00%) for fiscal 2006 and 5.00% for fiscal 2005. A 1% increase in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligation by 0.98% and the periodic postretirement benefit cost by 0.66%. A 1% decrease in the assumed health care cost trend rate would decrease the accumulated postretirement benefit obligation by 0.90% and periodic postretirement benefit cost by 0.60%.

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 December 31, 2006 and December 31, 2005:

			Plan Assets
	Target Range		December 31, 2006		December 31, 2005
Asset Category
Equity securities	60.0 - 75.0	%	67.4	%	69.6	%
Fixed income	25.0 - 40.0		32.6		30.4
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.

Spartan Stores expects to contribute approximately $2.5 million to its defined benefit plans in fiscal 2008 to meet the minimum funding requirements.

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
2008	$	3,701	$	346
2009		3,244		342
2010		3,604		357
2011		3,774		367
2012		4,193		381
2013 to 2017		25,813		2,006

- -59-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 10
Taxes on Income

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

(In thousands)	March 31, 2007		March 25, 2006			March 26, 2005
Currently payable (refundable)	$	281	$	(136	)	$	(84	)
Deferred		13,467		10,443			8,766
	$	13,748	$	10,307		$	8,682

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

	2007		2006		2005
Statutory income tax rate	35.0	%	35.0	%	35.0	%
Tax credits	(0.3	)	(0.3	)	(0.2	)
Tax reserve adjustment	-		(0.4	)	(4.6	)
Other	0.3		(0.7	)	0.2
Effective income tax rate	35.0	%	33.6	%	30.4	%

Companies are regularly audited by federal and state tax authorities, which may result in proposed assessments and adjustments. During the fourth quarter of fiscal 2005, the Internal Revenue Service concluded its audit of the fiscal tax returns for 2001 through 2003. As a result of the audit, Spartan Stores released $2.0 million in tax reserves that are no longer required with respect to these years, of which $1.3 million and $0.7 million, respectively, is reflected in "Income taxes" and "Loss from discontinued operations, net of taxes", on the Consolidated Statements of Earnings, respectively, for fiscal 2005.

- -60-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Deferred tax assets and liabilities resulting from temporary differences as of March 31, 2007 and March 25, 2006 are as follows:

(In thousands)
	2007		2006
Deferred tax assets:
Employee benefits	$	8,263	$	8,058
Accounts receivable		1,072		911
Goodwill		-		1,609
Net operating loss carryforward		2,898		9,755
Asset impairment and closed store reserves		4,167		5,209
State taxes		1,083		1,201
All other		3,441		2,114
Total deferred tax assets		20,924		28,857
Deferred tax liabilities:
Depreciation		10,244		10,187
Inventory		2,403		2,079
Goodwill		2,550		-
All other		1,136		729
Total deferred tax liabilities		16,333		12,995
Net deferred tax asset	$	4,591	$	15,862

At March 31, 2007, Spartan Stores has a Federal net operating loss carryforward of $8.3 million, which expires in fiscal year 2024.

Note 11
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. As of March 31, 2007, 127,533 shares remained unissued under the 2001 Plan, and 1,139,000 shares remained unissued under the 2005 Plan.

Prior to March 26, 2006, Spartan Stores accounted for the plans under the recognition and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations, as permitted by SFAS No. 123. No stock-based compensation cost was reflected in the Consolidated Statements of Earnings for stock options as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The fair value of restricted stock was determined based on the average of the highest and lowest sales prices of Spartan Stores' common stock on the date of grant, and deferred stock-based compensation, representing the fair value of the stock at the measurement date of the award, was amortized to compensation expense over the vesting period.

Effective March 26, 2006, Spartan Stores adopted the fair value recognition provisions of SFAS No. 123(R), using the modified-prospective transition method. Under that transition method, compensation cost recognized in fiscal 2007 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of March 26, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to March 26, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). Upon adoption of SFAS No. 123(R), Spartan Stores elected to begin recognizing compensation expense using the straight-line amortization

- -61-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

method for share-based awards granted on or after March 26, 2006, consistent with restricted stock awards granted prior to adoption. In accordance with the provisions of SFAS No. 123(R), results for prior periods have not been restated.

For share-based awards granted prior to adoption of SFAS No. 123(R), compensation expense was recognized over the stated vesting period, without regard for terms that accelerate vesting upon retirement. Upon adoption of SFAS No. 123(R), compensation expense will continue to be recognized under this method for awards granted prior to adoption. However, for awards granted on or after March 26, 2006, compensation expense will be recognized over the shorter of the vesting period or the period from the date of grant through the date the employee first becomes eligible to retire.

As a result of adopting SFAS No. 123(R) on March 26, 2006, fiscal 2007 Earnings before income taxes are $0.5 million lower and Earnings from continuing operations and Net earnings are $0.3 million lower than if Spartan Stores had continued to account for share-based compensation under APB Opinion No. 25. Basic and diluted earnings per share for fiscal 2007 would have been $1.22 and $1.19, respectively, had Spartan Stores not adopted SFAS No. 123(R), compared to reported basic and diluted earnings per share of $1.20 and $1.18, respectively.

The following table illustrates the effect on net earnings and earnings per share as if share-based compensation expense for fiscal 2006 and fiscal 2005 had been determined based on the fair value recognition provisions of SFAS No. 123(R):

(In thousands, except per share data)

	2006			2005
Net earnings, as reported	$	18,172		$	18,826
Deduct: Total stock-based employee compensation expense    determined under fair value based method for all awards, net of    related tax effects		(328	)		(307	)
Pro forma net earnings	$	17,844		$	18,519
Basic earnings per share - as reported	$	0.87		$	0.92
Basic earnings per share - pro forma		0.86			0.91
Diluted earnings per share - as reported	$	0.86		$	0.91
Diluted earnings per share - pro forma		0.84			0.89

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. Prior to adoption of SFAS No. 123(R), under the provisions of SFAS No. 123, expected volatility was determined based upon historical volatility of Spartan Stores common stock and the historical volatilities of guideline companies for the period of time that Spartan Stores was not publicly traded. The expected term of options granted was based upon expectations of future exercise behavior derived from vesting and contractual terms. Upon adoption of SFAS No. 123(R), and under the provisions of this statement, expected vola tility was 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. The expected term of options granted is determined using the "simplified method" as described in SEC Staff Accounting Bulletin No. 107 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.

- -62-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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:

	2007	2006	2005
Dividend yield	1.00% - 1.46%	0.00%	0.00%
Expected volatility	30.43% - 31.70%	57.73%	57.73%
Risk-free interest rate	4.58% - 5.11%	3.86%	3.89% - 4.41%
Expected life of option	6.25 years	7 years	7 years

The following table summarizes stock option activity for the three years ended March 31, 2007:

	Shares Under Options			Weighted Average Exercise Price	Weighted Average Remaining Contractual Life Years		Aggregate Intrinsic Value (In thousands)
Options outstanding at March 27, 2004	1,430,340		$	7.38
Granted	121,278			3.26
Exercised	(20,646	)		3.33
Cancelled	(190,212	)		7.92
Options outstanding at March 26, 2005	1,340,760		$	6.99		7.29	$	6,426
Granted	83,250			11.50
Exercised	(341,455	)		4.79
Cancelled	(73,612	)		8.15
Options outstanding at March 25, 2006	1,008,943		$	8.01		6.41	$	5,323
Granted	187,845			13.95
Exercised	(547,269	)		8.30
Cancelled	(40,122	)		10.68
Options outstanding at March 31, 2007	609,397		$	9.44		6.87	$	10,553
Options exercisable at March 26, 2005	669,779		$	8.70		6.77	$	2,311
Options exercisable at March 25, 2006	696,340		$	8.98		5.85	$	3,220
Options exercisable at March 31, 2007	265,832		$	8.57		5.17	$	4,833
Vested and expected to vest in the    future at March 31, 2007	584,712		$	9.30		6.78	$	10,205

The weighted average grant-date fair value of stock options granted during fiscal years 2007, 2006 and 2005 was $4.85, $7.05 and $2.03, respectively. The total intrinsic value of stock options exercised during fiscal years 2007, 2006 and 2005 was $5.0 million, $2.3 million and $0.1 million, respectively. Cash received from option exercises was $3.2 million, $0.9 million and $0.1 million during fiscal years 2007, 2006 and 2005, respectively.

- -63-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables summarize information concerning options outstanding and options exercisable at March 31, 2007:

Options Outstanding
Exercise Prices		Options Outstanding	Weighted Average Remaining Contractual Life Years	Weighted Average Exercise Price
$	2.68 - 16.57	176,054	3.5 - 5.5	$	11.16
	1.75 - 5.65	126,181	5.6 - 6.7		2.44
	3.25 - 11.50	124,442	7.1 - 8.1		7.47
	13.69 - 19.81	182,720	9.1 - 9.6		13.95
$	1.75 - 19.81	609,397	6.87	$	9.44

Options Exercisable
Exercise Prices		Options Exercisable	Weighted Average Exercise Price
$	2.68 - 16.57	176,054	$	11.16
	1.75 - 5.65	66,181		2.36
	3.25 - 11.50	23,597		6.72
	13.69 - 19.81	-		-
$	1.75 - 19.81	265,832	$	8.57

Spartan Stores awarded 268,677 shares, 252,173 shares and 248,253 shares of restricted stock during fiscal years 2007, 2006 and 2005, respectively. Shares awarded to employees vest in 20 percent increments 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.

- -64-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes restricted stock activity for the three years ended March 31, 2007:

	Shares		Weighted Average Grant-Date Fair Value
Outstanding and nonvested at March 27, 2004	148,399		$	2.97
Granted	248,253			3.26
Forfeited	(27,251	)		2.85
Outstanding and nonvested at March 26, 2005	369,401		$	3.18
Granted	252,173			11.50
Vested	(146,200	)		2.80
Forfeited	(38,376	)		6.32
Outstanding and nonvested at March 25, 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

The weighted average grant-date fair value of restricted shares granted during fiscal years 2007, 2006 and 2005 was $13.96, $11.50 and $3.26, respectively. The total fair value of shares vested during fiscal years 2007, 2006 and 2005 was $0.8 million, $0.4 million and $0, 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)
	2007			2006			2005
Stock options	$	493		$	-		$	-
Restricted stock		1,413			760			190
Tax benefits		(667	)		(266	)		(66	)
	$	1,239		$	494		$	124

As of March 31, 2007, total unrecognized compensation cost related to nonvested share-based awards granted under the stock incentive plans was $1.0 million for stock options and $4.8 million for restricted stock. The remaining compensation costs not yet recognized are expected to be recognized over a weighted average period of 2.4 years for stock options and approximately 3.6 years for restricted stock.

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 31, 2007, 181,408 shares remained unissued under the plan.

- -65-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Spartan Stores had an associate stock purchase plan covering 700,000 shares of Spartan Stores common stock. The plan provided that associates of Spartan Stores and its subsidiaries may purchase shares at 85% of the fair market value. At March 31, 2007, 282,321 shares had been issued under the plan. The plan was terminated on April 1, 2005.

Note 12
Operating 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' operating segments are identified by products sold and customer profile and include the Distribution and Retail segments.

The operations of the Insurance, Real Estate and Convenience Distribution segments and a portion of the Retail and Distribution segments are classified as discontinued operations. Residual real estate business operations are considered to be immaterial under the criteria in SFAS No. 131 and have not been separately classified. Those operations have been recorded in the Distribution segment. See Note 4 for further discussion.

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 and deep-discount food and drug stores in Michigan and Ohio that typically offer dry grocery, produce, frozen, dairy, meat, beverages, floral, seafood, health and beauty care, delicatessen and bakery goods. Over two-thirds of the stores offer pharmacy services and ten fuel centers are currently in operation.

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

- -66-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables set forth information by operating segment:

(In thousands)
	Distribution		Retail		Total
Year Ended March 31, 2007
Net sales	$	1,238,079	$	1,132,349	$	2,370,428
Depreciation and amortization		7,837		13,596		21,433
Operating earnings		31,205		20,222		51,427
Capital expenditures		6,284		22,081		28,365
Year Ended March 25, 2006
Net sales	$	1,155,880	$	884,046	$	2,039,926
Depreciation and amortization		8,281		11,741		20,022
Operating earnings		24,761		12,271		37,032
Capital expenditures		11,730		17,768		29,498
Year Ended March 26, 2005
Net sales	$	1,120,637	$	922,550	$	2,043,187
Depreciation and amortization		8,146		12,578		20,724
Operating earnings		24,528		12,969		37,497
Capital expenditures		6,377		18,977		25,354

	2007		2006		2005
Total assets
Distribution	$	193,442	$	184,098	$	191,086
Retail		289,671		188,443		187,301
Discontinued operations		4,386		6,056		6,070
Total	$	487,499	$	378,597	$	384,457

- -67-

SPARTAN STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 13
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. Stock sales prices are based on transactions reported on The NASDAQ Stock Market.

(In thousands, except per share data)
Fiscal 2007	Full Year (53 weeks)			4th Quarter (13 weeks)			3rd Quarter (16 weeks)			2nd Quarter (12 weeks)			1st Quarter (12 weeks)
Net sales	$	2,370,428		$	559,481		$	723,547		$	559,384		$	528,016
Gross margin		467,170			114,468			137,227			111,975			103,500
Earnings from continuing    operations before income taxes		39,323			11,499			9,260			14,533			4,031
Earnings from continuing operations		25,575			7,457			6,052			9,448			2,618
Discontinued operations, net of taxes		(415	)		(214	)		(158	)		(114	)		71
Net earnings		25,160			7,243			5,894			9,334			2,689
Earnings from continuing    operations per share:
Basic	$	1.22		$	0.35		$	0.29		$	0.46		$	0.12
Diluted		1.20			0.35			0.28			0.45			0.12
Net earnings per share:
Basic	$	1.20		$	0.34		$	0.28		$	0.45		$	0.13
Diluted		1.18			0.34			0.27			0.44			0.12
Dividends paid	$	4,302		$	1,083		$	2,154		$	-		$	1,065
Common stock price - High		27.40			27.40			22.62			18.60			14.73
Common stock price - Low		12.17			19.98			15.61			12.17			12.43

(In thousands, except per share data)
Fiscal 2006	Full Year (52 weeks)			4th Quarter (12 weeks)			3rd Quarter (16 weeks)			2nd Quarter (12 weeks)			1st Quarter (12 weeks)
Net sales	$	2,039,926		$	452,791		$	642,274		$	485,541		$	459,320
Gross margin		382,184			87,087			115,744			93,546			85,807
Earnings from continuing    operations before income taxes		30,669			8,784			7,121			10,483			4,281
Earnings from continuing operations		20,362			5,709			4,770			7,068			2,815
Discontinued operations, net of taxes		(2,190	)		(399	)		(1,413	)		(215	)		(163	)
Net earnings		18,172			5,310			3,357			6,853			2,652
Earnings from continuing    operations per share:
Basic	$	0.98		$	0.27		$	0.23		$	0.34		$	0.14
Diluted		0.96			0.27			0.22			0.33			0.13
Net earnings per share:
Basic	$	0.87		$	0.25		$	0.16		$	0.33		$	0.13
Diluted		0.86			0.25			0.16			0.32			0.12
Dividends paid	$	1,050		$	1,050		$	-		$	-		$	-
Common stock price - High		15.50			13.43			11.45			15.50			14.80
Common stock price - Low		8.42			10.46			8.42			9.68			9.82

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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 31, 2007 (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 31, 2007.

          The registered public accounting firm that audited the financial statements included in this Form 10-K Annual Report has issued an attestation report on management's assessment of the Company's internal control over financial reporting.

- -69-

Report of Independent Registered Public Accounting Firm

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

          We have audited management's assessment, included in the accompanying Management's Report on Internal Controls over Financial Reporting, that Spartan Stores, Inc. and subsidiaries (the "Company") maintained effective internal control over financial reporting as of March 31, 2007, 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. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of 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, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

          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 accounting principles generally accepted in the United States of America (hereinafter referred to as "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 expenditures 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.

          In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of March 31, 2007, is fairly stated, in all material respects, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2007, 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 31, 2007 of the Company and our report dated May 11, 2007, expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
May 11, 2007

- -70-

          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.

- -71-

PART III

Item 10. Directors, Executive Officers and Corporate Governance

          The information required by this item regarding Directors of the Registrant is incorporated herein by reference from the sections entitled "The Board of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Code of Conduct and Business Ethics" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2007. Certain information regarding executive officers of the Registrant is included in Part I of this Annual Report immediately following Item 4 above.

Item 11. Executive Compensation

          The information required by this item is incorporated herein by reference from the sections entitled "Executive Compensation" and "Compensation of Directors" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2007.

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

          The information required by this item is incorporated herein by reference from the sections entitled "Ownership of Spartan Stores Stock" and the table captioned "Equity Compensation Plans" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2007.

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

          The information required by this item is incorporated herein by reference from the section entitled "Transactions with Related Persons" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2007.

Item 14. Principal Accountant Fees and Services

          The information required by this item is incorporated herein by reference from the section entitled "Independent Auditors" in Spartan Stores' definitive proxy statement relating to its annual meeting of shareholders to be held in 2007.

- -72-

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 May 11, 2007
		Consolidated Balance Sheets at March 31, 2007 and March 25, 2006
		Consolidated Statements of Earnings for each of the three years in the period ended March 31, 2007
		Consolidated Statements of Shareholders' Equity for each of the three years in the period ended March 31, 2007
		Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 2007
		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 March 19, 2007 by and among Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC collectively as Purchaser and G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., and Felpausch Kalamazoo, LLC collectively as Seller. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 23, 2007. Here incorporated by reference.
2.2	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.
2.3	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.
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.

-73-

Exhibit Number	Document
3.2	Amended and Restated Bylaws of Spartan Stores, Inc. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 13, 2003. Here incorporated by reference.
10.1	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. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended January 3, 2004. Here incorporated by reference.
10.2	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.
10.3	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.
10.4	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.
10.5	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.
10.6	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.
10.7	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.
10.8*	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.
10.9*	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.
10.10*	Form of Stock Option Grant to Officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.

-74-

Exhibit Number	Document
10.11*	Form of Restricted Stock Award to Officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.
10.12*	Form of Restricted Stock Award to Outside Directors. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.
10.13*	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.
10.14*	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.
10.15*	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.
10.16*	Spartan Stores, Inc. 2000 Annual Incentive Plan.
10.17*	Spartan Stores, Inc. 2001 Stock Incentive Plan.
10.18*	Spartan Stores, Inc. 2001 Stock Bonus Plan.
10.19*	Form of Employment Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 11, 2004. Here incorporated by reference.
10.20*	Form of 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 October 3, 2006. Here incorporated by reference.
10.21*	Form of 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 September 21, 2006. Here incorporated by reference.
10.22*	Form of Executive Severance Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 11, 2004. Here incorporated by reference.
10.23*	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 October 3, 2006. Here incorporated by reference.
10.24*	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 September 21, 2006. Here incorporated by reference.
10.25	Amended and Restated Lease, dated as of January 26, 2000, between Plymouth Investors Limited Liability Company and Spartan Stores Distribution, LLC.
21	Subsidiaries of Spartan Stores, Inc.
23	Consent of Independent Registered Public Accounting Firm.

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Exhibit Number	Document
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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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:	May 18, 2007	By	/s/ Craig C. Sturken
			Craig C. Sturken Chairman, President and Chief Executive Officer (Principal Executive Officer)

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                    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.

May 18, 2007	By	/s/ M. Shân Atkins
		M. Shân Atkins Director
May 18, 2007	By	/s/ Dr. Frank M. Gambino
		Dr. Frank M. Gambino Director
May 18, 2007	By	/s/ Frederick S. Morganthall, II
		Frederick S. Morganthall, II Director
May 18, 2007	By	/s/ Elizabeth A. Nickels
		Elizabeth A. Nickels Director
May 18, 2007	By	/s/ Timothy J. O'Donovan
		Timothy J. O'Donovan Director
May 18, 2007	By	/s/ Kenneth T. Stevens
		Kenneth T. Stevens Director
May 18, 2007	By	/s/ Craig C. Sturken
		Craig C. Sturken Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)
May 18, 2007	By	/s/ James F. Wright
		James F. Wright Director
May 18, 2007	By	/s/ David M. Staples
		David M. Staples Executive Vice President and Chief Financial Officer (Principal Financial Officer and Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Document
2.1	Asset Purchase Agreement dated March 19, 2007 by and among Family Fare, LLC, Prevo's Family Markets, Inc., MSFC, LLC, and Spartan Stores Fuel, LLC collectively as Purchaser and G&R Felpausch Company, Felpausch Food Centers, LLC, Hastings Catalog Sales, Inc., and Felpausch Kalamazoo, LLC collectively as Seller. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed March 23, 2007. Here incorporated by reference.
2.2	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.
2.3	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.
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' Quarterly Report on Form 10-Q for the quarter ended September 13, 2003. Here incorporated by reference.
10.1	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. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended January 3, 2004. Here incorporated by reference.
10.2	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.
10.3	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.
10.4	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.

-i-

Exhibit Number	Document
10.5	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.
10.6	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.
10.7	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.
10.8*	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.
10.9*	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.
10.10*	Form of Stock Option Grant to Officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.
10.11*	Form of Restricted Stock Award to Officers. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.
10.12*	Form of Restricted Stock Award to Outside Directors. Previously filed as an exhibit to Spartan Stores' Current Report on Form 8-K, filed May 16, 2006. Here incorporated by reference.
10.13*	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.
10.14*	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.
10.15*	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.
10.16*	Spartan Stores, Inc. 2000 Annual Incentive Plan.
10.17*	Spartan Stores, Inc. 2001 Stock Incentive Plan.
10.18*	Spartan Stores, Inc. 2001 Stock Bonus Plan.

-ii-

Exhibit Number	Document
10.19*	Form of Employment Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 11, 2004. Here incorporated by reference.
10.20*	Form of 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 October 3, 2006. Here incorporated by reference.
10.21*	Form of 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 September 21, 2006. Here incorporated by reference.
10.22*	Form of Executive Severance Agreement between Spartan Stores, Inc. and certain executive officers. Previously filed as an exhibit to Spartan Stores' Quarterly Report on Form 10-Q for the quarter ended September 11, 2004. Here incorporated by reference.
10.23*	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 October 3, 2006. Here incorporated by reference.
10.24*	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 September 21, 2006. Here incorporated by reference.
10.25	Amended and Restated Lease, dated as of January 26, 2000, between Plymouth Investors Limited Liability Company and Spartan Stores Distribution, LLC.
21	Subsidiaries of Spartan Stores, Inc.
23	Consent of Independent Registered Public Accounting Firm.
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.

- -iii-

EX-10.2

EXHIBIT 10.2

[Execution]

AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT

          AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT, dated as of December 22, 2004, by and among Spartan Stores, Inc., a Michigan corporation ("Lead Borrower"), Spartan Stores Distribution, LLC, a Michigan limited liability company ("Stores Distribution"), UWG Company, formerly known as 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 ("Prevo"), Custer Pharmacy, Inc., a Michigan corporation ("Custer"), Buckeye Real Estate Management Co., an Ohio corporation ("Buckeye"), Spartan Stores Fuel, LLC, a Michigan limited liability company (together with Lead Borrower, Stores Distribution, United, MDC, Associates, Family Fare, MSFC, Seaway, Pharm, Valley Farm, Gruber Food Town, Gruber RE, Prevo, Custer 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"), JFW Distributing Company, a Michigan corporation ("JFW"), LLJ Distributing Company, a Michigan corporation (together with Holding, SI and JFW, 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 Congress Financial Corporation (Central), an Illinois corp oration, 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 (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 Agreement") and the other Financing Agreements (as defined therein); and

          WHEREAS, Lead Borrower has requested Agent and Lenders consent to the prepayment in full of the Supplemental Loan Debt and agree to certain amendments to the Loan Agreement, and Agent and Lenders are willing to provide such consent and agree to such amendments, subject to the terms and conditions herein; and

          WHEREAS, by this Amendment No. 2, Borrowers, Guarantors, Agent and Lenders desire and intend to evidence such consents and 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 Definitions. As used herein, the following terms shall have the meanings given to them below, and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:

                              (a)   "Amendment No. 2" shall mean this Amendment No. 2 to Loan and Security Agreement by and among Borrowers, Guarantors, Agent and Lenders, as it now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

                              (b)   "Eligible Leased Property" shall mean, as to any of the Real Property listed on Exhibit A hereto, the leasehold interest of the applicable Borrower in such Real Property upon written confirmation from Agent to Parent that each of the conditions set forth below as to such leasehold interest in such Real Property have been satisfied. The leasehold interest of a Borrower in any of the Real Property listed on Exhibit A hereto shall not constitute Eligible Leased Property unless and until Agent shall have received each of the following, in form and substance satisfactory to Agent, as to such leasehold interest: evidence that Agent has a valid and perfected first priority collateral assignment of the leasehold interest of a Borrower in such Real Property in form and substance similar to the Collateral Assignment of Leases given by Family Fare to Agent; evidence that the lease or a memora ndum of lease with respect to the leasehold interest of a Borrower in such Real Property has been properly filed and is of record in the correct governmental office, and Agent shall have received evidence thereof; fixture filings naming Agent, as secured party and the applicable Borrowers and Guarantors, as debtor have been filed with respect to such Real Property; a current appraisal as to the leasehold interest of a Borrower in such Real Property by an appraiser acceptable to Agent, in form, scope and methodology acceptable to Agent, addressed to Agent and upon which Agent is expressly permitted to rely; consent of the landlord to the collateral assignment of such leasehold interest; and a flood insurance certificate certified to Agent indicating whether or not each parcel of such Real Property is situated in an area designated as having special flood hazards and evidence of flood insurance if the improvements located on any such Real Property are determined to be situated in an area designated as having s pecial flood hazards.

                              (c)   "Leasehold Availability" shall mean, at any time, the lesser of $5,000,000 and seventy-five (75%) percent of the fair market value of the then Eligible Leased Property, provided, that, (A) there shall be no Leasehold Availability unless and until such time as the aggregate amount of the appraised fair market value of the leasehold interests of Borrowers constituting Eligible Leased Property as provided in the definition thereof is equal to or greater than $1,000,000, (B) at such time as there is Leasehold Availability as provided in clause (A) of this definition, the amount thereof as of the last day of the month in which there is such initial Leasehold Availability, shall be reduced automatically and without further action by the parties

2

effective as of the first day of the immediately following month and as of the first day of each month thereafter, by an amount equal to such initial Leasehold Availability divided by eighty-four (84), (C) if after the last day of the month in which there is the initial Leasehold Availability as provided in clause (A) of this definition, any leasehold interests of Borrowers listed on Exhibit A hereto not previously constituting Eligible Leased Property shall become Eligible Leased Property as provided in the definition thereof, the Leasehold Availability shall not be increased unless and until such time as the aggregate amount of the appraised fair market value of such leasehold interests of Borrowers that come to constitute Eligible Leased Property as provided in the definition thereof is equal to or greater than $500,000, (D) at any time as the Leasehold Availability is increased as described in clause (C) of this definition, the amount of such increase as of the last day of the month in which such increas e becomes effective shall be reduced automatically and without further action by the parties effective as of the first day of the immediately following month and as of the first day of each month thereafter, by an amount equal to such increase in the Leasehold Availability divided by eighty-four (84).

                    1.2   Amendments to Definitions.

                              (a)   The definition of the term "Applicable Margin" in the Loan Agreement is hereby amended to delete the table therein and replace it with the following:

Tier	Monthly Average Excess Availability	Applicable Prime Rate Margin	Applicable Eurodollar Rate Margin
1	$50,000,000 or more	0%	1 3/4 %
2	Greater than or equal to $25,000,000 and less than $50,000,000	1/4%	2%
3	Less than $25,000,000	1/2%	2 1/4 %

                              (b)   The definition of the term "Borrowing Base" in the Loan Agreement is hereby amended to: delete Section 1.10(a)(i)(B) thereof in its entirety and replace it with the following: "(B) ninety (90%) percent of Eligible Credit Card Receivables", delete at the end of Section 1.10(a)(i)(G) the word "or" and insert in its place the word "plus", and add at the end of Section 1.10(a)(i) a new Section 1.10(a)(i)(H) as follows: "plus (H) Leasehold Availability; or".

                              (c)   The definition of the term "Commitment" in the Loan Agreement is hereby amended in its entirety to read as follows: "Commitment" shall mean, at any time, as to each Lender, the principal amount set forth on Exhibit B hereto for each Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which any person that becomes a Lender hereunder after the date hereof 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".

3

                              (d)   The definition of the term "Fixed Asset Availability" in the Loan Agreement is hereby amended in its entirety to read as follows: "Fixed Asset Availability" shall mean the amount equal to the lesser of:

             (i)   the Fixed Asset Availability Limit; or

             (ii)   the sum of:

          (A)   seventy (70%) 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

          (B)   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;

Provided, that, the Fixed Asset Availability shall be reduced as of the first day of each month, commencing on January 1, 2005, by an amount equal to the initial Fixed Asset Availability divided by eighty-four (84).

                              (e)   The definition of the term "Fixed Asset Availability Limit" in the Loan Agreement is hereby amended to delete the reference to "$40,000,000" contained therein and replace it with the following: "$52,000,000".

                              (f)   The definition of the term "Maximum Credit" in the Loan Agreement is hereby amended to delete the reference to "$170,000,000" and replace it with the following: "$215,000,000".

                    1.3   Interpretation. For purposes of this Amendment No. 2, unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Loan Agreement.

          2.   Letter of Credit Accommodations. Section 2.2(b) of the Loan Agreement is hereby amended to delete the table therein and replace it with the following:

Tier	Monthly Average Excess Availability	Applicable Letter of Credit Fee Margin
1	$50,000,000 or more	1 3/4%
2	Greater than or equal to $25,000,000 and less than $50,000,000	2%
3	Less than $25,000,000	2 1/4%

4

          3.   Fees. Section 3.2(a) is hereby amended to add, after the words "Fixed Asset Availability", the words "and Leasehold Availability".

          4.   Collection of Accounts.

                    4.1   Section 6.3(a)(iv)(B) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "(B) at any time Excess Availability is less than $20,000,000."

                    4.2   The sixth sentence of Section 6.3(a)(iv) of the Loan Agreement is hereby amended to delete the words "for any month ending on or before December 31, 2004 or $30,000,000 for any month ending thereafter."

          5.   Loans, Investments, Etc. Section 9.10(i)(xiii) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

"(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, Eligible Leased 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 Inventory, Eligible Equipment, Eligible Real Prope rty, Eligible Leased 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;"

          6.   Minimum EBITDA. Section 9.18 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

"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

5

available or have been received by Agent shall be not less than $40,000,000 with respect to such period."

          7.   Capital Expenditures. Schedule 9.19 to the Loan Agreement is hereby deleted in its entirety and replaced with the revised Schedule 9.19 attached as Exhibit C hereto.

          8.   Amendments and Waivers. Section 11.3(d) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

"(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, Eligible Real Property or Eligible Leased Property shall not be deemed an amendment to the advance rates provided for in this Section 11.3."

          9.   Term. Section 13.1(a) of the Loan Agreement is hereby amended by deleting the reference therein to "FOUR (4) YEARS" from the first sentence thereof and replacing it with "FIVE (5) YEARS".

          10.   Consent. Subject to the terms and conditions contained herein, to the extent such consent is or may be required under the Loan Agreement, Agent and Lenders hereby consent to the repayment by Borrowers and Guarantors of all Indebtedness of Lead Borrower to the Supplemental Loan Agent and Supplemental Loan Lenders evidenced by or arising under the Supplemental Loan Agreement and the other Supplemental Loan Lender Agreements, provided, that, as to such repayment each of the following conditions shall have been satisfied:

                    10.1   the total amount of such payment shall not exceed $14,000,000 in principal, plus accrued interest, fees and other amounts payable under the Supplemental Loan Lender Agreements;

                    10.2   such payment shall satisfy all obligations of Borrowers and Guarantors under the Supplemental Loan Agreement and the other Supplemental Loan Lender Agreements, and Borrowers and Guarantors shall have no other or further obligations or liabilities thereunder other than such contingent indemnification obligations (but not any interests in assets to secure such obligations) which by the terms of the Supplemental Loan Agreement and the other Supplemental Loan Lender Agreements expressly survive such payment;

                    10.3   immediately upon any such payment, Supplemental Loan Agent and Supplemental Loan Lenders shall not have any interests in the assets of any Borrower or Guarantor under or pursuant to the Supplemental Loan Agreement or any of the other Supplemental Loan Lender Agreements;

                    10.4   Agent shall have received the agreement of the Supplemental Loan Agent, in form and substance satisfactory to Agent, that the Supplemental Loan Intercreditor Agreement is

6

terminated and of no further force and effect, as duly authorized, executed and delivered by the Supplemental Loan Agent, Borrowers and Guarantors;

                    10.5   Agent shall have received a payoff letter from the Supplemental Loan Agent, in form and substance satisfactory to Agent in good faith, in which the Supplemental Loan Agent states the amount required to be paid to satisfy all of Borrowers' and Guarantors' obligations under the Supplemental Loan Lender Agreement and agrees to provide, immediately following receipt of such amount, all releases, terminations and such other documents as Agent may request to evidence and effectuate the termination by Supplemental Loan Agent and Supplemental Loan 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 (to the extent execution is required) and delivered by it or each of them, including, but not limited to, (i) UCC terminatio n 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 Governmental Authority;

                    10.6   such payment shall be made by, and all of the conditions set forth in this Section 9 shall have been satisfied by, no later than January 31, 2005; and

                    10.7   as of the date of such payment and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.

          11.   Amendment Fee. In addition to all other fees, charges, interest and expenses payable by any Borrower or Guarantor to Agent or Lenders under the Loan Agreement and the other Financing Agreements, Borrowers and Guarantors shall pay to Agent for the account of Lenders (in such manner as Agent may agree), contemporaneously with the effectiveness of this Amendment No. 2, an amendment fee in the amount of $350,000, which fee shall be fully earned and nonrefundable as of the date hereof and may be charged to any loan account of Borrowers.

          12.   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. 2), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:

                    12.1   This Amendment No. 2 and each other agreement or instrument 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 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

7

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.

                    12.2   The execution, delivery and performance of this Amendment No. 2 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.

                    12.3   No Default or Event of Default exists or has occurred and is continuing.

          13.   Condition Precedent. The effectiveness of the consent and amendments contained herein shall only be effective upon the following:

                    13.1   Agent shall have received an original of this Amendment No. 2, duly authorized, executed and delivered by Borrowers and Guarantors;

                    13.2   Agent shall have received an original of this Amendment No. 2 as executed by all Lenders required for the consent and amendments provided for herein;

                    13.3   each of the conditions set forth above shall have occurred by no later than January 31, 2005.

          14.   Effect of this Amendment. Except as expressly amended pursuant hereto and except for the consent expressly granted herein, 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. 2, the provisions of this Amendment No. 2 shall control.

          15.   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. 2.

          16.   Governing Law. The validity, interpretation and enforcement of this Amendment No. 2 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.

          17.   Binding Effect. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

          18.   Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 2.

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          19.   Counterparts. This Amendment No. 2 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. 2 by telefacsimile shall have the same force and effect as the delivery of an original executed counterpart of this Amendment No. 2. Any party delivering an executed counterpart of this Amendment No. 2 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. 2 to be duly executed and delivered by their authorized officers as of the day and year first above written.

AGENT	BORROWERS
CONGRESS FINANCIAL CORPORATION      (CENTRAL), as Agent	SPARTAN STORES, INC.
By:	By:
Title:	Title:
	SPARTAN STORES DISTRIBUTION, LLC UWG COMPANY (F/K/A 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. SPARTAN STORES FUEL, LLC
	By:
	Title:
	GUARANTORS JFW DISTRIBUTING COMPANY LLJ DISTRIBUTING COMPANY SPARTAN STORES HOLDING, INC. SI INSURANCE AGENCY, INC.
	By:
	Title:

LENDERS

CONGRESS FINANCIAL CORPORATION
     (CENTRAL)

By:

Title:

KEY BANK NATIONAL ASSOCIATION

By:

Title:

FLEET CAPITAL CORPORATION

By:

Title:

NATIONAL CITY BUSINESS CREDIT

By:

Title:

GENERAL ELECTRIC CAPITAL
CORPORATION

By:

Title:

FIFTH THIRD BANK

By:

Title:

EX-10.16 3 spstex1016_051807.htm SPARTAN STORES EXHIBIT 10.16 TO FORM 10-K

EXHIBIT 10.16

SPARTAN STORES, INC.
2000 ANNUAL INCENTIVE PLAN

Preamble

                    This SPARTAN STORES, INC. 2000 ANNUAL INCENTIVE PLAN (the "Plan") is a program for measuring the financial performance of Spartan Stores, Inc. and its subsidiaries and affiliates and providing Participants with incentive compensation based upon corporate and individual results. The objectives of the Plan are to motivate Participants to achieve the Company's annual financial and business objectives; to allow Participants to share appropriately in the financial success of the Company; to provide a highly competitive incentive compensation opportunity; to create a linkage between Participant contribution and the Company's business and financial objectives; and to assist in the attraction, retention and motivation of Associates. The Plan provides annual incentive compensation for Participants who are in a position to make substantial contributions toward achievement of the goals established pursuant to the Plan.

SECTION 1
ESTABLISHMENT AND PURPOSES OF PLAN

          1.1          Establishment of Plan. Spartan Stores, Inc., a Michigan corporation, hereby establishes its 2000 Annual Incentive Plan for its Company and Subsidiary officers, employee directors and other key Associates. The Plan permits the award of incentive compensation in the form of performance-based incentive awards.

          1.2          Purposes of Plan. The purposes of the Plan are to motivate Participants to achieve the Company's annual financial and business objectives; to allow Participants to share appropriately in the financial success of the Company; to provide a highly competitive incentive compensation opportunity; to create a linkage between Participant contribution and the Company's business and financial objectives; and to assist in the attraction, retention and motivation of Associates. The Plan is further intended to provide flexibility to the Company in structuring incentive compensation to best promote the foregoing objectives.

          1.3          Plan Document. This instrument, as amended from time to time, constitutes the governing document of the Plan.

          1.4          Effective Date. The Plan is effective as of April 1, 2000. The Plan shall remain in effect until terminated by the Board. Unless earlier terminated by the Board, the Plan shall terminate as of the end of the Company's Fiscal Year ending in the year 2010.

          1.5          Incentive Compensation Plan. The Plan is an annual incentive compensation program for Participants. Because the Plan does not provide welfare benefits and does not provide for the deferral of compensation until termination of employment, it is established with the intent and understanding that it is not an employee benefit plan within the meaning of the federal Employee Retirement Income Security Act of 1974, as amended.

SECTION 2
DEFINITIONS

                    The following terms shall have the definitions stated, unless the context requires a different meaning. Other defined terms shall have the meanings ascribed to them herein.

          2.1          Annual Base Salary. "Annual Base Salary" means a Participant's annual salary rate in effect at the end of a Fiscal Year without regard to incentive compensation or bonuses or awards under this Plan or other benefits or incentive compensation plans maintained or provided by the Company.

          2.2          Associate. "Associate" means an employee of the Company or any Subsidiary.

          2.3          Beneficiary. "Beneficiary" means the individual, trust or other entity designated by the Participant to receive any incentive award payable with respect to the Participant under the Plan after the Participant's death. A Participant may designate or change a Beneficiary by filing a signed designation with the Committee in a form approved by the Committee. A Participant's will or other estate planning document is not effective for this purpose. If a designation has not been completed properly and filed with the Committee or is ineffective for any other reason, the Beneficiary shall be the Participant's Surviving Spouse. If there is no effective designation and the Participant does not have a Surviving Spouse, the remaining incentive award under this Plan, if any, shall be paid to the Participant's estate.

          2.4          Board. "Board" means the Board of Directors of the Company.

          2.5          Business Unit. "Business Unit" means any Subsidiary, department, division or other operational unit of the Company or any Subsidiary as to which the Committee shall establish a Goal under the Plan applicable in a Fiscal Year.

          2.7          Code. "Code" means the Internal Revenue Code of 1986, as amended.

          2.8          Committee. "Committee" means the Compensation Committee of the Board or such other committee as the Board designates to administer this Plan. The Committee shall consist of at least two persons, all of whom shall be "non-employee directors" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and "outside directors" as defined in Section 162(m) of the Code.

          2.9          Common Stock. "Common Stock means the Company's common stock, no par value.

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          2.10          Company. "Company" means Spartan Stores, Inc., a Michigan corporation, and its Subsidiaries.

          2.11          Fiscal Year. "Fiscal Year" means the financial reporting and taxable year of the Company.

          2.12          Goal. "Goal" means the goal established for one or more Participants by the Committee under Section 5 of this Plan for one or more of the Company and any Business Unit to achieve over a designated fiscal period. Goals may be based on the net earnings or other financial performance or results or improvements in operations of the Company or any Business Unit, or any other criteria that the Committee may determine from time to time.

          2.13          Normal Retirement Date. "Normal Retirement Date" means the date a Participant attains age 65.

          2.14          Officer. "Officer" means a Participant serving in one or more of the following positions with Spartan Stores, Inc.: Chief Executive Officer, President, any Executive or other Vice President, Secretary and Treasurer.

          2.15          Participant. "Participant" means an Associate designated by the Committee to participate in this Plan for a Plan Year pursuant to Section 4 of this Plan.

          2.16          Plan Year. "Plan Year" means the annual period that constitutes the Fiscal Year of the Company.

          2.17          Retirement. "Retirement" means termination of employment on or after the Participant's Normal Retirement Date.

          2.18          Subsidiary. "Subsidiary" means any corporation or other entity of which fifty percent (50%) or more of the outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled by the Company or by one or more Subsidiaries of the Company, except that for purposes of this Plan, the term "Subsidiary" does not include Spartan Insurance Company Ltd. or SI Insurance Agency, Inc.

          2.19          Surviving Spouse. "Surviving Spouse" means the husband or wife of the Participant at the time of the Participant's death who survives the Participant. If the Participant and the spouse die under circumstances that make the order of their deaths uncertain, it shall be presumed for purposes of this Plan that the Participant survived the spouse.

          2.20          Total Disability. "Total Disability" or "Disability" means a total and permanent inability of the Participant to engage in any substantial gainful activity as a result of a physical or mental condition of the Participant. The existence of a total disability shall be established by the certification of a physician or physicians selected by the Committee, unless the Committee determines that an examination is unnecessary.

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SECTION 3
ADMINISTRATION OF PLAN

          3.1          Plan Administration.

                    (a)          Power and Authority. The Committee shall have full power and authority to interpret the provisions of the Plan and shall have full power and authority to supervise the administration of the Plan. All determinations, interpretations and selections made by the Committee regarding the Plan shall be final and conclusive on all parties. To the extent it deems necessary or appropriate, the Committee may adopt rules, policies and forms for the administration, interpretation and implementation of the Plan.

                    (b)          Delegation of Authority. The Committee may delegate administrative authority and responsibility from time to time to and among one or more officers of the Company, but all actions taken pursuant to delegated authority and responsibility shall be subject to review, change and approval by the Committee.

          3.2          Grants or Awards to Participants. In accordance with and subject to the provisions of the Plan, the Committee shall have the authority to determine all matters as the Committee may deem necessary or desirable and as are consistent with the terms of the Plan, including, without limitation, the following: (a) the persons who shall be selected as Participants and (b) the nature and extent of the incentive awards granted to each Participant.

          3.3          Indemnification. A member of the Committee or any other individual or group to whom authority is delegated shall not be personally liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan. The Company shall hold harmless and indemnify each member of the Committee, and any other individual or group exercising delegated authority or responsibility with respect to the Plan, from any and all liabilities and costs arising from any act or omission related to the performance of duties or the exercise of discretion and judgment with respect to the Plan. This Section 3.3 shall not be construed as limiting the Company's or any Subsidiary's ability to terminate or otherwise alter the terms and conditions of the employment of individual or group exercising delegated authority or responsibility with respect to the Pla n, or to discipline any such person.

SECTION 4
ELIGIBILITY

          4.1          Participation. An associate shall be a Participant in the Plan for a Plan Year upon his or her designation as a Participant for that Plan Year by the Committee. When deemed appropriate by the Committee, the Committee may determine an effective date for the commencement of participation by a Participant that is subsequent to the first day of the Plan Year. Participants shall be notified in writing and provided a written summary of the Plan.

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          4.2          No Continuing Participation. An Associate's designation as a Participant for a Plan Year will not continue in effect for the subsequent Plan Year unless and until the Committee designates the Associate as a Participant in the subsequent Plan Year. The Committee may terminate participation by any Participant at any time with or without cause.

SECTION 5
ESTABLISHMENT OF GOALS AND POTENTIAL INCENTIVE AWARDS

          5.1          Performance Criteria. The Plan shall be administered so that the incentive compensation provided to Participants under the Plan for each Plan Year is based on whether the Goals that are applicable to the Participant for a Plan Year are achieved for that Plan Year.

          5.2          Determination of Possible Incentive Awards. Within a reasonable time prior to or after the commencement of a Plan Year, the Committee shall make the determinations set forth in this Section 5.2. With respect to the first Plan Year, which is the Company's Fiscal Year ending in March 2001, the Committee shall make the determinations set forth in this Section 5.2 within a reasonable time after the adoption of this Plan.

                    (a)          Participants. The Committee shall determine the Associates who shall be Participants for that Plan Year.

                    (b)          Goals. The Committee shall determine the one or more Goals applicable to each Participant for that Plan year, including any threshold, target or maximum Goals. The Committee may, but is not required to, set Goals for the person or persons serving in a particular position or positions with the Company, rather than individual Participants. Goals may vary among Participants in any manner that the Committee determines. In addition, there is no requirement that any Participant's Goals be similar from Plan Year to Plan Year.

                    (c)          Incentive Award; Allocation of Incentive Award. For each Participant selected for a Plan Year, the Committee shall determine the one or more incentive award levels applicable to a Goal for the Plan Year.

                    (d)          Determination of Relationships Between Goals. For each Goal established for a Participant, the Committee shall determine whether the Participant's eligibility to receive an incentive award with respect to such Goal is dependent on the achievement of any other Goal applicable to that Participant.

          5.3          Determination of Actual Incentive Awards.

                    (a)          Determination of Achievement of Goals. Within a reasonable time following the end of a Plan Year, the Committee shall determine whether each Participant's one or more Goals for that Plan Year have been met. The Committee shall make this determination by reference to such information as the Committee determines.

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                    (b)          Determination of Incentive Awards. Following its determinations under Section 5.3(a), the Committee shall determine the portion of each Participant's incentive award that such Participant is entitled to receive for that Plan Year, subject to the provisions of this Section 5.

          5.4          Adjustments. Adjustments to incentive awards may be made when deemed appropriate by the Committee pursuant to Section 6 below.

SECTION 6
DETERMINATION AND PAYMENT OF INCENTIVE AWARDS

          6.1          Final Plan Year Performance. Company, Business Unit and individual performance, including any necessary or appropriate adjustments required or permitted hereunder, shall be determined for each Participant as soon as administratively feasible following the availability of final performance results for the Plan Year.

          6.2          Determination of Incentive awards. Under rules established by the Committee, the incentive award for each Participant for each Plan Year shall be determined pursuant to Section 5.

          6.3          Payment of Incentive Awards; Form of Payment. The dollar amount of the incentive award for a Plan Year shall be paid to the Participant as soon as feasible following the completion of the incentive award calculations for the Plan Year. Upon completion of such calculations, the Committee shall notify each Participant of the amount of his or her incentive award. Any Participant may elect to receive a portion of his or her incentive award to be paid in cash under this Plan in the form of Common Stock under the Company's 1991 Stock Bonus Plan or any other incentive award plan that the Company may adopt, provided that the Participant is a participant under the other plan with the right to elect to receive shares of Common Stock under the plan. In the event of the death of a Participant, any incentive award payable to the Participant under the Plan will be paid to the Participant's Beneficiary. Before any incentive award shall be pa id, the Committee shall certify in writing, whether by appropriate resolution or otherwise, that the relevant Goals were met and that the other material terms of this Plan have been satisfied.

          6.4          Partial Year Participation and Employment Changes.

                    (a)          Partial Year Participation. If a person is designated to become a Participant in a Plan Year as of a date other than the first day of the Plan Year, then such Participant shall be entitled to receive a pro rata portion of the incentive awards to which he or she would otherwise be entitled had he or she been a Participant for the entire Plan Year, based on the Participant's time of active employment as a Participant during the Plan Year.

                    (b)          Employment Changes. Goals and incentive awards for a Participant for a Plan Year will be prorated or adjusted as appropriate, as determined by the Committee from time to time, in the event of any change in the Participant's compensation or employment status, or

6
any other change that would affect the determination for the Plan Year, in proportion to the duration of each applicable factor during the Plan Year.

                    (c)          Retirement, Death, or Disability. If a Participant's employment terminates during a Plan Year by reason of Retirement, death, or Total Disability, the Participant's incentive award for the Plan Year, if any, shall be prorated, as determined by the Committee, based on the Participant's time of active employment as a Participant during the Plan Year.

                    (d)          Other Termination of Employment. Except as otherwise provided in this subsection (d) or pursuant to subsection (e), upon termination of a Participant's employment during a Plan Year for any reason other than Retirement, death, or Total Disability, the Participant shall not be entitled to the payment of any incentive award for the Plan Year. Notwithstanding the preceding sentence, the Committee shall have sole and absolute discretion to determine that payment of a pro-rated amount may be made when termination of a Participant's employment results from job elimination, reduction in work force or other similar company initiative, or is encouraged or induced by incentives offered by the Company or other circumstances determined appropriate by the Committee. Except as provided in Section 6.4(c) or (e), a Participant must be employed by the Company or a Subsidiary at the time that an incenti ve award is paid to receive such incentive award.

                    (e)          Committee Discretion. Pursuant to the powers conferred in Section 6, the Committee may amend or modify any rule and make any other rule, exception or determination applicable to participation and employment changes relating to any Participant. Notwithstanding any other provision of this Plan, the Committee delegates to the Chief Executive Officer the authority to determine that a Participant's award will be reduced, delayed or withheld if the Chief Executive Officer determines that the reduction, delay or withholding is warranted by the Participant's performance.

SECTION 7
COMMITTEE DISCRETION

                    The Committee shall exercise all of its power and duties as the Committee deems appropriate in its sole and absolute discretion. All decisions of the Committee shall be final and binding on all Participants and their respective heirs, representatives and Beneficiaries. If the Committee determines in its sole and absolute discretion that any factor applicable in the ultimate determination of an incentive award under the Plan for a Plan Year is not appropriate with respect to one or more Participants due to unusual events, circumstances, or other factors that the Committee determines to be appropriate, the applicable factor or the amount of the resulting incentive award may be adjusted or modified in any manner deemed appropriate by the Committee. Without limiting the generality of the foregoing, to reflect significant, unanticipated changes, Goals may be adjusted during a Plan Year by recommendation of the Committee and upon approval of the Board of Directors. Adjustments to Goals are expected to be, but need not be, made on an extraordinary basis only.

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                    Without limiting the generality of the foregoing, for each Plan Year in which incentive awards are awarded, the Committee may, but need not, award incentive awards to persons who were not designated as Participants for that Plan Year in an aggregate amount equal to not more than twenty-five percent (25%) of the aggregate amount of incentive awards awarded to Participants for such Plan Year. The amount and other terms and conditions of such incentive awards to non-Participants, as well as the identities of the persons who are designated to receive such incentive awards, are within the sole and absolute discretion of the Committee.

SECTION 8
TERMINATION AND AMENDMENT

                    The Board may terminate the Plan at any time, or may from time to time amend the Plan as it deems appropriate and in the best interests of the Company.

SECTION 9
GENERAL PROVISIONS

          9.1          Benefits Not Guaranteed; No Rights to Award. Neither the establishment and maintenance of the Plan nor participation in the Plan shall provide any guarantee or other assurance that incentive awards or other compensation will be payable under the Plan. The success of the Company and its Business Units and affiliates, as determined hereunder and adjusted as provided herein and application of the administrative rules and determinations by the Committee, shall determine the extent to which Participants are entitled to receive incentive awards under this Plan. No Participant or other person shall have any claim to be granted any award or benefit under the Plan and there is no obligation of uniformity of treatment of Participants under the Plan. The terms and conditions of any award or benefit of the same type and the determination of the Committee to grant a waiver or modification of any award or benefit and the terms and conditions t hereof need not be the same with respect to each Participant.

          9.2          No Right to Participate. Nothing in this Plan shall be deemed or interpreted to provide a Participant or any non-participating Associate with any contractual right to participate in or receive benefits under the Plan. No designation of a person as a Participant for all or any part of a Plan Year shall create a right to any incentive award, compensation or other benefits of the Plan for any other Plan Year.

          9.3          No Employment Right. Participation in this Plan shall not be construed as constituting a commitment, guarantee, agreement, or understanding of any kind that the Company or any Subsidiary will continue to employ any individual and this Plan shall not be construed or applied as any type of employment contract or obligation. Nothing herein shall abridge or diminish the rights of the Company or any Subsidiary to determine the terms and conditions of employment of any Participant or other person or to terminate the employment of any Participant or other person with or without cause at any time.

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          9.4          No Assignment or Transfer. Neither a Participant nor any Beneficiary or other representative of a Participant shall have any right to assign, transfer, attach, or pledge any bonus amount or credit, potential payment, or right to future payments of any bonus amount or credit, or any other benefit provided under this Plan. Payment of any amount due or to become due under this Plan shall not be subject to the claims of creditors of the Participant or to execution by attachment or garnishment or any other legal or equitable proceeding or process, unless otherwise specifically ordered by any court of competent jurisdiction.

          9.5          Withholding and Payroll Taxes. The Company shall deduct from any payment made under this Plan all amounts required by federal, state and local tax laws to be withheld and shall subject any payments made under the Plan to all applicable payroll taxes and assessments.

          9.6          Incompetent Payee. If the Committee determines that a person entitled to a payment hereunder is incompetent, it may cause benefits to be paid to another person for the use or benefit of the Participant or the Participant's Beneficiary at the time or times otherwise payable hereunder, in total discharge of the Plan's obligations to the Participant or Beneficiary.

          9.7          Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Michigan and applicable federal law.

          9.8          Construction. The singular includes the plural and the plural includes the singular. Capitalized terms, except those at the beginning of a sentence or part of a heading, have the meaning defined in the Plan.

          9.9          Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

          9.10          No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other or additional compensation arrangements, including the grant of stock options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases.

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EX-10.16

Spartan Stores Exhibit 10.16 to Form 10-K - 05/18/07

EX-10.17

EXHIBIT 10.17

SPARTAN STORES, INC.
2001 STOCK INCENTIVE PLAN

SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN

          1.1          Establishment of Plan. The Company hereby establishes the 2001 STOCK INCENTIVE PLAN for its Directors and certain of its Associates. The Plan permits the grant and award of Stock Options, Restricted Stock, and Stock Awards.

          1.2          Purpose of Plan. The purpose of the Plan is to provide Participants with an increased incentive to contribute to the long-term performance and growth of the Company and its Subsidiaries, to join the interests of Participants with the interests of the Company's shareholders through the opportunity for increased stock ownership and to attract and retain Participants. The Plan is further intended to provide flexibility to the Company in structuring long-term incentive compensation to best promote the foregoing objectives. Within that context, it is intended that most awards of Stock Options under the Plan are to provide performance-based compensation under Section 162(m) of the Code and the Plan shall be interpreted, administered and amended if necessary to achieve that purpose.

SECTION 2
DEFINITIONS

          The following words have the following meanings unless a different meaning plainly is required by the context:

2.1	"Act" means the Securities Exchange Act of 1934, as amended.
2.2	"Affiliate" means any organization controlling, controlled by or under common control with the Company.
2.3	"Associate" means an employee of the Company or one of its Subsidiaries.
2.4	"Board" means the Board of Directors of the Company.
2.5	"Cause" means, with respect to termination of employment, (1) willful continued failure to perform or willful poor performance of duties (other than due to Disability) after warning and reasonable opportunity to meet reasonable required performance standards; (2) gross negligence causing or putting the Company or any Affiliate at risk of significant damage or harm; (3) misappropriation of or intentional damage to the property of the Company or any Affiliate; (4) conviction of a felony (other than negligent vehicular homicide); (5) intentional act or omission that the Participant knows or should know is significantly detrimental to the interests of the Company or any Affiliate; or (6) violation of any provisions of any employment agreement between the Company (or any Affiliate) and the Participant concerning loyalty and confidentiality or concerning ownership of ideas, inventions and other intellectual property. With respect to the removal of a Director, "Cause" shall be as defined in the Com pany's Restated Articles of Incorporation.

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2.6	"Change in Control" has the meaning given to that term in the Spartan Stores, Inc. Supplemental Executive Retirement Plan, as it may be amended from time to time.
2.7	"Code" means the Internal Revenue Code of 1986, as amended. Each reference herein to a section or sections of the Code shall, unless otherwise noted, be deemed to include a reference to the rules and regulations issued under such section(s) of the Code.
2.8	"Committee" means the Compensation Committee of the Board. The Committee shall consist of at least two Directors and all of its members shall be "non-employee directors" as defined in Rule 16b-3 issued under the Act and "outside directors" as defined in Section 162(m) of the Code.
2.9	"Common Stock" means the Company's common stock, no par value.
2.10	"Company" means Spartan Stores, Inc., a Michigan corporation, and its successors and assigns.
2.11	To be in "Competition" with the Company means (1) to be in direct or indirect competition with the Company or any Affiliate; (2) to be employed by, perform services for, advise or assist, own any interest in or loan or otherwise provide funds to, any other business that is engaged (or seeking the Participant's services with a view to becoming engaged) in any Competitive Business; or (3) to solicit or suggest, or provide assistance to anyone else seeking to solicit or suggest, that any person having or contemplating a Covered Relationship with the Company or an Affiliate refrain from entering into or terminate the Covered Relationship, or enter into any similar relationship with anyone else instead of the Company or the Affiliate; provided, however, that owning not more than 2% of any class of securities of a publicly traded entity shall not be considered "Competition," provided that the Participant does not engage in other activity listed above.
2.12	A "Competitive Business" means a business that (1) owns, (2) operates, or (3) sells or supplies products similar to or that substitute for products supplied by the Company of any Affiliate to, any Covered Operation that is located in any state of the United States in which the Company or any Affiliate owns, operates, or sells or supplies products to, any Covered Operation.
2.13	"Covered Operation" means any grocery store, grocery superstore, wholesale club, supermarket, limited assortment store, convenience store, drug store, pharmacy or any other store that offers grocery or food products separate or in combination with pharmaceutical products, general merchandise or other nonfood products or any grocery or convenience store product distribution facility.
2.14	"Covered Relationship" means a customer relationship, a vendor relationship, an employment relationship, or any other contractual or independent contractor relationship.
2.15	"Director" means a member of the Board.
2.16	"Disability" means an inability of a Participant to perform his or her employment duties due to physical or mental disability for a continuous period of one hundred eighty days (180) days or longer and the Participant is eligible for benefits under the Company's long-term disability policy.

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2.17	"Incentive Award" means the award or grant of a Stock Option, a share or shares of Restricted Stock or a Stock Award, or any combination thereof, to a Participant pursuant to the Plan.
2.18	"Market Value" means the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or such other quotation system or stock exchange on which the Company's Common Stock may be traded on the date in question) on the date in question or, if the date in question is not a trading day, the most recent date on which shares of Common Stock were traded on the Nasdaq National Market (or such other quotation system or stock exchange). If the Company's Common Stock is not listed on Nasdaq or another quotation system or stock exchange on the date in question, the Market Value shall be determined by any means deemed fair and reasonable by the Committee, which determination shall be final and binding on all parties.
2.19	"Mature Shares" means shares of Common Stock that a Participant has owned for at least six months.
2.20	"Participant" means a Director or Associate who is granted an Incentive Award under the Plan.
2.21	"Plan" means the Spartan Stores, Inc. 2001 Stock Incentive Plan as set forth herein, as it may be amended from time to time.
2.22	"Restricted Period" means the period of time during which Restricted Stock awarded under the Plan is subject to restrictions. The Restricted Period may differ among Participants and may have different expiration dates with respect to shares of Restricted Stock covered by the same Incentive Award.
2.23	"Restricted Stock" means Common Stock awarded to a Participant pursuant to Section 6 of the Plan.
2.24	"Retirement" means the termination of employment as a result of retirement on or after one or more of the retirement dates specified in the Spartan Stores, Inc. Cash Balance Pension Plan.
2.25	"Stock Award" means an award of Common Stock awarded to a Participant pursuant to Section 7 of the Plan.
2.26	"Stock Option" means the right to purchase Common Stock at a stated price for a specified period of time. For purposes of the Plan, a Stock Option may be either an incentive stock option within the meaning of Section 422(b) of the Code or a nonqualified stock option.
2.27	"Subsidiary" means any corporation or other entity of which 50% or more of the outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled by the Company or by one or more Subsidiaries of the Company. The term "Subsidiary" includes present and future Subsidiaries of the Company.

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SECTION 3
ADMINISTRATION

          3.1          Power and Authority. The Committee shall administer the Plan. The Committee may delegate record keeping, calculation, payment and other ministerial administrative functions to individuals designated by the Committee, who may be associates of the Company or its Subsidiaries. Except as limited in the Plan or as may be necessary to ensure, to the extent that the Committee so desires, that the Plan provides performance-based compensation under Section 162(m) of the Code, the Committee shall have all of the express and implied powers and duties set forth in the Bylaws of the Company and the Plan, shall have full power and authority to interpret the provisions of the Plan and Incentive Awards granted under the Plan and shall have full power and authority to supervise the administration of the Plan and Incentive Awards granted under the Plan and to make all other determinations considered necessary or advisable for the administration of the Plan. All determinations, interpretations and selections made by the Committee regarding the Plan shall be final and conclusive. The Committee shall hold its meetings at such times and places as it considers advisable. Action may be taken by a written instrument signed by all of the members of the Committee and any action so taken shall be fully as effective as if it had been taken at a meeting duly called and held. The Committee shall make such rules and regulations for the conduct of its business as it considers advisable.

          3.2          Grants or Awards to Participants. In accordance with and subject to the provisions of the Plan, the Committee shall have the authority to determine all provisions of Incentive Awards as the Committee may consider necessary or desirable and as are consistent with the terms of the Plan, including, without limitation, the following: (a) the persons who shall be selected as Participants; (b) the nature and, subject to the limitation set forth in Section 4.2 of the Plan, extent of the Incentive Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner in which an Incentive Award will vest or become exercisable and the form of payment for the Incentive Award); (c) the time or times when Incentive Awards will be granted; (d) the duration of each Incentive Award; and (e) the restrictions and other conditions to which payment or vesting of Incentive Awards may be subject.

          3.3          Amendments or Modifications of Awards. The Committee shall have the authority to amend or modify the terms of any outstanding Incentive Award in any manner, provided that the amended or modified terms are not prohibited by the Plan as then in effect, including, without limitation, the authority to: (a) modify the number of shares or other terms and conditions of an Incentive Award; (b) extend the term of an Incentive Award; (c) accelerate the exercisability or vesting or otherwise terminate, waive or modify any restrictions relating to an Incentive Award; (d) accept the surrender of any outstanding Incentive Award; and (e) to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, that Incentive Awards issued under the Plan may not be repriced, replaced, regranted through cancellation or modified without shareholder approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price of then outstanding Incentive Awards to the same Participants.

          3.4          Indemnification of Committee Members. Neither any member or former member of the Committee, nor any individual or group to whom authority or responsibility is or has been delegated, shall be personally responsible or liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan. Each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company from and against any cost, liability or expense imposed or incurred in connection with such person's or the Committee's taking or failing to take any action under the Plan or the exercise of discretion or judgment in the administration and implementation of the Plan. Each such person shall be justified in relying on information furnished in connection with the Plan's administration by any appropriate person or persons.

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SECTION 4
SHARES SUBJECT TO THE PLAN

          4.1          Number of Shares. Subject to adjustment as provided in Section 4.3 of the Plan, the total number of shares of Common Stock available for Incentive Awards under the Plan shall be 2,000,000; plus shares subject to Incentive Awards that are canceled, surrendered, modified, exchanged for substitute Incentive Awards or that expire or terminate prior to the exercise or vesting of the Incentive Awards in full and shares that are surrendered to the Company in connection with the exercise or vesting of Incentive Awards, whether previously owned or otherwise subject to such Incentive Awards. Such shares shall be authorized and unissued shares or shares repurchased by the Company, including shares purchased on the open market.

          4.2          Limitation Upon Incentive Awards. No Participant shall be granted, during any calendar year, Incentive Awards with respect to more than 25% of the total number of shares of Common Stock available for Incentive Awards under the Plan set forth in Section 4.1 of the Plan, subject to adjustment as provided in Section 4.3 of the Plan. The purpose of this Section 4.2 is to ensure that the Plan provides performance-based compensation under Section 162(m) of the Code and this Section 4.2 shall be interpreted, administered and amended if necessary to achieve that purpose.

          4.3          Adjustments.

          (a)          Stock Dividends and Distributions. If the number of shares of Common Stock outstanding changes by reason of a stock dividend, stock split, recapitalization or other general distribution of Common Stock or other securities to holders of Common Stock, the number and kind of securities subject to Incentive Awards and reserved for issuance under the Plan, together with applicable exercise prices, as well as the number of shares available for issuance under the Plan, shall be adjusted appropriately. No fractional shares shall be issued pursuant to the Plan and any fractional shares resulting from such adjustments shall be eliminated from the respective Incentive Awards.

          (b)          Other Actions Affecting Common Stock. If there occurs, other than as described in the preceding subsection, any merger, business combination, recapitalization, reclassification, subdivision or combination approved by the Board that would result in the persons who were shareholders of the Company immediately prior to the effective time of any such transaction owning or holding, in lieu of or in addition to shares of Common Stock, other securities, money and/or property (or the right to receive other securities, money and/or property) immediately after the effective time of such transaction, then the outstanding Incentive Awards and reserves for Incentive Awards under the Plan shall be adjusted in such manner and at such time as shall be equitable under the circumstances. It is intended that in the event of any such transaction, Incentive Awards under the Plan shall entitle the holder of each Incentive Award to receive (upon exer cise in the case of Stock Options), in lieu of or in addition to shares of Common Stock, any other securities, money and/or property receivable upon consummation of any such transaction by holders of Common Stock with respect to each share of Common Stock outstanding immediately prior to the effective time of such transaction; upon any such adjustment, holders of Incentive Awards under the Plan shall have only the right to receive in lieu of or in addition to shares of Common Stock such other securities, money and/or other property as provided by the adjustment. If the agreement, resolution or other document approved by the Board to effect any such transaction provides for the adjustment of Incentive Awards under the Plan in connection with such transaction, then the adjustment provisions contained in such agreement, resolution or other document shall be final and conclusive.

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SECTION 5
STOCK OPTIONS

          5.1          Grant. A Participant may be granted one or more Stock Options under the Plan. The Committee, in its discretion, may provide in the initial grant of a Stock Option or other Incentive Award for the subsequent automatic grant of additional Stock Options for the number of Mature Shares, if any, that are surrendered to the Company in connection with the exercise or vesting of the initial or any subsequently granted Stock Option or other Incentive Award. Stock Options shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. In addition, the Committee may vary, among Participants and among Stock Options granted to the same Participant, any and all of the terms and conditions of the Stock Options granted under the Plan. Subject to the limitation imposed by Section 4.2 of the Plan, the Committee shall have complete discretion in determinin g the number of Stock Options granted to each Participant. The Committee may designate whether a Stock Option is to be considered an incentive stock option as defined in Section 422(b) of the Code; provided, that the number of shares of Common Stock that may be designated as subject to incentive stock options for any given Participant shall be limited to that number of shares that become exercisable for the first time by the Participant during any calendar year (under all plans of the Company and its Subsidiaries) and have an aggregate Market Value less than or equal to $100,000 (or such other amount as may be set forth in relevant sections of the Code) and all shares subject to an Incentive Award that have a Market Value in excess of such aggregate amount shall automatically be subject to Stock Options that are not incentive stock options. No Stock Option granted to a Director who is not an Associate shall be considered an incentive stock option.

          5.2          Stock Option Agreements. Stock Options shall be evidenced by stock option agreements or certificates of award, or both, containing the terms and conditions applicable to such Stock Options. To the extent not covered by the stock option agreement or certificate of award, the terms and conditions of this Section 5 shall govern.

          5.3          Stock Option Price. The per share Stock Option price shall be determined by the Committee; provided, that the per share Stock Option price for any shares designated as incentive stock options shall be equal to or greater than 100% of the Market Value on the date of grant (or such higher amount as may be necessary under Section 5.5 below).

          5.4          Medium and Time of Payment. The exercise price for each share purchased pursuant to a Stock Option granted under the Plan shall be payable in cash or, if the Committee consents or provides in the applicable stock option agreement or grant, in Mature Shares or other consideration substantially equivalent to cash. The time and terms of payment may be amended with the consent of a Participant before or after exercise of a Stock Option. The Committee may from time to time authorize payment of all or a portion of the Stock Option price in the form of a promissory note or other deferred payment installments according to such terms as the Committee may approve; provided, however, that such promissory note or other deferred payment installments shall be with full recourse and shall bear a market rate of interest. The Board may restrict or suspend the power of the Committee to permit such loans and may require that adequate secur ity be provided.

          5.5          Stock Options Granted to 10% Shareholders. No Stock Option granted to any Participant who at the time of such grant owns, together with stock attributed to such Participant under Section 424(d) of the Code, more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries may be designated as an incentive stock option, unless such Stock Option provides an exercise price equal to at least 110% of the Market Value of the Common Stock and the exercise of the Stock Option after the expiration of five years from the date of grant of the Stock Option is prohibited by its terms.

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          5.6          Limits on Exercisability. Except as set forth in Section 5.5, Stock Options shall be exercisable for such periods, not to exceed 10 years from the date of grant, as may be fixed by the Committee. At the time of the exercise of a Stock Option, the holder of the Stock Option, if requested by the Committee, must represent to the Company that the shares are being acquired for investment and not with a view to the distribution thereof. The Committee may in its discretion require a Participant to continue the Participant's service with the Company and its Subsidiaries for a certain length of time prior to a Stock Option becoming exercisable and may eliminate such delayed vesting provisions.

          5.7          Restrictions on Transferability.

          (a)          General. Unless the Committee otherwise consents or permits (before or after the option grant) or unless the stock option agreement or grant provides otherwise, Stock Options granted under the Plan may not be sold, exchanged, transferred, pledged, assigned or otherwise alienated or hypothecated except by will or the laws of descent and distribution, and, as a condition to any transfer permitted by the Committee or the terms of the stock option agreement or grant, the transferee must execute a written agreement permitting the Company to withhold from the shares subject to the Stock Option a number of shares having a Market Value at least equal to the amount of any federal, state or local withholding or other taxes associated with or resulting from the exercise of a Stock Option. All provisions of a Stock Option that are determined with reference to the Participant, including without limitation those that refer to the Participant's employment with the Company or its Subsidiaries, shall continue to be determined with reference to the Participant after any transfer of a Stock Option.

          (b)          Other Restrictions. The Committee may impose other restrictions on any shares of Common Stock acquired pursuant to the exercise of a Stock Option under the Plan as the Committee deems advisable, including, without limitation, restrictions under applicable federal or state securities laws.

          5.8          Termination of Employment or Directorship. Unless the Committee otherwise consents or permits (before or after the option grant) or unless the stock option agreement or grant provides otherwise:

          (a)          General. If a Participant ceases to be a Director or to be employed by the Company or one of its Subsidiaries for any reason other than the Participant's death, Disability, Retirement (in the case of Associates only) or termination for Cause, the Participant may exercise his or her Stock Options in accordance with their terms for a period of three months after such termination of employment or directorship, but only to the extent the Participant was entitled to exercise the Stock Options on the date of termination. For purposes of the Plan, the following shall not be considered a termination of employment: (1) a transfer of an employee from the Company to any Subsidiary; (2) a leave of absence, duly authorized in writing by the Company, for military service or for any other purpose approved by the Company if the period of such leave does not exceed 90 days; (3) a leave of absence in excess of 90 days, duly authorized in writing by the Company, provided that the employee's right to re-employment is guaranteed by statute, contract or written policy of the Company; or (4) a termination of employment as an officer with continued service as an Associate. For purposes of the Plan, termination of employment shall be considered to occur on the date on which the Associate is no longer obligated to perform services for the Company or any of its Subsidiaries and the employee's right to re-employment is not guaranteed by statute, contract or written policy of the Company, regardless of whether the employee continues to receive compensation from the Company or any of its Subsidiaries after such date.

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          (b)          Death. If a Participant dies either while an Associate or Director or after the termination of employment or directorship other than for Cause but during the time when the Participant could have exercised a Stock Option, the Stock Options issued to such Participant shall be exercisable in accordance with their terms by the personal representative of such Participant or other successor to the interest of the Participant for one year after the Participant's death, but only to the extent that the Participant was entitled to exercise the Stock Options on the date of death or termination of employment or directorship, whichever first occurred, and not beyond the original terms of the Stock Options.

          (c)          Disability. If a Participant ceases to be an Associate or Director of the Company or one of its Subsidiaries due to the Participant's Disability, the Participant may exercise his or her Stock Options in accordance with their terms for one year following such termination of employment or directorship, but only to the extent that the Participant was entitled to exercise the Stock Options on the date of such event and not beyond the original terms of the Stock Options.

          (d)          Participant Retirement. If a Participant Retires as an Associate, Stock Options granted under the Plan to that Participant may be exercised in accordance with their terms during the remaining terms of the Stock Options.

          (e)          Termination for Cause. If a Participant' employment is terminated for Cause or the Participant is removed as a Director for Cause, the Participant shall have no further right to exercise any Stock Options previously granted. The Committee or officers designated by the Committee shall have absolute discretion to determine whether a termination or removal is for Cause.

          (f)          Entering into Competition. Notwithstanding anything herein or set forth in the Participant's stock option agreement or certificate of award to the contrary, if a Participant enters into Competition with the Company, the Participant shall have no further right to exercise any Stock Options previously granted. The Committee or officers designated by the Committee shall have absolute discretion to determine whether a Participant has entered into Competition with the Company.

SECTION 6
RESTRICTED STOCK

          6.1          Grant. The Committee may grant to any Participant Restricted Stock under the Plan. Restricted Stock shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as shall be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, consistent with the provisions of the Plan, to the vesting of Restricted Stock as it considers appropriate. The Committee may also require that certificates representing shares of Restricted Stock be retained and held in escrow by a designated employee or agent of the Company or any Subsidiary until any restrictions applicable to shares of Common Stock so retained have been satisfied or lapsed.

          6.2          Restricted Stock Agreements. Awards of Restricted Stock shall be evidenced by restricted stock agreements or certificates of award containing such terms and conditions, consistent with the provisions of the Plan, as the Committee shall from time to time determine. Unless a restricted stock agreement or certificate of award provides otherwise, Restricted Stock awards shall be subject to the terms and conditions set forth in this Section 6.

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          6.3          Termination of Employment or Directorship. Unless the Committee otherwise consents or permits (before or after the grant of Restricted Stock) or unless the restricted stock agreement or grant provides otherwise:

          (a)          General. If a Participant ceases to be a Director or to be employed by the Company or one of its Subsidiaries during the Restricted Period for any reason other than the Participant's death, Disability, Retirement (in the case of Associates only) or termination for Cause, any shares of Restricted Stock still subject to restrictions at the date of such termination shall automatically be forfeited and returned to the Company. For purposes of the Plan, the following shall not be considered a termination of employment: (1) a transfer of an employee from the Company to any Subsidiary; (2) a leave of absence, duly authorized in writing by the Company, for military service or for any other purpose approved by the Company if the period of such leave does not exceed 90 days; (3) a leave of absence in excess of 90 days, duly authorized in writing by the Company, provided that the employee's right to re-employment is guaranteed by statute, contract or written policy of the Company; or (4) a termination of employment as an officer with continued service as an Associate. For purposes of the Plan, termination of employment shall be considered to occur on the date on which the Associate is no longer obligated to perform services for the Company or any of its Subsidiaries and the employee's right to re-employment is not guaranteed by statute, contract or written policy of the Company, regardless of whether the employee continues to receive compensation from the Company or any of its Subsidiaries after such date.

          (b)          Death, Retirement or Disability. In the event a Participant terminates his or her employment or directorship with the Company because of death, Disability or (in the case of Associates only) Retirement during the Restricted Period, the restrictions applicable to the shares of Restricted Stock shall terminate automatically with respect to that number of shares (rounded to the nearest whole number) equal to the total number of shares of Restricted Stock granted to such Participant, multiplied by the number of full months that have elapsed since the date of grant, divided by the total number of full months in the Restricted Period. All remaining shares shall be forfeited and returned to the Company; provided, that the Committee may, in its sole discretion, waive the restrictions remaining on any or all such remaining shares of Restricted Stock either before or after the death, Disability or Retirement of the Participant.

          (c)          Termination for Cause. If a Participant's employment is terminated for Cause or the Participant is removed as a Director for Cause, the Participant shall have no further right to exercise or receive any Restricted Stock and all Restricted Stock still subject to restrictions at the date of such termination shall automatically be forfeited and returned to the Company. The Committee or officers designated by the Committee shall have absolute discretion to determine whether a termination or removal is for Cause.

          (d)          Entering into Competition. Notwithstanding anything herein or set forth in the Participant's restricted stock agreement or certificate of award to the contrary, if a Participant enters into Competition with the Company, the Participant shall have no further right to exercise or receive any Restricted Stock and all Restricted Stock still subject to restrictions at the date of such termination shall automatically be forfeited and returned to the Company. The Committee or officers designated by the Committee shall have absolute discretion to determine whether a Participant has entered into Competition with the Company.

          6.4          Restrictions on Transferability.

          (a)          General. Unless the Committee otherwise consents or permits or unless the terms of the restricted stock agreement or grant provide otherwise: (1) shares of Restricted Stock

9
shall not be sold, exchanged, transferred, pledged, assigned or otherwise alienated or hypothecated during the Restricted Period except by will or the laws of descent and distribution; and (2) all rights with respect to Restricted Stock granted to a Participant under the Plan shall be exercisable during the Participant's lifetime only by such Participant, his or her guardian or legal representative.

          (b)          Other Restrictions. The Committee may impose other restrictions on any shares of Common Stock acquired pursuant to an award of Restricted Stock under the Plan as the Committee considers advisable, including, without limitation, restrictions under applicable federal or state securities laws.

          6.5          Legending of Restricted Stock. Any certificates evidencing shares of Restricted Stock awarded pursuant to the Plan shall bear the following legend:

The shares represented by this certificate were issued subject to certain restrictions under the Spartan Stores, Inc. 2001 Stock Incentive Plan (the "Plan"). This certificate is held subject to the terms and conditions contained in a restricted stock agreement that includes a prohibition against the sale or transfer of the stock represented by this certificate except in compliance with that agreement and that provides for forfeiture upon certain events. Copies of the Plan and the restricted stock agreement are on file in the office of the Secretary of the Company.

          6.6          Rights as a Shareholder. A Participant shall have all voting, dividend, liquidation and other rights with respect to Restricted Stock held of record by such Participant as if the Participant held unrestricted Common Stock; provided, that the unvested portion of any award of Restricted Stock shall be subject to any restrictions on transferability or risks of forfeiture imposed pursuant to Sections 6.1, 6.3 and 6.4 of the Plan. Unless the Committee otherwise determines or unless the terms of the restricted stock agreement or grant provide otherwise, any non-cash dividends or distributions paid with respect to shares of unvested Restricted Stock shall be subject to the same restrictions as the shares to which such dividends or distributions relate.

SECTION 7
STOCK AWARDS

          7.1          Grant. A Participant may be granted one or more Stock Awards under the Plan. Stock Awards shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion.

          7.2          Rights as a Shareholder. A Participant shall have all voting, dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Stock Award under this Section 7 upon the Participant becoming the holder of record of the Common Stock granted pursuant to such Stock Award; provided, that the Committee may impose such restrictions on the assignment or transfer of Common Stock awarded pursuant to a Stock Award as it considers appropriate.

SECTION 8
CHANGE IN CONTROL

          8.1          Acceleration of Vesting. If a Change in Control of the Company shall occur, then, unless the Committee or the Board otherwise determines with respect to one or more Incentive Awards, without action by the Committee or the Board: (a) all outstanding Stock Options shall become immediately exercisable in full and shall remain exercisable during the remaining term thereof, regardless of whether the Participants to whom such Stock Options have been granted remain in the employ or

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service of the Company or any Subsidiary; and (b) all other outstanding Incentive Awards shall become immediately fully vested and exercisable and nonforfeitable.

          8.2          Cash Payment for Stock Options. If a Change in Control of the Company shall occur, then the Committee, in its sole discretion, and without the consent of any Participant affected thereby, may determine that some or all Participants holding outstanding Stock Options shall receive, with respect to some or all of the shares of Common Stock subject to such Stock Options, as of the effective date of any such Change in Control of the Company, cash in an amount equal to the greater of the excess of (a) the highest sales price of the shares on the Nasdaq National Market (or any other quotation system or stock exchange on which the Company's Common Stock may be listed or traded at that time) on the date immediately prior to the effective date of such Change in Control of the Company or (b) the highest price per share actually paid in connection with any Change in Control of the Company over the exercise price per share of such Stock Opt ions. Upon of a Participant's receipt of such amount with respect to some or all of his or her Stock Options, such Stock Options shall be cancelled and may no longer be exercised by such Participant.

SECTION 9
GENERAL PROVISIONS

          9.1          No Rights to Awards. No Participant or other person shall have any claim to be granted any Incentive Award under the Plan and there is no obligation of uniformity of treatment of Participants or holders or beneficiaries of Incentive Awards under the Plan. The terms and conditions of Incentive Awards of the same type and the determination of the Committee to grant a waiver or modification of any Incentive Award and the terms and conditions thereof need not be the same with respect to each Participant.

          9.2          Withholding. The Company or a Subsidiary shall be entitled to: (a) withhold and deduct from future wages of a Participant (or from other amounts that may be due and owing to a Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state, local and foreign withholding and employment-related tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award or a disqualifying disposition of Common Stock received upon exercise of an incentive stock option; or (b) require a Participant promptly to remit the amount of such withholding to the Company before taking any action with respect to an Incentive Award. Unless the Committee determines otherwise, withholding may be satisfied by withholding Common Stock to b e received upon exercise or vesting of an Incentive Award or by delivery to the Company of previously owned Common Stock.

          9.3          Compliance With Laws; Listing and Registration of Shares. All Incentive Awards granted under the Plan (and all issuances of Common Stock or other securities under the Plan) shall be subject to all applicable laws, rules and regulations, and to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares covered thereby upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the grant of such Incentive Award or the issuance or purchase of shares thereunder, such Incentive Award may not be exercised in whole or in part, or the restrictions on such Incentive Award shall not lapse, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

          9.4          No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other or additional

11
compensation arrangements, including the grant of stock options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases.

          9.5          No Right to Employment. The grant of an Incentive Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Subsidiary. The Company or any Subsidiary may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any written agreement with a Participant.

          9.6          Suspension of Rights under Incentive Awards. The Company, by written notice to a Participant, may suspend a Participant's and any transferee's rights under any Incentive Award for a period not to exceed 30 days while the termination for Cause of that Participant's employment with the Company and its Subsidiaries is under consideration.

          9.7          Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the state of Michigan and applicable federal law.

          9.8          Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

SECTION 10
TERMINATION AND AMENDMENT

          The Board may terminate the Plan at any time or may from time to time amend the Plan as it considers proper and in the best interests of the Company, provided that no such amendment may impair any outstanding Incentive Award without the consent of the Participant, except according to the terms of the Plan or the Incentive Award. No termination, amendment or modification of the Plan shall become effective with respect to any Incentive Award previously granted under the Plan without the prior written consent of the Participant holding such Incentive Award unless such amendment or modification operates solely to the benefit of the Participant.

SECTION 11
EFFECTIVE DATE AND DURATION OF THE PLAN

          The Plan shall take effect May 9, 2001, subject to approval by the shareholders at the Company's 2001 Annual Meeting of Shareholders or any adjournment thereof or at a Special Meeting of Shareholders. Unless earlier terminated by the Board, no Incentive Award shall be granted under the Plan after May 8, 2011.

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EX-10.18

EXHIBIT 10.18

SPARTAN STORES, INC.
2001 STOCK BONUS PLAN

SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN

          1.1          Establishment of Plan. The Company hereby establishes the 2001 STOCK BONUS PLAN for officers and other key employees of the Company and its Subsidiaries.

          1.2          Purpose of Plan. The purpose of the Plan is to provide a convenient series of opportunities for officers and key employees of the Company and its Subsidiaries to receive a portion of their annual bonuses, if any, earned under one or more of the Company's other compensation plans or policies in the form of shares of Common Stock. Furthermore, the Plan is intended to reward a Participant's decision to receive stock by making an additional grant of shares to the Participant, in an amount equal to 30% of the percentage of the Participant's bonus that he or she elects to receive in stock. The Plan is designed to help the Company attract and retain officers and other key employees of exceptional ability, to provide Participants with an increased incentive to make significant and extraordinary contributions to the long-term performance and growth of the Company and its Subsidiaries, and to join the interests of Participants with the i nterests of other shareholders of the Company.

SECTION 2
DEFINITIONS

          The following words have the following meanings unless a different meaning plainly is required by the context:

2.1	"Act" means the Securities Exchange Act of 1934, as amended.
2.2	"Board" means the Board of Directors of the Company.
2.3	"Bonus Amount" means, with respect to a Participant, a dollar amount equal to 30% of that Participant's Elective Share.
2.4	"Committee" means the Compensation Committee of the Board. The Committee shall consist of at least two directors and all of its members shall be "non-employee directors" as defined in Rule 16b-3 issued under the Act and "outside directors" as defined in Section 162(m) of the Internal Revenue Code and the rules and regulations thereunder.
2.5	"Common Stock" means the Company's common stock, no par value.
2.6	"Company" means Spartan Stores, Inc., a Michigan corporation, and its successors and assigns.
2.7	"Disability" means an inability of a Participant to perform his or her employment duties due to physical or mental disability for a continuous period of one hundred eighty days (180) days or longer and the Participant is eligible for benefits under the Company's long-term disability policy.

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2.8	"Elective Share" means, with respect to a Participant, the portion of that Participant's annual bonus earned under one or more of the Company's other compensation plans or policies that he or she has elected, pursuant to Section 7 below, to receive in the form of Common Stock rather than cash.
2.9	"Eligible Associates" means the officers and those other associates of the Company or any Subsidiary that the Committee may select or designate from time to time to participate in the Plan.
2.10	"Market Value" as of a given date means the average of the highest and lowest sales prices of the Common Stock reported on the Nasdaq National Market (or such other quotation system or stock exchange on which the Company's Common Stock may be traded on the date in question) on the date in question or, if the date in question is not a trading day, the most recent date on which shares of Common Stock were traded on the Nasdaq National Market (or such other quotation system or stock exchange). If the Company's Common Stock is not listed on Nasdaq or another quotation system or stock exchange on the date in question, the Market Value shall be determined by any means deemed fair and reasonable by the Committee, which determination shall be final and binding on all parties.
2.11	"Participant" means an Eligible Associate who has elected to participate in the Plan.
2.13	"Plan" means the Spartan Stores, Inc. 2001 Stock Bonus Plan as set forth herein, as it may be amended from time to time.
2.14	"Subsidiary" means any corporation or other entity of which 50% or more of the outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled by the Company or by one or more Subsidiaries of the Company. The term "Subsidiary" includes present and future Subsidiaries of the Company.

SECTION 3
ADMINISTRATION

          3.1          Power and Authority. The Committee shall administer the Plan. The Committee may delegate record keeping, calculation, payment and other ministerial administrative functions to individuals designated by the Committee, who may be associates of the Company or its Subsidiaries. Except as limited in the Plan, the Committee shall have all of the express and implied powers and duties set forth in the Bylaws of the Company and the Plan, shall have full power and authority to interpret the provisions of the Plan and shall have full power and authority to supervise the administration of the Plan and to make all other determinations considered necessary or advisable for the administration of the Plan. All determinations, interpretations and selections made by the Committee regarding the Plan shall be final and conclusive. The Committee shall hold its meetings at such times and places as it considers advisable. Action may be taken by a writte n instrument signed by all of the members of the Committee and any action so taken shall be fully as effective as if it had been taken at a meeting duly called and held. The Committee shall make such rules and regulations for the conduct of its business as it considers advisable.

          3.2          Indemnification of Committee Members. Neither any member or former member of the Committee, nor any individual or group to whom authority or responsibility is or has been delegated, shall be personally responsible or liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the

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Plan. Each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company from and against any cost, liability or expense imposed or incurred in connection with such person's or the Committee's taking or failing to take any action under the Plan or the exercise of discretion or judgment in the administration and implementation of the Plan. Each such person shall be justified in relying on information furnished in connection with the Plan's administration by any appropriate person or persons.

SECTION 4
SHARES SUBJECT TO THE PLAN

          4.1          Number of Shares. Subject to adjustment as provided in Section 4.2 below, the total number of shares of Common Stock available for issuance under the Plan shall be 300,000. Such shares shall be authorized and unissued shares or shares repurchased by the Company, including shares purchased on the open market.

          4.2          Adjustments. If the number of shares of Common Stock outstanding changes by reason of a stock dividend, stock split, recapitalization or other general distribution of Common Stock or other securities to holders of Common Stock, the number and kind of securities reserved for issuance under the Plan shall be adjusted appropriately.

SECTION 5
ELIGIBILTY

          Only Eligible Associates may be Participants in the Plan. An individual eligible to participate may choose the year or years of the Plan's operation in which he or she wishes to participate. An individual's participation need not be continuous or immediate. The Committee may, in its discretion, require a Participant to complete a designated term of service with the Company or a Subsidiary before being allowed to participate in the Plan, and may condition participation upon the execution of an employment contract by the Participant, on the execution of any other contract or waiver, or upon the taking of any other action that the Committee in its discretion deems appropriate. The Committee may require persons subject to Section 16 of the Act to make irrevocable advance elections concerning participation in the Plan.

SECTION 6
NOTIFICATION

          As soon as practicable after the Company determines that a cash bonus for the preceding fiscal year is payable to an Eligible Associate under one or more of the Company's other compensation plans or policies, the Company will notify such Eligible Associate of the amount of the bonus he or she is entitled to receive. The Company's notice will include an election form whereby the person can elect to participate in the Plan with respect to that earned bonus. Persons wishing to participate in the Plan with respect to that earned bonus will have a period of ten days after such notices are issued to complete and return the election form to the Company. Such due date shall be specified in the Company's notice.

SECTION 7
ELECTION TO PARTICIPATE

          A Participant's election to participate in the Plan with respect to an earned bonus may be indicated only by the timely completion and return of the election form provided to the Participant by the Company pursuant to Section 6 above. The Participant may elect to receive up to 100% of his or her bonus payment in the form of shares of Common Stock rather than cash. The deadline for receipt by the

3
Company of an election form may be waived in the sole discretion of the Committee, but no such waiver shall create a presumption that future waivers will be granted, nor shall any such waiver bind the Committee to grant a waiver in any future instance or to any other Participant. If requested to do so, the Participant shall agree not to sell or distribute stock obtained under the Plan, except upon such conditions as the Company may reasonably specify to insure compliance with federal and state securities laws. In addition, the Participant, if requested by the Committee, must represent to the Company that the stock is being acquired for investment and not with a view to the distribution thereof. The Company may require appropriate legends to be placed on the certificates for shares issued under the Plan to meet such requirements and shall remove such legends upon request and upon the satisfaction of the Company's counsel that the legends are no longer necessary or advisable.

SECTION 8
DETERMINATION OF NUMBER
OF SHARES TO BE AWARDED

          Upon receipt of a timely and completed election from a Participant, the Committee shall calculate the number of shares of Common Stock to be issued to that Participant. The Committee shall make this calculation as follows:

          (a)          The Committee shall multiply the Participant's Elective Share by 30% to obtain the Participant's Bonus Amount, and shall then add the Bonus Amount to the Elective Share.

          (b)          The Committee shall then divide the sum of the Participant's Elective Share and Bonus Amount by the per-share Market Value of the Common Stock as of the date following the due date of the Participant's election notice. The number of whole shares resulting from this division shall be issued to the Participant (subject to the other provisions of the Plan).

No fractional shares will be issued under the Plan. Any fractional shares resulting from the above calculation shall be eliminated, and any portion of the Participant's Elective Share or Bonus Amount that consequently cannot be paid in whole shares of Common Stock shall be distributed to the Participant in cash, either separately or as part of the Participant's remaining cash bonus (if any).

SECTION 9
DELIVERY OF CERTIFICATES

          The Company shall deliver certificates for shares of stock issued under the Plan within a reasonable period of time after the Committee completes the calculations described in Section 8 above. Each recipient of shares under this Plan shall sign all documents necessary and appropriate to facilitate such delivery from the Company.

SECTION 10
TERMINATION OF PARTICIPATION

          If a Participant dies or his or her employment with the Company or a Subsidiary is terminated for any reason prior to the date on which the Participant has returned his election form to the Company pursuant to Section 7, the Participant shall immediately cease to be eligible to participate in the Plan, and shall thereafter have no right to elect to receive in Common Stock any portion of any cash bonus he or she may have earned prior to the date of death or termination of employment.

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          If a Participant dies or his or her employment with the Company or a Subsidiary is terminated for any reason between the date on which the Participant has returned his election form to the Company pursuant to Section 7 and the date stock certificates are delivered for the shares issued under the Plan, then the Company may, in its sole discretion, deliver the stock certificates or make a cash payment equal to the Elective Share and the Bonus Amount to the Participant, his or her estate or his or her designated beneficiary, as the case may be.

          If a Participant (or prospective Participant) incurs a Disability at any time during his or her employment with the Company, the Committee may, in its discretion, determine whether or not the Participant can continue to participate in the Plan with respect to any bonus earned prior to or during the period of the Participant's Disability.

SECTION 11
GENERAL PROVISIONS

          11.1          Withholding. The Company or a Subsidiary shall be entitled to: (a) withhold and deduct from future wages of a Participant (or from other amounts that may be due and owing to a Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state, local and foreign withholding and employment-related tax requirements attributable to shares of Common Stock awarded pursuant to the Plan; or (b) require a Participant promptly to remit the amount of such withholding to the Company before taking any action with the issuance of Common Stock pursuant to the Plan. Unless the Committee determines otherwise, withholding may be satisfied by withholding Common Stock to be received by a Participant or by delivery to the Company of previously owned Common Stock.

          11.2          Compliance With Laws; Listing and Registration of Shares. All issuances of Common Stock or other securities under the Plan shall be subject to all applicable laws, rules and regulations, and to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares covered hereby upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the issuance of shares hereunder, shares to be issued pursuant to the Plan shall not be issued (nor shall certificates therefor be delivered) unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

          11.3          No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other or additional compensation arrangements, including the grant of stock options and other stock-based awards, and such arrangements may be either generally applicable or applicable only in specific cases.

          11.4          No Right to Employment. Participation in the Plan shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Subsidiary. The Company or any Subsidiary may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any written agreement with a Participant.

          11.5          Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the state of Michigan and applicable federal law.

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          11.6          Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

SECTION 12
TERMINATION AND AMENDMENT

          The Board may terminate the Plan at any time or may from time to time amend the Plan as it considers proper and in the best interests of the Company; provided that no such amendment may be made during (a) the period when the Company has notified a prospective Participant that he or she can elect to participate in the Plan with respect to that year's bonus; or (b) during the period when the Participant has returned an election form to the Company but not yet received the shares to be awarded thereunder; if such an amendment would in either case operate to the detriment of the Participant with respect to that election.

SECTION 13
EFFECTIVE DATE AND DURATION OF THE PLAN

          The Plan shall take effect May 9, 2001, subject to approval by the shareholders at the Company's 2001 Annual Meeting of Shareholders or any adjournment thereof or at a Special Meeting of Shareholders. The Plan shall continue into effect until terminated by the Board or until all shares authorized for issuance under the Plan have been issued, whichever occurs first.

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EX-10.25

EXHIBIT 10.25

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").

26

                    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.

27

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

28
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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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.	SPARTAN STORES HOLDING, INC. (see this entity's subsidiaries below) Jurisdiction of Incorporation: Names under which business is conducted:	Michigan Spartan Stores Holding, Inc.
4.	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) Buckeye Discount (in OH) Tracy & Avery Food Town (in OH)
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 Spartan Stores Holding, 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

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
 

Subsidiary of Prevo's Family Markets, Inc.:

10. SPARTAN STORES ASSOCIATES, LLC
(see this entity's subsidiary below)

Jurisdiction of Formation:
Names under which business is conducted:


Michigan
Spartan Stores Associates, LLC
 

Subsidiary of Spartan Stores Associates, LLC:

11. MSFC, LLC

Jurisdiction of Formation:
Names under which business is conducted:

Michigan
MSFC, LLC
Madison Family Market
Family Fare
 

Subsidiaries of Seaway Food Town, Inc.:

12. THE PHARM OF MICHIGAN, INC.

Jurisdiction of Incorporation:
Names under which business is conducted:

Michigan
The Pharm of Michigan, Inc.
The Pharm
 

- -2-

13.	SPARTAN PROPERTIES MANAGEMENT, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Ohio Spartan Properties Management, Inc.
14.	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)
15.	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
16.	CUSTER PHARMACY, INC. Jurisdiction of Incorporation: Names under which business is conducted:	Michigan Custer Pharmacy, Inc. Food Town Pharmacy
17.	GRUBER'S REAL ESTATE, LLC Jurisdiction of Formation: Names under which business is conducted:	Michigan Gruber's Real Estate, LLC

- -3-

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We consent to the incorporation by reference in Registration Statement No. 333-110952 of Spartan Stores, Inc. Supplemental Savings Plan for Directors, Registration Statement No. 333-110593 of Spartan Stores, Inc. 2001 Associate Stock Purchase Plan, Registration Statement No. 33-47443 of Spartan Stores, Inc. 1991 Stock Option Plan, Registration Statement No. 333-65802 of Spartan Stores, Inc. 2001 Stock Incentive Plan, Registration Statement No. 333-66430 of Spartan Stores, Inc. Savings Plus Plan, Spartan Stores, Inc. Savings Plus Plan for Union Associates, Spartan Retail Savings Plus Plan, Spartan Stores, Inc. Savings Plus Plan for J.F. Walker Company Associates, and the Post Effective Amendment No. 1 thereto, Registration Statement No. 333-71774 of Spartan Stores, Inc. 2001 Stock Bonus Plan, Registration Statement No. 333-72010 of Spartan Stores, Inc. 2001 Associate Stock Purchase Plan, Registration Statement No. 333-75810 of Spartan Stores, Inc. Supplemental Executive Savings Plan, Registration Statement No. 333-100794 of Spartan Stores, Inc. Savings Plus Plan, Spartan Stores, Inc. Savings Plus Plan for Union Associates, Spartan Retail Savings Plus Plan, and Spartan Stores, Inc. Savings Plus Plan for J.F. Walker Company Associates on Forms S-8, Registration Statement No. 333-53672 of Spartan Stores, Inc. Prospectus on Form S-3 and Amendments No. 1 and No. 2 thereto, and Registration Statement No. 333-129156 of Spartan Stores, Inc. Stock Incentive Plan of 2005 of our report dated May 11, 2007, relating to the consolidated financial statements of Spartan Stores, Inc. and subsidiaries, and management's report on the effectiveness of internal control over financial reporting appearing in this Annual Report on Form 10-K of Spartan Stores, Inc. and subsidiaries for the year ended March 31, 2007.

/s/ Deloitte & Touche LLP

Grand Rapids, MI
May 18, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Craig C. Sturken, 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:  May 18, 2007	/s/ Craig C. Sturken
	Craig C. Sturken Chairman, President and Chief Executive Officer

2

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:  May 18, 2007	/s/ David M. Staples
	David M. Staples Executive Vice President and Chief Financial Officer

2

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 31, 2007 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/ Craig C. Sturken

Craig C. Sturken
Chairman, President and
Chief Executive Officer

/s/ David M. Staples

David M. Staples
Executive Vice President and
Chief Financial Officer