-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, McfzlmEPuCpCxrh2eQLUsrzYo4CXyqHx088eTDqNy8HRyQC7dRc2zKrXvv8PxN24 DD4axHHPsHpQj3FMNQ851Q== /in/edgar/work/20000801/0000037912-00-000014/0000037912-00-000014.txt : 20000921 0000037912-00-000014.hdr.sgml : 20000921 ACCESSION NUMBER: 0000037912-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000617 FILED AS OF DATE: 20000801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELHAIZE AMERICA INC CENTRAL INDEX KEY: 0000037912 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 560660192 STATE OF INCORPORATION: NC FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15275 FILM NUMBER: 683433 BUSINESS ADDRESS: STREET 1: PO BOX 1330 CITY: SALISBURY STATE: NC ZIP: 28145 BUSINESS PHONE: 7046338250 MAIL ADDRESS: STREET 1: PO BOX 1330 CITY: SALISBURY STATE: NC ZIP: 28145 FORMER COMPANY: FORMER CONFORMED NAME: FOOD LION INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FOOD TOWN STORES INC DATE OF NAME CHANGE: 19830510 10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 17, 2000 OR [ ] 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 0-6080 DELHAIZE AMERICA, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-0660192 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 1330, 2110 Executive Drive, Salisbury, NC 28145-1330 (Address of principal executive office) (Zip Code) (704) 633-8250 (Registrant's telephone number) 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Outstanding shares of common stock of the Registrant as of July 20, 2000. Class A Common Stock 79,965,968 Class B Common Stock 75,290,542 155,256,510 Page 1 of 56 DELHAIZE AMERICA, INC. INDEX TO FORM 10-Q June 17, 2000 Part I.FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Statements of Income for the 12 and 24 weeks ended June 17, 2000 and June 19, 1999 3-4 Consolidated Balance Sheets as of June 17, 2000, January 1, 2000 and June 19, 1999 5 Consolidated Statements of Cash Flows for 24 weeks ended June 17, 2000 and June 19, 1999 6 Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Part II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Securities 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14-15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 Exhibit Index 17 -2- PART I. FINANCIAL INFORMATION Item 1. Financial Statements DELHAIZE AMERICA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the 12 Weeks ended June 17, 2000 and June 19, 1999 (Dollars in thousands except per share data) June 17, 2000 June 19, 1999 June 17, 2000 June 19, 1999 % % Net sales $2,647,124 $2,509,240 100.00 100.00 Cost of goods sold 2,054,739 1,933,085 77.62 77.04 Selling and administrative expenses 468,563 440,528 17.70 17.56 Operating income 123,822 135,627 4.68 5.40 Interest expense 28,344 25,384 1.07 1.01 Income before income taxes 95,478 110,243 3.61 4.39 Provision for income taxes 36,285 41,892 1.37 1.67 Net income $ 59,193 $ 68,351 2.24 2.72 Basic earnings per share $ 0.38 $ 0.43 Diluted earnings per share $ 0.38 $ 0.43 Dividends per share $ 0.14 $ 0.13 Weighted average number of shares outstanding: Class A 79,950,702 81,704,721 Class B 75,290,542 76,420,385 Total 155,241,244 158,125,106 Number of shares outstanding for the twelve weeks ended June 19, 1999 are restated to reflect a one-for-three reverse stock split on September 9, 1999.
-3- PART I. FINANCIAL INFORMATION Item 1. Financial Statements DELHAIZE AMERICA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the 24 Weeks ended June 17, 2000 and June 19, 1999 (Dollars in thousands except per share data) June 17, 2000 June 19, 1999 June 17, 2000 June 19, 1999 % % Net sales $5,126,358 $4,916,286 100.00 100.00 Cost of goods sold 3,944,697 3,789,947 76.95 77.09 Selling and administrative expenses 925,222 871,829 18.05 17.74 Operating income 256,439 254,510 5.00 5.17 Interest expense 55,374 49,737 1.08 1.01 Income before income taxes 201,065 204,773 3.92 4.16 Provision for income taxes 76,408 77,814 1.49 1.58 Net income $ 124,657 $ 126,959 2.43 2.58 Basic earnings per share $ 0.80 $ 0.80 Diluted earnings per share $ 0.80 $ 0.80 Dividends per share $ 0.29 $ 0.25 Weighted average number of shares outstanding: Class A 79,941,049 82,170,112 Class B 75,290,542 76,681,920 Total 155,231,591 158,852,032 Number of shares outstanding for the 24 weeks ended June 19, 1999 are restated to reflect a one-for-three reverse stock split on September 9, 1999.
-4- DELHAIZE AMERICA, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) June 17, 2000 January 1, 2000 June 19, 1999 Assets Current assets: Cash and cash equivalents $ 100,573 $ 195,502 $ 89,822 Receivables 222,586 235,457 167,358 Inventories 1,178,395 1,157,695 1,104,720 Prepaid expenses 57,812 28,407 27,215 Deferred tax assets 55,611 55,611 65,397 Total current assets 1,614,977 1,672,672 1,454,512 Property, at cost, less accumulated depreciation 2,107,368 2,039,314 1,968,728 Deferred tax assets - - 4,707 Intangible assets, less accumulated amortization 250,360 254,276 267,193 Other assets 20,775 7,150 3,346 Total assets $3,993,480 $3,973,412 $3,698,486 Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings $ 235,000 $ 302,000 $ 62,000 Accounts payable 590,038 569,592 559,399 Accrued expenses 327,880 369,230 353,137 Capital lease obligations - current 25,137 23,877 22,531 Long term debt - current 1,987 2,834 42,292 Other liabilities - current 13,100 12,660 11,272 Total current liabilities 1,193,142 1,280,193 1,050,631 Long-term debt 426,654 426,930 428,641 Capital lease obligations 505,322 478,942 492,327 Deferred income taxes 7,421 7,421 - Other liabilities 101,124 101,060 109,576 Total liabilities 2,233,663 2,294,546 2,081,175 Shareholders' equity: Class A non-voting common stock, $.50 par value 39,983 39,965 121,813 Class B voting common stock, $.50 par value 37,645 37,645 114,039 Additional capital 156,097 155,280 - Retained earnings 1,526,092 1,445,976 1,381,459 Total shareholders' equity 1,759,817 1,678,866 1,617,311 Total liabilities and shareholders' equity $3,993,480 $3,973,412 $3,698,486
-5- DELHAIZE AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the 24 Weeks ended June 17, 2000 and June 19, 1999 (Dollars in thousands) 24 Weeks Ended June 17, 2000 June 19, 1999 Cash flows from operating activities Net income $ 124,657 $126,959 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 130,315 117,176 Loss(gain) on disposals of property and capital lease terminations 584 (1,571) Changes in operating assets and liabilities: Receivables 12,871 31,743 Inventories (20,700) (1,085) Prepaid expenses (9,163) (6,663) Other assets (878) 149 Accounts payable and accrued expenses (20,904) 7,416 Other liabilities 504 (3,190) Total adjustments 92,629 143,975 Net cash provided by operating activities 217,286 270,934 Cash flows from investing activities Capital expenditures (156,343) (185,851) Proceeds from disposal of property 1,292 1,279 Direct costs associated with acquisition (3,239) - Other investment activity (9,508) - Net cash used in investing activities (167,798) (184,572) Cash flows from financing activities Net(payments)proceeds under short-term borrowings (67,000) 1,000 Principal payments on long-term debt (1,122) (1,348) Principal payments under capital lease obligations (12,347) (11,214) Direct financing costs (20,242) - Dividends paid (44,541) (39,884) Repurchase of common stock - (69,546) Proceeds from issuance of common stock 835 860 Net cash used in financing activities (144,417) (120,132) Net decrease in cash and cash equivalents (94,929) (33,770) Cash and cash equivalents at beginning of period 195,502 123,592 Cash and cash equivalents at end of period $100,573 $ 89,822
-6- Notes to Consolidated Financial Statements (Dollars in thousands) 1) Basis of Presentation: The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all the disclosures normally required by generally accepted accounting principles or those normally made in the Annual Report on Form 10-K of Delhaize America, Inc. (the "Company"). Accordingly, the reader of this Form 10-Q should refer to the Company's Form 10-K for the year ended January 1, 2000 for further information. The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited. In the opinion of management, the financial information includes all adjustments consisting of normal recurring adjustments necessary for a fair presentation of interim results. 2) Supplemental Disclosure of Cash Flow Information: Selected cash payments and non-cash activities during the period were as follows: June 17, 2000 June 19, 1999 Cash payments for income taxes $83,114 $86,923 Cash payments for interest, net of amounts capitalized 55,734 51,332 Non-cash investing and financing activities: Capitalized lease obligations incurred for store properties 41,107 28,878 Capitalized lease obligations terminated for store properties 1,120 17,406 The Company considers all highly liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents. -7- 3) Inventories Inventories are stated at the lower of cost or market. Inventories valued using the last-in, first-out (LIFO) method comprised approximately 82% and 85% of inventories as of June 17, 2000 and June 19, 1999, respectively. Meat, produce and deli inventories are valued on the first-in, first-out (FIFO) method. If the FIFO method were used entirely, inventories would have been $146.8 million and $141.5 million greater as of June 17, 2000 and June 19, 1999, respectively. Application of the LIFO method resulted in increases in the cost of goods sold of $3.9 million and $2.4 million for the 24 weeks ended June 17, 2000 and June 19, 1999, respectively. 4) Reclassification Certain financial statement items have been reclassified to conform to the current year's format. 5) Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding (155,241,244 and 158,125,106 for the second quarter of 2000 and 1999, respectively; 155,231,591 and 158,852,032 year to date for 2000 and 1999, respectively). Diluted earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding and the weighted average number of potential common shares outstanding. The common stock equivalents that were added to the weighted average shares outstanding for purposes of diluted EPS were 126,000 and 319,000 for outstanding stock options year to date for 2000 and 1999, respectively. For 1999, basic earnings per share and diluted earnings per share have been restated to reflect a one-for-three reverse stock split on September 9, 1999. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS (12 and 24 weeks ended June 17, 2000 compared to 12 and 24 weeks ended June 19, 1999) The Company recorded net income for the second quarter and year to date for 2000 of $59.2 million and $124.7 million, respectively, resulting in decreases of 13.4% and 1.8% over the corresponding periods of 1999. Net sales for the second quarter and year to date of 2000 were $2.6 billion and $5.1 billion, respectively, resulting in increases of 5.5% and 4.3% over the corresponding periods of 1999. Same store sales increased 1.1% for the second quarter and decreased 0.3% year to date. During the second quarter, the Company introduced new promotional campaigns at its Food Lion and Kash n'Karry banners to improve sales trends in response to a highly competitive sales environment in the first six months of 2000. Gross profit of 22.38% of sales for the second quarter this year was below the second quarter of last year of 22.96% of sales. Gross margins were adversely impacted in the second quarter by the cost of markdowns and changes in the mix of products sold as a result of promotional campaigns in a highly competitive sales environment. The Company's internal testing for the second quarter indicated minimal inflation; however, the Company has provided a $2.0 million LIFO provision in the second quarter of 2000 primarily due to an increase in paper products and cigarette costs. The current LIFO provision is adequate to cover this level of inflation. Year to date gross profit of 23.05% of sales compared favorably to the corresponding period of last year of 22.91% of sales. This improved gross profit was primarily due to continued category management initiatives of margin blending and category mix, particularly in the perishable (dairy and frozen) and grocery departments, partially offset by promotional markdowns. Selling and administrative expenses for the second quarter were $468.6 million (including $66.2 million in depreciation and amortization) or 17.70% of sales as compared to $440.5 million (including $59.7 million in depreciation and amortization) or 17.56% of sales in the corresponding period of the prior year. The increase in selling and administrative expenses was due primarily to increases in store salaries, store rent and depreciation. The Company has experienced increasing labor costs due to the low unemployment rates in all its operating markets, which in turn has created higher turnover as well as wage increases. Higher labor costs were partially offset by adjustments to benefit and insurance reserves to reflect -9- current estimates. The increase in store rent was due to 76 new store openings and 149 expansions of existing stores since second quarter of last year. Depreciation and amortization of $66.2 million increased over the second quarter of last year of $59.7 million due to leasehold improvements and equipment purchases for new stores and renovations. Selling and administrative expenses for the second quarter of 1999 included a one-time charge of $3.3 million (pre-tax) related to executive post-employment benefits. Interest expense of $28.3 million for the second quarter of 2000 and $55.4 million year to date was higher as compared to $25.4 million and $49.7 million for the respective periods of 1999 due to an increase in short-term borrowings. Net income for the quarter was $59.2 million or 2.24% of sales as compared to $68.4 million or 2.72% of sales in the second quarter of the prior year. Basic and diluted earnings per share were $0.38 for the second quarter of 2000 compared to $0.43 last year. Store Closing Costs (Dollars in millions) Reduction of Asset Lease Accrued Values Liabilities Expenses Total Balance at March 25, 2000 $8.2 $104.3 $1.1 $113.6 Additions 0.2 3.1 .9 4.2 Reductions -0.3 -2.4 -.6 -3.3 Balance at June 17, 2000 $8.1 $105.0 $1.4 $114.5 The Company recorded $3.9 million in store closing costs (included in Selling and Administrative Expenses on the Company's Consolidated Statement of Income) during the second quarter of 2000. These costs are included in the "Additions" line in the table above. Reductions relate primarily to on-going rent payments made on lease obligations. During the second quarter of 2000, the Company closed four stores and relocated three of these stores in the normal course of business. The revenues and operating results of these stores were not significant to the Company's total revenues and operating results. During the second quarter of 2000, the Company completed disposition efforts related to one closed store. At the end of the first quarter of 2000 the Company had $114.5 million in store closing costs related to 159 stores (156 leased and 3 owned) and one distribution center. Disposition efforts on the properties related to these facilities (leases, equipment, and buildings) will continue until all related properties are disposed. -10- Liquidity and Capital Resources Cash provided by operating activities totaled $217.3 million for the 24 weeks ended June 17, 2000, compared with $270.9 million for the same period last year. The decrease was primarily due to an increase in inventory levels, net of related accounts payable, and a decrease in accrued expenses mainly as a result of increased payouts for 1999 benefit plans. Capital expenditures totaled $156.3 million for the 24 weeks ended June 17, 2000, compared with $185.9 million for the same period in 1999. Year to date the Company opened 29 new stores and completed the renovation of 56 existing stores. In addition, during the 24 weeks of 2000, the Company had merger costs of $3.2 million related to the acquisition of Hannaford Bros. Co. and an investment of $9.5 million in a Thailand chain. With its 2000 growth plan, the Company anticipates a net increase in store square footage of approximately 8.0%. This plan is subject to change and review as conditions warrant. Capital expenditures currently estimated for 2000 are $360 million. Capital expenditures for 2000 will be financed through funds generated from operations and existing bank credit facilities. Cash flows used in financing activities for the 24 weeks ended June 17, 2000 increased to $144.4 million from $120.1 million for the same period of last year. The increase in cash used was primarily the result of payments on short-term borrowings and bridge financing costs incurred for the Company's announced Hannaford Bros. Co. acquisition. The Company maintains the following bank and credit lines: A revolving credit facility with a syndicate of commercial banks providing $500.0 million in committed lines of credit, which expires in November 2000. As of June 17, 2000, the Company had $180.0 million in outstanding borrowings. There were no outstanding borrowings as of the end of the second quarter of 1999. During the second quarter of 2000, the Company had average borrowings of $114.8 million at a daily weighted average interest rate of 7.62%. Additional short-term committed lines of credit totaling $20.0 million were available when needed through May 29, 2000. The Company was not required to maintain compensating balances related to these lines of credit, and borrowings could occur -11- periodically. These lines were replaced with additional uncommitted lines during the second quarter. The Company had no borrowings outstanding at June 17, 2000 and $20.0 million outstanding at the end of second quarter of 1999. During the second quarter while this line was available, the Company had average borrowings of $20.0 million at a daily weighted average interest rate of 6.58% with a maximum amount outstanding of $20.0 million. Periodic short-term borrowings may be placed under informal credit arrangements, which are available to the Company at the discretion of the lender. Borrowings for the second quarter were as follows: Informal Credit Arrangements (Dollars in millions) 2000 1999 Outstanding borrowings at the end of the second quarter $55.0 $42.0 Average borrowings $66.3 $26.8 Maximum amount outstanding $125.0 $105.0 Daily weighted average interest rate 7.45% 5.09% The Company completed its acquisition of all the outstanding shares of Hannaford Bros. Co. in a cash and stock transaction valued at approximately $3.6 billion, including the assumption of debt, on July 31, 2000. Hannaford will operate as a subsidiary of Delhaize America, Inc. The acquisition will result in a combined entity that will include more than 1,400 stores on the Eastern seaboard and generate sales in excess of $14 billion a year. The Company estimates the total amount of cash required for the merger with Hannaford to be approximately $2.7 billion. The cash consideration required to complete the merger will be funded through (i) a 364-day capital markets bridge facility for up to $2.5 billion and (ii) a $500 million five-year syndicated revolving credit facility. The Company plans to commence a debt offering for long term financing to replace the bridge facility within one year from completion of the merger. The Company has entered into various agreements to hedge against a potential increase in interest rates on planned bond issues related to the announced acquisition of Hannaford Bros. Co. The notional amount of the agreements totals $1.75 billion. At June 17, 2000, the unrealized loss related to these agreements was $98.7 million as compared to the unrealized gain totaling $7.2 million at January 1, 2000. The -12- differential to be paid or received will be recognized as an adjustment to interest expense over the life of the underlying debt. The Company is subject to risk of nonperformance by the counterparties to the agreement. The Company does not anticipate nonperformance by the counterparties, who are major U.S. financial institutions. The Company finances its daily working capital requirements, when necessary, through the use of its various committed and uncommitted lines of credit. These financial instruments are sensitive to interest rate changes. Outstanding borrowings under such agreements are discussed above. Other This report contains certain "forward-looking statements" within the protection of the statutory safe-harbors of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as expansion and growth of the Company's business, future capital expenditures and the Company's business strategy, are forward-looking statements. In reviewing such information, it should be kept in mind that actual results may differ materially from those projected or suggested in such forward-looking statements. This forward-looking information is based on various factors and was derived utilizing numerous assumptions. Many of these factors have previously been identified in filings or statements made by or on behalf of the Company, including filings with the Securities and Exchange Commission of Forms 10-Q, 10-K and 8-K. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward- looking statements include: changes in the general economy or in the Company's primary markets, changes in consumer spending, competitive factors, the nature and extent of continued consolidation in the industry, changes in the rate of inflation and interest costs on borrowed funds, changes in state or federal legislation or regulation, changes in the availability and cost of labor, adverse determinations with respect to litigation or other claims, inability to develop new stores or complete remodels as rapidly as planned, and stability of product costs -- supply or quality control problems with the Company's vendors detailed from time- to-time in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to update forward-looking information contained herein or elsewhere to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. -13- Item 3. Quantitative and Qualitative Disclosures About Market Risk This information is set forth in Item 2 to this Form 10-Q and is hereby incorporated by reference. Part II OTHER INFORMATION Item 1. Legal Proceedings The Company has had no significant developments related to legal matters since the Item 3 disclosure included in the Company's Form 10Q filed May 9, 2000 for the 12 weeks ended March 25, 2000. Item 2. Change in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders (a). The Company held its Annual Meeting of Shareholders on May 4, 2000. (b). Not applicable (c). Matters voted upon at the meeting Election of Directors For Withheld Broker Non-Votes Pierre-Olivier Beckers 62,034,416 3,048,545 10,207,581 Dr. J. Kelly Collamore 63,016,361 2,066,600 10,207,581 JC Coppieters`T Wallant 63,011,645 2,071,316 10,207,581 Pierre Dumont 62,971,571 2,111,390 10,207,581 William G. Ferguson 62,975,011 2,107,950 10,207,581 Dr. Bernard W. Franklin 63,014,506 2,068,455 10,207,581 Joseph C. Hall, Jr. 62,954,046 2,128,915 10,207,581 Margaret H. Kluttz 62,969,022 2,113,939 10,207,581 Bill McCanless 62,154,831 2,928,130 10,207,581 Dominique Raquez 62,066,357 3,016,604 10,207,581 -14- Appointment of For Against Abstain Broker Independent Accountants Non-votes PricewaterhouseCoopers 64,683,909 312,254 86,798 10,207,581 LLP For Against Abstain Broker Non-votes Amendments to the bylaws of the Company 61,215,211 3,421,843 445,907 10,207,581 For Against Abstain Broker Non-votes Delhaize America, Inc. 2000 Stock Incentive Plan 51,479,101 3,775,822 582,955 19,542,664 Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a). Exhibits 27 Financial Data Schedule (b). The Company did not file a report on Form 8-K during the period ended June 17, 2000. -15- SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. DELHAIZE AMERICA, INC. Registrant DATE: August 1, 2000 BY:Laura Kendall Laura Kendall Chief Financial Officer Principal Accounting Officer -16- Exhibit Index Exhibit Description Page No. 3 Bylaws of Delhaize America 18-31 10a Shareholders' Agreement 32-39 10b Stock Incentive Plan 40-54 27 Financial Data Schedule 55-56 -17- EX-3 2 0002.txt BYLAWS OF DELHAIZE AMERICA, INC. May 4, 2000 BYLAWS OF DELHAIZE AMERICA, INC. ARTICLE 1 Offices Section 1. Principal and Registered Office. The principal office of the corporation shall be located at 2110 Executive Drive, Salisbury, North Carolina, which shall also be the registered office of the corporation. Section 2. Other Offices. The corporation may have offices at such other places, either within or without the State of North Carolina, as the board of directors may from time to time determine. ARTICLE 2 Meetings of Shareholders Section 1. Place of Meeting. Meetings of shareholders shall be held at the principal office of the corporation, or at such other place, either within or without the State of North Carolina, as shall be designated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders shall be held on such date and at such time during the month of May of each year as shall be set by the board of directors, for the purpose of electing directors of the corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the shareholders may be called at any time by the president and chief executive officer or by any two members of the board of directors. Section 5. Notice of Meetings. At least 10 days and no more than 60 days prior to any annual or special meeting of the shareholders, the corporation shall notify shareholders of the date, time and place of the meeting and, in the case of a special or substitute annual meeting or where otherwise required by law, shall briefly describe the purpose or purposes of the meeting. Only business within the purpose or purposes described in the notice may be conducted at a special meeting. Unless otherwise required by the articles of incorporation or by law (for example, in the event of a meeting to consider the adoption of a plan of merger or share exchange, a sale of assets other than in the ordinary course of business or a voluntary dissolution), the corporation shall be required to give notice only to shareholders entitled to vote at the meeting. If an annual or special shareholder's meeting is adjourned to a different date, time or place, notice thereof need not be given if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date. It shall be the primary responsibility of the secretary to give the notice, but notice may be given by or at the direction of the president and chief executive officer or other person or persons calling the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail with postage thereon prepaid, correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. Section 6. Advance Notice of Shareholder Proposals. No business shall be transacted at a meeting of shareholders, except such business as shall be (a) specified in the notice of meeting given as provided in Section 5 of this Article 2, (b) otherwise brought before the meeting by or at the direction of the board of directors, or (c) otherwise brought before the meeting by a shareholder of record entitled to vote at the meeting, in compliance with the procedure set forth in this Section 6. For business to be brought before a meeting by a shareholder pursuant to (c) above, the shareholder must have given timely notice in writing to the Secretary. To be timely, a shareholder's notice must be delivered to, or mailed to and received by, the Secretary of the corporation not less than 10 days nor more than 60 days prior to the meeting; provided, however, that if fewer than 21 days' notice of the meeting is given to shareholders, such written notice shall be received not later than the close of the tenth day following the date on which notice of the meeting was mailed to shareholders. Notwithstanding the foregoing, any shareholder who wishes the board of directors to consider taking a position with respect to the matter must deliver such notice to, or mail it so that it is received by, the Secretary of the corporation not less than 90 nor more than 150 days prior to the meeting. Nothing in this Section 6 shall require the board of directors to recommend for adoption by the shareholders, or give the shareholders notice of, any matter of which notice is provided to the corporation pursuant to this Section or otherwise. Notice of actions to be brought before the meeting pursuant to (c) above shall set forth as to each matter the shareholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting, (ii) the name and address, as they appear on the corporation's books, of each shareholder proposing such business, and (iii) the classes and number of shares of the corporation that are owned of record and beneficially by such shareholder of the corporation. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the provisions set forth in this Section 6, except as otherwise may be required by law. Nothing in this Section 6 shall be deemed to restrict, expand or otherwise affect any rights or obligations of any party under Rule 14a- 8 of the Securities and Exchange Commission or any successor provision to such rule. If the chairman of the meeting determines that any business was not properly brought before the meeting in accordance with provisions prescribed by these bylaws, he shall so declare to the meeting, and to the extent permitted by law any such business not properly brought before the meeting shall not be transacted. Section 7. Quorum. A majority of the votes entitled to be cast by a voting group on a matter, represented in person or by proxy at a meeting of shareholders, shall constitute a quorum for that voting group for any action on that matter, unless quorum requirements are otherwise fixed by a court of competent jurisdiction acting pursuant to Section 55-7-03 of the General Statutes of North Carolina. Once a share is represented for any purpose at a meeting, it shall be deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof, unless a new record date is or must be set for the adjournment. Action may be taken by a voting group at any meeting at which a quorum of that voting group is represented, regardless of whether action is taken at that meeting by any other voting group. In the absence of a quorum at the opening of any meeting of shareholders, such meeting may be adjourned from time to time by a vote of the majority of the shares voting on the motion to adjourn. Section 8. Shareholders' List. After a record date is fixed for a meeting, the secretary of the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the shareholders' meeting. Such list shall be arranged by voting group (and within each voting group by class or series of shares) and shall show the address of and number of shares held by each shareholder. The shareholder's list shall be made available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at such other place identified in the meeting notice and the city where the meeting will be held. The corporation shall make the shareholders' list available at the meeting, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment thereof. Section 9. Voting of Shares. Except as otherwise provided by the articles of incorporation, each outstanding share of voting capital stock of the corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the shareholders. Action on a matter by a voting group for which a quorum is present is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the vote of a greater number is required by law or by the articles of incorporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of one-tenth of the shares represented at the meeting shall demand a ballot vote on a particular matter. Absent special circumstances, the shares of the corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, except that this provision shall not limit the power of the corporation to vote shares held by it in a fiduciary capacity. Section 10. Proxies. Shares may be voted either in person or by a proxy who has been appointed by the shareholder by signing an appointment form, either personally or by his duly authorized attorney- in-fact. An appointment of proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment of proxy is valid for 11 months unless a different period is expressly provided in the appointment form. Section 11. Action Without Meeting. Any action which the shareholders could take at a meeting may be taken without a meeting if one or more written consents, setting forth the action taken, shall be signed, before or after such action, by all the shareholders who would be entitled to vote upon the action at a meeting. The consent shall be delivered to the corporation for inclusion in the minutes or filing with the corporate records. The corporation must give its nonvoting shareholders written notice of the proposed action at least 10 days before the action is taken, which notice must contain or be accompanied by the same material that would have been required by law to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action. ARTICLE 3 Board of Directors Section 1. General Powers. The business and affairs of the corporation shall be managed under the direction of the board of directors except as otherwise provided by the articles of incorporation or by a valid shareholders' agreement. Section 2. Number, Term and Qualification. The number of directors of the corporation shall be not less than eight persons nor more than 14 persons, with the exact number of directors within the minimum and maximum to be established from time to time by the shareholders or, unless the articles of incorporation or a valid shareholders' agreement provides otherwise, the board of directors; but, in the absence of such action, the number of directors elected at the annual meeting shall constitute the number of directors of the corporation until the next annual meeting of shareholders, unless the number is previously changed by action of the shareholders or the board of directors. Only shareholders may change the range for the size of the board of directors or change from a variable range to a fixed size board of directors. Each director shall hold office until the next annual meeting of the shareholders and until his successor is elected and qualifies, until there is a decrease in the number of directors or until his earlier death, resignation, removal or disqualification. Directors need not be residents of the State of North Carolina or shareholders of the corporation unless the articles of incorporation so provide. No person after having attained the age of 70 years shall be allowed to run for election, reelection or re- appointment to the board of directors, excepting, however, that such retirement age shall not apply to directors over the age of 65 years who were serving on such board on July 3, 1997. Section 3. Nomination of Directors. Only persons who are nominated in accordance with the provisions set forth in these bylaws shall be eligible to be elected as directors at the annual or special meeting of shareholders. Nomination for election to the board of directors shall be made or approved by the board of directors. In addition, nomination for election of any person to the board of directors may be made by a shareholder if written notice of the nomination of such person shall have been delivered to the Secretary of the corporation at the principal office of the corporation not less than 10 days nor more than 60 days prior to any meeting of the shareholders called for the election of directors; provided, however, that if fewer than 21 days' notice of the meeting is given to shareholders, such written notice shall be received not later than the close of the tenth day following the day on which notice of the meeting was mailed to shareholders. Notwithstanding the foregoing, any shareholder who wishes the board of directors or a duly authorized committee of the board of directors to consider nominating for election to the board of directors a person recommended by a shareholder must deliver such notice to, or mail it so that it is received by, the Secretary of the corporation not less than 90 nor more than 150 days prior to the meeting. Any notice provided pursuant to this Section shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission if the nominee had been nominated by the board of directors; and (e) the written consent of each nominee to serve as a director of the corporation if so elected. Nothing in this Section shall require the board of directors to nominate or approve, as one of its nominees, any person recommended to be so nominated by a shareholder or to give the shareholders notice of any proposed nomination by a shareholder. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Section 4. Election. Except as provided in Section 6 of this Article 3 (Vacancies), the directors shall be elected at the annual meeting of shareholders. Those persons who receive the highest number of votes at a meeting at which a quorum is present shall be deemed to have been elected. Section 5. Removal. Directors may be removed from office with or without cause (unless the articles of incorporation provide that directors may be removed only for cause), provided the notice of the shareholders' meeting at which such action is to be taken states that a purpose of the meeting is removal of the director and the number of votes cast to remove the director exceeds the number of votes cast not to remove him. Section 6. Vacancies. Except as otherwise provided in the articles of incorporation, a vacancy occurring in the board of directors, including, without limitation, a vacancy resulting from an increase in the number of directors or from the failure by the shareholders to elect the full authorized number of directors, shall be filled by an affirmative vote of at least 70% of the remaining directors in favor of a nominee selected by the Nominating Committee of the board of directors, in accordance with the procedures set forth in Article 5, Section 2, below. The shareholders may elect a director at any time to fill a vacancy not filled by the directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 7. Compensation. The board of directors may compensate directors for their services as such and may provide for the payment of any or all expenses incurred by directors in attending regular and special meetings of the board of directors. ARTICLE 4 Meetings of Directors Section 1. Annual and Regular Meetings. The annual meeting of the board of directors shall be held immediately following the annual meeting of the shareholders. The board of directors may by resolution provide for the holding of regular meetings of the board on specified dates and at specified times. Notice of regular meetings held at the principal office of the corporation and at the usual scheduled time shall not be required. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on a date designated in the notice of the meeting, if any, during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the board shall be held at the principal office of the corporation or at such other place as may be designated in the notice of the meeting. Section 2. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president and chief executive officer or any two directors. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. Unless the articles of incorporation provide otherwise, the annual and regular meetings of the board of directors may be held without notice of the date, time or place. However, the president and chief executive officer or secretary shall provide each director with a written agenda of the items to be discussed at such meetings at least seven days prior thereto. Any person or persons calling a special meeting shall give notice by any usual means of communication to be sent at least seven days before the meeting if notice is sent by means of telephone, telecopy or personal delivery and at least ten days before the meeting if notice is sent by mail. A director's attendance at, or participation in, a meeting for which notice is required shall constitute a waiver of notice, unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote or assent to action taken at the meeting. Section 4. Quorum. Except as otherwise provided in the articles of incorporation, a majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the board of directors. Section 5. Manner of Acting. Except as otherwise provided in the articles of incorporation or these bylaws, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Section 6. Special Vote. The board of directors may not, without an affirmative vote of at least 70% of the number of directors fixed pursuant to these bylaws ("Special Vote"), be empowered to authorize the corporation to: (a) Approve the nomination of any person or persons for election to the board of directors or elect a chief executive officer; (b) Authorize any contract involving payment by the corporation of cash or property valued in excess of $500,000, including, without limitation, the purchase, sale or leasing of property or the incurring of indebtedness, except transactions relating to the leasing or construction of stores, warehouses and related facilities or any other transaction in the ordinary course of business; (c) Approve or authorize capital expenditures of more than $500,000 in any one instance or $1,000,000 in the aggregate in any fiscal year, except expenditures relating to the leasing or construction of stores, warehouses and related facilities or any other transaction in the ordinary course of business; (d) Authorize the issuance or sale of stock or other securities of the corporation or any subsidiary of the corporation, or options or warrants or obligations convertible into such stock or securities, except the issuance of stock options or stock or both, as the case may be, pursuant to the corporation's 1996 Employee Stock Option Plan, Employee Stock Purchase Plan and Employee Stock Ownership Plan and other employee benefit plans approved by the board of directors; (e) Sell or otherwise dispose of a substantial part of the corporation's assets other than in the ordinary course of business; (f) Amend the charter or the bylaws of the corporation; or (g) Approve for submission to the shareholders of the corporation for their approval a proposal for the amendment of the corporation's charter or the merger or consolidation of the corporation with or into any other corporation or the reorganization, recapitalization or liquidation of the corporation; Any Special Vote approving any such action may specify other limitations which shall not be exceeded without a further Special Vote. Section 7. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken is deemed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon arrival) to holding, or transacting business at, the meeting, or unless his dissent or abstention is entered in the minutes of the meeting or unless he shall file written notice of his dissent or abstention to such action with the presiding officer of the meeting before its adjournment or with the corporation immediately after adjournment of the meeting. The right of dissent or abstention shall not apply to a director who voted in favor of such action. Section 8. Action Without Meeting. Unless otherwise provided in the articles of incorporation, action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents signed by each director before or after such action, describing the action taken, and included in the minutes or filed with the corporate records. Action taken without a meeting is effective when the last director signs the consent, unless the consent specifies a different effective date. Section 9. Meeting by Communications Device. Unless otherwise provided in the articles of incorporation, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. Section 10. Minutes of Meeting of the Board of Directors. Minutes of all meetings of the board of directors shall be furnished to all directors promptly after such meeting. ARTICLE 5 Committees Section 1. General. The board of directors may create, by the affirmative vote of at least 70 % of the number of directors then serving, one or more committees not otherwise provided for by these bylaws. Such committees shall consist of two or more directors appointed and removable by the affirmative vote of at least 70% of the number of directors then serving. Such committees may meet at stated times, or on notice to all by any of their own number. The board of directors may by resolution provide that during intervals between meetings of the board of directors, the committees shall have and may exercise the powers of the board in the management of the business and affairs of the corporation, except that the committees shall not have authority to: (a) Authorize distributions; (b) Approve or propose to shareholders action required to be approved by shareholders; (c) Fill vacancies on the board of directors or on any of its committees; (d) Amend the articles of incorporation; (e) Adopt, amend or repeal the bylaws; (f) Approve a plan or merger not requiring shareholder approval; (g) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or (h) Authorize or approve the issuance, sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors. Section 2. Nominating Committee. There shall be a Nominating Committee of the board of directors, which shall consist of three directors, one of whom shall be designated by Etablissements Delhaize Freres et Cie "Le Lion" S.A. ("Delhaize") and/or Delhaize the Lion America, Inc., one of whom shall be the Chief Executive Officer of the Company or his designee from among the members of the board of directors of the Company, and one of whom shall be an independent director. The Nominating Committee shall propose to the board of directors (a) the slate of directors to be submitted to the shareholders for election at the annual meeting of shareholders or at any meeting of the shareholders at which a director or directors are to be elected, and (b) persons to fill any vacancies that may arise from time to time on the board of directors. The slate of directors proposed by the Nominating Committee shall consist of ten persons, four of whom shall be proposed by the Chief Executive Officer of Delhaize (the "Delhaize Designees"), two of whom shall be proposed by the Chief Executive Officer of the Company or his representative on the Nominating Committee (the "CEO Designees") and four of whom shall be independent directors. In the event of a vacancy on the board of directors, the Nominating Committee shall propose to the board of directors an appropriate person to fill such vacancy such that the foregoing ratio of Delhaize Designees, CEO Designees and independent directors is regained. Thus, if a Delhaize Designee ceases to be a director, the vacancy left thereby shall be filled by a new Delhaize Designee, if a CEO Designee ceases to be a director, the vacancy left thereby shall be filled by a new CEO Designee, and if an independent director ceases to be a director, the vacancy left thereby shall be filled by a new independent director. The Nominating Committee shall recommend its slate of directors or any individual nominee to the board of directors of the Company, which shall approve such nominations by Special Vote. If the board of directors does not approve a slate of directors or any individual nominee proposed by the Nominating Committee, the Nominating Committee shall meet to propose another slate of directors or nominee acceptable to the board of directors. The Nominating Committee shall meet at least (a) annually, prior to the annual meeting of shareholders, (b) prior to any special meeting of shareholders called for the purpose of electing one or more directors, (c) within thirty days' notice of any vacancy occurring on the board of directors, and (d) at any time that it is determined that the composition of the Company's board of directors does not comply with any laws or rules that apply to the Company, including the rules of the National Association of Securities Dealers or any national securities exchange on which the Company's securities are listed. Meetings of the Nominating Committee shall be held at such place as is fixed by the chairman thereof in the notice of the meeting. The provisions of Article 4 governing action without a meeting, notice, waiver of notice and quorum requirements shall apply to the Nominating Committee. All decisions of the Nominating Committee shall require the affirmative vote of at least two members. Section 3. Meetings. Except as otherwise provided in these bylaws, the provisions of Article 4 governing meetings of the board of directors, action without meeting, notice, waiver of notice, presumption of assent and quorum and voting requirements shall apply to the committees of the board and its members. Section 4. Minutes. The committees shall keep minutes of their proceedings and documentation of their decisions and shall transmit copies thereof and report thereon to the board of directors at or before the next meeting of the board. ARTICLE 6 Officers Section 1. Titles. The officers of the corporation shall be a chairman of the board, a president and chief executive officer, a secretary and a treasurer. The board of directors or the president and chief executive officer (if authorized by the board) may appoint one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers and such other officers as shall be deemed necessary. The additional officers shall have the authority and perform the duties as from time to time may be prescribed by the board of directors or by direction of the president and chief executive officer (if authorized by the board of directors to prescribe the authority and duties of other officers). Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election; Appointment. The officers of the corporation shall be elected from time to time by the board of directors or appointed from time to time by the president and chief executive officer (to the extent that the president and chief executive officer is authorized by the board to appoint officers). Section 3. Removal. Any officer may be removed by the board at any time with or without cause whenever in its judgment the best interests of the corporation will be served, but removal shall not itself affect the officer's contract rights, if any, with the corporation. Section 4. Vacancies. Vacancies among the officers may be filled and new officers may be created and filled by the board of directors, or by the president and chief executive officer (to the extent authorized by the board). Section 5. Compensation. Except as otherwise provided in these bylaws, the compensation of the officers shall be fixed by the board of directors. Section 6. Chairman and Vice Chairman of the Board of Directors. The chairman of the board of directors shall preside at meetings of the shareholders and the board of directors and shall have such other authority and perform such other duties as the board of directors shall designate. The vice chairman, if elected, shall preside at meetings of the board in the absence of the chairman and shall have such other authority and perform such other duties as the board of directors shall designate. Section 7. President and Chief Executive Officer. In the absence of the chairman of the board, the president and chief executive officer shall preside at all meetings of the shareholders and the board of directors. Subject to the board of directors, he shall be the principal executive officer of the corporation and shall have general charge of the business of the corporation; he shall keep the board of directors fully informed of the business of the corporation; he may sign and execute all authorized bonds, contracts, or other obligations in the name of, and on behalf of, the corporation, and with the secretary or assistant secretary, if one be elected, may sign all certificates of stock, and without further authorization than these presents, may sign all checks or drafts upon funds of this corporation, in its name and on its behalf, and any bank or depository in which funds of the corporation shall be deposited shall be fully and conclusively protected in honoring any checks or drafts on behalf of this corporation, signed by the president and chief executive officer. Subject to the limitations of Section 6(e) of Article 4 of these bylaws, he shall have the power to fix the salaries of all other officers, agents and employees of the corporation, except the chairman and vice presidents (including senior vice presidents, if any); and shall have the power to employ and discharge all agents and employees of the corporation, subject to the control of the board of directors, except the chairman and vice presidents. He shall generally conduct the affairs of the corporation and shall do and perform such other duties as, from time to time, may be assigned to him by the board of directors or by these bylaws. Section 8. Vice Presidents. The vice presidents shall perform such duties as from time to time may be assigned to them by the chairman of the board or the president and chief executive officer, the board of directors or by these bylaws. Section 9. Secretary. The secretary shall keep accurate records of the acts and proceedings of all meetings of shareholders and of the board of directors and shall give all notices required by law and by these bylaws. The secretary shall have general charge of the corporate books and records and shall have the responsibility and authority to maintain and authenticate such books and records. The secretary shall have general charge of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The secretary shall have general charge of the stock transfer books of the corporation and shall keep at the principal office of the corporation a record of shareholders, showing the name and address of each shareholder and the number and class of shares held by each. The secretary shall sign such instruments as may require the signature of the secretary, and in general shall perform the duties incident to the office of secretary and such other duties as may be assigned from time to time by the board of directors or the president and chief executive officer (if authorized by the board of directors to prescribe the authority and duties of other officers). Section 10. Assistant Secretaries. Each assistant secretary shall have such powers and perform such duties as may be assigned by the board of directors or the president and chief executive officer (if authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant secretaries shall exercise the powers of the secretary during that officer's absence or inability to act. Section 11. Treasurer. The treasurer shall have custody of all funds and securities belonging to the corporation and shall receive, deposit or disburse the same under the direction of the board of directors. The treasurer shall keep full and accurate accounts of the finances of the corporation and shall cause a true statement of the assets and liabilities of the corporation as of the close of each fiscal year and of the results of its operations and of changes in surplus, all in reasonable detail, to be made and filed at the principal office of the corporation within four months after the end of the fiscal year. The statement shall be available for inspection by any shareholder for a period of ten years, and the treasurer shall mail or otherwise deliver a copy of the latest statement to any shareholder upon written request. The treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the board of directors or the president and chief executive officer (if authorized by the board of directors to prescribe the authority and duties of other officers). Section 12. Assistant Treasurers. Each assistant treasurer shall have such powers and perform such duties as may be assigned by the board of directors or the president and chief executive officer (if authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant treasurers shall exercise the powers of the treasurer during that officer's absence or inability to act. Section 13. Voting Upon Stocks. Unless otherwise ordered by the board of directors, the president and chief executive officer shall have full power and authority in behalf of the corporation to attend, act and vote at meetings of the shareholders of any corporation in which this corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the corporation might have possessed and exercised if present. The board of directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE 7 Capital Stock Section 1. Certificates. Shares of the capital stock of the corporation shall be represented by certificates. The name and address of the persons to whom shares of capital stock of the corporation are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the corporation. Certificates for shares of the capital stock of the corporation shall be in such form not inconsistent with the articles of incorporation of the corporation as shall be approved by the board of directors. Each certificate shall be signed (either manually or by facsimile) by (a) the president and chief executive officer or any vice president and by the secretary, assistant secretary, treasurer or assistant treasurer or (b) any two officers designated by the board of directors. Each certificate may be sealed with the seal of the corporation or a facsimile thereof. Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer records of the corporation, and transfers shall be made only upon surrender of the certificate for the shares sought to be transferred by the recordholder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer or reissue shall be canceled before new certificates for the shares shall be issued. Section 3. Transfer Agent and Registrar. The board of directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The board of directors may make rules and regulations as it deems expedient concerning the issue, transfer and registration of shares of capital stock of the corporation. Section 5. Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors may fix in advance a date as the record date for the determination of shareholders. The record date shall not be more than 70 days before the meeting or action requiring a determination of shareholders. A determination of shareholders entitled to notice of or to vote at the shareholders' meeting shall be effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed for the determination of shareholders, the record date shall be the day the notice of the meeting is mailed or the day the action requiring a determination of shareholders is taken. If no record date is fixed for action without a meeting, the record date for determining shareholders entitled to take action without a meeting shall be the date the first shareholder signs a consent to the action taken. Section 6. Lost Certificates. The board of directors must authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken, upon receipt of (a) an affidavit from the person explaining the loss, destruction or wrongful taking, and (b) a bond from the claimant in a sum as the corporation may reasonably direct to indemnify the corporation against loss from any claim with respect to the certificate claimed to have been lost, destroyed or wrongfully taken. The board of directors may, in its discretion, waive the affidavit and bond and authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken. ARTICLE 8 Indemnification of Officers and Directors Section 1. Indemnification Provisions. Any person who at any time serves or has served as a director or officer of the corporation or of any wholly owned subsidiary of the corporation, or in such capacity at the request of the corporation for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under any employee benefit plan of the corporation or of any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be indemnified and held harmless by the corporation to the fullest extent from time to time permitted by law against all liabilities and litigation expenses (as hereinafter defined) in the event a claim shall be made or threatened against that person in, or that person is made or threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of the corporation, including all appeals therefrom (a "proceeding"), arising out of that person's status as such or that person's activities in any such capacity; provided, that such indemnification shall not be effective with respect to (a) that portion of any liabilities or litigation expenses with respect to which the Claimant is entitled to receive payment under any insurance policy or (b) any liabilities or litigation expenses incurred on account of any of the Claimant's activities which were at the time taken known or believed by the Claimant to be clearly in conflict with the best interests of the corporation. Section 2. Definitions. As used in this Article, (a) "liabilities" shall include, without limitation, (1) payments in satisfaction of any judgment, money decree, excise tax, fine or penalty for which the Claimant had become liable in any proceeding and (2) payments in settlement of any such proceeding subject, however, to Section 3 of this Article 8; (b) "litigation expenses" shall include, without limitation, (1) reasonable costs and expenses and attorneys' fees and expenses actually incurred by the Claimant in connection with any proceeding and (2) reasonable costs and expenses and attorneys' fees and expenses in connection with the enforcement of rights to the indemnification granted hereby or by applicable law, if such enforcement is successful in whole or in part; and (c) "disinterested directors" shall mean directors who are not party to the proceeding in question. Section 3. Settlements. The corporation shall not be liable to indemnify the Claimant for any amounts paid in settlement of any proceeding effected without the corporation's written consent. The corporation will not unreasonably withhold its consent to any proposed settlement. Section 4. Litigation Expense Advances. (a) Except as provided in subsection (b) below, any litigation expenses shall be advanced to any Claimant within 30 days of receipt by the secretary of the corporation of a demand therefor, together with an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that Claimant is entitled to be indemnified by the corporation against such expenses. The secretary shall promptly forward notice of the demand and undertaking immediately to all directors of the corporation. (b) Within 10 days after mailing of notice to the directors pursuant to subsection (a) above, any disinterested director may, if desired, call a meeting of all disinterested directors to review the reasonableness of the expenses so requested. No advance shall be made if a majority of the disinterested directors affirmatively determines that the item of expense is unreasonable in amount; but if the disinterested directors determine that a portion of the expense item is reasonable, the corporation shall advance such portion. Section 5. Approval of Indemnification Payments. Except as provided in Section 4 of this Article, the board of directors of the corporation shall take all such action as may be necessary and appropriate to authorize the corporation to pay the indemnification required by Section 1 of this Article, including, without limitation, making a good faith evaluation of the manner in which the Claimant acted and of the reasonable amount of indemnity due the Claimant. In taking any such action, any Claimant who is a director of the corporation shall not be entitled to vote on any matter concerning such Claimant's right to indemnification. Section 6. Suits by Claimant. No Claimant shall be entitled to bring suit against the corporation to enforce his rights under this Article until sixty days after a written claim has been received by the corporation, together with any undertaking to repay as required by Section 4 of this Article. It shall be a defense to any such action that the Claimant's liabilities or litigation expenses were incurred on account of activities described in clause (b) of Section 1, but the burden of proving this defense shall be on the corporation. Neither the failure of the corporation to have made a determination prior to the commencement of the action to the effect that indemnification of the Claimant is proper in the circumstances, nor an actual determination by the corporation that the Claimant had not met the standard of conduct described in clause (b) of Section 1, shall be a defense to the action or create a presumption that the Claimant has not met the applicable standard of conduct. Section 7. Consideration; Personal Representatives and Other Remedies. Any person who during such time as this Article or corresponding provisions of predecessor bylaws is or has been in effect serves or has served in any of the aforesaid capacities for or on behalf of the corporation, shall be deemed to be doing so or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein or therein. The right of indemnification provided herein or therein shall inure to the benefit of the legal representatives of any person who qualifies or would qualify as a Claimant hereunder, and the right shall not be exclusive of any other rights to which the person or legal representative may be entitled apart from this Article. Section 8. Scope of Indemnification Rights. The rights granted herein shall not be limited by the provisions of Section 55-8- 51 of the General Statutes of North Carolina or any successor statute. ARTICLE 9 General Provisions Section 1. Dividends and other Distributions. The board of directors may from time to time declare, and the corporation may pay or make, dividends and other distributions with respect to its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the corporation shall consist of two concentric circles between which is the name of the corporation and in the center of which is inscribed SEAL; and such seal as is impressed in the margin hereof is hereby adopted as the corporate seal of the corporation. Section 3. Waiver of Notice. Whenever notice is required to be given to a shareholder, director or other person under the provisions of these bylaws, the articles of incorporation or by applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the date and time stated in the notice and delivered to the corporation, shall be equivalent to giving the notice. Section 4. Checks. All checks, drafts or orders for the payment of money shall be signed by the officer or officers or other individuals that the board of directors may from time to time designate. Section 5. Contracts. The board of directors may authorize any officer or officers, agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be generally or confined to specific instances. Section 6. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such depositories as the board of directors may select. Section 7. Bond. The board of directors may by resolution require any or all officers, agents and employees of the corporation to give bond to the corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the board. Section 8. Fiscal Year. The fiscal year of the corporation shall be fixed by the board of directors. Section 9. Amendments. Unless otherwise provided in the articles of incorporation or a bylaw adopted by the shareholders or by law, these bylaws may be amended or repealed by the board of directors in accordance with the special voting provisions contained in Article 4, Section 6, except that a bylaw adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the board of directors if neither the articles of incorporation nor a bylaw adopted by the shareholders authorizes the board of directors to adopt, amend or repeal that particular bylaw or the bylaws generally. These bylaws may also be amended or repealed by the board of directors. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed (a) if originally adopted by the shareholders, only by the shareholders, unless such bylaw as originally adopted by the shareholders provides that such bylaw may be amended or repealed by the board of directors of (b) if originally adopted by the board of directors, either by the shareholders or by the board of directors. A bylaw that fixes a greater quorum or voting requirement may not be adopted by the board of directors by a vote less than a majority of the directors then in office and may not itself be amended by a quorum or vote of the directors less than a quorum or vote prescribed in such bylaw or prescribed by the shareholders. THIS IS TO CERTIFY that the above bylaws of Delhaize America, Inc., were duly adopted by the board of directors of the corporation, effective May 4, 1995, and amended by the board of directors of the corporation effective July 3, 1997, and further amended by the shareholders of the corporation effective September 7, 1999 and May 4, 2000, all by action taken at duly called meetings of the board of directors or shareholders as required by the General Statutes of North Carolina. This 5th day of May, 2000. G. Linn Evans G. Linn Evans, Assistant Secretary [Corporate Seal] EX-10.A 3 0003.txt EXECUTION COPY 2000 SHAREHOLDERS' AGREEMENT This 2000 Shareholders' Agreement ("Agreement"), dated as of the 27th day of March, 2000, is among ETABLISSEMENTS DELHAIZE FRERES ET CIE "LE LION" S.A., a Belgian corporation ("Delhaize"), DELHAIZE THE LION AMERICA, INC., a Delaware corporation and wholly owned subsidiary of Delhaize ("Detla"), and DELHAIZE AMERICA, INC., a North Carolina corporation (the "Company"). STATEMENT OF PURPOSE Delhaize and Detla (hereinafter collectively referred to as the "Shareholders") own, in the aggregate, approximately 46.6% percent of the issued and outstanding nonvoting Class A common stock, par value $.50 per share, and 55.6% percent of the issued and outstanding voting Class B common stock, par value $.50 per share, of the Company. The Company recognizes the expertise and experience of the Shareholders in the retail food business and desires to ensure that the Company will continue to benefit from such expertise and experience. The Company and the Shareholders recognize the importance of retaining the current management of the Company, and desire that management should continue to have full responsibility for the day to day management of the Company, subject to the authority of the Board of Directors. The Shareholders and the Company recognize that they have had a mutually beneficial relationship of long- standing (in part by reason of the corporate governance provisions of certain past agreements among the Shareholders and other past and present management shareholders of the Company) and believe that the continuation of such relationship on a long-term basis is in the best interest of the Company. The Shareholders and the Company further recognize that provision must be made for the nomination of independent and certain other directors. The Shareholders and the Company desire to achieve their purposes by entering into this Agreement relating to certain corporate governance matters affecting the Company, including the voting of stock or other securities of the Company now or hereafter owned by the Shareholders. AGREEMENT l. Nomination and Election of Directors. Subject to the fiduciary duties of directors under North Carolina law or except as the Board of Directors of the Company by Special Vote (as defined in Section 3 hereof) shall otherwise direct: (a) Simultaneously with the consummation of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of August 17, 1999, by and between the Company and Hannaford Bros. Co. (the "Merger Agreement"), the Company's Board of Directors shall cause the bylaws of the Company with respect to the Nominating Committee of the Board of Directors to be consistent with the provisions set forth in this paragraph 1. Subject to the consummation of such transactions, the composition of the Nominating Committee, the composition of each slate of directors to be nominated and the other responsibilities of the Nominating Committee shall be as set forth below: (i) The Nominating Committee shall consist of three directors, one of whom shall have been designated by the Shareholders, one of whom shall be the Chief Executive Officer of the Company (or his designee from among the members of the Board of Directors of the Company) and one of whom shall be an independent director; (ii) The slate of directors nominated by the Nominating Committee shall consist of twelve (12) persons, six (6) of whom shall have been proposed by the Chief Executive Officer of Delhaize (hereinafter the "Delhaize Designees"), two (2) of whom shall have been proposed by the Chief Executive Officer of the Company (hereinafter the "CEO Designees"), and four (4) of whom shall be independent directors; (iii) In the event that any director ceases to be a director of the Company, then the Nominating Committee shall nominate an appropriate person to fill such vacancy, selected in the same manner as the director who ceased being director. Thus, in the event a Delhaize Designee ceases to be a director, the vacancy left thereby shall be filled by a new Delhaize Designee; in the event a CEO Designee ceases to be a director, the vacancy left thereby shall be filled by a new CEO Designee; and in the event an independent director ceases to be a director, the vacancy left thereby shall be filled by a new independent director. (iv) The Nominating Committee shall meet at least once a year to determine the proposed slate of directors to be submitted to the annual meeting of shareholders for election. In addition, it shall meet each time a meeting of the shareholders is called for the purpose of electing one or more directors. It shall also meet within thirty (30) days of notice of any vacancy occurring in the Board of Directors to nominate a director to fill such vacancy. It may solicit the views of shareholders of the Company for suggestions with regard to possible independent directors. It will assess the independence of each such candidate (which shall at a minimum require that the candidate not be currently or previously employed, nor currently paid as a consultant, by the Company or its affiliates or officers or by either of the Shareholders or their respective affiliates or officers) and will consider any other potential for conflict of interest of each such candidate. It will determine the appropriate qualifications for directorship and will evaluate candidates against the requisite qualifications; (v) The Nominating Committee shall recommend its slate of directors or any individual nominee to the Board of Directors of the Company. Approval of any such nomination(s) by the Board of Directors shall be by Special Vote. In the event that the Board of Directors fails to approve a slate or any individual nominee proposed by the Nominating Committee, the Nominating Committee shall meet to propose another slate, or nominee, as the case may be, acceptable to the Board of Directors; and (vi) Meetings of the Nominating Committee shall be held at such place as may from time to time be fixed by the Chairman thereof in the Notice of Meeting. Any meeting may be held without notice if all members are present or if notice is waived in writing either before or after the meeting by those not present. Two members of the Nominating Committee shall constitute a quorum and all decisions of the Nominating Committee shall require the affirmative vote of at least two members. The Nominating Committee may take action without a meeting upon unanimous written consent signed by all members of the Nominating Committee. Meetings of the Nominating Committee may be held by means of conference telephone or similar communications equipment and participation in such a meeting shall constitute presence in person at such meeting. (b) Notwithstanding any provision in this paragraph 1 to the contrary, if at any time it is determined that the composition of the Company's Board of Directors does not comply with applicable corporate governance rules contained in Section 3 of the New York Stock Exchange Listed Company Manual or similar rules of any national securities exchange or automated quotation system on which the Company's securities may be listed (the "Requirement"), the Nominating Committee shall meet to determine the action necessary to comply with the Requirement and shall recommend such action, including the nomination of an additional director or additional directors and the removal of any director or directors. The Board of Directors, by Special Vote, shall take such actions as are necessary to comply with the Requirement, but which to the extent possible shall be consistent with the intentions of the parties as set forth in this Agreement. (c) In the event that the Merger Agreement is terminated prior to consummation of the transactions contemplated thereunder, the Company's Board of Directors shall amend the bylaws of the Company with respect to the Nominating Committee of the Board of Directors to be consistent with the provisions set forth in this paragraph 1, except that the following provision shall be included in lieu of paragraph 1(a)(ii) above: "The slate of directors nominated by the Nominating Committee shall consist of ten (10) persons, four (4) of whom shall have been proposed by the Chief Executive Officer of Delhaize (hereinafter the "Delhaize Designees"), two (2) of whom shall have been proposed by the Chief Executive Officer of the Company (hereinafter the "CEO Designees"), and four (4) of whom shall be independent directors"; 2. Voting Agreement. At each election of directors of the Company, the Shareholders shall vote their voting shares as follows: (i) In the event cumulative voting is not in effect for such election, to elect the slate of directors proposed by the Nominating Committee and approved by the Board of Directors; and (ii) In the event cumulative voting is in effect for such election of directors, first, to the extent necessary, to elect the Delhaize Designees and thereafter to retain or remove any such Delhaize Designees as the Shareholders shall direct; second, to the extent possible, to elect the CEO Designees and thereafter to retain or remove any such CEO Designees as the CEO shall direct; and third, to the extent possible, to elect the independent directors nominated by the Nominating Committee and thereafter to retain or remove any such independent directors as the Nominating Committee shall direct. The Shareholders agree not to participate, directly or indirectly, in any effort to cause cumulative voting to be in effect for any election of directors of the Company. 3. Bylaws. (a) During the term of the Agreement, the Company's bylaws shall provide that the Board of Directors may not, without an affirmative vote of at least 70 percent of the directors ("Special Vote"): (A) Approve the nomination of any person or persons for election to the Board of Directors or elect a chief executive officer; (B) Authorize any contract involving payment by the Company of cash or property valued in excess of $500,000, including, without limitation, the purchase, sale or leasing of property or the incurring of indebtedness, except transactions relating to the leasing or construction of stores, warehouses and related facilities or any other transaction in the ordinary course of business; (C) Approve or authorize capital expenditures of more than $500,000 in any one instance or $1,000,000 in the aggregate in any fiscal year, except expenditures relating to the leasing or construction of stores, warehouses and related facilities or any other transaction in the ordinary course of business; (D) Authorize the issuance or sale of stock or other securities of the Company or any subsidiary of the Company, or options or warrants for or obligations convertible into such stock or securities, except the issuance of stock options or stock or both, as the case may be, pursuant to the Company's 1996 Employee Stock Incentive Plan (and, upon adoption, the Company' 2000 Stock Incentive Plan), Employee Stock Purchase Plan and Employee Stock Ownership Plan and other employee benefit plans approved by the Board of Directors; (E) Sell or otherwise dispose of a substantial part of the Company's assets other than in the ordinary course of business; (F) Amend the charter or the bylaws of the Company; or (G) Approve for submission to the shareholders of the Company for their approval a proposal for the amendment of the Company's charter or the merger or consolidation of the Company with or into any other corporation or the reorganization, recapitalization or liquidation of the Company; provided, that any Special Vote approving any action set forth in this paragraph 3(a) may specify other limitations which shall not be exceeded without a further Special Vote. (b) The parties acknowledge that the provisions of subparagraphs 3(a)(B), (C), (E), (F) and (G) are currently set forth in the bylaws of the Company. Subparagraphs 3(a)(A) and 3(a)(D) shall be submitted to the shareholders of the Company at the next annual meeting of the shareholders for approval in accordance with the requirements of North Carolina law as an amendment to, and restatement of, Article 4, Sections 6(a) and (d), respectively, of the bylaws of the Company, and shall not be effective until such approval is granted. The Shareholders shall vote each share of common stock of the Company beneficially owned by them in favor of such approval. Until such time as such amendment and restatement of the bylaws is approved by the requisite shareholder vote of the Company, the current provisions of such sections in the bylaws shall remain in full force and effect. 4. Term. This Agreement shall be effective for a term commencing on the date hereof and ending April 30, 2007; provided that this Agreement shall terminate in the event that the Shareholders' aggregate ownership of voting shares of the Company shall be reduced to less than 10% of the aggregate outstanding voting shares of the Company. 5. Binding Nature. This Agreement shall be binding upon and shall inure to the benefit of the Company, Delhaize and Detla and their respective successors and assigns until the expiration of the term of this Agreement. Any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Delhaize, Detla or the Company shall expressly assume and agree to perform this Agreement in the same manner and to the same extent that the respective parties would be required to perform it if no such succession had taken place. 6. Assignment. Neither this Agreement nor any rights hereunder may be assigned without the prior written consent of the other parties hereto and prior to any assignment the assignee must agree in writing to be bound by the terms and conditions of this Agreement. 7. Governing Law. This Agreement shall be construed in accordance with the laws of the State of North Carolina applicable to contracts made and to be performed entirely within such state. 8. Amendment. This Agreement may be amended, modified, superseded, cancelled, renewed or extended only by a written instrument executed by the parties hereto and, in the case of the Company, approved by a Special Vote of its Board of Directors. 9. Notices. Any notice or communication given pursuant hereto by any of the parties hereto to the other parties shall be in writing and personally delivered or mailed by registered or certified mail or by telegraphic means as follows: If to Delhaize: Etablissements Delhaize Freres et Cie "Le Lion" S.A. rue Osseghem, 53 1080 Brussels, Belgium With a copy to: Carl H. Amon III, Esq. White & Case 1155 Avenue of the Americas New York, New York 10036 If to Detla: Delhaize The Lion America, Inc. Suite 2160 Atlanta Plaza 950 East Pace Ferry Road Atlanta, Georgia 30326 With a copy to: Carl H. Amon III, Esq. White & Case 1155 Avenue of the Americas New York, New York 10036 If to the Company: Delhaize America, Inc. Post Office Box 1330 Salisbury, North Carolina 28145-1330 With a copy to: Richard L. Wyatt, Jr. Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1333 New Hampshire Ave., N.W. Suite 400 Washington, D.C. 20036 or to such other address as hereafter shall be furnished in writing by any Shareholder to the other Shareholders. 10. Entire Agreement. This Agreement sets forth the entire understanding and agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof, including but not limited to the 1994 Shareholders' Agreement, dated as of September 15, 1994, by and among Delhaize, Detla, and the Company, which 1994 Shareholders' Agreement is hereby terminated. 11. No Employment. Nothing contained in this Agreement shall be construed to constitute an employment agreement with regard to any person. 12. Headings. The headings in the Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 13. Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the balance of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. 14. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of such together shall constitute one and the same instrument. [The next page is the signature page] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. ETABLISSEMENTS DELHAIZE FRERES ET CIE "LE LION" S.A. By: Gui de Vaucleroy By: Pierre-Olivier Beckers DELHAIZE THE LION AMERICA, INC. By: Pierre-Olivier Beckers Its: DELHAIZE AMERICA, INC. By: R.William McCanless Its: EX-10.B 4 0004.txt DELHAIZE AMERICA, INC. 2000 STOCK INCENTIVE PLAN (As Adopted March 27, 2000) DELHAIZE AMERICA, INC. 2000 STOCK INCENTIVE PLAN 1. Purpose. The purpose of this Plan is to provide an incentive to the employees, individuals who have accepted an offer of employment, officers, consultants and eligible directors of Delhaize America, Inc., a North Carolina corporation (the "Company"), and thereby encourage them to devote their abilities and industry to the success of the Company's business enterprise. It is intended that this purpose be achieved by extending to employees, individuals who have accepted an offer of employment, officers, consultants and directors of the Company and its Subsidiaries an added long-term incentive for high levels of performance and unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock Options and Restricted Stock (as each term is herein defined). 2. Definitions. For purposes of the Plan: 2.1. "Agreement" means the written agreement between the Company and an Optionee or Grantee evidencing the grant of an Option or Award and setting forth the terms and conditions thereof. 2.2. "Award" means a grant of Restricted Stock. 2.3. "Board" means the Board of Directors of the Company. 2.4. "Change in Capitalization" means any increase or reduction in the number of Shares, or any change (including, but not limited to, a change in value) in the Shares or exchange of Shares for a different number or kind of shares or other securities of the Company or another corporation, by reason of a reclassification, recapitalization, merger, consolidation, reorganization, reincorporation, spin-off, split-up, issuance of warrants or rights or debentures, stock dividend, stock split or reverse stock split, cash dividend, property dividend, combination or exchange of shares, repurchase of shares, change in corporate structure or otherwise. 2.5. "Code" means the Internal Revenue Code of 1986, as amended. 2.6. "Committee" means the committee, as described in Section 3.1, appointed by the Board from time to time to administer the Plan and to perform the functions set forth herein. 2.7. "Company" means Delhaize America, Inc. 2.8. "Director" means a director of the Company. 2.9. "Disability" means: (a) in the case of an Optionee or Grantee whose employment with the Company or a Subsidiary is subject to the terms of an employment agreement between such Optionee or Grantee and the Company or Subsidiary, which employment agreement includes a definition of "Disability," the term "Disability" as used in this Plan or any Agreement shall have the meaning set forth in such employment agreement during the period that such employment agreement remains in effect; and (b) in all other cases, the term "Disability" as used in this Plan or any Agreement shall mean a physical or mental infirmity which impairs the Optionee's or Grantee's ability to perform substantially his or her duties for a period of one hundred eighty (180) consecutive days. 2.10. "Division" means any of the operating units or divisions of the Company designated as a Division by the Committee. 2.11. "EBITDA" means earnings before interest, taxes, depreciation and amortization. 2.12. "Eligible Director" means a director of the Company who is not an employee of the Company or any Subsidiary. 2.13. "Eligible Individual" means any director (other than an Eligible Director), officer, employee of the Company or a Subsidiary or individual who has accepted an offer of employment from the Company or a Subsidiary, or any consultant of the Company or a Subsidiary, designated by the Committee as eligible to receive Options or Awards subject to the conditions set forth herein. 2.14. "Exchange Act" means the Securities Exchange Act of 1934, as amended. 2.15. "Fair Market Value" on any date means the closing sales price of the Shares on such date on the principal national securities exchange on which such Shares are listed or admitted to trading, or, if such Shares are not so listed or admitted to trading, the average of the per Share closing bid price and per Share closing asked price on such date as quoted on the National Association of Securities Dealers Automated Quotation System or such other market in which such prices are regularly quoted, or, if there have been no published bid or asked quotations with respect to Shares on such date, the Fair Market Value shall be the value established by the Board in good faith and, in the case of an Incentive Stock Option, in accordance with Section 422 of the Code. 2.16. "Grantee" means a person to whom an Award has been granted under the Plan. 2.17. "Incentive Stock Option" means an Option satisfying the requirements of Section 422 of the Code and designated by the Committee as an Incentive Stock Option. 2.18. "Nonemployee Director" means a director of the Company who is a "nonemployee director" within the meaning of Rule 16b-3 promulgated under the Exchange Act. 2.19. "Nonqualified Stock Option" means an Option that is not an Incentive Stock Option. 2.20. "Option" means a Nonqualified Stock Option or an Incentive Stock Option or either or both of them. 2.21. "Optionee" means a person to whom an Option has been granted under the Plan. 2.22. "Outside Director" means a director of the Company who is an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder. 2.23. "Parent" means any corporation that is a parent corporation (within the meaning of Section 424(e) of the Code) with respect to the Company. 2.24. "Performance Cycle" means the time period specified by the Committee at the time a performance-based Award is granted during which the performance of the Company, a Subsidiary or a Division will be measured. 2.25. "Performance Objectives" has the meaning set forth in Section 6.4(b) hereof. 2.26. "Plan" means the Delhaize America, Inc. 2000 Stock Incentive Plan, as amended and restated from time to time. 2.27. "Reload Option" means an Option that may be granted when an Optionee pays all or a portion of the purchase price and withholding taxes of an Option with previously owned Shares. 2.28. "Restricted Stock" means Shares issued or transferred to an Eligible Individual or Eligible Director pursuant to Section 6 hereof. 2.29. "Shares" means the Class A common stock, par value $0.50 per share, of the Company. 2.30. "Subsidiary" means any corporation that is a subsidiary corporation (within the meaning of Section 424(f) of the Code) with respect to the Company, including any limited liability company that is disregarded for Federal tax purposes or treated as a corporate subsidiary under the Code. 2.31. "Ten-Percent Stockholder" means an Eligible Individual, who, at the time an Incentive Stock Option is to be granted to him or her, owns (within the meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, or of a Parent or a Subsidiary. 3. Administration. 3.1. The authority to control and manage the operation and administration of the Plan shall be vested in the Committee, which shall hold meetings at such times as may be necessary for the proper administration of the Plan. The Committee shall keep minutes of its meetings. A quorum shall consist of a majority of the members of the Committee, and a majority of a quorum may authorize any action. The foregoing notwithstanding, with respect to Options or Awards that: (i) are intended to qualify as "performance-based" under Section 162(m) of the Code, and/or (ii) are granted to individuals who qualify as "insiders" under Section 16 of the Exchange Act, (A) any Committee members who do not qualify as "Outside Directors" and/or "Nonemployee Directors," as the case may be, shall have no authority to act and shall automatically be recused from any action with respect to Options or Awards, and (B) the remaining qualifying directors shall be authorized to act independently without further approval. No member of the Committee shall be liable for any action, failure to act, determination or interpretation made in good faith with respect to this Plan or any transaction hereunder, except for liability arising from his or her own willful misfeasance, gross negligence or reckless disregard of his or her duties. The Company hereby agrees to indemnify each member of the Committee for all costs and expenses and, to the extent permitted by applicable law, any liability incurred in connection with defending against, responding to, negotiating for the settlement of or otherwise dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering this Plan or in authorizing or denying authorization to any transaction hereunder. Notwithstanding the foregoing, if the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee; provided, however, that if any members of the Board do not qualify as Outside Directors, only the Committee appointed above may grant Options or Awards that are intended to be performance-based under Section 162(m). 3.2. Subject to the express terms and conditions set forth herein, the Committee shall have the power from time to time to: (a) determine those Eligible Individuals and Eligible Directors to whom Options shall be granted under the Plan and the number of such Options to be granted and to prescribe the terms and conditions (which need not be identical) of each such Option, including the purchase price per Share subject to each Option, and make any amendment or modification to any Option Agreement consistent with the terms of the Plan; (b) select those Eligible Individuals and Eligible Directors to whom Awards shall be granted under the Plan and determine the number of Shares to be granted pursuant thereto, determine the terms and conditions of each Award including the restrictions or Performance Objectives relating to Shares, and to make any amendment or modification to any Agreement consistent with the terms of the Plan; (c) construe and interpret the Plan, Options and Awards granted hereunder and to establish, amend and revoke rules and regulations for the administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable so that the Plan complies with applicable law including Rule 16b-3 under the Exchange Act and the Code to the extent applicable, and otherwise to make the Plan fully effective. All decisions and determinations by the Committee in good faith in the exercise of this power shall be final, binding and conclusive upon the Company, its Subsidiaries, the Optionees and Grantees, and all other persons having any interest therein; (d) determine the duration and purposes for leaves of absence which may be granted to an Optionee or Grantee on an individual basis without constituting a termination of employment or service for purposes of the Plan; (e) exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan; (f) except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any part of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, which allocation or delegation may be revoked by the Committee at any time; and (g) generally, to exercise such powers and to perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan. 4. Stock Subject to the Plan. 4.1. The Shares subject to Options and Awards that shall be reserved for the purposes of the Plan, shall be from the Company's authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board. An aggregate of 8,000,000 Shares may be issued or transferred pursuant to this Plan plus the number of Shares that have not been awarded under the 1996 Employee Stock Incentive Plan of Food Lion, Inc. (the "1996 Plan") as of the Effective Date (including those that may be forfeited or cancelled under the 1996 Plan after the effective date of this Plan). No employee shall be granted in any calendar year Options to purchase more than 400,000 Common Shares. No Eligible Individual may be awarded more than 150,000 Shares of Restricted Stock that are intended to be performance-based compensation in any calendar year. No more than 8,000,000 Shares shall be granted pursuant to Options intended to be Incentive Stock Options. In the event of a Change in Capitalization, the Board or Committee shall conclusively determine the appropriate adjustments, if any, to (i) the maximum number of Shares with respect to which Options and Awards may be granted, (ii) the maximum number of Shares or other stock or securities with respect to which Options or Awards may be granted in any calendar year, (iii) the maximum number of Shares which may be granted pursuant to Incentive Stock Options, (iv) the number of Shares or other stock or securities which are subject to outstanding Options or Awards and the purchase price therefor, if applicable, and (v) the Performance Objectives. In connection with the grant of an Option or an Award, the number of Shares available for grant under the Plan shall be reduced by the number of Shares in respect of which the Option or Award is granted. 4.2. Whenever any outstanding Option or Award or portion thereof expires, is canceled or is otherwise terminated for any reason without having been exercised or without payment having been made in respect of the entire Option or Award, the Shares allocable to the expired, canceled or otherwise terminated portion of the Option or Award may again be the subject of Options or Awards granted hereunder. 4.3. Whenever any portion of an Option under this Plan or the 1996 Plan is paid for with previously held Shares (by either actual delivery or attestation), only the difference between (i) the number of Shares issued upon exercise and (ii) the number of Shares transferred in payment of the purchase price shall be counted for purposes of determining the maximum number of Shares available for grant under the Plan. 5. Option Grants. 5.1. Authority of Committee. Subject to the provisions of the Plan, the Committee, or the persons to whom authority has been delegated under Paragraph (f) of Section 3.2 hereof, shall have full and final authority to select those Eligible Individuals and Eligible Directors who will receive Options, and the terms and conditions that shall be set forth in the applicable Agreements. Some terms and conditions that may, but are not required to be included are: a provision allowing the issuance of a Reload Option and a provision providing acceleration of exercisability under certain conditions as may be determined by the Committee. Other terms and conditions not inconsistent with this Plan may be included in Agreements in the discretion of the Committee. 5.2. Purchase Price. The purchase price or the manner in which the purchase price is to be determined for Shares under each Option shall be determined by the Committee and set forth in the Agreement; provided, however, that the purchase price per Share under each Incentive Stock Option shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (110% in the case of an Incentive Stock Option granted to a Ten-Percent Stockholder). 5.3. Maximum Duration. Options granted hereunder shall be for such term as the Committee shall determine, provided that an Incentive Stock Option shall not be exercisable after the expiration of ten (10) years from the date it is granted (five (5) years in the case of an Incentive Stock Option granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not be exercisable after the expiration of ten (10) years from the date it is granted. The Committee may, subsequent to the granting of any Option, extend the term thereof, but in no event shall the term as so extended exceed the maximum term provided for in the preceding sentence. 5.4. Vesting. Each Option shall become exercisable in such installments (which need not be equal) and at such times as may be designated by the Committee and set forth in the Agreement. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires. The Committee may accelerate the exercisability of any Option or portion thereof at any time. 5.5. Modification. No modification of an Option shall adversely alter or impair any rights or obligations under the Option without the Optionee's consent. 5.6. Non-Transferability. Unless set forth in the Agreement evidencing the Option (other than an Incentive Stock Option) at the time of grant or at any time thereafter, an Option granted hereunder shall not be transferable by the Optionee to whom granted except by will or the laws of descent and distribution or pursuant to a domestic relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act), and an Option may be exercised during the lifetime of such Optionee only by the Optionee or his or her guardian or legal representative. The terms of such Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Optionee. 5.7. Method of Exercise. The exercise of an Option shall be made only by a written notice delivered in person or by mail to the Secretary of the Company at the Company's principal executive office, specifying the number of Shares to be purchased and accompanied by payment therefor and otherwise in accordance with the Agreement pursuant to which the Option was granted. The purchase price for any Shares purchased pursuant to the exercise of an Option shall be paid, as determined by the Committee in its discretion, in either of the following forms (or any combination thereof): (i) cash or (ii) the transfer or attestation of Shares that have been held at least six months to the Company upon such terms and conditions as determined by the Committee. In addition, Options may be exercised through a registered broker-dealer pursuant to such cashless exercise procedures (other than Share withholding) which are, from time to time, deemed acceptable by the Committee, and the Committee may authorize that the purchase price payable upon exercise of an Option may be paid by having Shares withheld that otherwise would be acquired upon such exercise. Any Shares transferred to the Company (or withheld upon exercise) as payment of the purchase price under an Option shall be valued at their Fair Market Value on the date of exercise of such Option. The value of the number of Shares that may be withheld for the payment of taxes may not be in excess of the minimum withholding requirements. At the Company's request, the Optionee shall deliver the Agreement evidencing the Option to the Secretary of the Company who shall endorse thereon a notation of such exercise and return such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued upon exercise of an Option and the number of Shares that may be purchased upon exercise shall be rounded to the nearest number of whole Shares. The Committee, in its discretion, may also permit simultaneous sale of Shares upon exercise through a broker-dealer. 5.8. Rights of Optionees. Optionee shall not be deemed for any purpose to be the owner of any Shares subject to any Option unless and until (i) the Option shall have been exercised pursuant to the terms thereof, (ii) the Company shall have issued and delivered Shares to the Optionee, and (iii) the Optionee's name shall have been entered as a stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such Shares, subject to such terms and conditions as may be set forth in the applicable Agreement. 6. Restricted Stock. 6.1. Grant. The Committee may grant Awards to Eligible Individuals and Eligible Directors, which shall be evidenced by an Agreement between the Company and the Grantee. Each Agreement shall contain such restrictions, terms and conditions as the Committee may, in its discretion, determine and (without limiting the generality of the foregoing) such Agreements may require that an appropriate legend be placed on Share certificates. Awards shall be subject to the terms and provisions set forth below in this Section 6. 6.2. Rights of Grantee. Shares of Restricted Stock granted pursuant hereunder shall be recorded in the name of the Grantee as soon as reasonably practicable after the Award is granted provided that the Grantee has executed an Agreement evidencing the Award and any other documents which the Committee may require as a condition to the issuance of such Shares. If a Grantee shall fail to execute the Agreement evidencing an Award or any other documents which the Committee may require within the time period prescribed by the Committee at the time the Award is granted, the Award shall be null and void. Unless the Committee determines otherwise and as set forth in the Agreement, the Grantee shall have no rights of a stockholder with respect to such Shares, including no right to vote the Shares or receive dividends or other distributions with respect to the Shares, until the restrictions with respect to such Shares shall have lapsed in the manner set forth in Section 6.4. 6.3. Non-transferability. Until all restrictions upon the Shares of Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth in Section 6.4, such Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated, nor shall they be delivered to the Grantee. 6.4. Lapse of Restrictions. (a) Generally. Restrictions upon Shares of Restricted Stock awarded hereunder shall lapse at such time or times and on such terms and conditions as the Committee may determine. The Agreement evidencing the Award shall set forth any such restrictions. The Board may accelerate the lapse of all or a portion of the restrictions on an Award at any time. (b) Performance Objectives. If the Committee has determined that the restrictions on Shares of Restricted Stock awarded shall only lapse in accordance with Performance Objectives, the Performance Objectives may be expressed in terms of (i) earnings per Share, (ii) Share price, (iii) pre- tax profits, (iv) net earnings, (v) return on equity or assets, (vi) revenues, (vii) EBITDA, (viii) market share or market penetration or (ix) any combination of the foregoing. Performance Objectives may be in respect of the performance of the Company and its Subsidiaries (which may be on a consolidated basis), a Subsidiary or a Division. Performance Objectives may be absolute or relative and may be expressed in terms of a progression within a specified range. The Performance Objectives with respect to a Performance Cycle shall be established in writing by the Committee by the earlier of (i) the date on which a quarter of the Performance Cycle has elapsed or (ii) the date which is ninety (90) days after the commencement of the Performance Cycle, and in any event while the performance relating to the Performance Objectives remain substantially uncertain. At the time of grant of a performance-base Award, and to the extent permitted under Section 162(m) of the Code and the regulations thereunder, the Committee may provide for the manner in which the Performance Objectives will be measured to reflect the impact of specified corporate transactions, extraordinary events, accounting changes and other similar events. Prior to the vesting, payment, settlement or lapsing of any restrictions with respect to any Award that is intended to be performance-based compensation, made to a Grantee who is subject to Section 162(m) of the Code, the Committee shall certify in writing that the applicable Performance Objectives have been satisfied. 6.5. Delivery of Shares. Upon the lapse of the restrictions on Shares of Restricted Stock, the Committee shall cause a stock certificate to be delivered to the Grantee with respect to such Shares, free of all restrictions hereunder. 7. Effect of a Termination of Employment. The Agreement evidencing the grant of each Option and each Award shall set forth the terms and conditions applicable to such Option or Award upon a termination or change in the status of the employment of the Optionee or Grantee by the Company, a Subsidiary or a Division which shall be as the Committee may, in its discretion, determine at the time the Option or Award is granted or thereafter. 8. Adjustment Upon Changes in Capitalization. 8.1. Adjustments to Incentive Stock Options. Any adjustment that may be made pursuant to Section 4.1 hereof in the Shares or other stock or securities subject to outstanding Incentive Stock Options upon a Change in Capitalization, (including any adjustments in the purchase price) shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to the extent otherwise permitted by Sections 422 and 424 of the Code. 8.2. Terms of Adjusted Options and Awards. If, by reason of a Change in Capitalization, a Grantee of an Award shall be entitled to, or an Optionee shall be entitled to exercise an Option with respect to, new, additional or different shares of stock or securities, such new, additional or different shares shall thereupon be subject to all of the conditions, restrictions and performance criteria which were applicable to the Shares subject to the Award or Option, as the case may be, prior to such Change in Capitalization. 9. Effect of Certain Transactions. Except as otherwise provided in an Agreement, in the event of (i) the liquidation or dissolution of the Company or (ii) a merger or consolidation of the Company (a "Transaction"), the Plan and the Options and Awards issued hereunder shall continue in effect in accordance with their respective terms, except that following a Transaction each Optionee and Grantee shall be entitled to receive in respect of each Share subject to any outstanding Options or Awards, as the case may be, upon exercise of any Option or payment or transfer in respect of any Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of a Share was entitled to receive in the Transaction in respect of a Share; provided, however, that such stock, securities, cash, property or other consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the Options and Awards prior to such Transaction. 10. Interpretation. 10.1. Rule 16b-3. The Plan is intended to comply with Rule 16b-3 promulgated under the Exchange Act, and the Committee shall interpret and administer the provisions of the Plan or any Agreement in a manner consistent therewith. Any provisions inconsistent with such Rule shall be inoperative and shall not affect the validity of the Plan. 10.2. Section 162(m). Unless otherwise expressly stated in the relevant Agreement, each Option and Award subject to Performance Objectives granted to an Eligible Individual who may be a "covered employee" under Section 162(m) of the Code is intended to be performance-based compensation within the meaning of Section 162(m)(4)(C) of the Code. The Committee shall not be entitled to exercise any discretion otherwise authorized hereunder with respect to any such Options or Awards if the ability to exercise such discretion or the exercise of such discretion itself would cause the compensation attributable to such Options or Awards to fail to qualify as performance-based compensation. 11. Termination and Amendment of the Plan. The Plan shall terminate on the day preceding the tenth anniversary of the date of its adoption by the Board and no Option or Award may be granted thereafter. The Board may sooner terminate the Plan and the Board may at any time and from time to time amend, modify or suspend the Plan; provided, however, that: (a) no such amendment, modification, suspension or termination shall impair or adversely alter any Options or Awards theretofore granted under the Plan, except with the consent of the Optionee or Grantee, nor shall any amendment, modification, suspension or termination deprive any Optionee or Grantee of any Shares which he or she may have acquired through or as a result of the Plan; and (b) to the extent necessary under applicable law, no amendment shall be effective unless approved by the stockholders of the Company in accordance with applicable law. 12. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. 13. Limitation of Liability. As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to: (i) give any person any right to be granted an Option or Award other than at the sole discretion of the Committee; (ii) give any person any rights whatsoever with respect to Shares except as specifically provided in the Plan; (iii) limit in any way the right of the Company or any Subsidiary to terminate the employment of any person at any time; or (iv) be evidence of any agreement or understanding, expressed or implied, that the Company will employ any person at any particular rate of compensation or for any particular period of time. 14. Regulations and Other Approvals; Governing Law. 14.1. Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of North Carolina without giving effect to conflicts of laws principles thereof. 14.2. The obligation of the Company to sell or deliver Shares with respect to Options and Awards granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee. 14.3. The Board may make such changes as may be necessary or appropriate to comply with the rules and regulations of any government authority, or to obtain for Eligible Individuals granted Incentive Stock Options the tax benefits under the applicable provisions of the Code and regulations promulgated thereunder. 14.4. Each Option and Award is subject to the requirement that, if at any time the Committee determines, in its discretion, that the listing, registration or qualification of Shares issuable pursuant to the Plan is required by 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 an Option or Award or the issuance of Shares, no Options or Awards shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions as acceptable to the Committee. 14.5. Notwithstanding anything contained in the Plan or any Agreement to the contrary, in the event that the disposition of Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities Act and Rule 144 or other regulations thereunder. The Committee may require any individual receiving Shares pursuant to an Option or Award granted under the Plan, as a condition precedent to receipt of such Shares, to represent and warrant to the Company in writing that the Shares acquired by such individual are acquired without a view to any distribution thereof and will not be sold or transferred other than pursuant to an effective registration thereof under said Act or pursuant to an exemption applicable under the Securities Act or the rules and regulations promulgated thereunder. The certificates evidencing any of such Shares shall be appropriately amended to reflect their status as restricted securities as aforesaid. 15. Miscellaneous. 15.1. Multiple Agreements. The terms of each Option or Award may differ from other Options or Awards granted under the Plan at the same time, or at some other time. The Committee may also grant more than one Option or Award to a given Eligible Individual or Eligible Director during the term of the Plan, either in addition to, or in substitution for, one or more Options or Awards previously granted to that Eligible Individual or Eligible Director. 15.2. Withholding of Taxes. (a) At such times as an Optionee or Grantee recognizes taxable income in connection with the receipt of Shares or cash hereunder (a "Taxable Event"), the Optionee or Grantee shall pay to the Company an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld by the Company in connection with the Taxable Event (the "Withholding Taxes") prior to the issuance of such Shares or the payment of such cash. The Company shall have the right to deduct from any payment of cash to an Optionee or Grantee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to the Company, the Optionee or Grantee may make a written election (the "Tax Election"), which may be accepted or rejected in the discretion of the Committee, to have withheld a portion of the Shares then issuable to him or her having an aggregate Fair Market Value equal to the Withholding Taxes. (b) If an Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any Share or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock Option within the two- year period commencing on the day after the date of the grant or within the one-year period commencing on the day after the date of transfer of such Share or Shares to the Optionee pursuant to such exercise, the Optionee shall, within ten (10) days of such disposition, notify the Company thereof, by delivery of written notice to the Company at its principal executive office. 15.3. Effective Date. The effective date of this Plan (the "Effective Date") shall be March 27, 2000 subject only to the approval by the affirmative vote of the holders of a majority of the securities of the Company present, or represented, and entitled to vote at a meeting of stockholders duly held in accordance with the applicable laws of the State of North Carolina within twelve (12) months of the adoption of the Plan by the Board. EX-27 5 0005.txt
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets, the Consolidated Statements of Income and the Consolidated Statement of Cash Flows and is qualified in its entirety by reference to such financial statments. 1,000 6-MOS DEC-30-2000 JAN-02-2000 JUN-17-2000 100,573 0 222,586 0 1,178,395 1,614,977 3,516,633 1,409,265 3,993,480 1,193,142 426,654 0 0 233,725 1,526,092 3,993,480 5,126,358 5,126,358 3,944,697 3,944,697 0 0 55,374 201,065 76,408 124,657 0 0 0 124,657 0.80 0.80
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