-----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, DAUqVTl1MHLdIStwdPgsSbmAJRA6BEvSHStD4ul6haHoV5mY8h3EQ2rGOC8JW7C6 TdSjKpEewm99vk43QtFhyg== 0000906280-96-000134.txt : 19961120 0000906280-96-000134.hdr.sgml : 19961120 ACCESSION NUMBER: 0000906280-96-000134 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961115 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELCHAMPS INC CENTRAL INDEX KEY: 0000729970 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 630245434 STATE OF INCORPORATION: AL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12923 FILM NUMBER: 96667195 BUSINESS ADDRESS: STREET 1: 305 DELCHAMPS DR STREET 2: P O BOX 1668 CITY: MOBILE STATE: AL ZIP: 36602 BUSINESS PHONE: 2054330431 MAIL ADDRESS: STREET 1: 305 DELCHAMPS DR STREET 2: PO BOX 1668 CITY: MOBILE STATE: AL ZIP: 36602 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 13-Week Period Ended September 28, 1996 Commission File Number 0-12923 Delchamps, Inc. ----------------------------------------- (Exact name of registrant as specified in its charter) Alabama 63-0245434 - ----------------------------------- -------------------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 305 Delchamps Drive, Mobile, AL 36602 - ----------------------------------- -------------------------------- (Address of principal executive (Zip code) offices) (334) 433-0431 - ----------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ----- ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 7,113,536 shares at November 4, 1996. DELCHAMPS, INC. AND SUBSIDIARY INDEX Page No. --------------- Part 1. Financial Information Item 1. Financial Statements Condensed Balance Sheets - September 28, 1996 and June 29, 1996 1 Condensed Statements of Earnings - Thirteen Weeks Ended September 28, 1996 and September 30, 1995 2 Condensed Statements of Cash Flows - Thirteen Weeks Ended September 28, 1996 and September 30, 1995 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II. Other Information Item 1. Legal Proceedings 7 Item 2. Changes in Securities 7 Item 3. Default upon Senior Securities 7 Item 4. Submission of Matters to a Vote of Security Holders 7 Item 5. Other Information 7 Item 6. Exhibits and Reports on Form 8-K 7 Signatures 8 Part I. Financial Information DELCHAMPS, INC. AND SUBSIDIARY Condensed Balance Sheets - (In thousands) (Unaudited)
September 28, 1996 June 29, 1996* ------------------ ------------------ Amount %Assets Amount %Assets -------- --------- -------- --------- ASSETS - ------ Current assets: Cash and cash equivalents $ 6,471 2.61 10,503 4.12 Trade accounts receivable 8,141 3.28 8,422 3.30 Merchandise inventories 90,940 36.65 90,797 35.58 Prepaid expenses 2,371 0.96 1,376 0.54 Income taxes receivable 0 0.00 764 0.30 Deferred income taxes 3,878 1.56 3,878 1.52 ----------- -------- ---------- -------- Total current assets 111,801 45.06 115,740 45.36 Property and equipment: Land 15,017 6.05 15,210 5.96 Buildings and improvements 58,431 23.55 58,111 22.77 Fixtures and equipment 223,251 89.97 221,090 86.64 Construction in progress 8,551 3.44 9,771 3.83 ----------- -------- ---------- -------- 305,250 123.01 304,182 119.20 Less accumulated depreciation and amortization (171,080) (68.94) (166,931) (65.42) ----------- -------- ---------- -------- Net property and equipment 134,170 54.07 137,251 53.78 Other assets 2,171 0.87 2,192 0.86 ----------- -------- ---------- -------- Total assets $ 248,142 100.00 $ 255,183 100.00 =========== ======== ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Notes payable $ 15,000 6.04 14,000 5.49 Current portion of obligations under capital leases 749 0.30 749 0.29 Current portion of long-term debt 3,760 1.52 3,760 1.47 Current portion of restructure obligation 3,996 1.61 3,996 1.57 Accounts payable 43,220 17.42 48,308 18.93 Accrued expenses 23,464 9.46 22,860 8.96 Income taxes 432 0.17 - - ----------- -------- ---------- -------- Total current liabilities 90,621 36.52 93,673 36.71 Obligations under capital leases, excluding current portion 10,219 4.12 10,398 4.07 Long-term debt, excluding current portion 9,898 3.99 10,839 4.25 Restructure obligation, excluding current 14,923 6.01 15,668 6.14 Deferred income taxes 7,741 3.12 9,225 3.62 Other liabilities 2,361 0.95 2,455 0.96 ----------- -------- ---------- -------- Total liabilities 135,763 54.71 142,258 55.75 Stockholders' equity: Junior participating preferred stock of no par value - authorized 5,000,000 shares; no shares issued - - - - Common stock of $.01 par value - authorized 25,000,000 shares; issued 7,112,940 shares at September 28, 1996 and 7,112,320 shares at June 29, 1996 71 0.03 71 0.03 Additional paid-in capital 19,671 7.93 19,657 7.70 Retained earnings 92,781 37.39 93,359 36.59 ----------- -------- ---------- -------- 112,523 45.35 113,087 44.32 Less: Unamortized restricted stock award (144) (0.06) (162) (0.07) ----------- -------- ---------- -------- Total stockholders' equity 112,379 45.29 112,925 44.25 Total liabilities and stockholders' equity $ 248,142 100.00 $ 255,183 100.00 =========== ======== ========== ========
See accompanying notes to condensed financial statements. * Condensed from Balance Sheet included in the 1996 Annual Report. DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Earnings - (In thousands except per share amounts) (Unaudited) Thirteen Weeks Ended ----------------------------------------- 09/28/96 09/30/95 ------------------- ------------------- Amount % Sales Amount % Sales Sales $ 289,699 100.00 284,689 100.00 Cost of sales 224,332 77.44 220,996 77.63 --------- ------- -------- ------- Gross profit 65,367 22.56 63,693 22.37 Selling, general and administrative expenses 63,721 21.99 63,033 22.14 --------- ------- -------- ------- Operating income 1,646 0.57 660 0.24 Interest expense, net 1,303 0.45 1,784 0.63 --------- ------- -------- ------- Earnings (loss) before income tax 343 0.12 (1,124) (0.39) Income tax expense (benefit) 139 0.05 (368) (0.12) --------- ------- -------- ------- Net earnings (loss) $ 204 0.07 (756) (0.27) ========= ======= ======== ======= Net earnings (loss) per common share $ 0.03 $ (0.11) ======== ======== Weighted average number of common shares 7,113 7,109 ======== ======== Dividends declared per common share $ 0.11 0.11 ======== ======== See accompanying notes to condensed financial statements. DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Cash Flows - (In thousands) Increase (Decrease) In Cash and Cash Equivalents (Unaudited) Thirteen Weeks Ended ------------------------ 09/28/96 09/30/95 -------- -------- Cash flows from operating activities: Net earnings (loss) $ 204 (756) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 5,026 5,189 Loss (gain) on sale of property and equipmen 19 (85) Loss reserve on closed stores (94) (164) Restricted stock award compensation expense 18 20 Restructure obligation payments (745) (1,162) (Increase) decrease in merchandise inventories (143) 2,069 Decrease in accounts payable and accrued expenses (4,484) (5,563) Decrease in income taxes receivable, net 1,196 951 Other, net (2,184) (2,656) ------- ------- Net cash flows used in operating activities (1,187) (2,157) Cash flows from investing activities: Additions to property and equipment (2,229) (4,569) Proceeds from sale of property and equipment 286 188 ------- ------- Net cash used in investing activities (1,943) (4,381) Cash flows from financing activities: Proceeds from notes payable 1,000 - Principal payments on obligations under capital leases (179) (159) Principal payments on long-term debt (941) (940) Dividends paid (782) (782) ------- ------- Net cash used in financing activities (902) (1,881) Net decrease in cash and cash equivalents (4,032) (8,419) Beginning of period cash and cash equivalents 10,503 15,906 ------- ------- End of period cash and cash equivalents $ 6,471 7,487 ======= ======= Supplemental Disclosures of Cash Flow Information: Cash paid for: Interest expenses $ 1,412 1,880 ======= ======= Income taxes $ 565 - ======= ======= See accompanying notes to condensed financial statements. DELCHAMPS, INC. AND SUBSIDIARY Notes to Condensed Financial Statements (Unaudited) (A) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements include the results of operations, account balances and cash flows of the Company and its wholly-owned subsidiary. All material intercompany balances have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly, in all material respects, the results of operations of the Company for the periods presented. The statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the accompanying notes included in the Company's 1996 Annual Report. The balance sheet at June 29, 1996 has been taken from the audited financial statements at that date. (B) Reclassifications ----------------- Certain reclassifications have been made in the prior year's financial statements to conform to classifications used in the current year. Management's Discussion And Analysis Of Financial Condition And Results Of Operations RESULTS OF OPERATIONS Sales: - ----- Sales increased 1.76% for the thirteen-week period compared with the corresponding period last year. Sales of stores open during both the current and prior year periods ("same store sales") increased 0.11%. The small increase in same store sales was because of high sales levels achieved during last year's quarter. Last year's quarterly sales were favorably impacted by a promotion in which prices were lowered on thousands of items. Last year's same store sales increased 7.02%. At September 28, 1996, the Company operated 119 supermarkets and ten liquor stores compared with 116 supermarkets and ten liquor stores at September 30, 1995. During the thirteen-week period, the Company opened one new supermarket and acquired one supermarket from Schwegmann Giant Supermarkets. Gross Profit: - ------------ Gross profit as a percentage of sales increased from 22.37% to 22.56% for the current thirteen-week period. The increase was primarily the result of increased levels of buying allowances from vendors. Selling, General and Administrative Expenses ("SG & A"): - ------------------------------------------------------- Selling, general and administrative expenses in dollars increased by $.69 million over last year's quarter. This increase in dollars is small considering the Company operated additional supermarkets in the current year's quarter. The Company has continued implementing cost reductions in all areas of the business. Specifically, labor costs, bag costs, and store supply costs all decreased as compared to last year's quarter (even though the Company operated additional stores in the current quarter.) Selling, general and administrative expenses as a percentage of sales decreased from 22.14% to 21.99% for the current thirteen-week period. The decrease resulted from higher sales in the current thirteen-week period combined with certain cost reductions as noted above. Interest Expense, Net - --------------------- Interest expense, net decreased by $.48 million over last year's quarter because of lower levels of long-term indebtedness which resulted from scheduled debt payments and lower levels of short-term indebtedness under the Company's revolving credit facility. Income Taxes: - ------------ The effective rate for income tax expense was 40.52% compared to an effective rate of 32.74% for last year's income tax benefit. The effective rate in the current year's quarter exceeded the statutory tax rate because of the low level of earnings combined with certain expenses which were not deductible for tax purposes. LIQUIDITY AND CAPITAL RESOURCES Cash flows used in operating activities were $1.187 million for the current year's quarter and $2.157 million for last year's quarter. Historically, the Company has funded working capital requirements, capital requirements, and other cash requirements primarily through cash flows from operations. However, if an insufficient amount of cash flows are generated, the Company may draw on a short-term revolving loan. The Company may borrow up to $75 million under the revolving loan of which $60 million is available for future use. The revolving loan expires June, 1998. Cash used in investing activities was $1.943 million for the current year's quarter and $4.381 million for last year's quarter. The decrease in investing activities was because of reductions in purchases of equipment for new supermarkets, reductions in purchases of equipment for expanded supermarkets, and reductions in purchases of equipment for the Company's distribution facility. Cash used in financing activities was $.902 million for the current year's quarter and $1.881 million for last year's quarter. The decrease as compared to last year's period was because of increased borrowings under the Company's short-term revolving loan. At the end of the quarter ended September 28, 1996, the Company was in compliance with all financial covenants under the revolving loan agreement and its long-term debt agreement. PART II. OTHER INFORMATION Item 1. Legal Proceedings For the thirteen week period ended September 28, 1996, the Company had no significant developments related to legal matters. The Company is involved in various claims, administrative proceedings, and other legal proceedings which arise from time to time in connection with the ordinary conduct of the Company's business. Item 2. Changes in Securities - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders. The Company held its annual meeting of shareholders on October 22, 1996. At the meeting, John A. Caddell, Carl F. Bailey, and Timothy E. Kullman were elected as directors for three-year terms expiring at the 1999 annual meeting. Other board members continuing to serve are J. Thomas Arendall, Jr., E. E. Bishop, and David W. Morrow whose terms expire at the 1997 annual meeting and James M. Cain, William W. Crawford, and Richard W. La Trace whose terms expire at the 1998 annual meeting. The shareholders also approved the Director's Stock Option Plan, an amendment to the Articles of Incorporation, and ratified the appointment of KPMG Peat Marwick LLP as the Company's independent auditors for the fiscal year ending June 28, 1997. A summary of voting results follows (in thousands): Against / With- For hold Authority Abstain ---------------- ---------------- -------------- Amount % Amount % Amount % ------ --- ------ --- ------ --- Directors: John A. Caddell 4,609 88.4 602 11.6 Carl F. Bailey 4,608 88.4 603 11.6 Timothy E. Kullman 4,608 88.4 603 11.6 Approval of Directors Stock Option Plan 4,077 79.2 1,018 19.8 50 1.0 Amend Articles of Incorporation 3,958 77.0 1,153 22.4 32 0.6 Appointment of KPMG Peat Marwick LLP 5,031 96.5 163 3.1 18 0.4 Item 5. Other Information - None Item 6. Exhibits and Reports on Form 8-K - See Exhibit Index 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. DELCHAMPS, INC. Registrant Date: November 13, 1996 /s/David W. Morrow ------------------------------ David W. Morrow, Chairman of the Board and Chief Executive Officer Date: November 13, 1996 /s/Richard W. La Trace ------------------------------ Richard W. La Trace, President Date: November 13, 1996 /s/ Timothy E. Kullman ------------------------------ Timothy E. Kullman, Senior Vice President, Chief Financial Officer, Treasurer and Secretary EXHIBIT INDEX Exhibit No. Description Page No. - ----------- ----------- -------- 3.1 Composite of Amended and Restated Articles of Incorporation, as of November 11, 1996 3.2 Composite of By-Laws, as of November 11, 1996 4.1 Specimen of Common Stock Certificate (Incorporated by reference from Exhibit 4(a) to the Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1990). 10.1 Director Stock Option Plan 10.2 Form of Indemnity Agreement between Registrant and its Directors 27 Financial Data Schedule EX-3 2 Exhibit 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF DELCHAMPS, INC. (Composite Copy as of November 11, 1996 of Restated Articles of Incorporation, as Amended Compiled in the Manner Required by Rule 601(b)(3)(i) of Regulation S-K Promulgated Under the Securities Act of 1933, as Amended) ARTICLE ONE The name of the Corporation shall be Delchamps, Inc. ARTICLE TWO The purpose for which the Corporation is organized is the transaction of all lawful business for which corporations may be incorporated under the Alabama Business Corporation Act. Without limiting the foregoing, the purposes for which the Corporation is organized, and its powers and authority, shall include the following: (a) To engage in and carry on a general wholesale and retail grocery and mercantile business; and to operate one or more wholesale and/or retail stores and warehouses for that purpose; to buy, sell, trade or otherwise deal generally in and with, both at wholesale and at retail, any and all kinds of groceries and other property, articles, goods, wares and merchandise of all kinds and character; (b) To purchase, own, hold, control, use, develop, improve, exchange, mortgage, lease, rent, sell, convey or otherwise acquire and dispose of and deal generally in and with, real property, both improved and unimproved, and any and all oil, gas and other minerals and mineral rights of every kind and any easement or other interest therein, wherever situate; to erect, or cause to be erected, on any lands owned, held or occupied by the Corporation, houses, buildings, or other structures, with their appurtenances; to manage, operate, lease, rebuild, enlarge, alter or improve any buildings or other structures, now or hereafter erected on lands so owned, held or occupied; to encumber, sell or otherwise dispose of any lands or interests in lands, and any buildings or other structures, and any houses, stores, shops, suites, rooms or part of any buildings or other structures, at any time owned or held by the Corporation; (c) To purchase or otherwise acquire, and to sell, let or grant letters patent, concessions, licenses, inventions, rights, and privileges, subject to royalty or otherwise, and whether exclusive, nonexclusive, or limited, or any part interest in such letters patent, concessions, licenses, inventions, rights, and privileges, whether in the United States or in any other part of the world; (d) To acquire by purchase, exchange, lease or otherwise, and to own, hold, use, develop, improve, operate, sell, assign, lease, transfer, convey, exchange, mortgage, pledge, or otherwise dispose of or deal in and with all kinds of equipment, fixtures, appliances, machinery, vehicles, structures, buildings, facilities, intangibles, choses in action and other personal property, and all kinds of real property of every class or description and interests, rights and privileges therein wheresoever situate; (e) To acquire and pay for in cash, stocks, bonds, debentures, or other securities of this Corporation or otherwise, the good will, rights, assets and property and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association and corporation; (f) To purchase or otherwise acquire, and to own, engage in, operate and maintain, any and all types and kinds of lawful businesses; (g) To acquire, by subscription, discount, purchase or otherwise, own, hold, underwrite, guarantee, negotiate, sell, assign, discount, exchange, mortgage, pledge, dispose of, realize upon and deal in and with securities of all kinds, including, but not limited to, shares of stock, bonds, debentures, script, warrants, rights, voting trust certificates, coupons, notes, accounts receivable, contracts, mortgages, commercial paper, evidences of indebtedness, certificates of interest, participation certificates, acceptances and interim receipts and certificates, issued or created by any corporation, association, joint stock company, partnership, firm, individual, trustee, syndicate, government, governmental authority, state, municipal corporation, or any governmental division or subdivision; to possess and exercise any and all rights, powers and privileges of ownership of any of the stock or other property of the Corporation, including the right to vote or consent or otherwise act with respect thereto; and to do any acts or things for the protection, preservation, improvement and enhancement in value of any property of the Corporation; (h) To borrow or raise money for any of the purposes of the Corporation and, from time to time, without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other types of indebtedness and securities and to secure the payment of any thereof and of the interest thereon by mortgage upon, pledge, conveyance or assignment in trust of the whole or any part of the properties, assets, business and good will of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the Corporation for its corporate purposes; (i) To guarantee the payment of the dividends on any shares of any corporation, joint stock company or association in which the Corporation has or may at any time have an interest; to endorse or otherwise guarantee the payment of the principal of, or interest on, any bonds, mortgages, debentures, or other securities issued or created by any corporation, joint stock company or association, in which this Corporation has an interest, or whose shares or securities it owns; to become surety for, and to guarantee, the carrying out or the performance of any contract of every kind of any corporation; joint stock company or association in which this Corporation has an interest, or whose shares or securities it owns; and to do any and all lawful things designed to protect, preserve, improve or enhance the value of any such shares, bonds, mortgages, debentures, securities, or other evidences of indebtedness of any corporation, joint stock company or association in which this Corporation has an interest or whose shares or securities it may own; (j) To purchase, hold, cancel, reissue, sell, exchange, transfer, or otherwise deal in its own securities from time to time, to such extent, in such manner and upon such terms as the Board of Directors of the Corporation shall determine to the extent now or hereafter allowed by law, and provided further that the shares of its own capital stock belonging to the Corporation shall not be voted upon directly or indirectly; (k) To have one or more offices, to carry on all or any part of its operations and business without restriction or limit as to amount; to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the States of District of Columbia of the United States, subject to the laws of such State or District; (l) To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, State, body politic, or government; (m) To lend its funds or credit from time to time to such extent, to such persons, firms, associations, corporations, governments, or subdivisions thereof, and on such terms and on such security, if any, or without security, ad the Board of Directors of the Corporation may determine and as may be lawful; (n) To carry on any other lawful business whatsoever in connection with any of the foregoing, or which is calculated directly or indirectly to promote the interest of the Corporation or to enhance the value of its property; and to execute from time to time, general and special powers of attorney to person, firms, associations or corporations, and to revoke the same as and when the Board of Directors may determine; (o) In general, to have and exercise all the powers conferred by the laws of Alabama upon corporations formed under the laws of the State of Alabama, and to do any or all of the things herein above set forth to the same extent as natural persons might or could do. The foregoing clauses shall be construed as being objects and purposes and powers and the foregoing clauses shall, except where otherwise expressed, be in nowise limited to, restricted by reference to, or inference from, the terms of any other clause in these Articles of Incorporation, but the objects and purposes and powers specified in each of the foregoing clauses of this article shall be regarded as independent objects, purposes and powers. The foregoing enumeration of specific objects, purposes and powers shall not be deemed to restrict or diminish the general powers of the Corporation, and the enjoyment and exercise thereof, as conferred by the laws of the State of Alabama on business corporations organized pursuant to said laws. ARTICLE THREE The mailing address of the Corporation's initial registered office is Post Office Box 1668, Mobile, Alabama 36633. The location of the Corporation's initial registered office is 305 Delchamps Drive, Mobile, Alabama 36602. The name of the Corporation's initial registered agent at such address is Joel O. Swanson. ARTICLE FOUR The aggregate number of shares which the Corporation shall have authority to issue is 30,000,000 shares, divided into two classes: (a) 25,000,000 shares of Common Stock, having a par value of One Cent ($.01) per share and (b) 5,000,000 shares of Preferred Stock having no par value. Each previously authorized share of $1.00 par value Common Stock, whether issued or unissued, shall hereafter represent one share of $.01 par value Common Stock. The Board of Directors is hereby authorized to take such action as it deems necessary to provide for the exchange of stock certificates and the implementation of this paragraph. The Preferred Stock may be issued from time to time, in the discretion of the Board of Directors, either in whole or in part, in one or more series or without series. The Board of Directors is hereby given power and authority to fix and determine by resolution, adopted and filed in accordance with Alabama law, the voting powers, if any, full or limited, or no voting powers, and such other designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, if any, including, but not limited to, dividend rights, conversion rights, redemption rights and liquidation preferences, if any, of all or any portion or series of Preferred Stock, and the number of shares constituting any such series and the terms and conditions of the issuance thereof. Unless otherwise provided in such resolution, the number of shares of Preferred Stock or series thereof set forth in such resolution may thereafter be increased or decreased (but not below the number of shares thereof then outstanding) by a resolution adopted by the Board of Directors and filed in accordance with Alabama law. Should the number of such shares be decreased, the number of shares by which the original number is decreased shall resume the status which they had prior to the adoption of the original resolution. ARTICLE FIVE The names and post office addresses of the incorporators were as follows: A. F. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 O. H. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Annie M. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Lucile C. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Virginia S. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 The names and post office addresses of the Directors chosen for the first year and to serve until the first annual meeting were the following five persons: A. F. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 O. H. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Annie M. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Lucile C. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 Virginia S. Delchamps, 305 Delchamps Drive, Mobile, Alabama 36602 ARTICLE SIX There is no period limited for the duration of said Corporation, and its existence shall be perpetual. ARTICLE SEVEN The shareholders of the Corporation shall have no preemptive rights. ARTICLE EIGHT A. A majority of the Directors shall constitute a quorum for the transactions of the business of the Corporation. The act of a majority of Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. B. Except as otherwise fixed by or pursuant to the provisions of Article Four hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional directors under specified circumstances, the number of the Directors of the Corporation shall be fixed from time to time by or pursuant to the By-Laws of the Corporation. The Directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as shall be provided in the manner specified in the By-Laws of the Corporation, one class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1985, another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1986, and another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1987, with each class to hold office until its successor is elected and qualified. At each annual meeting of the shareholders of the Corporation, the successors of the class of Directors whose term expires at the meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. C. Advance notice of shareholder nominations for the election of Directors shall be given in the manner provided in the By-Laws of the Corporation. D. Except as otherwise provided for or fixed by or pursuant to the provisions of Article Four hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect Directors under specified circumstances, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal, retirement or other cause (other than a newly created directorship resulting from an increase in the number of Directors) may be filled by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors. Any Director elected in accordance with the preceding sentence shall hold office until the next annual meeting of shareholders and until such Director's successor shall have been elected and qualified. In the case of a vacancy occurring other than in the last year of a Director's term of office, the Board of Directors may take appropriate steps by designation of short terms or otherwise, to insure that the term of office of the successor Director expires concurrently with the terms of the other Directors of his predecessor's class. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. E. Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect Directors under specified circumstances, any Director may be removed from office, with or without cause, only by the affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of Directors, voting together as a single class. F. Notwithstanding anything contained in these Restated Articles of Incorporation, the By-Laws of the Corporation may specify a mandatory age of retirement for all Directors. G. Notwithstanding anything contained in these Restated Articles of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article Eight. ARTICLE NINE The Board of Directors shall have power to make, alter, amend and repeal the By-Laws of the Corporation (except that the Board of Directors may not alter, amend or repeal any By-Law establishing what constitutes a quorum at shareholders' meetings). Notwithstanding the foregoing and anything contained in these Restated Articles of Incorporation to the contrary, Sections 1, 2, 3 and 4 of the Article III, and Article VI, of the By-Laws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 80% of the voting power of all the shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class. Notwithstanding anything contained in these Restated Articles of Incorporation to the contrary, the affirmative vote of the holders of at lest 80% of the voting power of all the shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article Nine. ARTICLE TEN A majority of the shares entitled to vote shall constitute a quorum at a meeting of the shareholders. ARTICLE ELEVEN A. In addition to any affirmative vote required by law or these Restated Articles of Incorporation, and except as otherwise expressly provided in Section 2 of this Article Eleven. (i) any merger or consolidation of the Corporation or any subsidiary (as hereinafter defined) with (a) any interested stockholder (as hereinafter defined) or (b) any other corporation (whether or not itself an interested shareholder) which is, or after such merger or consolidation would be, an affiliate (as hereinafter defined) of an interested shareholder; or (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any interested shareholder or any affiliate of any interested shareholder of any assets of the Corporation or any subsidiary having an aggregate fair market value of $10,000,000 or more; or (iii) the issuance or transfer by the Corporation or any subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any subsidiary to any interested shareholder or any affiliate of any interested shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $10,000,000 or more; or (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an interested shareholder or any affiliate or any interested shareholder; or (v) any reclassification of securities (including any reverse stock split), or any merger or consolidation of the Corporation with any of its subsidiaries or any other transaction (whether or not with or into or otherwise involving an interested shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any subsidiary which is directly or indirectly owned by any interested shareholder or any affiliate of any interested shareholder, shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of the directors (the "voting stock"), voting together as a single class (it being understood that for purposes of this Article Eleven, each share of the voting stock shall have the number of votes granted to it generally in the election of directors). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. B. The term "business combination" as used in this Article Eleven shall mean any transaction which is referred to in any one or more of clauses (i) through (v) of paragraph A of this Section 1. SECTION 2 The provisions of Section 1 of this Article Eleven shall not be applicable to any particular business combination, and such business combination shall require only such affirmative vote as is required by law and any other provision of these Restated Articles of Incorporation, if all the conditions specified in either of the following paragraphs A and B are met: A. The business combination shall have been approved by a majority of the disinterested directors (as hereinafter defined). B. All of the following conditions shall have been met: (i) The aggregate amount of the cash and the fair market value (as hereinafter defined) as of the date of the consummation of the business combination of consideration other than cash to be received per share by holders of Common Stock in such business combination shall be at least equal to the higher of the following: (a) (if applicable) the highest per share price (as hereinafter defined) (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the interested shareholder for any shares of Common Stock acquired by it (1) within the two-year period immediately prior to the first public announcement of the proposal of the business combination (the "announcement date"), or (2) in the transaction in which it became an interested shareholder, whichever is higher; and (b) the fair market value per share of Common Stock on the announcement date or on the date on which the interested shareholder became an interested shareholder (such latter date is referred to in this Article Eleven as the "determination date"), whichever is higher. (ii) The aggregate amount of the cash and the fair market value as of the date of the consummation of the business combination of consideration other than cash to be received per share by holders of shares of any class of outstanding voting stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph B (ii) shall be required to be met with respect to every class of outstanding voting stock, whether or not the interested shareholder has previously acquired any shares of a particular class of voting stock); (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the interested stockholder for any shares of such class of voting stock acquired by it (1) within the two-year period immediately prior to the announcement date or (2) in the transaction in which it became an interested shareholder; whichever is higher; (b) (if applicable) the highest preferential amount per share to which the holders of shares of such class of voting stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and (c) the fair market value per share of such class of voting stock on the announcement date or on the determination date, whichever is higher. (iii) The consideration to be received by holders of a particular class of outstanding voting stock (including Common Stock) shall be in cash or in the same form as the interested shareholder has previously paid for shares of such class of voting stock. If the interested shareholder has paid for shares of any class of voting stock with varying forms of consideration, the form of consideration for such class of voting stock shall be either cash or the form used to acquire the largest number of shares of such class of voting stock previously acquired by it. The price determined in accordance with paragraphs B(i) and B(ii) of this Section 2 shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event. (iv) After such interested shareholder has become an interested shareholder prior to the consummation of such business combination: (a) except as approved by a majority of the disinterested directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding Preferred Stock; (b) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the disinterested directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the disinterested directors; and (c) such interested shareholder shall have not become the beneficial owner of any additional shares of voting stock except as part of the transaction which results in such interested shareholder becoming an interested shareholder. (v) After such interested shareholder has become an interested shareholder, such interested shareholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such business combination or otherwise. (vi) A proxy or information statement describing the proposed business combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 30 days prior to the consummation of such business combination (whether or not such proxy or information statement is required to be mailed pursuant to such act or subsequent provisions). SECTION 3 For the purposes of this Article Eleven: A. A "person" shall mean any individual, firm, corporation or other entity. B. "Interested shareholder" shall mean any person (other than the Corporation or any subsidiary) who or which: (i) is the beneficial owner, directly or indirectly, of more than 20% of the voting power of the outstanding voting stock; or (ii) is an affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 20% or more of the voting power of the then outstanding voting stock; or (iii) is an assignee of or has otherwise succeeded to any shares of voting stock which were at any time within the two-period immediately prior to the date in question beneficially owned by any interested shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. C. A person shall be a "beneficial owner" of any voting stock: (i) which such person or any of its affiliates or associates (as hereinafter defined) beneficially owns, directly or indirectly; or (ii) which such person or any of its affiliates or associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of voting stock. D. For the purposes of determining whether a person is an interested shareholder pursuant to paragraph B of this Section 3, the number of shares of voting stock deemed to be outstanding shall include shares deemed owned through application of paragraph C of this Section 3 but shall not include any other shares of voting stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. E. "Affiliate" or "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on June 29, 1984. F. "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of interested shareholder set forth in paragraph B of this Section 3, the term "subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. G. "Disinterested director" means any member of the Board of Directors of the Corporation (the "Board") who is unaffiliated with the interested shareholder and was a member of the Board prior to the time that the interested shareholder became an interested shareholder, and any successor of a disinterested director who is unaffiliated with the interested shareholder, and is recommended to succeed a disinterested director by a majority of disinterested directors then on the Board. H. "Fair market value" means: (i) in case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc., Automated Quotation System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board in good faith, in each case with respect to any class of stock, appropriately adjusted for any dividend or distribution in shares of such stock or any stock split, reclassification or combination of outstanding shares of such stock into a greater or lesser number of shares of such stock; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board in good faith. I. The "highest per share price" shall be the highest per share price reflecting, in each case with respect to any class of stock, an appropriate adjustment for any dividend or distribution in shares of such stock or any stock split, reclassification or combination of outstanding shares of such stock into a greater or lesser number of shares of such stock. J. In the event of any business combination in which the Corporation survives, the phrase "other consideration to be received" as used in paragraphs B(i) and (ii) of Section 2 of this Article Eleven shall include the shares of Common Stock and/or the shares of any other class of outstanding voting share retained by the holders of such shares. SECTION 4 A majority of the disinterested directors of the Corporation shall have the power and duty to determine for the purposes of this Article Eleven, on the basis of information known to them after reasonable inquiry, (A) whether a person is an interested shareholder, (B) the number of shares of voting stock beneficially owned by any person, (C) whether a person is an affiliate or associate of another, (D) whether the assets which are the subject of any business combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any subsidiary in any business combination has, an aggregate fair market value of $10,000,000 or more. A majority of the disinterested directors of the Corporation shall have the further power to interpret all of the terms and provisions of this Article Eleven. SECTION 5 Nothing contained in this Article Eleven shall be construed to relieve any interested shareholder from any fiduciary obligation imposed by law. SECTION 6 Notwithstanding any other provisions of these Restated Articles of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, these Restated Articles of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of 80% or more of the outstanding voting stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with this Article Eleven. ARTICLE TWELVE A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for any action taken, or any failure to take any action in his or her capacity as a director, except for liability for (a) the amount of a financial benefit received by a director to which he or she is not entitled; (b) an intentional infliction of harm on the Corporation or its shareholders; (c) a violation of Section 10-2B-8.33 of the Alabama Business Corporation Law; (d) an intentional violation of criminal law; or (e) a breach of the director's duty of loyalty to the Corporation or its shareholders. Any repeal or modification of this Article XII shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to or at the time of such repeal or modification. The provisions of this Article XII shall not be deemed to limit or preclude indemnification of a director by the Corporation for any liability of a director that has not been eliminated by the provisions of this Article XII. ************************************** EX-3 3 Exhibit 3.2 BY-LAWS OF DELCHAMPS, INC. (Composite Copy as of November 11, 1996 of By-laws of Delchamps, Inc. as Amended, Compiled in the Manner Required by Rule 601 (b)(3)(ii) of Regulation S-K Promulgated Under the Securities Act of 1933, as Amended) ARTICLE I OFFICES SECTION 1. PRINCIPAL OFFICE. The principal office shall be established and maintained in the City of Mobile, County of Mobile, State of Alabama. SECTION 2. OTHER OFFICES. The Corporation may have other offices, either within or outside of said State, at such place or places as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II STOCKHOLDERS SECTION 1. PLACE OF MEETING. All meetings of stockholders shall be at such place as may be directed by the Board of Directors. SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be held on such date and at such time as the Board of Directors may direct. SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be called by the President, the Board of Directors or the holders of not less than ten percent of all the shares entitled to vote at the meeting. In order for the stockholders to call such a meeting, the requisite percentage thereof shall deliver to the President or Secretary a statement in writing signed by the holders of the requisite percentage of stock stating the purposes therefore and requesting that the Secretary send required notices to the stockholders. SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the place, day and hour of the meeting shall be given before the date of the meeting, either personally or by mail, by, or at the direction of the Board of Directors, the President, Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. Such notice shall be given not less than ten nor more than fifty days before the date of the meeting. Notwithstanding the provisions of this section, the stock or bonded indebtedness of the Corporation shall not be increased at a meeting unless thirty days' notice of such meeting shall have been given to each stockholder entitled to vote thereat. In the case of a special meeting, such notice shall also state the purpose or purposes for which the meeting is called, or the special action which is proposed to be taken, in such detail as may be required by all applicable laws of the State of Alabama. If mailed, any such notice shall be deemed to have been given when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. SECTION 5. PRESIDING OFFICER AT MEETINGS. The President, or his designee, or the designee of the Board of Directors in the absence of the President and his failure to name his designee, shall preside at all meetings of the shareholders, including special meetings. In presiding over meetings of the shareholders, the President or such designee shall have full authority to establish rules of conduct and procedure, to limit the nature, extent and time to be devoted to the discussion of any issue and the number of individuals who may speak for and against any issue, to determine whether an issue or motion shall be voted on by heads or by shares represented and to determine whether such vote shall be by written ballot, and to rule out of order any inappropriate comment, statement, question or motion, or any individual who fails to comply with the rules of procedure so established, and to take such other actions as he, in his discretion, shall deem appropriate to insure that the business of the meeting is conducted in a manner that is expeditious, businesslike and fair. SECTION 6. QUORUM. Except as otherwise required by law, by the Articles of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, the holders of a majority in interest of the stock entitled to vote thereat, whether present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the Amount of stock entitled to vote necessary to constitute a quorum shall be represented. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 7. VOTING. Each stockholder shall be entitled to one vote on. any matter for each share of stock entitled to vote thereon held by such stockholder. A stockholder may vote either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. At each election for directors, every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has the right to vote. Cumulative voting shall not be permitted. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise required by the Articles of Incorporation, these By-Laws, or the Laws of Alabama. The officer or agent having charge of the stock transfer books shall make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any stockholder at any time during usual business hours of the Corporation. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any stockholder during the whole time of the meeting. Failure to comply with the requirements of this paragraph shall not affect the validity of any action taken at such meeting. SECTION 8. ACTION WITHOUT MEETING. Any action required by the laws of Alabama to be taken at a meeting of stockholders of this Corporation, or any action which may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders entitled to vote thereat with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of stockholders, and may be stated as such in any writing or document required to be filed under the laws of Alabama. ARTICLE III DIRECTORS SECTION 1. NUMBER, ELECTION AND TERMS. Except as otherwise fixed by or pursuant to the provisions of Article Four of the Restated Articles of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect additional directors under specified circumstances, the number of the Directors of the Corporation shall be fixed from time to time by the Board of Directors but shall not be less than nine. The Directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as determined by the Board of Directors of the Corporation, one class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1985, another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1986, and another class to be originally elected for a term expiring at the annual meeting of shareholders to be held in 1987, with each class to hold office until its successor is elected and qualified. At each annual meeting of the shareholders of the Corporation,.the successors of the class of Directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. SECTION 2. SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or a proxy committee appointed by the Board of Directors or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as Directors at a meeting only if written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to the election to be held at an annual meeting of shareholders, 90 days in advance of such meeting, and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice 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 stock 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, had the nominee been nominated by the Board of Directors; and (e) the signed consent of each nominee to serve as a Director of the Corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. SECTION 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise provided for or fixed by or pursuant to the provisions of Article Four of the Restated Articles of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause (other than a newly created directorship resulting from an increase in the number of Directors) may be filled by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors. Any Director elected in accordance with the preceding sentence shall hold office until the next annual meeting of the shareholders and until such Director's successor shall have been elected and qualified. In the case of a vacancy occurring other than in the last year of a Director's term of office, the Board of Directors may take appropriate steps by designation of short terms or otherwise, to insure that the term of office of the successor Director expires concurrently with the terms of the other Directors of his predecessor's class. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. SECTION 4. REMOVAL. Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect Directors under specified circumstances, any Director may be removed from office,--with or without cause, only by the affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. SECTION 5. MANDATORY RETIREMENT OF DIRECTORS. Notwithstanding any-thing contained in these By-Laws to the contrary, the term of office of each Director, with the sole exception of members of the original Board of Directors as constituted at the time of incorporation of Delchamps, Inc., shall expire at the annual meeting of shareholders held in the year in which such Director(s) reaches seventy (70) years of age. SECTION 6. RESIGNATIONS. Any Director or member of a committee designated by the Board of Directors may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, and if no time be so specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 7. POWERS. The Board of Directors shall exercise all of the powers of the Corporation except such as are by law, or by the Articles of Incorporation, or by these By-Laws conferred upon or reserved to the stockholders; shall determine the compensation of officers; and may, with or without cause, remove any officer at any time. SECTION 8. COMMITTEES. The Board of Directors may by resolution or resolutions, passed by a majority of the whole Board, designate one or more committees and the chairman of each committee so designated, each committee to consist of two or more of the Directors of the Corporation, which to the extent provided in such resolution or resolutions, or in these By-Laws, shall have and may during intervals between the meetings of the Board exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no such committee shall have the authority of the Board of Directors in reference to declaring a dividend or distribution from capital surplus, issuing capital stock, amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending to the shareholders the sale, lease, mortgage, exchange or other disposition of all or substantially all the property and assets of the Corporation other-wise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the Corporation or a revocation thereof, filling vacancies in the Board of Directors or amending By-Laws. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. SECTION 9. PLACE AND NOTICE OF DIRECTORS' MEETINGS. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Alabama. Regular meetings of the Board of Directors may be held with or without notice, at such places and times as shall be determined from time to time by resolution of the Directors. Special meetings of the Board shall be called by the Secretary or any Assistant Secretary at the direction of the President or of a majority of the members of the Board of Directors, upon at least one day's notice to each Director, and shall be held at such place or places and at such time or times as may be determined by the Directors or as shall be stated in the call of the meeting. If mailed, notice of any meeting of the Directors shall be deemed to have been given when deposited in the United States mail, addressed to the Director at his address last known to the Corporation, with postage thereon prepaid. SECTION 10. QUORUM OF DIRECTORS. A majority of the Directors shall constitute a quorum for the transaction of business. The act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by the Articles of Incorporation, these By-Laws or the Laws of Alabama. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting, without further notice, from time to time until a quorum shall have been obtained. If a quorum is present when any meeting is convened, the Directors present may continue to do business, taking action by a vote of a majority of a quorum as fixed above until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum as fixed above, or the refusal of any Directors present to vote. SECTION 11. COMPENSATION. The Board of Directors is authorized to fix the compensation of Directors. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or other-wise, and receiving compensation therefor. SECTION 12. ATTENDANCE OF A DIRECTOR AT A MEETING. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objection to the transaction of any business because the meeting is not lawfully called or convened. The business to be transacted at a regular meeting of the Board of Directors need not be specified in the notice of waiver of notice of such meeting. SECTION 13. MEETINGS BY TELEPHONE. Any meeting of the Board of Directors or of any committee thereof may be held by means of a conference telephone or similar communications equipment by means of which all person participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting. SECTION 14. ACTION WITHOUT MEETING. Any action required to be taken at any meeting of the Board of Directors, or any action which may be taken at a meeting of the Board of Directors or of a committee, may be taken without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of the Directors or all of the members of the committee, as the case may be. Such consent shall have the same effect as a unanimous vote and shall be filed with the minutes of proceedings of the Board or committee. ARTICLE IV OFFICERS SECTION 1. OFFICERS. The officers of the Corporation may consist of a President, a Treasurer and a Secretary, and such Vice-Presidents, Assistant Treasurers and Assistant Secretaries as the Board of Directors may deem proper. In addition, the Board of Directors may elect a Chairman and/or Vice-Chairman of the Board of Directors. None of the officers, except the Chairman and the Vice-Chairman of the Board of Directors, and the President, need be Directors. The officers shall be elected at the first annual meeting. Any two officers, other than those of President and vice- President and those of President and Secretary, may be held by the same person. Any officer may resign at any time and such resignation shall be in writing and become effective at the time specified therein, or if no time be so specified, then upon its receipt by, the President or Secretary. The acceptance of such resignation shall not be necessary to make it effective. SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT. The President shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or nonelection of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the Corporation. SECTION 5. VICE-PRESIDENTS. Vice-Presidents, in the absence, unavailability or inability of the President to act, shall have all the powers of the President, Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors. SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursing to the Corporation. He shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, provided that nothing herein contained shall render invalid any notice given by any person or persons authorized by these By-Laws to give the same. He shall record all the proceedings of the meetings of the stockholders and of the Directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or the President. He shall have the custody of the Seal of the Corporation and shall affix the same to all instruments requiring it, when authorized by the Directors or the President; and attest the same. He shall keep or cause to be kept the stock transfer books in the manner prescribed by law, so as to show at all times the amount of capital stock, the manner and the time the same was paid in, the names and the owners thereof, alphabetically arranged, their post office addresses, the number of shares owned by each; keep or cause to be kept stock and - transfer books which shall be subject to the inspection of the stockholder; and permit any stockholder to make extracts from said books to the extent and as prescribed by law. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Directors. ARTICLE V MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, numbered and with the Seal of the Corporation affixed, or a facsimile thereof, signed by the President or a Vice-President and the Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number and class of shares, and the designation of the series, if any, of shares owned by each such person in the Corporation. den such certificates are countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself, or an employee of the Corporation, the signatures of such officers may be facsimiles. SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in the place of any certificate theretofore issued by the Corporation, alleged to have been lost or destroyed, and the Directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representative, to give the Corporation a bond, or such sum as they may direct, not exceeding double the value of the stock, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. TRANSFER OF SHARES. The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys, agents or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to. such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. SECTION 4. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period, but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than fifty days, and, in case of a meeting of stockholders, not less than ten days prior to the date on which the particular action requiring such determination of stockholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of Incorporation, the Board of Directors may, from time to time, pay dividends on the outstanding shares of the Corporation in cash, property, or the Corporation's own shares, legally available therefor; provided, however, that no dividend payable in shares of any class shall be paid to the holders of shares of any other class (if there be more than one class) unless the Articles of Incorporation so provides or such payment is authorized by the affirmative vote or the written consent of the holders of at least a majority of the outstanding shares of the class in which the payment is to be made. Before declaring any dividend, there may be set apart, out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time deem proper for working capital, or as a reserve fund to meet contingencies, or for equalizing dividends, or for such other purposes of the Directors shall deem conducive to the interests of the Corporation. SECTION 6. SEAL. The Corporate Seal shall be circular in form and shall contain the name of the Corporation, and the words "CORPORATE SEAL" and "ALABAMA". Said seal may be used by causing it or a facsimile thereof to be impressed, affixed, reproduced, inscribed, or otherwise. SECTION 7. FISCAL YEAR. The fiscal year, of the Corporation shall be fixed by the Board of Directors. SECTION 8. CHECKS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness, issued in the name of the Corporation, shall be signed by such officer of officers, agent or agents of the Corporation, and in such manner, as shall be determined, from time to time, by resolution of the Board of Directors. SECTION 9. WAIVER OF NOTICE. Whenever any notice is required to be given to any stockholder or director under the provisions of the Constitution or any Law of Alabama, or under the provisions of the Articles of Incorporation, or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice. SECTION 10. INDEMNITY. (a) The Corporation shall indemnify any officer or director of the Corporation and may indemnify any employee or agent of the Corporation to the full extent permitted by Article 8, Division E of the Alabama Business Corporation Act. (b) The indemnification authorized by this article shall not be deemed exclusive of and shall be in addition to any other right (whether created prior or subsequent to the adoption of this article) to which those indemnified may be entitled under any statute, rule of law, by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office,, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (c) The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such,. whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this article. ARTICLE VI AMENDMENTS Unless otherwise provided by the Restated Articles of Incorporation, these By-Laws may be altered, amended or repealed at any regular meeting of the shareholders (or at any special meeting thereof duly called for that purpose) by a majority vote of the shares represented and entitled to vote at such meeting; provided that in the notice of such special meeting notice of such purpose shall be given. Unless otherwise provided by the Laws of the State of Alabama, the Restated Articles of Incorporation or these By- Laws, the Board of Directors may by majority vote of those present at any meeting at which a quorum is present amend these By-Laws, or enact such other By-Laws as in their judgment may be advisable for the regulation of the conduct of the affairs of the Corporation, provided, however, that the Board of Directors may not alter, amend or repeal any By-Law establishing what constitutes a quorum at a meeting of shareholders. Notwithstanding the foregoing and anything contained in these By-Laws to the contrary, Sections 1, 2, 3 and 4 of Article III and Article VI, shall not be altered, amended, or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 80% of the voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class. ********************************** EX-10 4 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES ISSUED PURSUANT TO THE DELCHAMPS, INC. DIRECTORS' STOCK OPTION PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. DELCHAMPS, INC. DIRECTORS' STOCK OPTION PLAN 1. Purpose of the Plan. The purpose of the Directors' Stock Option Plan of Delchamps, Inc. is to promote the interests of the Company and its shareholders by strengthening the Company's ability to attract, motivate and retain Directors of experience and ability, and to encourage the highest level of Directors' performance by providing Directors with a proprietary interest in the Company's financial success and growth. 2. Definitions. 1. "Board" means the Board of Directors of the Company. 2. "Committee" means the Compensation Committee of the Board or a subcommittee thereof as shall be appointed by the Board from time to time. The Committee shall consist of two or more members of the Board none of whom shall be Employees of the Company. 3. "Common Stock" means the common stock, $.01 par value per share, of the Company. 4. "Company" means Delchamps, Inc., an Alabama corporation. 5. "Director" means a member of the Board who is not an Employee. 6. "Employee" means any full-time employee of the Company, or any of its present or future parent or subsidiary corporations 7. "Fair Market Value" means (i) if the Common Stock is listed on an established stock exchange or any automated quotation system that provides sale quotations, the closing sale price for a share of the Common Stock on such exchange or quotation system on the applicable date, or if no sale of the Common Stock shall have been made on that day, on the next preceding day on which there was a sale of the Common Stock; (ii) if the Common Stock is not listed on any exchange or quotation system, but bid and asked prices are quoted and published, the mean between the quoted bid and asked prices on the applicable date, and if bid and asked prices are not available on such day, on the next preceding day on which such prices were available; and (iii) if the Common Stock is not regularly quoted, the fair market value of a share of Common Stock on the applicable date as established by the Committee in good faith. 8. "Participant" means each Director. 9. "Option" means a stock option that does not satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended. 10. "Plan" means the Delchamps, Inc. Directors' Stock Option Plan as set forth herein and as amended from time to time. 3. Shares of Common Stock Subject to the Plan. Subject to the provisions of Section 7, the aggregate number of shares of Common Stock that may be issued or transferred pursuant to exercise of Options under the Plan is 40,000 shares of Common Stock. Such shares may be either authorized but unissued shares or shares issued and thereafter acquired by the Company. 4. Administration of the Plan. 1. The Plan shall be administered by the Committee, which shall have the power to interpret the Plan and, subject to its provisions, to prescribe, amend and rescind rules and to make all other determinations necessary for the Plan's administration. 2. All action taken by the Committee in the administration and interpretation of the Plan shall be final and binding upon all parties. No member of the Committee will be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Option. 5. Eligibility. 1. Each Director shall be automatically granted an Option to acquire 5,000 shares of Common Stock on July 29, 1996, subject to approval of the Plan by the shareholders of the Company at the next annual meeting. 2. Each person who becomes a Director from July 30, 1996 to July 29, 1999 will also receive an Option to acquire 5,000 shares of Common Stock on the date such person becomes a Director. 6. Terms and Conditions of Options. 1. Except in the event of acceleration of exercisability as provided in Sections 6.5 and 8.2 hereof, the Options granted to Directors on July 29, 1996 under the Plan shall become exercisable as follows: One-third of the total number of shares covered by the Option beginning July 29, 1997; Two-thirds of the total number of Shares covered by the Option beginning July 29, 1998, less any shares previously issued; 100% of the total number of Shares covered by the Option beginning July 29, 1999, less any shares previously issued. 2. Except in the event of acceleration of exercisability as provided in Sections 6.5 and 8.2 hereof, an Option granted to a person who becomes a Director from July 30, 1996 to July 29, 1999 shall become exercisable in equal portions on July 29 of each year following the date such person joins the Board such that the Option shall be fully exercisable on July 29, 1999. 3. No Option granted to a Director under the terms of the Plan may be exercised after July 29, 2001. 4. The exercise price of the Options granted to Directors shall be equal the Fair Market Value, as defined in the Plan, of a share of Common Stock on the date of grant. 5. The Committee may accelerate the exercisability of any Option at any time in its discretion. 6. In the event a Director ceases to serve on the Board of Directors of the Company for any reason, the Options granted hereunder must be exercised, to the extent otherwise exercisable at the time of termination of Board service, within one year from the date of termination of Board service. 7. An Option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased. The exercise notice shall be accompanied by the full purchase price for such shares. The option price shall be payable in United States dollars and may be paid (a) in cash; (b) by uncertified or certified check; (c) by delivery of shares of Common Stock, which shares shall be valued for this purpose at their Fair Market Value on the date such option is exercised, and, unless otherwise determined by the Committee, shall have been held by the Participant for at least six months; (d) by simultaneously exercising options and selling the shares of Common Stock acquired pursuant to a brokerage or similar arrangement and using the proceeds from such sale as payment of the exercise price; or (e) in such other manner as may be authorized from time to time by the Committee. In the case of delivery of an uncertified check upon exercise of a stock option, no shares shall be issued until the check has been paid in full. Prior to the issuance of shares of Common Stock upon the exercise of an Option, a Participant shall have no rights as a shareholder. 7. Adjustment Provisions. In the event of any merger, consolidation or reorganization of the Company with any other corporation or corporations, there shall be substituted for each of the shares of Common Stock then subject to the Plan, including shares subject to Options, the number and kind of shares of stock or other securities to which the holders of the shares of Common Stock will be entitled pursuant to the transaction. In the event of any recapitalization, stock dividend, stock split, combination of shares or other change in the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to Options, shall be adjusted in proportion to the change in outstanding shares of Common Stock. In the event of any such adjustments, the purchase price of any Option shall be adjusted as and to the extent appropriate, in the reasonable discretion of the Committee, to provide Participants with the same relative rights before and after such adjustment. 8. Change of Control. 1. A Change of Control shall mean: (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of more than 30% of the outstanding shares of the Common Stock; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition of Common Stock directly from the Company, (ii) any acquisition of Common Stock by the Company, (iii) any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition of Common Stock by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 8.1; or (b) individuals who, as of the date the Plan was adopted by the Board of Directors (the "Approval Date"), constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Approval Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual's initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Incumbent Board; or (c) consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Company's outstanding Common Stock and the Company's voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect beneficial ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the corporation resulting from such Business Combination (which, for purposes of this paragraph (i) and paragraphs (ii) and (iii), shall include a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries), and (ii) except to the extent that such ownership existed prior to the Business Combination, no person (excluding any corporation resulting from such Business Combination or any employee benefit plan or related trust of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 20% or more of the combined voting power of the then outstanding voting securities of such corporation, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) approval by the shareholders of the Company of a plan of complete liquidation or dissolution of the Company. 2.d Upon a Change of Control, or immediately prior to the closing of a transaction that will result in a Change of Control if consummated, all outstanding Options granted pursuant to the Plan shall automatically become fully exercisable. 9. General Provisions. 1.d Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Participant any right to continue as a Director or affect the right of the Company to terminate the services of any Participant. 2.d No shares of Common Stock will be issued or transferred pursuant to an Option unless and until all then-applicable requirements imposed by federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any stock exchanges upon which the Common Stock may be listed, have been fully met. As a condition precedent to the issuance of shares pursuant to the exercise of an Option, the Company may require the Participant to take any reasonable action to meet such requirements. 3.d No Participant and no beneficiary or other person claiming under or through such Participant will have any right, title or interest in or to any shares of Common Stock allocated or reserved under the Plan or subject to any Option except as to such shares of Common Stock, if any, that have been issued or transferred to such Participant. 4.d Options granted under the Plan shall not be transferrable except: (a) by will, (b) by the laws of descent or distribution; (c) pursuant to a domestic relations order, as defined in the Code, to family members, to a family partnership, to a trust for the benefit of family members or to charitable institutions, if permitted by the Committee and so provided in the Option agreement or an amendment thereto. Any attempt at assignment, transfer, pledge, hypothecation or other disposition of an Option, or levy of attachment or similar process upon the Option not specifically permitted herein, shall be null and void and without effect. 5.d Each Option shall be evidenced by a written instrument, including terms and conditions consistent with the Plan, as the Committee may determine. 10. Amendment and Termination. 1.d The Board will have the power, in its discretion, to amend, suspend or terminate the Plan at any time. 2.d No amendment, suspension or termination of the Plan will, without the consent of the holder, alter, terminate, impair or adversely affect any right or obligation under any Option previously granted under the Plan. 3.d Notwithstanding the provisions of Section 10.1, if required for the availability of the exemption provided by Rule 16b-3 under the 1934 Act, the Board may not amend the provisions of Section 5 or the definition of Director in Section 2 more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employment Retirement Income Security Act or the rules thereunder. 11. Effective Date of Plan and Duration of Plan. This Plan shall become effective upon adoption by the Board, subject to approval by the holders of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote on the subject at the 1996 Annual Meeting of Shareholders of the Company. EX-10 5 Exhibit 10 [Delchamps has entered into the following Indemnity Agreement with each of its directors.] INDEMNITY AGREEMENT This Agreement is made as of the _____ day of _________________, 1996, by and between DELCHAMPS, INC., an Alabama corporation (the "Corporation"), and [Name of Director] ("Indemnitee"). WHEREAS, Division E of Article 8 of the Alabama Business Corporation Law (the "ABCL"), which sets forth certain provisions relating to the indemnification of the directors of an Alabama corporation, is specifically not exclusive of any indemnification or advance of expenses contained in a corporation's articles of incorporation, bylaws, a resolution of a corporation's shareholders or directors, or in a contract or otherwise; and WHEREAS, the Corporation desires to have Indemnitee serve or continue to serve as a director of the Corporation. NOW, THEREFORE, in consideration of Indemnitee's service after the date hereof, the Corporation and Indemnitee do hereby agree as follows: 1. Agreement to Serve. Indemnitee shall serve or continue to serve as a director (and, if applicable, an officer) of the Corporation and as a director, officer, partner, trustee, employee, agent or fiduciary of any other corporation, partnership, joint venture, trust, employee benefit plan or other for profit or not for profit enterprise of which he is serving at the request of the Corporation while a director of the Corporation, and agrees to serve in such capacities for so long as he is duly elected or appointed and qualified or until such earlier time as he tenders his resignation in writing. 2. Definitions. As used in this Agreement: (a) The term "Claim" shall mean any threatened, pending or completed claim, action, suit or proceeding, including appeals, whether civil, criminal, administrative or investigative and whether formal or informal and whether made judicially or extra-judicially, including any action by or in the right of the Corporation or any separate issue or matter therein, as the context requires. (b) The term "Determining Body" shall mean, and the Determining Body shall act, as follows: (i) those members of the Board of Directors not at the time parties to the Claim ("Impartial Directors"), by majority vote, if there is a sufficient number of Impartial Directors to constitute a quorum of the Board of Directors, or (ii) if there is an insufficient number of Impartial Directors to establish a quorum of the Board of Directors, a committee duly designated by the Board of Directors (in which designation directors who are not Impartial Directors may participate) consisting solely of two or more Impartial Directors, by majority vote of such committee, or (iii) special legal counsel, which may be the regular outside counsel of the Corporation, selected by the Impartial Directors as provided in clause (i) or the committee as provided in clause (ii) or if a quorum of the Board of Directors cannot be obtained under clause (i) and a committee cannot be designated under clause (ii), selected by majority vote of the full Board of Directors (in which selection directors who are not Impartial Directors may participate), or (iv) the shareholders of the Corporation; provided that, shares owned by or voted under the control of directors who are not Impartial Directors may not be voted on the determination; and provided further that, a majority of shares entitled to vote on the determination by virtue of not being owned by or voted under the control of a director who is not an Impartial Director shall constitute a quorum for the purpose of making the determination. (c) The term "Expenses" shall mean the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), and reasonable expenses, including counsel fees, incurred with respect to a Claim. 3. Limitation of Liability. To the fullest extent permitted by the Articles of Incorporation and By-laws of the Corporation (each as in effect on the date hereof), Indemnitee shall not be liable for breach of his fiduciary duty as a director. If and to the extent such provisions are amended to permit further limitations of liability, Indemnitee shall not be liable for any breach of his fiduciary duty to the fullest extent permitted by any such amendment. 4. Maintenance of Insurance. (a) The Corporation represents and warrants that it presently maintains in force and effect a directors and officers insurance policy, and Indemnitee represents and warrants that he has been furnished with a copy thereof. Subject only to the provisions of Section 4(b) hereof, the Corporation hereby agrees that, so long as Indemnitee shall continue to serve in any capacity referred to in Section 1 hereof and thereafter so long as Indemnitee shall be subject to any possible Claim, the Corporation shall use its commercially reasonable best efforts to purchase and maintain in effect for the benefit of Indemnitee one or more valid and enforceable policies of directors and officers liability insurance providing, in all material respects, coverage at least comparable to that currently provided pursuant to the insurance policy. (b) The Corporation shall not be required to purchase and maintain the insurance policy or any comparable policy if directors and officers liability insurance is not reasonably available or if, in the reasonable business judgment of the then Board of Directors of the Corporation, there is insufficient benefit to the Corporation from continuing to carry such insurance. 5. Indemnity. (a) Except with respect to a Claim commenced by Indemnitee against the Corporation or by Indemnitee as a derivative action by or in the name of the Corporation that has not been authorized by the Corporation, unless prohibited by law, the Corporation shall indemnify Indemnitee against any Expenses actually and reasonably incurred by Indemnitee in connection with a Claim if Indemnitee is or is threatened to be made a defendant or respondent in connection with the Claim because Indemnitee is or was a director or officer of the Corporation or is or was, while a director of the Corporation, serving at the Corporation's request as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other for profit or not for profit enterprise (whether such Claim relates to service by Indemnitee in such positions before or after the date of this Agreement), under the following circumstances: (i) if Indemnitee is successful, on the merits or otherwise, in the defense of any Claim, or of any claim, issue or matter in connection with such Claim (notwithstanding that Indemnitee was not successful on any other claim, issue or matter in connection with such Claim); provided, that if Indemnitee is successful on the merits or otherwise in the defense of any claim, issue or matter in connection with a Claim, such indemnification shall relate only to Expenses incurred in connection with such claim, issue or matter; or (ii) the Indemnitee is found by the Determining Body to have met the Standard of Conduct (as hereinafter defined); provided that no indemnification shall be made in respect of any Claim as to which Indemnitee shall have been adjudicated in a final judgment to be liable for willful, intentional and deliberate infliction of harm on the Corporation or the shareholders or to have obtained an improper personal financial benefit, unless, and only to the extent that, a court shall determine upon application by Indemnitee that Indemnitee is entitled to indemnity for such Expenses. The Corporation shall pay or reimburse expenses incurred by a director in connection with the directors's appearance as a witness in connection with a Claim at a time when the director has not been made a defendant or respondent to the Claim. (b) For purposes of this Agreement, the "Standard of Conduct" is met if Indemnitee (i) conducted himself in good faith, and (ii) in the case of conduct in Indemnitee's official capacity with the Corporation, reasonably believed his conduct was in the best interests of the Corporation or, in all other cases, reasonably believed his conduct was at least not opposed to the best interests of the Corporation, and (iii) in the case of a Claim that is a criminal action or proceeding, Indemnitee had no reasonable cause to believe that his conduct was unlawful. "Official capacity" means the office of director or officer of the Corporation and does not include service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise. In the case of a Claim that concerns the conduct of the Indemnitee as a fiduciary to an employee benefit plan, the "Standard of Conduct" is met when Indemnitee's conduct with respect to the plan is for a purpose Indemnitee reasonably believed to be in the interests of the participants in and beneficiaries of such employee benefit plan. The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not be, of itself, determinative that Indemnitee did not meet the Standard of Conduct. (c) Promptly upon becoming aware of the existence of any Claim as to which the Indemnitee may be indemnified for Expenses and as to which Indemnitee desires to obtain indemnification, Indemnitee shall so notify the Chief Executive Officer of the Corporation, but the failure to promptly notify the Chief Executive Officer shall not relieve the Corporation from any obligation under this Agreement, except and to the extent that such failure has materially and irrevocably harmed the Corporation's ability to defend against such Claim pursuant to Section 5(f) of this Agreement. Upon receipt of such request, the Chief Executive Officer shall promptly advise the Board of Directors of the request and that the establishment of a Determining Body with respect thereto will be a matter to be considered at the next regularly scheduled meeting of the Board. If a meeting of the Board of Directors is not regularly scheduled within 120 calendar days of the date the Chief Executive Officer receives notice of the Claim, the Chief Executive Officer shall cause a special meeting of the Board of Directors to be called within such period in accordance with the provisions of the Corporation's By-laws. After the Determining Body has been established, the Determining Body shall inform the Indemnitee of the constitution of the Determining Body, and Indemnitee shall provide the Determining Body with all facts relevant to the Claim known to such Indemnitee and deliver to the Determining Body all documents relevant to the Claim in Indemnitee's possession. Before the 60th day after its receipt from the Indemnitee of such information (the "Determination Date"), the Determining Body shall determine whether or not Indemnitee has met the Standard of Conduct and shall advise Indemnitee of its determination. Prior to the Determination Date, Indemnitee shall also provide such additional information as the Determining Body may reasonably request (the receipt of which shall not begin a new 60-day period). If Indemnitee shall have supplied the Determining Body with all relevant information, including all additional information reasonably requested by the Determining Body, any failure of the Determining Body to make a determination by or on the Determination Date as to whether the Standard of Conduct was met shall be deemed to be a determination that the Standard of Conduct was met by Indemnitee. (d) If at any time during the 60-day period ending on the Determination Date, Indemnitee becomes aware of any relevant facts or documents not theretofore provided by him to the Determining Body, Indemnitee shall promptly inform the Determining Body of such facts or documents, unless the Determining Body has obtained such facts or documents from another source. The provision of such facts or documents to the Determining Body shall not begin a new 60 day period. (e) The Determining Body shall have no power to revoke a determination that Indemnitee met the Standard of Conduct unless it concludes that Indemnitee (i) has submitted fraudulent information to the Determining Body or (ii) has failed to comply with the provisions of Sections 5(c) or 5(d) hereof. (f) In the case of any Claim not involving any threatened or pending criminal proceeding, (i) if prior to the Determination Date the Determining Body has affirmatively made a determination that the Indemnitee met the Standard of Conduct (not including a determination deemed to have been made by inaction), the Corporation may, except as otherwise provided below, individually or jointly with any other indemnifying party similarly notified, assume the defense thereof with counsel reasonably satisfactory to the Indemnitee. If the Corporation assumes the defense of the Claim, it shall notify Indemnitee of such action and keep Indemnitee informed as to the progress of such defense, including any proposed settlements, so that Indemnitee may make an informed decision as to the need for separate counsel. After notice from the Corporation that the Corporation is assuming the defense of the Claim, the Corporation will not be liable to Indemnitee under this Agreement for any legal fees and expenses subsequently incurred by Indemnitee in connection with the defense other than as provided below. Indemnitee shall have the right to employ its own counsel in such action, suit or proceeding, but the fees and expenses of such counsel incurred after such notice from the Corporation of its assumption of the defense shall be at the expense of Indemnitee unless (A) the employment of counsel by Indemnitee has been authorized by the Determining Body, (B) Indemnitee shall have concluded reasonably that there may be a conflict of interest between the Corporation and Indemnitee in the conduct of the defense of such action or (C) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Corporation. The Corporation shall not be entitled to assume the defense of any action, suit or proceeding brought by or in the right of the Corporation or as to which Indemnitee shall have made the conclusion provided for in (B) above; and (ii) the Corporation shall fairly consider any proposals by Indemnitee for settlement of the Claim. If the Corporation proposes a settlement of the Claim and such settlement is acceptable to the person asserting the Claim, or the Corporation believes a settlement proposed by the person asserting the Claim should be accepted, it shall inform Indemnitee of the terms of such proposed settlement and shall fix a reasonable date by which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall execute such documents as shall be necessary to make final the settlement. If Indemnitee does not agree with such terms, Indemnitee may proceed with the defense of the Claim in any manner he chooses, provided that if Indemnitee is not successful on the merits or otherwise, the Corporation's obligation to indemnify such Indemnitee as to any Expenses incurred following his disagreement shall be limited to the lesser of (A) the total Expenses incurred by Indemnitee following his decision not to agree to such proposed settlement or (B) the amount that the Corporation would have paid pursuant to the terms of the proposed settlement. If, however, the proposed settlement would impose upon Indemnitee any requirement to act or refrain from acting that would materially interfere with the conduct of Indemnitee's affairs, Indemnitee may refuse such settlement and continue his defense of the Claim, if he so desires, at the Corporation's expense in accordance with the terms and conditions of this Agreement without regard to the limitations imposed by the immediately preceding sentence. In any event, the Corporation shall not be obligated to indemnify Indemnitee for any amount paid in a settlement that the Corporation has not approved. (g) In the case of any Claim involving a proposed, threatened or pending criminal proceeding, Indemnitee shall be entitled to conduct the defense of the Claim with counsel of his choice and to make all decisions with respect thereto; provided that the Corporation shall not be obliged to indemnify Indemnitee for any amount paid in settlement of such a Claim unless the Corporation has approved such settlement. (h) After notifying the Corporation of the existence of a Claim, Indemnitee may from time to time request the Corporation to pay the Expenses (other than judgments, fines, penalties or amounts paid in settlement) that he incurs in pursuing a defense of the Claim prior to the time that the Determining Body determines whether the Standard of Conduct has been met. The Corporation shall pay to Indemnitee the amount requested (regardless of Indemnitee's apparent ability to repay such amount) upon (i) receipt from the Indemnitee of a written affirmation of the Indemnitee's good faith belief that he has met the Standard of Conduct, (ii) receipt of a written undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation under the circumstances and (iii) a determination by the Determining Body that the facts then known to the Determining Body do not preclude indemnification and that the Expenses are reasonable; provided, that if the Determining Body is special legal counsel, the determination shall be made by those entitled to select such counsel. (i) After it has been determined that the Standard of Conduct has been met, for so long as and to the extent that the Corporation is required to indemnify Indemnitee under this Agreement, the provisions of Section 5(h) shall continue to apply with respect to Expenses incurred after such time except that the Corporation shall pay to Indemnitee the amount of any settlements, fines, penalties or judgments against him which have become final and for which he is entitled to indemnification hereunder, and any amount of indemnification ordered to be paid to him by a court. (j) Any determination by the Corporation with respect to settlement of a Claim shall be made by the Determining Body. (k) All determinations and judgments made by the Determining Body hereunder shall be made in good faith. 6. Enforcement. (a) The rights provided by this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction. (b) If Indemnitee seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all Expenses actually and reasonably incurred by him in connection with such proceeding, but only if he prevails therein. If it shall be determined that Indemnitee is entitled to receive part but not all of the relief sought, then the Indemnitee shall be entitled to be reimbursed for all Expenses incurred by him in connection with such judicial adjudication if the amount to which he is determined to be entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated. (c) In any judicial proceeding described in this Section 6, the Corporation shall bear the burden of proving that Indemnitee is not entitled to the relief sought. 7. Saving Clause. If any provision of this Agreement is determined by a court having jurisdiction over the matter to violate or conflict with applicable law, the court shall be empowered to modify or reform such provision so that, as modified or reformed, such provision provides the maximum indemnification permitted by law and such provision, as so modified or reformed, and the balance of this Agreement, shall be applied in accordance with their terms. Without limiting the generality of the foregoing, if any portion of this Agreement shall be invalidated on any ground, the Corporation shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated and to the full extent permitted by law with respect to that portion that has been invalidated. 8. Non-Exclusivity; Full Protection. (a) The indemnification and advancement of Expenses provided by or granted pursuant to this Agreement shall not be deemed exclusive of any other rights to which Indemnitee is or may become entitled under any statute, articles of incorporation, by-law, authorization of stockholders or directors, agreement, or otherwise; provided, however, that Indemnitee shall not be entitled to any duplicate reimbursement of Expenses through this Agreement, other rights of indemnification, insurance or otherwise. (b) It is the intent of the Corporation by this Agreement to indemnify and hold harmless Indemnitee to the fullest extent permitted by law, as in effect on the date hereof or as subsequently modified, notwithstanding that the other terms of this Agreement would provide for lesser indemnification. 9. Confidentiality. The Corporation and Indemnitee shall keep confidential to the extent permitted by law and their fiduciary obligations all information and determinations provided pursuant to or arising out of the operations of this Agreement and the Corporation and Indemnitee shall instruct its or his agents and employees to do likewise. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute the original. 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Alabama. 12. Successors and Assigns. This Agreement shall be binding upon Indemnitee and upon the Corporation, its successors and assigns, and shall inure to the benefit of the Indemnitee's heirs, personal representatives, and assigns and to the benefit of the Corporation, its successors and assigns. 13. Amendment. No amendment, modification, termination or cancellation of this Agreement shall be effective unless made in writing signed by the Corporation and Indemnitee. Notwithstanding any amendment, modification, termination or cancellation of this Agreement or any portion hereof, Indemnitee shall be entitled to indemnification in accordance with the provisions hereof with respect to any acts or omissions of Indemnitee which occur prior to such amendment, modification, termination or cancellation. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and signed as of the date and year first above written. DELCHAMPS, INC. By: ______________________________ Name: Title: INDEMNITEE __________________________________ Name: EX-27 6
5 3-MOS JUN-30-1996 SEP-30-1996 6,471,000 0 8,141,000 0 90,940,000 111,801,000 305,250,000 (171,080,000) 248,142,000 90,621,000 9,898,000 0 0 71,000 (144,000) 248,142,000 289,699,000 289,699,000 224,332,000 63,721,000 0 0 1,303,000 343,000 139,000 204,000 0 0 0 204,000 .03 0
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