DELHAIZE AMERICA INC, PRE 14A, 2000-03-16

DELHAIZE AMERICA INC
PRE 14A, 2000-03-16
GROCERY STORES

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<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934

[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

DELHAIZE AMERICA, INC.
(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

1) Title of each class of securities to which transaction applies: Not
Applicable

2) Aggregate number of securities to which transaction applies: Not
Applicable

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): Not
Applicable

4) Proposed maximum aggregate value of transaction: Not Applicable

5) Total fee paid: Not Applicable

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: _______________________________________

(2) Form, Schedule or Registration Statement No.: ______________________

(3) Filing Party: ________________________________________________________

(4) Date Filed: ________________________________________________________

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DELHAIZE AMERICA, INC.
2110 EXECUTIVE DRIVE
P.O. BOX 1330
SALISBURY, NORTH CAROLINA 28145-1330

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

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

To the Shareholders of Delhaize America, Inc.:

The Annual Meeting of the Shareholders of Delhaize America, Inc. (the
"Company") will be held at 9:00 a.m. on Thursday, May 4, 2000 at ____________,
_________________, for the following purposes, all as more fully described in
the accompanying Proxy Statement:

1. To elect ten members to the Board of Directors;

2. To consider and vote on certain amendments to the bylaws of
the Company;

3. To consider and vote on a proposal to adopt the Delhaize
America, Inc. 2000 Stock Incentive Plan;

4. To consider and vote on a proposal to ratify the appointment
of PricewaterhouseCoopers LLP as independent accountants for
the fiscal year ending December 30, 2000; and

5. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on March 27,
2000 as the record date for the determination of shareholders entitled to vote
at the meeting and, accordingly, only shareholders who are otherwise entitled to
vote and who are holders of record at the close of business on that date will be
entitled to notice of, and to vote at, the meeting. The transfer books of the
Company will not be closed.

A Proxy Statement and proxy card are enclosed herewith. You are urged
to date, sign and return the proxy card promptly in the envelope provided.

LESTER C. NAIL
Secretary

______________ , 2000

SHAREHOLDERS MAY REVOKE A PROXY UPON DELIVERY TO THE SECRETARY OF THE COMPANY OF
A WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE.
SHAREHOLDERS MAY ALSO REVOKE A PROXY BY ATTENDING THE ANNUAL MEETING OF
SHAREHOLDERS AND VOTING IN PERSON.

<PAGE> 3

DELHAIZE AMERICA, INC.
2110 EXECUTIVE DRIVE
P.O. BOX 1330
SALISBURY, NORTH CAROLINA 28145-1330

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

_______________________, 2000

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

PROXY STATEMENT

The accompanying proxy is solicited by and on behalf of the Board of
Directors of Delhaize America, Inc. (the "Company") for use at the Annual
Meeting of Shareholders to be held at 9:00 a.m. on Thursday, May 4, 2000 at
_________, ____________, and at any adjournment or postponement thereof (the
"Annual Meeting"). The entire cost of such solicitation will be borne by the
Company. In addition to solicitation by mail, arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxy
materials to their principals, and the Company may reimburse them for their
expenses in doing so. Personal solicitations may be conducted by directors,
officers and employees of the Company. This Proxy Statement and accompanying
proxy card will be mailed to shareholders on or about ______________, 2000.

The shares represented by the accompanying proxy and entitled to vote
will be voted if the proxy card is properly signed and received by the Company
prior to the meeting. Where a choice is specified on any proxy card as to the
vote on any matter to come before the meeting, the proxy will be voted in
accordance with such specification. If the proxy card is properly signed and
returned, but where no choice is specified, the proxy will be voted (i) for the
election of the persons nominated to serve as the directors of the Company named
in this Proxy Statement, (ii) for the proposal to approve the amendments to the
bylaws of the Company described in this Proxy Statement, (iii) for the proposal
to adopt the Delhaize America, Inc. 2000 Stock Incentive Plan, (iv) for the
proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending December 30, 2000 and (v) in such manner
as the persons named on the enclosed proxy card in their discretion determine
upon such other business as may properly come before the Annual Meeting.

VOTING SECURITIES OF THE COMPANY

The Company has outstanding (i) non-voting shares of Class A Common
Stock, par value $.50 per share ("Class A Common Stock"), and (ii) voting shares
of Class B Common Stock, par value $.50 per share ("Class B Common Stock")
(collectively, the "Common Stock"). Holders of record of the Class B Common
Stock at the close of business on March 27, 2000 (the "Record Date") are
entitled to vote at the Annual Meeting and are entitled to one vote for each
share held. At the close of business on the Record Date, there were [75,290,542]
shares of Class B Common Stock issued and outstanding and [79,931,607] shares of
Class A Common Stock issued and outstanding. Shares of Class A Common Stock have
no voting rights other than as provided by North Carolina law.

The laws of North Carolina, under which the Company is incorporated,
provide that, in connection with the election of directors, the persons
receiving a vote of a plurality of the shares of Class B Common Stock
represented and entitled to vote at the Annual Meeting will be elected as
directors. The proposals to amend the bylaws, to adopt the Delhaize America,
Inc. 2000 Stock Incentive Plan and to ratify the appointment of independent
accountants will require the affirmative vote of the holders of a majority of
the Class B Common Stock voting on each such proposal. Abstentions will be
counted in determining the existence of a quorum for the Annual Meeting. An
abstention, a broker non-vote or a failure to return a signed proxy card will
not be counted as votes in favor of or against the proposals described above.

Etablissements Delhaize Freres et Cie "Le Lion" S.A. ("Delhaize") and
its wholly owned subsidiary, Delhaize The Lion America, Inc., a Delaware
corporation ("Detla"), own, in the aggregate, more than 50% of the outstanding
shares of the Company's Class B Common Stock. See "SECURITY OWNERSHIP OF
CERTAIN

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BENEFICIAL OWNERS AND MANAGEMENT -- Principal Shareholder." The affirmative
vote by Delhaize and Detla will guarantee the passage of all of the proposals
described above (and any other proposals that require the affirmative vote of no
more than a majority of the outstanding shares of Class B Common Stock for
passage). The Company has been informed that Delhaize and Detla intend to vote
FOR the election of the ten nominees for director proposed herein under
"Proposal (1) -- Election of Directors"; FOR the proposal to approve the
amendments to the bylaws described under "Proposal (2) - Amendments to Bylaws";
FOR the adoption of the Delhaize America, Inc. 2000 Stock Incentive Plan
described under "Proposal (3) - Approval of 2000 Stock Incentive Plan"; and FOR
the ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending December 30, 2000 described under
"Proposal (4) - Appointment of Independent Accountants."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

PRINCIPAL SHAREHOLDER

The following information is furnished for each person known by
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Class B Common Stock, the only voting
security of the Company, as of March 27, 2000:

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OWNERSHIP PERCENT OF CLASS
---------------- --------- ----------------
<S> <C> <C>
Etablissements Delhaize Freres et Cie 41,862,086 (1) 55.6%
"Le Lion" S.A.
rue Osseghem, 53
1080 Brussels, Belgium
</TABLE>

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

(1) Includes 21,117,593 shares held of record by Delhaize's wholly owned
subsidiary, Detla. Detla's address is Suite 2160, Atlanta Plaza, 950
East Paces Ferry Road, Atlanta, Georgia 30326. Delhaize, Detla and the
Company are parties to a Shareholders Agreement, dated March , 2000
which governs the voting of the shares held by Delhaize and Detla in
the election of directors and other matters. See "Shareholders
Agreement" below.

OWNERSHIP OF MANAGEMENT

The following information with respect to beneficial ownership of
shares of the Company's Class A Common Stock and Class B Common Stock as of
March 27, 2000 is furnished for each director, nominee for director, the Chief
Executive Officer, the five other most highly compensated executive officers of
the Company (including one executive officer who retired during fiscal year
1999), the former Chief Executive Officer and for all directors, nominees for
director, and executive officers of the Company as a group. The number of shares
of Common Stock set forth in the table below includes shares that may be
acquired within 60 days after March 27, 2000, but does not include shares of
Common Stock beneficially owned by Delhaize, as to which Messrs. Beckers,
Coppieters, Dumont and Raquez are associated as further described herein. As of
March 27, 2000, Delhaize and Detla collectively owned 37,216,152 shares of Class
A Common Stock. See "Principal Shareholder" above for more information relating
to the ownership of Class B Common Stock by Delhaize. Unless otherwise noted,
each person has sole voting and investment power of the shares beneficially
owned by such person.

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<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
----------------------- --------------------------
AMOUNT AND AMOUNT AND
NAME OF INDIVIDUAL NATURE OF PERCENT NATURE OF PERCENT
OR NUMBER OF BENEFICIAL OF BENEFICIAL OF
PERSONS IN GROUP OWNERSHIP CLASS OWNERSHIP CLASS
- ------------------ --------- ----- --------- -----
<S> <C> <C> <C> <C>
Pierre-Olivier Beckers................... -- -- -- --
A. Edward Benner......................... 3,108(1) * 195 *
Robert J. Brunory........................ 20,000(2) * 4,000 *
Jacqueline Kelly Collamore............... 763 * 333 *
Jean-Claude Coppieters `t Wallant........ -- -- -- --
W. Bruce Dawson.......................... 21,870(3) * 4,196 *
Pierre Dumont............................ -- -- -- --
William G. Ferguson...................... 763 * -- --
Bernard W. Franklin...................... 904 * -- --
Joseph C. Hall, Jr....................... 86,334(4) * 20,677(4) *
Laura C. Kendall......................... 15,770(5) * -- --
Margaret H. Kluttz....................... 863 * 349 *
Bill McCanless........................... 51,922(6) * -- --
Dominique Raquez......................... -- -- -- --
Tom E. Smith............................. 366,529(7) * 309,754 *
All directors, nominees for director, and
executive officers as a group (32
persons)............................ 654,877(8) * 340,070 *
</TABLE>

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

* Indicates less than 1%.

(1) Effective December 31, 1999, A. Edward Benner, Jr., retired as Vice
President of Information Technology and Chief Information Officer of
the Company.

(2) Includes (a) 6,169 restricted shares of Class A Common Stock held
pursuant to the 1996 Employee Stock Incentive Plan of Food Lion, Inc.;
(b) 6,321 shares of Class A Common Stock that may be acquired upon the
exercise of options granted under the 1996 Employee Stock Incentive
Plan of Food Lion, Inc.; and (c) shares represented by 3,526 units in
the Profit Sharing Retirement Plan of Food Lion, Inc.

(3) Includes (a) 400 shares of Class A Common Stock held by Mr. Dawson's
wife; (b) 300 shares of Class A Common Stock and 800 shares of Class B
Common Stock held by Mr. Dawson's children; (c) 500 shares of Class A
Common Stock held by a trust for his children; (d) 6,198 restricted
shares of Class A Common Stock held pursuant to the 1996 Employee Stock
Incentive Plan of Food Lion, Inc.; and (e) 6,980 shares of Class A
Common Stock that may be acquired upon the exercise of options granted
under the 1996 Employee Stock Incentive Plan of Food Lion, Inc.

(4) Includes (a) 2,310 shares of Class A Common Stock and 360 shares of
Class B Common Stock held by Mr. Hall as custodian for his children;
(b) 99 shares of Class A Common Stock held by Mr. Hall's wife as
custodian for their children; (c) 1,800 shares of Class A Common Stock
and 1,800 shares of Class B Common Stock held by Mr. Hall's children;
(d) 21,772 restricted shares of Class A Common Stock held pursuant to
the 1996 Employee Stock Incentive Plan of Food Lion, Inc.; and (e)
30,383 shares of Class A Common Stock that may be acquired upon
exercise of options granted under the 1996 Employee Stock Option Plan
of Food Lion, Inc.

(5) Includes (a) 9,497 restricted shares of Class A Common Stock held
pursuant to the 1996 Employee Stock Incentive Plan of Food Lion, Inc.
and (b) 5,458 shares of Class A Common Stock that may be acquired upon
the exercise of options granted under the 1996 Employee Stock Incentive
Plan of Food Lion, Inc.

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<PAGE> 6

(6) Includes (a) 599 shares of Class A Common Stock held by Mr. McCanless's
wife; (b) 24,262 restricted shares of Class A Common Stock held
pursuant to the 1996 Employee Stock Incentive Plan of Food Lion, Inc.;
and (c) 22,529 shares of Class A Common Stock that may be acquired upon
exercise of options granted under the 1996 Employee Stock Incentive
Plan of Food Lion, Inc.

(7) On April 7, 1999, Tom E. Smith retired as President and Chief Executive
Officer of the Company. On that date, Bill McCanless was appointed
President and Chief Executive Officer to fill the vacancies resulting
from Mr. Smith's retirement.

(8) Includes (a) 140,805 restricted shares of Class A Common Stock held
pursuant to the 1996 Employee Stock Incentive Plan of Food Lion, Inc.;
(b) 208,248 shares of Class A Common Stock that may be acquired upon
exercise of options granted under the 1996 Employee Stock Incentive
Plan of Food Lion, Inc.; and (c) shares represented by 42,203 units in
the Profit Sharing Retirement Plan of Food Lion, Inc. allocated to
Class A Common Stock. The number of shares per unit in such plan
fluctuates based in part on the allocation of cash to the fund. As of
March 27, 2000, the 42,203 units held by all directors and executive
officers as a group represented 22,364 shares of Class A Common Stock.

SHAREHOLDERS AGREEMENT

On March , 2000, Delhaize, Detla and the Company entered into an
agreement (the "2000 Shareholders Agreement" or "Shareholders Agreement")
containing provisions regarding, among other things, the nomination of
candidates for election to the Board of Directors, the voting of securities
beneficially owned by the parties to the Shareholders Agreement for the election
of directors and the voting requirements applicable to specified actions by the
Board of Directors. The 2000 Shareholders Agreement is effective until April 30,
2007, unless Delhaize and Detla's aggregate ownership of voting shares of the
Company is reduced below 10%, in which case the Shareholders Agreement would
terminate at that time.

The 2000 Shareholders Agreement provides for, subject to the fiduciary
duties of directors under North Carolina law or except as the Board of Directors
by the affirmative vote of at least 70% of the directors may otherwise direct, a
Nominating Committee of the Board of Directors to nominate the slate of
directors to be submitted to the shareholders for election to the Board and
persons to fill any vacancies on the Board of Directors that arise from time to
time. See "THE BOARD OF DIRECTORS." The Shareholders Agreement provides that the
Nominating Committee shall consist of three persons, one of whom will be
designated by Delhaize and Detla, collectively, one of whom will be the Chief
Executive Officer of the Company or his designee from among the members of the
Board of Directors, and one of whom will have no affiliation (other than Board
of Directors or Committee membership) with either Delhaize, Detla or the
Company. The Shareholders Agreement specifies that, at all times after the
closing of the acquisition of Hannaford, the slate to be proposed for election
to the Board of Directors shall consist of twelve persons, six proposed by the
Chief Executive Officer of Delhaize, two proposed by the Chief Executive Officer
of the Company, and four to have no affiliation (other than Board of Directors
or Committee membership) with either Delhaize, Detla or the Company. The
Shareholders Agreement requires persons nominated to fill vacancies on the Board
to be selected in a corresponding manner.

The Shareholders Agreement also reflects a voting agreement between
Delhaize and Detla to vote in favor of the slate of directors proposed by the
Nominating Committee and approved by the Board of Directors, and not to
participate directly or indirectly in any effort to cause cumulative voting to
be in effect for any election of directors of the Company.

5
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PROPOSAL (1)

ELECTION OF DIRECTORS

Article 3, Section 2 of the bylaws of the Company provides for a
minimum of eight and a maximum of fourteen directors, as such number is
established from time to time by the shareholders or the Board of Directors of
the Company. The Board of Directors has set the number of directors at ten. The
ten persons who receive the highest number of votes at the meeting (assuming a
quorum is present) shall be elected as directors of the Company. The ten persons
named below are nominated to serve on the Board of Directors until the 2001
Annual Meeting of Shareholders and until their successors are elected and
qualified. Each nominee is currently a director of the Company. The Board of
Directors unanimously recommends that each shareholder vote FOR the election of
each of the nominees named below as a director of the Company.

Each nominee for director has indicated that he or she is willing and
able to serve as a director if elected. However, if any nominee should become
unable to serve or will not serve, the persons named on the enclosed proxy card
will vote for such substitute nominees as designated by the Board of Directors.

The age and brief biographical description of each of the ten nominees
for director are set forth below:

PIERRE-OLIVIER BECKERS (39) -- Mr. Beckers is a director of Delhaize and has
been for more than five years a member of the Executive Committee of Delhaize.
Since January 1, 1999, Mr. Beckers has served as Chief Executive Officer and
President of the Executive Committee of Delhaize. Mr. Beckers also serves as
Chairman, Chief Executive Officer and President of Detla, a wholly owned
subsidiary of Delhaize. From January 1, 1998 to December 31, 1998, Mr. Beckers
served as Executive Vice President of the Executive Committee of Delhaize. He
has been a manager of Delhaize since 1986. Mr. Beckers was first elected as a
director of the Company in 1992 and is a member of the Nominating, Senior
Management Compensation and Stock Option Committees. Mr. Beckers was elected
Chairman of the Board of Directors of the Company on April 7, 1999, following
the retirement of Tom E. Smith as Chairman on that date.

DR. JACQUELINE KELLY COLLAMORE (40) -- Dr. Collamore manages a corporate
consulting practice in Chevy Chase, Maryland. Between 1993 and 1996, she held
the positions, variously, of Associate with Credit Suisse, Vice President and
Chief of Staff of Credit Suisse Asset Management, Inc., and Associate and Chief
of Staff of Credit Suisse Private Banking. Dr. Collamore was a consultant with
Arthur D. Little from 1991 to 1992, and was an independent business consultant
from 1986 to 1991. She was a Lecturer of Marketing from 1989 to 1992 at various
colleges and universities. Dr. Collamore was first elected as a director in 1994
and is Chairperson of the Audit Committee.

JEAN-CLAUDE COPPIETERS `T WALLANT (54) -- Mr. Coppieters is and has been for
more than five years the Secretary of the Board of Directors and a member of the
Executive Committee of Delhaize. Since January 1, 1998, he has been the Group
Chief Financial Officer of Delhaize. He is also a director, Vice President,
Treasurer and Assistant Secretary of Detla. Mr. Coppieters was first elected as
a director of the Company in 1996.

PIERRE DUMONT (62) -- Mr. Dumont has been the Secretary of the Executive
Committee of Delhaize since 1995 and the Group Human Resources Development
Officer of Delhaize since 1998. He was the Human Resources Manager of Delhaize
from 1971 to 1997. Mr. Dumont was first elected as a director of the Company in
1999.

WILLIAM G. FERGUSON (72) -- Mr. Ferguson has been a director of Snow Aviation
International, Inc. since 1988 and the Executive Vice President since 1989. Mr.
Ferguson is Chairman of the Board of Directors of Pyrocap International
Corporation. Mr. Ferguson was Chairman and Chief Executive Officer of TTI
Systems, Inc. from 1977 through the sale thereof to Transco Energy Company in
1986 and until he retired from Transco in 1989. Mr. Ferguson was first appointed
to the Board of Directors in 1993. He is a member of the Audit and Stock Option
Committees and is Chairperson of the Senior Management Compensation Committee.

DR. BERNARD W. FRANKLIN (47) -- Dr. Franklin has been the President of Virginia
Union University in Richmond, Virginia since July 1999. Dr. Franklin was the
President of St. Augustine's College in Raleigh, North

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Carolina from March 1995 to July 1999. From July 1989 until March 1995, Dr.
Franklin served as President of Livingstone College and Hood Theological
Seminary in Salisbury, North Carolina. Dr. Franklin served as Vice President of
Student Affairs at Virginia Union University (from 1987 to 1989) and Assistant
Vice President of Student Affairs at Johnson C. Smith University (from 1985 to
1987). Dr. Franklin was first elected as a director in 1993 and is a member of
the Audit Committee and Chairperson of the Stock Option Committee. Dr. Franklin
also is a member of the board of directors of Centura Bank, Inc.

JOSEPH C. HALL, JR. (50) -- Mr. Hall is President and Chief Operating Officer of
the Food Lion Division and has held those positions since September 1999. Mr.
Hall was the Senior Vice President and Chief Operating Officer of the Company
from July 1, 1995 to September 1999. Mr. Hall joined the Company in 1976 and has
served as a Vice President since 1988. Mr. Hall previously held the positions of
Vice President of Purchasing, Vice President of Marketing, Vice President of
Operations - Southern Division and Vice President of Operations - Central
Division before assuming his current position. Mr. Hall was first appointed to
the Board of Directors in 1995.

MARGARET H. KLUTTZ (56) -- Mrs. Kluttz has been a member of the North Carolina
Board of Transportation since 1993. She was appointed Chairperson of the North
Carolina Rail Council in 1994. She served as Chairperson on the North Carolina
Rail Commission from 1994 until 1997. Mrs. Kluttz served as Mayor of the City of
Salisbury, North Carolina from 1991 until 1997. Mrs. Kluttz is a member of the
Board of Advisors of the National Trust for Historic Preservation. She was first
appointed to the Board of Directors in 1994. Mrs. Kluttz is a member of the
Audit Committee and is Chairperson of the Nominating Committee.

BILL MCCANLESS (42) -- Mr. McCanless is the President and Chief Executive
Officer of the Company, and has held those positions since April 7, 1999. Mr.
McCanless was elected by the Board of Directors to fill those positions upon the
retirement of Tom E. Smith as the President and Chief Executive Officer of the
Company. Prior to that time, Mr. McCanless was Senior Vice President of
Administration and Chief Administrative Officer from 1995 to April 7, 1999 and
was Vice President of Legal Affairs from 1993 to 1995. Mr. McCanless also was
Secretary from 1994 to April 7, 1999. Mr. McCanless was appointed to the Board
of Directors on April 7, 1999, to fill the vacancy created by the retirement of
Tom E. Smith and is a member of the Nominating Committee.

DOMINIQUE RAQUEZ (40) -- Mr. Raquez is, and has been since 1995, a Member of the
Executive Committee of Delhaize. He serves, and has served since January 1,
1998, as the Financial Planning, Control and Development Officer of Delhaize. He
was the Secretary of the Executive Committee of Delhaize from 1990 until 1994.
He has been a manager of Delhaize since 1985. Mr. Raquez was first elected to
the Board of Directors in 1998. He is a member of the Senior Management
Compensation Committee.

In connection with the acquisition of Hannaford Bros. Co. by the
Company, the Company has agreed to expand the number of directors of the Company
from ten to twelve and to cause Hugh G. Farrington, the Chief Executive Officer
of Hannaford Bros. Co., and Paul D. Sobey, a representative of Empire Company
Limited (Hannaford's largest shareholder), to be appointed to the Board of
Directors of the Company. These appointments will occur at the time of the
closing of the acquisition of Hannaford Bros. Co., which the Company expects to
occur during its second quarter ending June , 2000. Hugh G. Farrington was
elected President of Hannaford in 1984 and designated as Chief Executive Officer
of Hannaford in 1992. He held the position of Chief Operating Officer of
Hannaford from 1984 to 1992. He was Executive Vice President from 1981 until his
election as President. He has been employed by Hannaford in various operating,
supervisory and executive capacities since 1968. Paul D. Sobey is the President
and Chief Executive Officer of the Empire Company Limited and serves as a
director of Nova Scotia Power Incorporated, Sobeys Inc., The Bank of Nova
Scotia, Wajax Limited, Atlantic Shopping Centers Limited and Sobey Leased
Properties Limited.

THE BOARD OF DIRECTORS

The business of the Company is managed under the direction of the Board
of Directors, as provided by North Carolina law and the Company's bylaws. The
Board of Directors has established an Audit Committee, Nominating Committee,
Senior Management Compensation Committee and Stock Option Committee.

The Audit Committee recommends to the Board of Directors the
appointment of the Company's outside accountants and reviews the scope and
results of the audits by the Company's outside accountants. The Audit Committee
also reviews the scope and results of audits by the Company's Internal Audit
Department and other

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<PAGE> 9

matters pertaining to the Company's accounting and financial reporting
functions. The members of the Audit Committee, which met [FOUR TIMES] during the
fiscal year ended January 1, 2000, are presently Jacqueline Kelly Collamore
(Chairperson), William G. Ferguson, Bernard W. Franklin and Margaret H. Kluttz.

Under the Company's bylaws, the Nominating Committee must consist of
three directors, one director designated by Delhaize and Detla, collectively,
one director designated by the Company's Chief Executive Officer and one
director who has no affiliation (other than Board of Directors or Committee
membership) with either Delhaize, Detla or the Company. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Shareholders Agreement." The
Nominating Committee is responsible for nominating the slate of directors to be
submitted to the shareholders for election, if approved by the Board, and for
nominating persons to fill vacancies that arise on the Board. Under the bylaws,
the slate of directors nominated by the Nominating Committee will consist of ten
persons, four of whom are proposed by Delhaize, two of whom are proposed by the
Chief Executive Officer of the Company and four of whom have no affiliation
(other than Board or Committee membership of the Company) with either Delhaize,
Detla or the Company. If any director ceases to be a director of the Company,
the Nominating Committee, subject to the Board's approval, shall nominate an
appropriate person to fill the vacancy, selected in a corresponding manner
(e.g., if a director proposed by Delhaize ceases to be a director, then Delhaize
shall propose the person to fill the vacancy). The members of the Nominating
Committee are presently Margaret H. Kluttz (Chairperson), Bill McCanless and
Pierre-Olivier Beckers. The Nominating Committee will consider candidates
suggested by shareholders in accordance with the procedures set forth in the
Company's bylaws. The Nominating Committee met [ONE TIME] during the fiscal year
ended January 1, 2000.

The Senior Management Compensation Committee, which consists of three
non-employee directors, is responsible for reviewing and approving compensation
for senior management of the Company, including amounts allocated to
participants under the Company's Annual Incentive Bonus Plan and the Key
Executive Annual Incentive Bonus Plan, both of which are described below under
the caption "REPORT ON EXECUTIVE COMPENSATION -- Incentive Compensation." The
members of the Senior Management Compensation Committee, which met [TWO TIMES]
during the fiscal year ended January 1, 2000, are presently Pierre-Olivier
Beckers, William G. Ferguson (Chairperson) and Dominique Raquez.

The Stock Option Committee administers the 1996 Employee Stock
Incentive Plan of Food Lion, Inc. This Committee selects the individuals who
will be awarded options and restricted stock and establishes terms of options
and the restrictions on restricted stock awarded under the 1996 Employee Stock
Incentive Plan of Delhaize America, Inc. See "REPORT ON EXECUTIVE COMPENSATION
- -- Incentive Compensation." The members of the Stock Option Committee, which met
[ONE TIME] during the fiscal year ended January 1, 2000, are presently
Pierre-Olivier Beckers, William G. Ferguson and Bernard W. Franklin
(Chairperson).

The Board of Directors met [nine] times during the fiscal year ended
January 1, 2000. During that period, each incumbent director attended at least
75% of the aggregate of (i) the total number of meetings of the Board of
Directors and (ii) the total number of meetings held by all committees on which
the director served.

COMPENSATION OF DIRECTORS

The Company has agreed to pay Dr. Jacqueline Kelly Collamore, Dr.
Bernard W. Franklin, William G. Ferguson and Margaret H. Kluttz a quarterly fee
of $6,500 and a fee of $1,000 per board meeting, and to reimburse them for all
related travel expenses for their service on the Board of Directors. The $6,500
quarterly fee is paid in cash in each of the first three quarters of the year.
The Board of Directors has approved the payment of the $6,500 fourth quarter
fees in the form of Class A Common Stock, until such time as the aggregate
number of shares of Class A Common Stock issued in payment of such director's
fees is 8,333 shares. There are no other arrangements pursuant to which
directors of the Company are compensated for services as directors.

8
<PAGE> 10

PROPOSAL (2)

AMENDMENTS TO BYLAWS

In connection with the entering into of the 2000 Shareholders'
Agreement, the Board of Directors has unanimously approved, subject to
shareholder approval, amendments to Article 4, Section 6(a) and (d) of the
bylaws of the Company. See "Shareholders Agreement."

Article 4, Section 6(a) and (d) currently provide as follows:

Section 6. Special Vote. The board of directors may not, without an
affirmative vote of at least 70% of the number of directors fixed
pursuant to these bylaws ("Special Vote"), be empowered to authorize
the corporation to:

(a) Approve the nomination of any person or persons for
election to the board of directors or elect a chief executive officer
other than Tom E. Smith;

* * *

(d) Authorize the issuance or sale of stock or other
securities of the corporation or any subsidiary of the corporation, or
options or warrants or obligations convertible into such stock or
securities, except the issuance of stock options or stock or both, as
the case may be, pursuant to the corporation's 1981 Employee Stock
Option Plan, 1983 Employee Stock Option Plan, 1991 Employee Stock
Option Plan, Employee Stock Purchase Plan and Employee Stock Ownership
Plan and other employee benefit plans approved by the board of
directors;

* * *

The Board of Directors has proposed that Article 4, Section 6(a) and
(d) of the Bylaws be amended, in keeping with the Shareholders Agreement, to
provide as follows:

(a) Approve the nomination of any person or persons for
election to the board of directors or elect a chief executive officer;

* * *

(d) Authorize the issuance or sale of stock or other
securities of the corporation or any subsidiary of the corporation, or
options or warrants or obligations convertible into such stock or
securities, except the issuance of stock options or stock or both, as
the case may be, pursuant to the corporation's 1996 Employee Stock
Option Plan, Employee Stock Purchase Plan and Employee Stock Ownership
Plan and other employee benefit plans approved by the board of
directors;
* * *

Pursuant to Article 9, Section 9 of the bylaws and the requirements of
North Carolina law, shareholder approval of the proposed amendments to Article
4, Section 6(a) and (d) of the bylaws is required because the bylaw section
proposed to be amended previously was approved by the holders of Class B Common
Stock. In the Shareholders Agreement, Delhaize and Detla have agreed to vote the
securities beneficially owned by them in favor of these proposed amendments to
the bylaws. The proposed amendments will be approved if they receive the
affirmative vote of the holders of a majority of the shares of Class B Common
Stock voting on such proposal. Since Delhaize and Detla own, in the aggregate,
more than 50% of the outstanding shares of the Company's Class B Common Stock,
these proposed amendments to the bylaws will be approved upon the affirmative
vote of Delhaize and Detla for the proposal. It is the opinion of the Board of
Directors that it is in the best interest of the Company and its shareholders to
amend the bylaws as proposed.

9
<PAGE> 11

The accompanying proxy card, when properly dated and executed, will be
voted in the manner directed therein by the shareholder. If no direction is
made, the proxy will be voted for Proposal (2). The Board of Directors
recommends that each shareholder vote FOR this proposal.

PROPOSAL (3)

APPROVAL OF 2000 STOCK INCENTIVE PLAN

On March __, 2000, the Board of Directors approved a new stock
incentive plan entitled the 2000 Stock Incentive Plan of Delhaize America, Inc.,
subject to shareholder approval. Upon approval of the 2000 Stock Incentive Plan
by shareholders, the 1996 Stock Incentive Plan will effectively be frozen and
will govern only those options and awards of restricted stock then outstanding
under the 1996 Stock Incentive Plan.

The principal provisions of the 2000 Stock Incentive Plan are
summarized below. The following summary of the material provisions of the 2000
Stock Incentive Plan does not purport to be complete and is qualified in its
entirety by the terms of the 2000 Stock Incentive Plan, a complete copy of which
is attached hereto as Exhibit A and incorporated herein by reference. All
defined terms used herein shall have the same meanings set forth in the 2000
Stock Incentive Plan, unless otherwise indicated herein.

The 2000 Stock Incentive Plan is administered by the Board or a
committee (the "Committee") appointed by the Board. With respect to Options or
Awards that: (i) are intended to qualify as "performance-based" under Section
162(m) of the Code, and/or (ii) are granted to individuals who qualify as
"insiders" under Section 16 of the Exchange Act, (A) any Committee members who
do not qualify as "Outside Directors" and/or "Nonemployee Directors," as the
case may be, shall have no authority to act and shall automatically be recused
from any action with respect to Options or Awards, and (B) the remaining
qualifying directors shall be authorized to act independently without further
approval. Notwithstanding the foregoing, if the Committee does not exist, or for
any other reason determined by the Board, the Board may take any action under
the Plan that would otherwise be the responsibility of the Committee; provided,
however, that if the full Board grants Options or Awards that are intended to be
performance-based under Section 162(m), members of the entire Board who do not
qualify as Outside Directors shall have no authority and shall be automatically
recused with respect to such Options or Awards. For grants to individuals who
are neither Section 16 insiders nor covered under Code Section 162(m), the Board
or Committee may delegate grant making and certain other responsibilities under
the 2000 Stock Incentive Plan to the Company's executive officers or any other
person designated by the Board (collectively, "Designees"). Pursuant to the 2000
Stock Incentive Plan, the Board, Committee or Designees, as applicable, shall
select participants to whom Options and Restricted Stock are to be granted;
determine the type, size, terms and conditions of grants, including the per
share purchase price and vesting provisions of Options and the restrictions or
performance criteria relating to Restricted Stock; and administer and interpret
the 2000 Stock Incentive Plan.

PURPOSE OF THE 2000 STOCK INCENTIVE PLAN

The Board believes that it is important that directors, executives and
employees have a significant financial stake in the growth of the value of the
Company so as to align their interests with those of the Company's shareholders.
The Board also believes that in the future it will be easier to attract highly
qualified individuals if the Company can offer them a meaningful opportunity and
incentive to participate in the growth of the value of the Company.

SECURITIES TO BE OFFERED

The Common Stock subject to grants of Options and Restricted Stock to
be reserved for the purposes of the Plan shall be such number of shares of Class
A Common Stock ("Shares") as shall be determined by the Board. An aggregate of
Shares of Common Stock of the Company may be issued or transferred pursuant to
the 2000 Stock Incentive Plan plus the number of Shares that have not been
awarded under the 1996 Employee Stock Incentive Plan of Food Lion, Inc. (the
"1996 Plan") (including those that may be forfeited or cancelled under the 1996
Plan after the effective date of this plan).

10
<PAGE> 12

No employee shall be granted in any calendar year Options to purchase
more than Common Shares. No employee may be awarded more than Shares of
performance-based Restricted Stock in any calendar year. No more than Shares
shall be granted pursuant to Incentive Stock Options over the term of this plan.

In the event of a Change in Capitalization, the Board or Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares with respect to which Options and Restricted
Stock may be granted, (ii) the maximum number and class of Shares or other stock
or securities with respect to which Options or Restricted Stock may be granted
in any calendar year, (iii) the maximum number of Shares which may be granted
pursuant to Incentive Stock Options, (iv) the number and class of Shares or
other stock or securities which are subject to outstanding Options or awards of
Restricted Stock and the purchase price therefor, if applicable, and (v) the
Performance Objectives. In addition, if any Option or award of Restricted Stock
expires or terminates without having been exercised, the Shares subject to that
Option or award again become available for grant under the 2000 Stock Incentive
Plan.

Except as otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Options and awards of Restricted
Stock issued hereunder shall continue in effect in accordance with their
respective terms, except that following a Transaction each Optionee and Grantee
shall be entitled to receive in respect of each Share subject to any outstanding
Options or awards of Restricted Stock, as the case may be, upon exercise of any
Option or payment or transfer in respect of any awards of Restricted Stock, the
same number and kind of stock, securities, cash, property or other consideration
that each holder of a Share was entitled to receive in the Transaction in
respect of a Share; provided, however, that such stock, securities, cash,
property or other consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the Options and
Awards prior to such Transaction.

INDIVIDUALS WHO MAY PARTICIPATE IN THE 2000 STOCK INCENTIVE PLAN

All of the Company's (and its subsidiaries') salaried employees and
officers together with its (and its subsidiaries') advisors and consultants who
receive cash compensation from the Company (or any of its subsidiaries) are
eligible to receive Options and Restricted Stock under the 2000 Stock Incentive
Plan. Options and Restricted Stock under the Plan shall be granted at the sole
discretion of the Board, Committee or Designees. The granting of Options and
Restricted Stock does not confer upon the participant any right to continue in
the employ of the Company or affect any right or power of the Company to
terminate the services of such participant at any time. Options and Restricted
Stock may also be awarded to nonemployee directors and to individuals who have
accepted an offer of employment with the Company or a subsidiary.

OPTIONS AND AWARDS

Options. The Committee may grant to participants Options to purchase
Shares. Subject to the provisions of the Code, Options may either be Incentive
Stock Options (within the meaning of Section 422 of the Code) or Nonqualified
Stock Options. The purchase price of each share of Common Stock under each
Option shall be established at the time the Option is granted. The purchase
price of an Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a Share on the date the Option is granted (110% in the case of
an Incentive Stock Option granted to a 10% stockholder). Options are exercisable
at such times and in such installments as determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercisable after the
expiration of ten years from its grant date (five years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder). The Committee may
accelerate the exercisability of any Option at any time, before or after grant.
Option Agreements may contain terms and conditions not inconsistent with the
2000 Stock Incentive Plan, including, but not limited to, provisions governing
accelerated vesting upon a change in control of the Company and provisions
permitting the grant of Reload Options upon the purchase of Shares under an
Option with previously owned Shares.

Unless otherwise provided in the applicable Agreement, Options are not
transferable by the Optionee other than by will or the laws of descent and
distribution and may be exercised during the Optionee's lifetime only by the
Optionee or the Optionee's guardian or legal representative. The purchase price
for Shares acquired pursuant to the exercise of an Option must be paid (i) in
cash, (ii) by transferring Shares to the Company, or (iii) a combination of

11
<PAGE> 13

the foregoing, upon such terms and conditions as determined by the Committee.
Notwithstanding the foregoing, the Committee may establish cashless exercise
procedures which provide for the exercise of an Option and sale of the
underlying Share by a registered broker-dealer.

Restricted Stock. The terms of an award of Restricted Stock shall be
determined by the Committee at the time the award is made. The Committee also
may determine at such time that dividends paid on such Restricted Stock may be
paid to the Grantee or deferred and, if deferred, whether such dividends will be
reinvested in shares of Common Stock or held in cash. If deferred dividends are
held in cash, they will be paid (together with any interest accrued thereon)
upon the lapsing of restrictions on shares of Restricted Stock or forfeited upon
the forfeiture of shares of Restricted Stock. Restricted Stock may either vest
over time or in accordance with Performance Objectives. Performance Objectives
for Restricted Stock may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) revenues, (vii) EBITDA, (viii) market share or market penetration
or (ix) any combination of the foregoing.

Agreements. Any Options or awards of Restricted Stock under the Plan
shall be evidenced by written Agreements which may contain such other terms and
conditions that the Board, Committee or Designees deem appropriate and not in
conflict with the express terms of the Plan.

ADDITIONAL INFORMATION

The 2000 Stock Incentive Plan provides that in satisfaction of the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to an Option or Award,
the Optionee or Grantee may make a written election (the "Tax Election"), which
may be accepted or rejected in the discretion of the Committee, to have withheld
a portion of the Shares issuable to him or her having an aggregate Fair Market
Value equal to the Withholding Taxes.

Amendment and Termination of Plan. The Plan shall terminate on the day
preceding the tenth anniversary of the date of its adoption by the Board and no
Option or award of Restricted Stock may be granted thereafter. The Board may
sooner terminate the Plan and the Board may at any time and from time to time
amend, modify or suspend the Plan; provided, however, that: (a) no such
amendment, modification, suspension or termination shall impair or adversely
alter any Options or Awards theretofore granted under the Plan, except with the
consent of the Optionee or Grantee, nor shall any amendment, modification,
suspension or termination deprive any Optionee or Grantee of any Shares which he
or she may have acquired through or as a result of the Plan; and (b) only to the
extent necessary under applicable law, no amendment shall be effective unless
approved by the shareholders of the Company.

FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS

In general, an Optionee will not recognize taxable income upon grant or
exercise of an Incentive Stock Option and the Company will not be entitled to
any business expense deduction with respect to the grant or exercise of an
Incentive Stock Option. However, upon the exercise of an Incentive Stock Option,
the excess of the Fair Market Value on the date of the exercise of the Shares
received over the exercise price of Shares will be treated as an adjustment to
the Optionee's alternative minimum taxable income. In order for the exercise of
an Incentive Stock Option to qualify for the foregoing tax treatment, the
Optionee generally must be an employee of the Company or a Subsidiary from the
date the Incentive Stock Option is granted through the date three months before
the date of exercise, except in the case of death or disability, where special
rules apply.

If the Optionee has held the Incentive Stock Option (or the Shares
acquired upon exercise thereof) for at least two years after the date of grant
and the Shares acquired upon exercise of the Options for at least one year after
the date of exercise, upon disposition of the Shares by the Optionee, the
difference, if any, between the sale price of the Shares and the exercise price
of the Option will be treated as long-term capital gain or loss. If the Optionee
does not satisfy these holding period requirements, the Optionee will recognize
ordinary income at the time of the disposition of the Shares, generally in an
amount equal to the excess of the Fair Market Value of the Shares at the time
the Option was exercised over the exercise price of the Option. The balance of
gain realized, if any, will be long-term or short-term capital gain, depending
on whether or not the Shares were sold more than one year after the Option was
exercised. If the Optionee sells the Shares prior to the satisfaction of the
holding period requirements

12
<PAGE> 14

but at a price below the Fair Market Value of the Shares at the time the Option
was exercised, the amount of ordinary income will be limited to the excess of
the amount realized on the sale over the exercise price of the Option. If the
Optionee includes the ordinary income in income or the Company complies with
applicable reporting requirements, it will be entitled to a business expense
deduction in the same amount and at the same time as the Optionee recognizes
ordinary income, subject to any deduction limitation under Section 162(m).

In general, an Optionee to whom a Nonqualified Stock Option is granted
will recognize no income and the Company will not be entitled to any business
expense deduction at the time of the grant of the Option. Upon exercise of a
Nonqualified Stock Option, an Optionee will recognize ordinary income in an
amount equal to the amount by which the Fair Market Value of the Shares on the
date of exercise exceeds the exercise price of the Option. If the Optionee
includes such amount in income or the Company complies with applicable reporting
requirements, it will be entitled to a business expense deduction in the same
amount and at the same time as the Optionee recognizes ordinary income, subject
to any deduction limitation under Section 162(m).

A participant who has been granted Restricted Stock will not realize
taxable income at the time of grant, and the Company will not be entitled to a
deduction at that time, assuming that the restrictions constitute a "substantial
risk of forfeiture" for Federal income tax purposes. Upon the vesting of Shares
subject to an award of Restricted Stock, the Grantee will realize ordinary
income in an amount equal to the then Fair Market Value of those Shares, and the
Company will be entitled to a corresponding deduction, subject to any deduction
limitation under Section 162(m). Gains or losses realized by the Grantee upon
disposition of such Shares will be treated as capital gains or losses, with the
basis in such Shares equal to the Fair Market Value of the Shares at vesting. If
dividends are paid to the Grantee during the restricted period, they will be
compensation income to the Grantee and deductible as such by the Company. A
Grantee may elect pursuant to Section 83(b) of the Code to have the income
recognized and measured as of the date of grant of Restricted Stock and to have
the applicable capital gain holding period commence as of that date. If such an
election is filed in a timely manner, the Company will have a corresponding
deduction, subject to any deduction limitation under Section 162(m).

Section 162(m) of the Code and the regulations proposed thereunder
generally would disallow the Company a federal income tax deduction for
compensation paid to the chief executive officer and the four other most highly
compensated executive officers to the extent such compensation paid to any of
such individuals exceeds one million dollars in any year. Section 162(m)
generally does not disallow a deduction for payments of qualified
"performance-based compensation" the material terms of which have been disclosed
to and approved by shareholders. The Company intends that compensation
attributable to Options and Restricted Stock subject to Performance Objectives
granted under the 2000 Stock Incentive Plan will be qualified "performance-based
compensation."

Under certain circumstances, the accelerated vesting or the cashout or
exercise of Options or the accelerated lapse of restrictions on Restricted Stock
in connection with a change in control of the Company might be deemed an "excess
parachute payment" for purposes of the golden parachute tax provisions of
Section 280G of the Code. To the extent it is so considered, the Optionee may be
subject to a 20% excise tax and the Company may be denied a tax deduction.

A copy of the 2000 Stock Incentive Plan is attached hereto as Exhibit A
and incorporated herein by reference.

The persons named on the accompanying proxy card intend to vote in
favor of the adoption of the 2000 Stock Incentive Plan, unless a contrary choice
is indicated on the enclosed proxy card. The plan will be approved if it
receives the affirmative vote of the holders of a majority of the shares of
Class B Common Stock voting on such proposal. The Board of Directors unanimously
recommends that each shareholder vote FOR this proposal. The affirmative vote by
Delhaize and Detla will guarantee the passage of the 2000 Stock Incentive Plan.
The Company has been informed that Delhaize and Detla intend to vote for the
passage of the 2000 Stock Incentive Plan.

13
<PAGE> 15

PROPOSAL (4)

APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The firm of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"),
Charlotte, North Carolina has, upon the recommendation of the Audit Committee of
the Board of Directors, been selected by the Board of Directors of the Company
as independent accountants for the fiscal year ending December 30, 2000, subject
to ratification of that appointment by the vote of the holders of a majority of
the shares of Class B Common Stock voting on such proposal.
PricewaterhouseCoopers, or its predecessors, has acted as independent
accountants for the Company since 1973. Representatives of
PricewaterhouseCoopers are expected to be present at the Annual Meeting with the
opportunity to make a statement if they so desire and will also be available to
respond to appropriate questions.

The persons named on the accompanying proxy card intend to vote in
favor of the ratification of the appointment of PricewaterhouseCoopers as
independent accountants for the fiscal year ending December 30, 2000, unless a
contrary choice is indicated on the enclosed proxy card. The Board of Directors
unanimously recommends that each shareholder vote FOR this proposal. The
affirmative vote of Delhaize and Detla will guarantee the ratification of the
appointment. The Company has been informed that Delhaize and Detla intend to
vote for the ratification of the appointment.

14
<PAGE> 16

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the annual and
long-term compensation earned by the Chief Executive Officer, the former Chief
Executive Officer and each of the five other most highly compensated executive
officers of the Company (the "Named Executives") for services rendered to the
Company in all capacities for the fiscal years ended January 1, 2000, January 2,
1999 and January 3, 1998.

<TABLE>
<CAPTION>
LONG-TERM
COMP. LONG-TERM
OTHER RESTRICTED COMP. ALL
ANNUAL COMP. ANNUAL STOCK OPTIONS/ OTHER
------------------------ COMP. AWARD(S) SARS COMP.
YEAR SALARY($) BONUS(1) ($)(2) ($)(3) (#) (4)
---- ------- ------- ----- ------- ------- -------
NAME AND PRINCIPAL POSITION
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bill McCanless 1999 616,324 237,260 9,888 417,308 267,745/0 119,507
President and 1998 425,132 166,845 7,239 151,195 24,710/0 85,586
Chief Executive 1997 368,983 139,037 6,615 108,498 27,155/0 97,658
Officer

Joseph C. Hall, Jr 1999 494,519 190,481 9,035 262,052 42,541/0 102,617
President of 1998 446,389 175,187 7,705 158,765 25,945/0 94,063
Food Lion Division 1997 441,577 166,845 8,362 153,177 38,336/0 130,218

Laura C. Kendall 1999 322,388 77,612 8,003 136,684 22,187/0 57,963
Chief Financial 1998 261,045 50,649 7,734 78,913 12,897/0 --
Officer 1997 223,106 -- 4,543 84,467 16,376/0 56,338

W. Bruce Dawson 1999 233,726 56,268 5,506 82,595 13,405/0 43,063
President of Kash n' 1998 217,536 38,805 22,484 50,297 8,219/0 36,830
Karry 1997 192,909 45,597 4,272 33,484 8,382/0 30,397

Robert J. Brunory 1999 232,120 55,880 6,171 82,010 13,312/0 42,967
Senior Vice 1998 221,492 48,508 5,739 51,206 8,368/0 38,989
President, 1997 205,224 38,806 6,175 35,631 8,917/0 32,351
Sales and Marketing
of Food Lion Division

Tom E. Smith 1999 -- -- -- 0 0 --
Former President and 1998 958,657 423,256 39,222 460,245 75,222/0 233,153
Chief Executive 1997 973,901 414,986 27,183 456,281 114,200/0 299,948
Officer (5)

A. Edward Benner, Jr 1999 253,732 65,970 9,592 96,832 15,716/0 47,228
Former Vice 1998 249,181 61,120 11,298 75,340 12,311/0 46,108
President of 1997 246,494 58,209 11,718 55,573 13,910/0 51,539
Information
Technology and
Chief Information
Officer (6)
</TABLE>

(1) These amounts are awarded under the Key Executive Annual Incentive
Bonus Plan or the Incentive Bonus Plan, and are shown for the year
earned.

(2) Includes amounts reimbursed for medical expenses, amounts deemed
compensation under the Company's Low Interest Loan Plan, amounts deemed
compensation in connection with an automobile furnished by the Company
to each of the Named Executives, amounts deemed compensation in
connection with life insurance policies for the Named Executives, and
the value of certain other personal benefits.

15
<PAGE> 17

(3) The dollar values of the restricted stock awards shown in this column
are based on the closing market price of the Company's Class A Common
Stock on the date of grant multiplied by the number of shares awarded.
The number and value of the aggregate restricted stock holdings for
each of the Named Executives at the end of the last completed fiscal
year (January 1, 2000), representing shares of restricted stock that
had been granted under the 1996 Employee Stock Incentive Plan, are as
follows: for Mr. McCanless, 24,262 shares valued at $492,822; for Mr.
Hall, 21,771 shares valued at $442,223; for Ms. Kendall, 9,496 shares
valued at $192,888; for Mr. Dawson, 6,197 shares valued at $125,877;
and for Mr. Brunory, 6,169 shares valued at $125,308. The value of such
shares, which were granted in 1996, 1997, 1998 and 1999, is based on
the closing stock price of the Company's Class A Common Stock on
December 31, 1999, the last trading day in fiscal year 1999. The shares
of restricted stock were granted on May 3, 1996, May 1, 1997, May 7,
1998 and April 30, 1999 in the following amounts: to Mr. McCanless,
3,284 shares in 1996, 5,408 shares in 1997, 4,993 shares in 1998 and
13,571 shares in 1999; to Mr. Hall, 4,560 shares in 1996, 7,635 shares
in 1997, 5,243 shares in 1998 and 8,522 shares in 1999; to Ms. Kendall,
3,261 shares in 1997, 2,606 shares in 1998 and 4,445 shares in 1999; to
Mr. Dawson, 1,198 shares in 1996, 1,669 shares in 1997, 1,661 shares in
1998 and 2,686 shares in 1999; and to Mr. Brunory, 958 shares in 1996,
1,776 shares in 1997, 1,691 shares in 1998 and 2,667 shares in 1999.
The shares of restricted stock granted in 1996 will vest one-fourth on
May 3, 2000, and one-fourth on May 3, 2001. The shares granted in 1997
will vest one-fourth on May 1, 2000, one-fourth on May 1, 2001, and
one-fourth on May 1, 2002. The shares of restricted stock granted in
1998 will vest one-fourth on May 7, 2000, one-fourth on May 7, 2001,
one-fourth on May 7, 2002, and one-fourth on May 7, 2003. The shares of
restricted stock granted in 1999 will vest one-fourth on April 30,
2001, one-fourth on April 30, 2002, one-fourth on April 30, 2003, and
one-fourth on April 30, 2004. No dividends will be paid on the
restricted stock during the period in which the shares are subject to
restrictions under the 1996 Employee Stock Incentive Plan.

(4) Includes $24,000 contributed by the Company on behalf of each of the
Named Executives under the Company's non-contributory qualified profit
sharing plan (the "Profit Sharing Plan") during 1999. Amounts set forth
in this column also include contributions to the Company's Profit
Sharing Restoration Plan on behalf of the Named Executives in lieu of
additional contributions that would have been made under the Company's
Profit Sharing Plan but for certain limitations on such contributions
in the Internal Revenue Code. These payments were, for Mr. McCanless,
$93,475 in 1999, $60,625 in 1998 and $53,531 in 1997; for Mr. Hall,
$76,456 in 1999, $67,985 in 1998 and $72,865 in 1997, for Mrs. Kendall,
$33,963 in 1999, $ in 1998 and $ in 1997; for Mr. Dawson, $19,063 in
1999, $12,830, in 1998 and $ 6,397 in 1997; for Mr. Brunory, $18,967 in
1999, $14,989 in 1998 and $8,351 in 1997, for Mr. Smith, $191,000 in
1999, $200,955 in 1998 and $206,957 in 1997 and for Mr. Benner, $23,228
in 1999, $22,108 in 1988 and $24,339 in 1997. On May 4, 1995, the Board
of Directors adopted the Profit Sharing Restoration Plan, pursuant to
which excess profit sharing payments are credited to an account on
behalf of each participant. See "REPORT ON EXECUTIVE COMPENSATION --
Profit Sharing" below. Amounts set forth in this column also include,
for Messrs. McCanless, Hall and Smith, the economic value of premiums
paid by the Company directly or, in the case of Mr. Smith, paid by Mr.
Smith and reimbursed by the Company to Mr. Smith, to maintain split
dollar life insurance policies on behalf of the executives. Under an
agreement with Mr. Smith, Mr. Smith (or his assignee in the event of
assignment) has an interest in life insurance policies on his life in
the amount of $3,250,000 . The Company has secured split dollar life
insurance policies for Messrs. McCanless and Hall in the face amount of
three and one-half times such officer's base salary, if death occurs
prior to retirement, and two times base salary if death occurs after
retirement. The life insurance policies are assigned to the Company as
security for the premiums paid by the Company and, upon the death of
the executive (or earlier termination of the policies), the Company is
entitled to receive directly from the insurance carrier an amount equal
to the sums advanced.

(5) Only includes compensation Mr. Smith received through April 7, 1999. On
April 7, 1999, Mr. Smith retired as President and Chief Executive
Officer of the Company. On that date, the Board of Directors appointed
Mr. McCanless as President and Chief Executive Officer of the Company.
See "Employment Plans and Arrangements."

(6) Effective December 31, 1999, A. Edward Benner, Jr., retired as Vice
President of Information Technology and Chief Information Officer.

16
<PAGE> 18

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

The following table shows information for the Named Executives,
concerning (i) exercises of stock options during the year ended January 1, 2000
and (ii) the amount and value of unexercised "in-the-money" options for the
Company's Class A Common Stock, as of January 1, 2000. The value of stock
options at January 1, 2000 was determined by the spread between the exercise
price of such options and the closing price of shares of the Company's Class A
Common Stock, as reported by the New York Stock Exchange on December 31, 1999,
the last trading day in fiscal year 1999.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
SHARES UNDERLYING VALUE OF
ACQUIRED UNEXERCISED UNEXERCISED
ON VALUE OPTIONS/SARS AT OPTIONS/SARS AT
NAME EXERCISE REALIZED FY-END(#) FY-END($)
- ---- --------------------------------------------------------------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE

<S> <C> <C> <C> <C>
A. Edward Benner, Jr ............ 3,727 $ 45,280 -- --
Robert J. Brunory ............... 1,167 11,484 0/8,917 0/2,229
W. Bruce Dawson ................. -- -- 1,000/8,382 4,000/2,096
Joseph C. Hall, Jr .............. -- -- 1,667/38,336 5,730/9,584
Laura C. Kendall ................ -- -- 0/5,269 0/1,317
Bill McCanless .................. -- -- 1,723/27,433 5,610/7,588
Tom E. Smith .................... -- -- 0/114,200 0/28,550
</TABLE>

17
<PAGE> 19

PERFORMANCE GRAPHS

The graphs set forth below compare, for the five- and ten-year periods
indicated, the "cumulative shareholder return" to shareholders of the Company as
compared with the return of the Standard & Poor's 500 Stock Index and of a group
of five retail food chain stores consisting of Albertson's, Inc., Great Atlantic
& Pacific Tea Co., Kroger Co., Safeway, Inc., and Winn-Dixie Stores, Inc. (the
"Peer Group Index"). "Cumulative shareholder return" has been computed assuming
an investment of $100 at the beginning of the periods indicated in the Class A
Common Stock of the Company and the stock of the companies comprising the
Standard & Poor's 500 Stock Index and the Peer Group Index, and assuming the
reinvestment of dividends.

The Peer Group Index in the Company's 1999 Proxy Statement included
American Stores Co. and Bruno's, Inc., in addition to the corporations included
in this 2000 Peer Group Index. The Peer Group Index has been restated to omit
American Stores Co. and Bruno's, Inc. since American Stores Co. was acquired and
Bruno's, Inc. went into bankruptcy and trading data for the full year ended
December 31, 1999 is not available.

FIVE YEAR PERFORMANCE

<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500
(FISCAL YEAR COVERED) COMPANY INDEX PEER GROUP

[CHART]

18
<PAGE> 20

TEN YEAR PERFORMANCE

<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500
(FISCAL YEAR COVERED) COMPANY INDEX PEER GROUP

[CHART]

19
<PAGE> 21

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth the number of shares of the Company's
Class A Common Stock for which stock options were granted to each of the Named
Executives during the fiscal year ended January 1, 2000.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
- ---------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------ ------------ ----- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
A. Edward Benner, Jr 15,716 2.74(1) $ 30.75 4/30/09 304,029 770,530
Robert J. Brunory 13,312 2.32(1) 30.75 4/30/09 257,523 652,666
W. Bruce Dawson 13,405 2.34(1) 30.75 4/30/09 259,322 657,226
Joseph C. Hall, Jr 42,541 7.41(1) 30.75 4/30/09 822,964 2,085,718

Laura C. Kendall 22,187 3.87(1) 30.75 4/30/09 429,212 1,087,793
Bill McCanless 67,745 11.81(1) 30.75 4/30/09 1,310,541 3,321,430
Bill McCanless 200,000(2) 34.85 26.625 4/07/09 3,348,864 8,486,679
Tom E. Smith
</TABLE>

(1) These options vest and become exercisable for shares of the Company's
Class A Common Stock as follows: one-third on April 30, 2002, one-third
on April 30, 2003 and the remaining one-third on April 30, 2004.

(2) Options vest on or prior to April 7, 2002 if the closing market price
of the Company's Class A Common Stock is $60.00 or greater for 45
consecutive trading days. If options have not vested by April 7, 2002,
options will automatically vest and become exercisable on April 7,
2006.

20
<PAGE> 22

REPORT OF THE SENIOR MANAGEMENT COMPENSATION COMMITTEE,
STOCK OPTION COMMITTEE AND BOARD OF DIRECTORS

REPORT ON EXECUTIVE COMPENSATION

The Company's policy with respect to executive compensation has been designed
to:

- - reward executive officers for the achievement of short-term operating
goals and for the enhancement of the long-term shareholder value of the
Company;

- - align the interests of executive officers with those of the Company's
shareholders with respect to short-term operating results; and

- - adequately and fairly compensate executive officers in relation to
their responsibilities, capabilities, and contributions to the Company
and in a manner that is commensurate with compensation paid by
companies of comparable size within the Company's industry to enable
the Company to attract and retain highly skilled and qualified senior
management.

As in prior years, the Company worked with Towers Perrin, an
independent compensation consulting firm, to establish estimated competitive
compensation opportunities for the Company's senior executives to ensure that
the Company's compensation structure is sufficiently competitive to attract and
retain highly qualified executives in all of its senior management positions.
Towers Perrin's competitive review and analysis of industry pay practices was
based on a compilation of competitive compensation and benefit information from
published surveys of the retail grocery industry, proxy statements for 11
specific competitors in the grocery industry selected on the basis of their
revenues and multi-store operational formats (Albertson's Inc.; American Stores
Co.; Fleming Companies, Inc.; Giant Food, Inc.; Great Atlantic & Pacific Tea
Co.; Hannaford Bros. Co.; Kroger Co.; Publix Super Markets, Inc.; Safeway, Inc.;
Supervalu, Inc.; and Winn-Dixie Stores, Inc.), as well as Towers Perrin's own
compensation and benefit data sources. This compilation of competitive
information is referred to herein as the "Towers Perrin Competitive Data."
According to the Towers Perrin Competitive Data, total compensation (which
included stock options and restricted stock) for the Named Executives was
competitive, and Towers Perrin so advised the Senior Management Compensation
Committee.

The primary components of compensation paid by the Company to executive
officers are base salary and incentive compensation, with incentive compensation
broken down further into incentive bonus payments, stock options, restricted
stock and profit sharing. The relationship of each principal component of
compensation to the Company's performance is discussed below.

BASE SALARY

Each year, the Senior Management Compensation Committee reviews and
approves the base salaries to be paid by the Company during the following year
to members of senior management. Annual adjustments to base salaries are
determined based on a number of factors, including the Company's business and
financial performance and the executives' contributions to the Company's
performance.

At its December 1999 meeting, the Senior Management Compensation
Committee reviewed the base salaries of the Named Executives taking into account
their roles and performance contributions, as well as the Company's overall
competitive pay positions, to determine appropriate increases to base salaries
for 2000. As a result of this review, such Committee increased the 2000 base
salary for each of the Named Executives in amounts ranging from 1.91% to 17.17%.
This Committee believes that these increases and the resulting new base salaries
are consistent with overall Company and individual performance and the Company's
general strategy of paying base salaries competitive within the industry to
allow it to retain valued executives. These salary actions are also consistent
with such Committee's strategy over the past six years to bring the Company's
executive compensation program more in line with competitive industry practice.

21
<PAGE> 23

Bill McCanless's terms of employment, including the level of his base
salary, are set forth in an April 7, 1999 Employment Agreement between Mr.
McCanless and the Company (the "McCanless Employment Agreement"). The McCanless
Employment Agreement provides that Mr. McCanless's base salary will be
competitive within the Company's industry as determined annually, but that Mr.
McCanless's base salary will not be reduced in connection with any annual review
of industry practices. The McCanless Employment Agreement further provides that
Mr. McCanless annually shall be eligible to receive up to 45% of his base salary
in the form of a bonus under the Company's Key Executive Annual Incentive Bonus
Plan and that Mr. McCanless shall be eligible to participate in the Company's
stock option plans and other compensation plans of the Company. In addition, the
McCanless Employment Agreement provides that Mr. McCanless shall be provided
split dollar life insurance in specified amounts. The McCanless Employment
Agreement additionally provided for a one-time grant to Mr. McCanless of options
to purchase 200,000 shares of Class A Common Stock of the Company. Such options
are exercisable within the first three years after the date of grant only if the
stock price of Class A Common Stock is $60 or greater for 45 consecutive trading
days or, if not previously exercisable, on the seventh anniversary of the date
of grant. Except for the base salary, bonus, split dollar life insurance and
options, the McCanless Employment Agreement does not address in detail any
component of Mr. McCanless's compensation. See also "Employment Plans and
Agreements -- Senior Management Employment Agreements" for discussion of
employment agreements with Messrs. Brunory, Dawson and Hall and Ms. Kendall.

INCENTIVE COMPENSATION

Incentive Bonus. A substantial portion of each executive officer's
compensation package is in the form of an incentive bonus designed to reward the
achievement of short-term operating goals and long-term increases in shareholder
value.

The Company's Incentive Bonus Plan, which was adopted by the Company in
1982, is designed to offer an incentive to those employees whose performance
most directly affects the Company's profitability, as determined by the Senior
Management Compensation Committee. Under the terms of the Incentive Bonus Plan,
each employee selected for participation in the plan is assigned a maximum
potential bonus award, which is computed by multiplying a predetermined
percentage rate ranging from 10% to 45%, depending on the participant's position
in the Company (the "Potential Percentage Rate"), by each participant's salary
(the "Potential Bonus"). Under the plan, the total bonus payable each year for
all participants (the "Total Bonus") may not exceed the lesser of (i) 2.1% of
the Company's net income before taxes and certain other adjustments in excess of
a 15% return on average shareholder's equity (the "ROE Bonus Amount") and (ii)
the aggregate of the Potential Bonus for all plan participants (the "Maximum
Bonus Amount"). A portion of each participant's bonus is determined by
multiplying one-half of such participant's Potential Percentage Rate by such
participant's salary (the "Objective Bonus"). All or any of the remaining Total
Bonus is determined and allocated among participants at the discretion of the
Senior Management Compensation Committee (the "Discretionary Bonus"). In
determining the Discretionary Bonus, the Senior Management Compensation
Committee considers a number of factors, including contributions of each
participant toward the accomplishment of business objectives during the year.

For the year ended January 1, 2000, each of the Named Executives
received his or her Potential Bonus, and the Total Bonus paid to participants
under the plan equaled the Maximum Bonus Amount. In determining the
Discretionary Bonus awarded to each executive, the Senior Management
Compensation Committee sought to reward senior management for the Company's
financial performance during 1999 and for increasing long-term shareholder value
of the Company. The Senior Management Compensation Committee found that the
Company had substantially benefited during 1999 from improved financial
performance in a highly competitive industry, and the continued growth of the
Company. In addition, the Senior Management Compensation Committee considered to
what extent each participant met his or her personal goals established at the
beginning of the fiscal year by such participant and his or her supervisor.

In December 1995, the Internal Revenue Service issued its final
regulations for Section 162(m) of the Code covering the non-deductibility of
compensation in excess of $1,000,000 for the CEO and the four highest-paid
officers (other than the CEO) named in the proxy statements of public companies.
Code Section 162(m) provides for deductibility of "performance-based"
compensation in excess of $1,000,000 so long as it meets the requirements

22
<PAGE> 24

of Section 162(m), which include, among other things, that the compensation be
paid through application of a shareholder approved plan.

At the Annual Meeting of Shareholders in May 1996, shareholders
approved the Key Executive Annual Incentive Bonus Plan (the "Key Executive
Plan"), which was designed to provide annual incentive compensation
opportunities that will qualify as performance-based under the terms of Code
Section 162(m). Under the terms of this Plan, the Senior Management Compensation
Committee may designate certain executive officers who may be affected by the
terms of Section 162(m) to participate in this plan. Executives who are
designated for participation in this plan may not simultaneously participate in
the Company's Incentive Bonus Plan.

Participants in the Key Executive Plan are eligible to receive bonuses
if and only to the extent that pre-established performance goals are met. The
potential maximum bonus that each participant in this plan is eligible to
receive will be set as a fixed percentage of profit in excess of a return on
average equity threshold as pre-determined by the Senior Management Compensation
Committee. The maximum bonus award that any participant may receive in any
single year under this plan is $[750,000]. At the discretion of such Committee,
actual bonuses paid may be lower than the amounts generated by the formula, but
in no case may they be higher. In 1999, Mr. McCanless was the only executive
designated to participate in the Key Executive Plan. In addition, certain
portions of Mr. McCanless' compensation may be deferred as necessary for
purposes of Code Section 162(m). See "Employment Plans and Agreements --
Deferred Compensation Agreements."

Stock Options. At the May 2, 1996 Annual Meeting, shareholders approved
amendments to the 1991 Employee Stock Option Plan of Food Lion, Inc. and renamed
the plan the 1996 Employee Stock Incentive Plan of Food Lion, Inc. (the "1996
Incentive Plan"). Like the Company's earlier stock option plans, the 1996
Incentive Plan provides the Stock Option Committee full and final authority, in
its discretion, to determine within the terms of the plan the individuals to
receive awards pursuant to the plan, the times or effective dates when awards
will be granted, the number of shares subject to each award, the exercise price
for any stock options granted and the time(s) when, and the conditions, if any,
under which each award may be vested and/or exercisable.

The 1996 Incentive Plan provides for grants of stock options and
restricted stock. Under the terms of this plan, options to purchase shares of
the Company's Class A Common Stock, or awards of shares of Class A Common Stock
subject to certain vesting and other restrictions determined by the Stock Option
Committee, may be granted on an annual basis to key employees. Grants to the
Named Executives of stock options and restricted stock under this plan are made
with reference to competitive practice, the Company's overall goal of linking
executive compensation to the enhancement of long-term shareholder value, and
individual circumstances with respect to executive recruitment and retention.
Towers Perrin's recommendations to the Stock Option Committee contemplated
annual grants of stock options and restricted stock to the Named Executives in
amounts comparable to the grants made in 1998, assuming satisfactory company and
individual performance. During 1999, options for 650,670 shares of Class A
Common Stock were granted under the 1996 Incentive Plan to 1,181 employees. Upon
approval of the 2000 Stock Incentive Plan by the shareholders of the Company,
the 1996 Incentive Plan will effectively be frozen and will govern only those
options and awards of restricted stock then outstanding under the 1996 Incentive
Plan.

Profit Sharing. The Company also maintains the Profit Sharing
Retirement Plan of Food Lion, Inc. (the "Profit Sharing Plan") for employees
pursuant to which the Company contributes annually an amount of current or
accumulated earnings as determined by the Board of Directors but not exceeding
the maximum amount deductible for income tax purposes. Each employee of the
Company is generally eligible to participate in the Profit Sharing Plan as of
the first day of the plan year in which he or she completes 1,000 or more hours
of service. The annual contribution each year under the Profit Sharing Plan is
determined by the Board of Directors but may not in any event exceed 15% of the
compensation paid or otherwise accrued during the taxable year for each employee
under the Profit Sharing Plan. The Board of Directors approved a contribution to
the Company's Profit Sharing Plan for 1999 equal to 15% of the 1999 wages of all
eligible employees. The Board of Directors authorized one-third of the total
contribution to be allocated for investment in the Company's Class A Common
Stock.

Tax-deferred contributions by the Company for the benefit of highly
compensated employees to the Profit Sharing Plan are subject to certain limits
imposed by the Code. This limit was $[30,000] during each of the last three
fiscal years. Contributions on behalf of executive officers in excess of these
limitations are credited to the

23
<PAGE> 25

executives' accounts under the Company's Profit Sharing Restoration Plan of Food
Lion, Inc., which includes a credit of interest at a variable rate equal to the
10-year Constant Maturity Treasury yield in effect on the last day of the
previous calendar quarter. Each participant in the Profit Sharing Restoration
Plan of Food Lion, Inc. will receive a single lump sum cash distribution in the
amount of his or her entire account balance on the first day of the month next
succeeding termination of employment with the Company.

Supplemental Executive Retirement Plan. The Company also sponsors a
Supplemental Executive Retirement Plan ("SERP") for certain key employees
including each of the Named Executives. This plan provides a supplemental
benefit that, combined with benefits from the Profit Sharing and Profit Sharing
Restoration Plans, deferred compensation agreements, and Social Security, will
provide estimated annual benefits at normal retirement (age 65) of up to 60% of
the participant's final average compensation. A participant's "final average
compensation" means the annual average of the participant's annual cash
compensation (to include base salary and incentive bonus) paid to the
participant for the five completed calendar years that immediately precede the
year in which payments of benefits under the plan are to begin. A participant
who retires on or after his normal retirement date, and has completed 20 or more
years of service to the Company, will receive an annual retirement benefit under
the SERP payable as a single life annuity that is equal to the difference
between 60% of his final average compensation and certain "benefit offsets." The
benefit offsets are the sum of: (1) the participant's annuity under the Profit
Sharing Plan; (2) the participant's annuity under the Profit Sharing Restoration
Plan; (3) the participant's annuity under any deferred compensation agreement
with the Company; and (4) the participant's Social Security benefit. Any
participant who retires on or after his normal retirement date and has completed
fewer than 20 years of service to the Company will receive a reduced benefit in
proportion to the participant's years of service. A participant who retires
prior to normal retirement age may be entitled to reduced benefits under the
SERP, depending on the participant's age and years of service.

Based on currently available information and assumptions, the estimated
annual benefits under the SERP alone to the Named Executives are $10,000 for Mr.
Brunory, $10,000 for Mr. Dawson, $10,000 for Mr. Hall, $10,000 for Ms. Kendall
and $10,000 for Mr. McCanless. The projected SERP benefits to Messrs. _______
and _______, and to Ms. ______, are $____ because it is estimated that the
benefit offsets will exceed [60%] of the final average compensation for each of
these Named Executives. These estimates may change from time to time depending
on the projected final average compensation and the projected value of the
benefit offsets for each of the Named Executives.

This report is submitted by the Senior Management Compensation
Committee, the Stock Option Committee and the Board of Directors of the Company.

<TABLE>
<CAPTION>
SENIOR MANAGEMENT
COMPENSATION COMMITTEE: STOCK OPTION COMMITTEE:

<S> <C>
Pierre-Olivier Beckers Pierre-Olivier Beckers
William G. Ferguson, Chairperson William G. Ferguson
Dominique Raquez Bernard W. Franklin, Chairperson

BOARD OF DIRECTORS:

Pierre-Olivier Beckers, Chairman of the Board Bernard W. Franklin
Jacqueline K. Collamore Joseph C. Hall, Jr.
Jean-Claude Coppieters `t Wallant Margaret H. Kluttz
Pierre Dumont Bill McCanless
William G. Ferguson Dominique Raquez
</TABLE>

24
<PAGE> 26

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following persons served on the Senior Management Compensation
Committee during fiscal year 1999: William G. Ferguson (Chairperson),
Pierre-Olivier Beckers and Dominique Raquez. Messrs. Hall and McCanless, who are
executive officers of the Company, are members of the Company's Board of
Directors and participate in decisions by the Board of Directors with respect to
annual contributions made by the Company to or for the benefit of employees
(including the Named Executives) under the Company's Profit Sharing Plan. In
addition, on January 1, 2000, Mr. McCanless was appointed to the Executive
Committee of Delhaize.

Mr. Raquez, who is a member of the Compensation Committee, and Mr.
Beckers, who is a member of the Compensation and Stock Option Committees, are
affiliated with Delhaize.

EMPLOYMENT PLANS AND AGREEMENTS

Employment Agreement with Bill McCanless.

Effective April 7, 1999, Bill McCanless entered into an agreement with
the Company providing for his employment as President and Chief Executive
Officer of the Company (the "McCanless Agreement"). The McCanless Agreement
expires on April 7, 2004, provides for Mr. McCanless to receive a base salary of
not less than $650,000 per year, and authorizes the Board of Directors to
increase such amount from time to time. Mr. McCanless is also eligible to
receive a bonus of up to 45% of his salary in any year at the discretion of the
Board of Directors. The McCanless Agreement also entitles Mr. McCanless to
participate in other compensation and benefit plans of the Company and requires
the Company to maintain split dollar life insurance for Mr. McCanless in the
face amount of three and one-half times his base salary if his death occurs
prior to retirement (subject to certain conditions), and two times his last base
salary if death occurs after retirement. Mr. McCanless may elect to defer some
or all of his bonus compensation and up to 50% of his base salary.

The McCanless Agreement also provides for the grant of option to
purchase 200,000 shares of Class A common stock to Mr. McCanless (the "Jump
Start Options"). The Jump Start Options expire on April 7, 2009. If the closing
price per share of the Class A common stock is $60 or greater for 45 consecutive
trading days ending on or prior to April 7, 2002 and Mr. McCanless is still the
President and Chief Executive Officer of the Company on such date, the Jump
Start Options will vest on such date. Otherwise, the Jump Start Options will
vest on April 7, 2006, provided that Mr. McCanless remains employed as the
President and Chief Executive Officer of the Company on such date. The exercise
price of the Jump Start Options is $26.625 per share.

The Company may terminate Mr. McCanless' employment for Cause, as
defined in the McCanless Agreement. The McCanless Agreement defines Cause as (i)
willful failure (other than by reason of incapacity due to physical or mental
illness) by Mr. McCanless to perform his material duties thereunder and his
inability or unwillingness to correct such failure within 30 days after receipt
of such written notice, (ii) conviction of Mr. McCanless of a felony or plea of
guilty or no contest to a felony, or (iii) perpetration of a material dishonest
act or fraud against the Company or any affiliate thereof. The definition of
"Cause" expressly excludes any mistake of fact or judgment made by Mr. McCanless
in good faith with respect to the Company's business. If the Company terminates
Mr. McCanless' employment for Cause, or Mr. McCanless' employment terminates due
to death, the Company will no longer be required to make payments to Mr.
McCanless or his estate under the agreement, except for compensation earned
prior to such termination and pursuant to plans, arrangements or agreements
providing for payments after termination of employment, including, in the case
of death, payments pursuant to a salary continuation agreement with the Company.
See "Employment Plans and Agreements--Salary Continuation Agreements." The
Company or Mr. McCanless may terminate his employment upon Mr. McCanless'
disability as specified in the McCanless Agreement, in which case, the Company
shall pay Mr. McCanless a lump sum payment equal to 50 percent of the present
value of the future base salary payable to Mr. McCanless during the longer of
the remainder of the term of employment under his employment agreement or for a
period of two years.

Mr. McCanless may terminate his employment without liability to the
Company for Good Reason, as defined in the McCanless Agreement. Good Reason is
defined as the occurrence of any of the following circumstances: (i) a material
diminution of the professional responsibilities of Mr. McCanless, (ii)
assignment of inappropriate duties to Mr. McCanless, (iii) failure of the
Company to provide compensation and benefits obligations to Mr. McCanless as set
forth in the McCanless Agreement, (iv) transfer of Mr. McCanless more than 50
miles from Salisbury, North Carolina, (v) a purported termination of the
McCanless Agreement by the Company other than in accordance with the terms
thereof or (vi) failure of the Company to require any successor to the Company
to assume and comply with the McCanless Agreement.

If Mr. McCanless terminates his employment for Good Reason or if the
Company terminates his employment (except for "Cause" as defined above, or by
reason of death or disability), the Company shall pay Mr. McCanless the full
amount of Mr. McCanless's base salary and other compensation earned prior to the
Date of Termination. In addition, the Company shall pay Mr. McCanless an amount
(the "Termination Payment") equal to the product of Mr. McCanless's current
annual base salary multiplied by the greater of (i) three years, or (ii) the
number of full years remaining in the term of the McCanless Agreement.

25
<PAGE> 27

If Mr. McCanless' employment is terminated by Mr. McCanless for Good
Reason prior to a Change in Control or by the Company without Cause, the Company
shall maintain in full force and effect for the continued benefit of Mr.
McCanless and his eligible dependents for three years, after the Date of
Termination (or for the number of years remaining in the term of the agreement,
whichever is greater), the employee fringe benefit plans and programs relating
to medical, dental, health and life insurance in which Mr. McCanless was
entitled to participate immediately prior to the Date of Termination, if Mr.
McCanless's continued participation is permitted under the general terms and
provisions of such plans and programs and applicable law, but not including the
Annual Incentive Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan
and the Profit Sharing Restoration Plan and any other bonus, retirement or
similar compensation plan.

If Mr. McCanless' employment is terminated by the Company without Cause
in contemplation of a Change in Control of the Company within six months prior
to such Change in Control or Mr. McCanless' employment is terminated by the
Company without Cause or by Mr. McCanless with Good Reason within one year
following a Change in Control of the Company, the Company shall pay Mr.
McCanless the compensation and benefits set forth in the two paragraphs above,
and in addition, for three years following the Date of Termination (or for the
number of years remaining in the term of the McCanless Agreement, whichever is
greater). Mr. McCanless shall be paid an annual amount equal to the amounts, if
any, which would have been payable to Mr. McCanless under the Key Executive
Annual Incentive Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan
and the Profit Sharing Restoration Plan (or such other plans in which Mr.
McCanless was entitled to participate as of the Date of Termination) assuming
Mr. McCanless had remained employed for such three years (or greater) period and
received an annual salary at the rate in effect on the Date of Termination.

The McCanless Agreement defines a "Change in Control" of the Company as
a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided that
a Change in Control of the Company shall be deemed to have occurred if: (i) an
acquisition (other than directly from the Company by a Person (as set forth in
Sections 3(a)(2) and 13(d)(3) of the Exchange Act, excluding the Company or an
employee benefit plan of the Company or an entity controlled by the shareholders
of the Company results in the aggregate number of shares of the voting
securities of the Company beneficially owned by any other Person to exceed the
number of shares of the voting securities of the Company beneficially owned, in
the aggregate, by Delhaize and Detla; (ii) at any time during the term of the
Employment Agreement there is a change in the composition of the Board of
Directors of the Company resulting in a majority of the directors of the Company
who are in office on the date of the Employment Agreement ("Incumbent Company
Directors") no longer constituting a majority of the directors of the Company;
provided that, in making such determination, persons who are elected to serve as
directors of the Company and who are approved by all directors in office on the
date of such election (other than in connection with an actual or threatened
proxy contest) shall be treated as Incumbent Company Directors; (iii)
consummation of a complete liquidation or dissolution of the Company or a
merger, consolidation or sale of all or substantially all of the assets of the
Company (collectively, a "Business Combination") other than a Business
Combination in which all or substantially all of the beneficial holders of
voting securities of the Company receive or retain fifty percent or more of the
voting securities of the Company or entity resulting from the Business
Combination ("Resulting Company"), at least a majority of the board of directors
of the resulting corporation were Incumbent Company Directors, and after which
no person or entity owns twenty percent or more of the voting securities
("Beneficial Ownership Threshold") of the Resulting Company, who did not
beneficially own such stock immediately before the Business Combination; or (iv)
occurrence of any of the events described in (ii) or (iii) above to Delhaize, or
the acquisition by any Person of more than thirty percent of the stock of
Delhaize. Notwithstanding any other provision of this paragraph, for purposes of
the definition of "Change in Control" of the Company a change in control of
Delhaize shall not constitute a Change in Control of the Company unless it
involves an event contemplated by (iv) above. With respect to (iii) above as it
applies to Delhaize under (iv) above, the Beneficial Ownership Threshold shall
be thirty percent (30%).

Upon a Change in Control, or if Mr. McCanless's employment terminates
other than for Cause, all of the rights granted to Mr. McCanless by the Company
to own or acquire stock of the Company (including stock options and restricted
stock granted under the 1996 Incentive Plan or other plans but excluding the
Jump Start Options) will automatically vest upon the date of such Change in
Control or date of termination, provided however, that (assuming no occurrence
of a Change in Control) such rights shall not vest if Mr. McCanless's employment
is terminated for his failure adequately to perform his duties under the
McCanless Agreement as determined by an affirmative vote of at least

26
<PAGE> 28

seventy percent of the Board of Directors of the Company. If the Jump Start
Options have not vested by April 7, 2002, they will not vest for any reason,
including a Change in Control, until April 7, 2006.

The McCanless Agreement prohibits McCanless, without the written
consent of the Board of Directors of the Company, from engaging in any retail or
wholesale grocery business which is directly competitive with the business of
the Company or its affiliates in any geographic area which the Company or its
affiliates operates on the Date of Termination. This prohibition applies to Mr.
McCanless during the term of the McCanless Agreement and for a period of two
years after his termination. The McCanless Agreement also place restrictions,
for a period of two years after termination of Mr. McCanless's employment, on
the recruitment or solicitation of employees or independent contractors of the
Company for the purpose of being employed by Mr. McCanless or an entity on
behalf of which Mr. McCanless is acting as agent, representative or employee.
If, however, Mr. McCanless's employment is terminated prior to the first
anniversary of the date on which a Change in Control occurs, the foregoing
restrictions on competition and solicitation by Mr. McCanless shall not apply.

Under the McCanless Agreement, the Company agrees to indemnify Mr.
McCanless to the fullest extent permitted under North Carolina law from and
against any losses, claims, damages, costs and expenses suffered by Mr.
McCanless as a result of the fact that he is or was an officer of the Company or
is or was serving at the request of the Company as an officer, employee or agent
of an affiliate of the Company. The McCanless Agreement also provides that in
the event that any payments to which Mr. McCanless is entitled are subject to
tax imposed by Section 4999 of the Code (the "Excise Tax"), the Company shall
pay Mr. McCanless an additional amount such that the net amount retained by Mr.
McCanless shall be equal to the amount to which Mr. McCanless is entitled prior
to deduction of the Excise Tax.

Employment Agreement with Tom E. Smith. Tom E. Smith, the former
President and Chief Executive Officer of the Company, retired on April 7, 1999.
Mr. Smith's terms of employment, including the level of his base salary, for the
period prior to his retirement on April 7, 1999, were set forth in an August 1,
1991 Employment Agreement between Mr. Smith and the Company (the "Smith
Employment Agreement"). The Smith Employment Agreement provided that Mr. Smith's
base salary would be competitive with the Company's industry as determined
annually based upon a consultant's report of industry practices, but that Mr.
Smith's base salary would not be reduced in connection with any annual review of
industry practices. The Smith Employment Agreement further provided that Mr.
Smith would be eligible to participate in participate in compensation plans of
the Company and that he would be provided split dollar life insurance in
specified amounts. Except for the base salary and split dollar life insurance,
the Smith Employment Agreement did not address in detail any component of Mr.
Smith's compensation. See also "Employment Plans and Agreements - Senior
Management Employment Agreements" for discussion of employment agreements with
Messrs. Hall, McCanless and Benner, and Ms. Kohn.

Senior Management Employment Agreements. The Company is party to
employment agreements with each of the Named Executives (except for Messrs.
Dawson, Smith and Benner as discussed below). Mr. Dawson is party to an
employment agreement with Kash n' Karry Food Stores, Inc. ("Kash n' Karry"), a
wholly owned subsidiary of the Company and references to the Company below refer
to Kash n' Karry in the case of Mr. Dawson. These agreements are referred to
herein as the "Employment Agreements," and the executives are referred to as the
"Executives," except where referred to by name. The Employment Agreements with
Messrs. Hall, Dawson and Brunory were entered into on ______________, 2000, the
Employment Agreement with Ms. Kendall was entered into on ______________, 2000
and the Employment Agreement with Mr. Benner was entered into on October 1,
1997. The Employment Agreements with Messrs. Hall and Benner have five-year
terms, and the Employment Agreements with Messrs. Dawson and Brunory and Ms.
Kendall have three year terms. Each Employment Agreement will automatically be
extended for additional periods of one year unless the Executive or the Company
gives the other party at least 90 days' written notice (180 days' written
notice, in the case of Mr. Benner) prior to the expiration of the term.

The Employment Agreement with Mr. Hall provides for his employment as
President of Food Lion, a division of the Company, and for payment to Mr. Hall
of a base salary of not less than $521,390 per year. The Employment Agreement
with Ms. Kendall provides for her employment as Vice President of Finance and
Chief Financial Officer of the Company, and for payment to Ms. Kendall of a base
salary of not less than $336,206 per year. The Employment Agreement with Mr.
Dawson provides for his employment as President of Kash n' Karry, and for the
payment to Mr. Dawson of a base salary of not less than $238,706 per year. The
Employment Agreement with Mr. Brunory provides for his employment as Senior Vice
President of Category Management/Procurement at Food Lion, and for the payment
to Mr. Brunory of a base salary of not less than $238,708 per year. The
Employment Agreement with Mr. Benner provided for his employment as Vice
President of Information Technology/Chief Information Officer of the Company,
and for payment to Mr. Benner of a base salary of not less than $232,836 per
year. Effective December 31, 1999, Mr. Benner retired from the Company. The
Employment Agreements authorize the Board of Directors of the Company to
increase such minimum amounts from time to time. The Employment Agreements also
entitle the Executives to participate in other compensation and benefit plans of
the Company. The Employment Agreement with Mr. Hall requires the Company to
maintain split dollar life insurance for Mr. Hall in the face amount of three
and one-half times Mr. Hall's base salary if his death occurs prior to
retirement (subject to certain conditions), and two times the Executive's last
base salary if death occurs after retirement.

The Company may terminate an Executive's employment for Cause, as
defined in the Employment Agreements. The Employment Agreements define Cause as
(i) willful failure (other than by reason of incapacity due to physical or
mental illness) by the Executive to perform his or her material duties
thereunder and his or her inability or unwillingness to correct such failure
within 30 days after receipt of such written notice, (ii) conviction of

27
<PAGE> 29

the Executive of a felony or plea of guilty or no contest to a felony, (iii)
perpetration of a material dishonest act or fraud against the Company or any
affiliate thereof or, except in the case of Mr. Benner's Employment Agreement,
(iv) a material violation of any Company policy or any state, federal or other
governmental statute or regulation. The Employment Agreements of Messrs. Hall
and Brunory and Ms. Kendall also define cause to include (i) the termination of
the Executive's employment by the Company in conjunction with an assignment of
the Executive's Employment Agreement to a successor or subsidiary of the Company
and (ii) subsequent terminations of the Executive's employment in connection
with subsequent assignments of the Executive's Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of the Company. Ms.
Kendall's Employment Agreement further defines Cause to include the termination
of Ms. Kendall's employment at either the Company or any direct or indirect
subsidiary so long as Ms. Kendall is also then employed by any direct or
indirect subsidiary of the Company or a successor to the Company. In Mr.
Dawson's Employment Agreement, Cause is also defined to include (i) the
termination of Mr. Dawson's employment by Kash n' Karry in connection with an
assignment of his Employment Agreement to the Company or a successor or
subsidiary of Kash n' Karry or the Company and (ii) subsequent terminations of
Mr. Dawson's employment in connection with subsequent assignments of his
Employment Agreement to Kash n' Karry or the Company or the successors or direct
or indirect subsidiaries of Kash n' Karry or the Company. The definition of
"Cause" expressly excludes any mistake of fact or judgment made by the Executive
in good faith with respect to the Company's business. If the Company terminates
the Executive's employment for Cause, or the Executive's employment terminates
due to death, the Company will no longer be required to make payments to the
Executive or his or her estate under his or her Employment Agreement, except for
compensation earned prior to such termination and pursuant to plans,
arrangements or agreements providing for payments after termination of
employment (including, in the case of the Executive's death, payments pursuant
to a salary continuation agreement with the Company. See "Employment Plans and
Agreements--Salary Continuation Agreements." The or the Executive may terminate
the Executive's employment upon the Executive's disability as specified in the
Employment Agreements, in which case, the Company shall pay the Executive a lump
sum payment equal to 50 percent of the present value of the future base salary
payable to the Executive during the longer of the remainder of the term of
employment under his or her Employment Agreement or for a period of two years,
in the case of Messrs. Hall and Benner, or one year, in the case of Messrs.
Brunory and Dawson and Ms. Kendall.

The Executive may terminate his or her employment without liability to
the Company for Good Reason, as defined in the Employment Agreements. The
Employment Agreements of Messrs. Hall, Brunory and Dawson and Ms. Kendall define
Good Reason as the occurrence of any of the following circumstances without the
Executive's consent, provided that the Executive has provided notice to the
Company of the Executive's intention to terminate his or her employment for Good
Reason within 30 days after the occurrence of such event and the Company has
failed to cure such circumstance, if curable, within 30 days after receipt of
notice thereof: (i) a material diminution of the professional responsibilities
of the Executive as such responsibilities existed on the date of the Executive's
Employment Agreement, (ii) assignment of duties to the Executive which are
materially adverse to and inconsistent with the Executive's position, (iii)
failure of the Company to provide compensation and benefits obligations to the
Executive as set forth in the Executive's Employment Agreement, (iv) transfer of
the Executive more than 50 miles from Salisbury, North Carolina, without good
business reasons, as determined by the Board of Directors of the Company or (v)
failure of the Company to require any successor to the Company to assume and
comply with the Executive's Employment Agreement.

If Messrs. Hall, Brunory or Dawson or Ms. Kendall terminates his or her
employment for Good Reason or if the Company terminates his or her employment
(except for "Cause" as defined above, or by reason of the Executive's death or
disability), the Company shall pay the Executive the full amount of the
Executive's base salary and other compensation earned prior to the Date of
Termination. In addition, the Company shall pay the Executive an amount (the
"Termination Payment") equal to the product of the Executive's current monthly
base salary multiplied by the greater of (i) twelve months, in the case of
Messrs. Dawson and Brunory and Ms. Kendall, and thirty-six months, in the case
of Mr. Hall, or (ii) the number of full months remaining in the Term of the
Executive's Employment Agreement.

If the employment of Messrs. Hall, Brunory or Dawson or Ms. Kendall is
terminated by the Executive for Good Reason prior to a Change in Control or by
the Company without Cause more than six months prior to a Change in Control, the
shall maintain in full force and effect for the continued benefit of the
Executive and the Executive's eligible dependents for one year, in the case of
Messrs. Dawson and Brunory and Ms. Kendall, and three years, in the case of Mr.
Hall, after the Date of Termination (or for the number of years remaining in the
Term of the Executive's Employment Agreement, whichever is greater), the
employee fringe benefit plans and programs relating to medical, dental, health
and life insurance in which the Executive was entitled to participate
immediately prior to the Date of Termination, if the Executive's continued
participation is

28
<PAGE> 30

permitted under the general terms and provisions of such plans and programs and
applicable law, but not including the Annual Incentive Bonus Plan, the Wellness
Bonus Plan, the Profit Sharing Plan and the Profit Sharing Restoration Plan and
any other bonus, retirement or similar compensation plan.

If the employment of Messrs. Hall, Brunory or Dawson or Ms. Kendall is
terminated by the Company without Cause in contemplation of a Change in Control
of the Company within six months prior to such Change in Control or the
Executive's employment is terminated by the Company without Cause or by Employee
with Good Reason within one year following a Change in Control of the Company
the Company shall pay Employee the compensation and benefits set forth in the
two paragraphs above, and in addition, for one year following the Date of
Termination (or for the number of years remaining in the Term of the Executive's
Employment Agreement, whichever is greater). The Executive shall be paid an
annual amount equal to the amounts, if any, which would have been payable to the
Executive under the Annual Incentive Bonus Plan, the Wellness Bonus Plan, the
Profit Sharing Plan and the Profit Sharing Restoration Plan (or such other plans
in which the Executive was entitled to participate as of the Date of
Termination) assuming the Executive had remained employed for such one year (or
greater) period and received an annual salary at the rate in effect on the
Executive's Date of Termination.

The Employment Agreements define a "Change in Control" of the Company
as a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided that
a Change in Control of the Company shall be deemed to have occurred if: (i) an
acquisition (other than directly from the Company by a Person (as set forth in
Sections 3(a)(2) and 13(d)(3) of the Exchange Act, excluding the Company or an
employee benefit plan of the Company or an entity controlled by the shareholders
of the Company results in the aggregate number of shares of the voting
securities of the Company beneficially owned by any other Person to exceed the
number of shares of the voting securities of the Company beneficially owned, in
the aggregate, by Delhaize and Detla; (ii) at any time during the term of the
Employment Agreement there is a change in the composition of the Board of
Directors of the Company resulting in a majority of the directors of the Company
who are in office on the date of the Employment Agreement ("Incumbent Company
Directors") no longer constituting a majority of the directors of the Company;
provided that, in making such determination, persons who are elected to serve as
directors of the Company and who are approved by at least 70% (100%, in the case
of Mr. Benner) of the Incumbent Company Directors in office on the date of such
election (other than in connection with an actual or threatened proxy contest)
shall be treated as Incumbent Company Directors; (iii) consummation of a
complete liquidation or dissolution of the Company or a merger, consolidation or
sale of all or substantially all of the assets of the Company (collectively, a
"Business Combination") other than a Business Combination in which all or
substantially all of the beneficial holders of voting securities of the Company
(the shareholders, in the case of Mr. Benner) receive or retain fifty percent or
more of the voting securities (stock, in the case of Mr. Benner) of the Company
or entity resulting from the Business Combination ("Resulting Company"), at
least a majority of the board of directors of the resulting corporation were
Incumbent Company Directors, and after which no person or entity owns twenty
percent or more of the voting securities (stock, in the case of Mr. Benner)
("Beneficial Ownership Threshold") of the Resulting Company, who did not
beneficially own such stock immediately before the Business Combination; or (iv)
occurrence of any of the events described in (ii) or (iii) above to Delhaize, or
the acquisition by any Person of more than thirty percent of the stock of
Delhaize. In the case of Messrs. Hall, Brunory and Dawson and Ms. Kendall,
notwithstanding any other provision of this paragraph, for purposes of the
definition of "Change in Control" of the Company a change in control of Delhaize
shall not constitute a Change in Control of the Company unless it involves an
event contemplated by (iv) above. In the case of Messrs. Hall, Brunory and
Dawson and Ms. Kendall, with respect to (iii) above as it applies to Delhaize
under (iv) above, the Beneficial Ownership Threshold shall be thirty percent
(30%).

Upon a Change in Control, or if the Executive's employment terminates
other than for Cause, all of the rights granted to the Executive by the Company
to own or acquire stock of the Company (including stock options and restricted
stock granted under the 1996 Incentive Plan or other plans) will automatically
vest upon the date of such Change in Control or date of termination, provided
however, that (assuming no occurrence of a Change in Control) such rights shall
not vest if the Executive's employment is terminated for his or her failure
adequately to perform his or her duties under his or her Employment Agreement as
determined by an affirmative vote of at least seventy percent of the Board of
Directors of the Company.

The Employment Agreements of Messrs. Hall, Brunory and Dawson and Ms.
Kendall prohibit the Executives, without the written consent of the Board of
Directors of the Company, from owning, operating, controlling or being employed
as an officer, director, manager or consultant, or as an employee with
management or executive level duties or responsibilities, in any case, for or by
any business engaged in, or any entity whose business or whose direct or
indirect parent entity's or direct or indirect subsidiary entity's business is,
any retail or wholesale grocery or supermarket business within 10 miles

29
<PAGE> 31

of any store operated by the Company or any subsidiary thereof on the date on
which the Executive's employment with the Company ends; provided, however, that
this restriction shall not apply if the Executive works, consults or accepts
employment with a business that does not directly compete with the Company or
any Subsidiary thereof. These prohibitions apply to the Executives during the
term of the Employment Agreements and for a period of two years after their
termination. The Employment Agreements also place restrictions, for a period of
two years after termination of an Executive's employment, on the recruitment or
solicitation of employees or independent contractors of the Company for the
purpose of being employed by such Executive or an entity on behalf of which such
Executive is acting as agent, representative or employee. If, however, an
Executive's employment is terminated prior to the first anniversary of the date
on which a Change in Control occurs, the foregoing restrictions on competition
and solicitation by such Executive shall not apply.

Under the Employment Agreements, the Company agrees to indemnify the
Executives to the fullest extent permitted under North Carolina law from and
against any losses, claims, damages, costs and expenses suffered by the
Executives as a result of the fact that they are or were officers of the Company
or are or were serving at the request of the Company as officers, employees or
agents of an affiliate of the Company. Each Employment Agreement also provides
that in the event that any payments to which the Executive is entitled are
subject to tax imposed by Section 4999 of the Code (the "Excise Tax"), the
Company shall pay the Executive an additional amount such that the net amount
retained by the Executive shall be equal to the amount to which the Executive is
entitled prior to deduction of the Excise Tax.

Retirement Agreement with Tom E. Smith. On April 7, 1999, Tom E. Smith
retired as President and Chief Executive Officer of the Company. In connection
with his retirement, Mr. Smith entered into a Retirement Agreement with the
Company, which provides for Mr. Smith to receive annual compensation of $960,700
through July 31, 2001, plus an additional annual bonus of $432,315 through April
7, 2002, and an annual "wellness" bonus of $36,950 through April 7, 2002. All
stock options that have been granted to Mr. Smith that vest on or before
December 31, 2000, will remain outstanding and vest on the same schedule as if
Mr. Smith had remained employed with the Company through December 31, 2000, and,
once such options are vested, will remain exercisable for three months following
the respective vesting dates of such options. Additionally, all restricted stock
under awards to Mr. Smith that vest on or before December 31, 2000, will remain
outstanding following his retirement and will vest on the same schedule as if
Mr. Smith had remained employed with the Company through December 31, 2000.
Following the date of his retirement, Mr. Smith will receive cash payments from
the Company in the amounts that would have been contributed to the Profit
Sharing Plan and the Profit Sharing Restoration Plan for Mr. Smith as if he
remained employed with the Company through April 7, 2002. Under the Retirement
Agreement, Mr. Smith will have a one-time right, exercisable within 30 trading
days after his retirement, to sell to the Company for cash, up to 33% of the
shares of Class A Common Stock and Class B Common Stock of the Company owned by
Mr. Smith on the date of exercise of such right at a per share purchase price
equal to the average closing price of the Class A Common Stock or Class B Common
Stock, as the case may be, for the 30 trading days preceding the date of
exercise as reported on the NASDAQ National Market System. The Company will
continue to pay the premiums on the split-dollar life insurance policies
currently in effect with respect to Mr. Smith through December 31, 2001. At that
time, the life insurance policies will be transferred to Mr. Smith, and the
Company will waive its right to receive reimbursement for premiums paid on such
policies. Mr. Smith also will be entitled to participate in certain benefit
plans of the Company in which he participated prior to his retirement, or
receive substantially similar benefits, for a period of three years following
his retirement. Mr. Smith has agreed among other things that, for three years
following his retirement, (i) he will not, directly or indirectly, own, manage,
operate, control, be employed by, or perform services for any business that
engages in the retail or wholesale grocery business and which is located
anywhere within the continental United States; and (ii) he will not, directly or
indirectly, solicit the customers, suppliers or employees of the Company or its
affiliates to terminate their relationship with the Company or its affiliates
(or to modify such relationship in a manner that is adverse to the interests of
the Company or its affiliates), or to violate any valid contracts they may have
with the Company or its subsidiaries.

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<PAGE> 32

Employment Severance Agreement with A. Edward Benner, Jr. Effective
December 31, 1999, A. Edward Benner, Jr., retired as Vice President of
Information Technology and Chief Information Officer. In connection with his
retirement, Mr. Benner entered into an Employment Severance Agreement and Mutual
Release with the Company, which provides for Mr. Benner to receive his weekly
salary of $5,075 from January 1, 2000 through June 4, 2000, plus an incentive
bonus for 1999 in an amount determined by the Board of Directors on the same
basis as amounts are determined for vice presidents of the Company who were
employed through December 31, 1999, and an annual "wellness" bonus of $ for
1999. All stock options that have been granted to Mr. Benner that vest on or
before December 31, 1999, will remain exercisable for 89 days following December
31, 2000. Mr. Benner's participation in the Company's Profit Sharing Plan and
Profit Sharing Restoration Plan terminated as of December 31, 1999. Mr. Benner
has agreed among other things that, for one year following his retirement, (i)
he will not compete with the Company, directly or indirectly, by acting either
individually or as an advisor, representative, agent, employee, partner,
shareholder, investor, consultant, or in any other similar capacity, on behalf
of any other membership clubs selling groceries or other retail formats selling
food products in North Carolina, South Carolina, Virginia, Tennessee, Georgia,
Florida, Maryland, Delaware, Kentucky, West Virginia and Pennsylvania; and (ii)
he will not recruit, solicit or otherwise contact employees of the Company on
behalf of any other entity, either directly or as an agent, in order to solicit
or induce any employee of the Company to accept employment with another entity.

Deferred Compensation Agreements. The Company has entered into deferred
compensation agreements with the President and Chief Executive Officer and the
other Named Executives of the Company providing for the payment of deferred
compensation commencing at age 65 (if employed by the Company at such time) and
continuing until their death or for a period of ten years, whichever occurs
later. Annual payments to each of the following Named Executives pursuant to
these agreements will be as follows: Mr. ________ -- $10,000, Mr. _____________
- -- $10,000, Mr. ___________ -- $10,000 and Ms. _________ -- $10,000.

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<PAGE> 33

Salary Continuation Agreements. The Company has entered into salary
continuation agreements with each of the Named Executives providing for payments
to a named beneficiary in the event of such executive's death prior to attaining
the age of 65 while employed by the Company. The agreements are intended to
encourage participants to continue employment with the Company.

Payments for the first 12 months following death are fixed. If death
occurs prior to attaining the age of 55, payments after the first 12 months
following death are made through the month the decedent would have attained the
age of 65 or for a maximum period of 24 years, whichever is less. If death
occurs at or after 55 but prior to attaining the age of 65, payments after the
first 12 months following death are made for a period of 9 years. Except as
provided above, all rights of the participant terminate upon his reaching age 65
or on the date he retires or, for reasons other than death, ceases to be an
active employee of the Company. The following table sets forth the amounts
payable to the Named Executives at January 1, 2000, pursuant to the arrangements
described above:

<TABLE>
<CAPTION>
SUBSEQUENT MONTHLY PAYMENT
--------------------------
MONTHLY PAYMENT 24-YEAR
NAME OF INDIVIDUAL FIRST TWELVE MONTHS PERIOD OR 9-YEAR PERIOD
------------------ ------------------- -------- -------------
<S> <C> <C> <C>
A. Edward Benner, Jr.........................
Robert J. Brunory............................
W. Bruce Dawson..............................
Joseph C. Hall, Jr...........................
Laura C. Kendall.............................
Bill McCanless...............................
Tom E. Smith.................................
</TABLE>

LOW INTEREST LOAN PLAN

Until December 31, 1997, the Company maintained a Low Interest Loan
Plan to provide low interest unsecured demand loans to certain officers and
employees of the Company. The Board of Directors of the Company terminated the
Low Interest Loan Plan as of December 31, 1997 and no further loans were
extended under the plan as of that date. However, the terms of the plan apply to
amounts, if any, still outstanding thereunder. With minor exceptions, the total
of all loans outstanding to any one employee cannot exceed the following
percentages of the employee's annual salary: an amount equal to 25% during the
first year of participation in the Low Interest Loan Plan, 50% during the second
year, 75% during the third year and 100% thereafter. Interest is payable in
monthly installments and may be paid through bi-monthly payroll deductions from
the borrower's salary. The rate of interest charged is a rate equal to one half
of the prime rate of BankAmerica Corporation on the first business day of each
calendar quarter. Pursuant to the Low Interest Loan Plan, the principal amount
of a loan is payable on demand (or within 90 days after a borrower leaves
service with the Company). Participants must supply a financial statement before
receiving a loan under the Low Interest Loan Plan, although no collateral is
required.

Messrs. Brunory, Dawson and Benner were the only Named Executives to
have loans outstanding under the plan in 1999. The largest amount outstanding
under the plan during the fiscal year ended January 1, 2000 for Mr. Brunory was
$40,000, for Mr. Dawson was $106,936, and for Mr. Benner was $177,700. The
amounts outstanding as of March 27, 2000 for Mr. Brunory was $ , for
Mr. Dawson was $ , and for Mr. Benner was $ .

INFORMATION REGARDING DELHAIZE

Delhaize is the beneficial owner of approximately 46.6% and 55.6%
respectively, of the outstanding Class A Common Stock and Class B Common Stock
of the Company. Delhaize, a Belgian corporation founded in 1867, has its
principal executive offices at rue Osseghem, 53, 1080 Brussels, Belgium. Its
shares are listed on the Brussels Stock Exchange. Delhaize is engaged primarily
in the operation of supermarkets located in Belgium and supplied by its own
warehouse facilities, the operation of other retail food outlets and the
packaging, distribution and sale of wine, food and food products. Although a
precise determination cannot be made since its shares are not registered,
its management estimates that approximately 35% of the outstanding stock of
Delhaize is held by the descendants of the founders and their relatives,
including Messrs. Beckers and Raquez. Delhaize is the owner of the lion logo,
which the Company uses with its own trademarks pursuant to a nonexclusive
license agreement.

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<PAGE> 34

CERTAIN TRANSACTIONS

Tom E. Smith, who retired on April 7, 1999, as the President and Chief
Executive Officer of the Company, is the beneficial owner of 50% of the common
stock of SAFHI, Inc., a corporation which owns two Hampton Inn motels, one in
Salisbury, North Carolina, and one in Mount Pleasant, South Carolina. In 1999,
the Company paid a total of $98,035 to these two Hampton Inn Motels, in
connection with lodging for various management trainees and other employees of
the Company and its subsidiaries. The Company believes that the rates paid for
such lodging were at least as favorable as would have been obtainable from an
unrelated party.

The Company has entered into a lease for the operation of Food Lion
stores with a real estate venture in which an indirect subsidiary of Delhaize
owns a one-half interest. On October 1, 1986, the Company entered into a 20-year
lease for the operation of a 20,000 square foot store in Orange Park, Florida.
An indirect subsidiary of Delhaize owns a one-half interest in Debarry Place
Joint Venture, which is involved in the development of the Orange Park, Florida,
shopping center. The store opened in September 1987. Under the terms of the
lease, the provisions of which the Company believes are no more favorable than a
lease with a third party lessor, the Company is expected to make annual payments
of $206,500 in fixed rent and $6,249 in common area maintenance fees for the
Food Lion store. In addition, the lease provides for an annual payment to the
lessor equal to the amount by which 1% of the annual gross receipts of the
leased premises exceeds the fixed rent for the lease year. The lease includes an
option to extend the lease for up to four five-year periods.

The Company has entered into a joint venture with Delhaize regarding
Bel-Thai Supermarket Co., Ltd. ("Bel-Thai"), a supermarket company based in
Thailand. On January 18, 2000, the Company acquired, through a wholly-owned
subsidiary, a 51% interest in Bel-Thai for approximately $3.9 million. Delhaize
owns the remaining 49% interest in Bel-Thai. Subsequent to the Company's
acquisition of its interest in Bel-Thai, the Company contributed additional
capital of approximately $5.6 million to Bel-Thai for operations and
acquisitions. The Company's investment in Bel-Thai was consummated pursuant to
arms-length negotiations and was approved by the Board of Directors of the
Company (by a vote of the directors unaffiliated with Delhaize). In addition,
the Company obtained a fairness opinion from an investment banking firm as to
the fairness of the transaction to the Company.

For other information relating to certain transactions, see "Executive
Compensation -- Compensation Committee Interlocks and Insider Participation."

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

One transaction for each of Thomas Robinson, Robert Brunory, and Luther
Johnson, and two transactions for Coy Morgan were inadvertently reported
untimely under Section 16(a) of the Securities Exchange Act of 1934 on Forms 5.
The total number of late reports was two for Mr. Morgan and one for each of such
other officers. All of these transactions relate to transfers of stock in the
Company's Profit Sharing Plan, including minor adjustments made by the plan
trustee following transactions in accounts other than the Company stock fund.
Larry Cooper, a former officer, similarly reported one transaction under the
Profit Sharing Plan untimely prior to his departure from the Company. In
addition, Robert Mitchell reported one sale transaction untimely on Form 4.

PROPOSALS OF SHAREHOLDERS

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
under certain conditions, shareholders may request the Company to include a
proposal for action at a forthcoming meeting of the shareholders of the Company
in the proxy material of the Company for such meeting. All proposals of
shareholders intended to be presented at the 2001 Annual Meeting of the Company
must be received by the Company no later than

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<PAGE> 35

December 17, 2000 for inclusion in the Proxy Statement and proxy card relating
to such meeting. Subject to any rights that a shareholder has, pursuant to Rule
14a-8, to have a proposal included in the Proxy Statement, if a shareholder
wishes to raise a matter at a shareholders' meeting, or if a shareholder wishes
to nominate a person for election to the Board of Directors of the Company at an
annual or special meeting, the shareholder is required by the Company's bylaws
to give written notice to the Secretary of the Company at least 10 but no more
than 60 days before the meeting, unless fewer than 21 days' notice of the
meeting is given to shareholders. If fewer than 21 days' notice of the meeting
is given to shareholders, the notice by the shareholder must be received by the
Secretary no more than 10 days after the date on which the notice of the meeting
is mailed to shareholders. The Company's bylaws should be consulted for the
specific requirements for raising matters at shareholders' meetings and for
nominating persons to the Board of Directors.

OTHER MATTERS

The management of the Company knows of no other business that will be
presented for consideration at the meeting, except for the possible presentation
of a shareholder proposal that has been omitted from the Proxy Statement in
accordance with rules of the Securities and Exchange Commission. However, if
other matters, including the omitted shareholder proposal, are properly
presented at the meeting, it is the intention of the proxy holders named in the
accompanying proxy card to vote such proxies in accordance with their best
judgment.

By order of the Board of Directors.

LESTER C. NAIL
Secretary

, 2000

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<PAGE> 36

DELHAIZE AMERICA, INC.

2000 STOCK INCENTIVE PLAN

(AS ADOPTED _______________, 2000)

<PAGE> 37

DELHAIZE AMERICA, INC.

2000 STOCK INCENTIVE PLAN

1. Purpose.

The purpose of this Plan is to provide an incentive to the
employees, individuals who have accepted an offer of employment, officers,
consultants and eligible directors of Delhaize America, Inc., a North Carolina
corporation (the "Company"), and thereby encourage them to devote their
abilities and industry to the success of the Company's business enterprise. It
is intended that this purpose be achieved by extending to employees, individuals
who have accepted an offer of employment, officers, consultants and directors of
the Company and its Subsidiaries an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock Options,
Nonqualified Stock Options and Restricted Stock (as each term is herein
defined).

2. Definitions.

For purposes of the Plan:

2.1. "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.

2.2. "Award" means a grant of Restricted Stock.

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

2.4. "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
reincorporation, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.

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

2.6. "Committee" means the committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.

<PAGE> 38

2.7. "Company" means Delhaize America, Inc.

2.8. "Director" means a director of the Company.

2.9. "Disability" means:

(a) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of
"Disability," the term "Disability" as used in this Plan or any
Agreement shall have the meaning set forth in such employment agreement
during the period that such employment agreement remains in effect; and

(b) in all other cases, the term "Disability" as used in this Plan
or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially
his or her duties for a period of one hundred eighty (180) consecutive
days.

2.10. "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.

2.11. "EBITDA" means earnings before interest, taxes, depreciation and
amortization.

2.12. "Eligible Director" means a director of the Company who is not an
employee of the Company or any Subsidiary.

2.13. "Eligible Individual" means any director (other than an Eligible
Director), officer, employee of the Company or a Subsidiary or individual who
has accepted an offer of employment from the Company or a Subsidiary, or any
consultant of the Company or a Subsidiary, designated by the Committee as
eligible to receive Options or Awards subject to the conditions set forth
herein.

2.14. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

2.15. "Fair Market Value" on any date means the closing sales price of
the Shares on such date on the principal national securities exchange on which
such Shares are listed or admitted to trading, or, if such Shares are not so
listed or admitted to trading, the average of the per Share closing bid price
and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair

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<PAGE> 39
Market Value shall be the value established by the Board in good faith and, in
the case of an Incentive Stock Option, in accordance with Section 422 of the
Code.

2.16. "Grantee" means a person to whom an Award has been granted under
the Plan.

2.17. "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

2.18. "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.

2.19. "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.

2.20. "Option" means a Nonqualified Stock Option or an Incentive Stock
Option or either or both of them.

2.21. "Optionee" means a person to whom an Option has been granted
under the Plan.

2.22. "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

2.23. "Parent" means any corporation that is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.

2.24. "Performance Cycle" means the time period specified by the
Committee at the time a performance-based Award is granted during which the
performance of the Company, a Subsidiary or a Division will be measured.

2.25. "Performance Objectives" has the meaning set forth in Section
6.4(b) hereof.

2.26. "Plan" means the Delhaize America, Inc. 2000 Stock Incentive
Plan, as amended and restated from time to time.

2.27. "Reload Option" means an Option that may be granted when an
Optionee pays all or a portion of the purchase price and withholding taxes of an
Option with previously owned Shares.

2.28. "Restricted Stock" means Shares issued or transferred to an
Eligible Individual or Eligible Director pursuant to Section 6 hereof.

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<PAGE> 40

2.29. "Shares" means the Class A common stock, par value $0.50 per
share, of the Company.

2.30. "Subsidiary" means any corporation that is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company, including any limited liability company that is disregarded for
Federal tax purposes or treated as a corporate subsidiary under the Code.

2.31. "Ten-Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.

3. Administration.

The authority to control and manage the operation and
administration of the Plan shall be vested in the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist
of not fewer than two members of the Committee, and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held. The
foregoing notwithstanding, with respect to Options or Awards that: (i) are
intended to qualify as "performance-based" under Section 162(m) of the Code,
and/or (ii) are granted to individuals who qualify as "insiders" under Section
16 of the Exchange Act, (A) any Committee members who do not qualify as "Outside
Directors" and/or "Nonemployee Directors," as the case may be, shall have no
authority to act and shall automatically be recused from any action with respect
to Options or Awards, and (B) the remaining qualifying directors shall be
authorized to act independently without further approval. No member of the
Committee shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any transaction
hereunder, except for liability arising from his or her own willful misfeasance,
gross negligence or reckless disregard of his or her duties. The Company hereby
agrees to indemnify each member of the Committee for all costs and expenses and,
to the extent permitted by applicable law, any liability incurred in connection
with defending against, responding to, negotiating for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind arising
in connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder. Notwithstanding the
foregoing, if the Committee does not exist, or for any other reason determined
by the Board, the Board may take any action under the Plan that would otherwise
be the responsibility of the Committee; provided, however, that if any members
of the Board do not qualify as Outside Directors, only the Committee appointed

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<PAGE> 41

above may grant Options or Awards that are intended to be performance-based
under Section 162(m).

3.1. Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:

(a) determine those Eligible Individuals and Eligible Directors to
whom Options shall be granted under the Plan and the number of such
Options to be granted and to prescribe the terms and conditions (which
need not be identical) of each such Option, including the purchase
price per Share subject to each Option, and make any amendment or
modification to any Option Agreement consistent with the terms of the
Plan;

(b) select those Eligible Individuals and Eligible Directors to
whom Awards shall be granted under the Plan and determine the number of
Shares to be granted pursuant thereto, determine the terms and
conditions of each Award including the restrictions or Performance
Objectives relating to Shares, and to make any amendment or
modification to any Agreement consistent with the terms of the Plan;

(c) to construe and interpret the Plan, Options and Awards granted
hereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable so that the Plan complies
with applicable law including Rule 16b-3 under the Exchange Act and the
Code to the extent applicable, and otherwise to make the Plan fully
effective. All decisions and determinations by the Committee in good
faith in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and
Grantees, and all other persons having any interest therein;

(d) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for
purposes of the Plan;

(e) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan;

(f) except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may allocate all or
any part of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it, which allocation or
delegation may be revoked by the Committee at any time; and

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<PAGE> 42

(g) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.

4. Stock Subject to the Plan.

4.1. The Shares subject to Options and Awards that shall be reserved
for the purposes of the Plan, shall be from the Company's authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly out
of each, such number of Shares as shall be determined by the Board. An aggregate
of Shares may be issued or transferred pursuant to this Plan plus the
number of Shares that have not been awarded under the 1996 Employee Stock
Incentive Plan of Food Lion, Inc. (the "1996 Plan") as of the Effective Date
(including those that may be forfeited or cancelled under the 1996 Plan after
the effective date of this Plan).

No employee shall be granted in any calendar year Options to purchase
more than Common Shares.

No Eligible Individual may be awarded more than Shares of
Restricted Stock that are intended to be performance-based compensation in any
calendar year.

No more than Shares shall be granted pursuant to Options
intended to be Incentive Stock Options.

In the event of a Change in Capitalization, the Board or Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number of Shares with respect to which Options and Awards may be
granted, (ii) the maximum number of Shares or other stock or securities with
respect to which Options or Awards may be granted in any calendar year, (iii)
the maximum number of Shares which may be granted pursuant to Incentive Stock
Options, (iv) the number of Shares or other stock or securities which are
subject to outstanding Options or Awards and the purchase price therefor, if
applicable, and (v) the Performance Objectives.

In connection with the grant of an Option or an Award, the number of
Shares available for grant under the Plan shall be reduced by the number of
Shares in respect of which the Option or Award is granted.

4.2. Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason without having
been exercised or without payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, canceled or otherwise
terminated portion of the Option or Award may again be the subject of Options or
Awards granted hereunder.

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<PAGE> 43

4.3. Whenever any portion of an Option under this Plan or the 1996 Plan
is paid for with previously held Shares (by either actual delivery or
attestation), only the difference between (i) the number of Shares issued upon
exercise and (ii) the number of Shares transferred in payment of the purchase
price shall be counted for purposes of determining the maximum number of Shares
available for grant under the Plan.

5. Option Grants.

5.1. Authority of Committee. Subject to the provisions of the Plan, the
Committee, or the persons to whom authority has been delegated under Paragraph
(f) of Section 3.2 hereof, shall have full and final authority to select those
Eligible Individuals and Eligible Directors who will receive Options, and the
terms and conditions that shall be set forth in the applicable Agreements. Some
terms and conditions that may, but are not required to be included are: a
provision allowing the issuance of a Reload Option and a provision providing
acceleration of exercisability under certain conditions as may be determined by
the Committee. Other terms and conditions not inconsistent with this Plan may be
included in Agreements in the discretion of the Committee.

5.2. Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the purchase price per Share under each Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a Share on the date the Option is
granted (110% in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).

5.3. Maximum Duration. Options granted hereunder shall be for such term
as the Committee shall determine, provided that an Incentive Stock Option shall
not be exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and a Nonqualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted.
The Committee may, subsequent to the granting of any Option, extend the term
thereof, but in no event shall the term as so extended exceed the maximum term
provided for in the preceding sentence.

5.4. Vesting. Each Option shall become exercisable in such installments
(which need not be equal) and at such times as may be designated by the
Committee and set forth in the Agreement. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option expires.
The Committee may accelerate the exercisability of any Option or portion thereof
at any time.

5.5. Modification. No modification of an Option shall adversely alter
or impair any rights or obligations under the Option without the Optionee's
consent.

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<PAGE> 44

5.6. Non-Transferability. Unless set forth in the Agreement evidencing
the Option (other than an Incentive Stock Option) at the time of grant or at any
time thereafter, an Option granted hereunder shall not be transferable by the
Optionee to whom granted except by will or the laws of descent and distribution
or pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and an Option may be exercised during the
lifetime of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee.

5.7. Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid, as determined by the Committee in its discretion, in either of
the following forms (or any combination thereof): (i) cash or (ii) the transfer
or attestation of Shares that have been held at least six months to the Company
upon such terms and conditions as determined by the Committee. In addition,
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures (other than Share withholding) which are, from time
to time, deemed acceptable by the Committee, and the Committee may authorize
that the purchase price payable upon exercise of an Option may be paid by having
Shares withheld that otherwise would be acquired upon such exercise. Any Shares
transferred to the Company (or withheld upon exercise) as payment of the
purchase price under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. The value of the number of
Shares that may be withheld for the payment of taxes may not be in excess of the
minimum withholding requirements. The Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse thereon
a notation of such exercise and return such Agreement to the Optionee. No
fractional Shares (or cash in lieu thereof) shall be issued upon exercise of an
Option and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares. The Committee, in its discretion,
may also permit simultaneous sale of Shares upon exercise through a
broker-dealer.

5.8. Rights of Optionees. Optionee shall not be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall have issued and delivered Shares to the Optionee, and (iii) the Optionee's
name shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

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<PAGE> 45

6. Restricted Stock.

6.1. Grant. The Committee may grant Awards to Eligible Individuals and
Eligible Directors, which shall be evidenced by an Agreement between the Company
and the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. Awards shall be subject to
the terms and provisions set forth below in this Section 6.

6.2. Rights of Grantee. Shares of Restricted Stock granted pursuant
hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing an Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow agreement
and any other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with a Award shall be deposited together with the stock powers with an escrow
agent (which may be the Company) designated by the Committee. Unless the
Committee determines otherwise and as set forth in the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.

6.3. Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 6.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.

6.4. Lapse of Restrictions.

(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms
and conditions as the Committee may determine. The Agreement evidencing
the Award shall set forth any such restrictions. The Board may
accelerate the lapse of all or a portion of the restrictions on an
Award at any time.

(b) Performance Objectives. If the Committee has determined that
the restrictions on Shares of Restricted Stock awarded shall only lapse
in accordance with Performance Objectives, the Performance Objectives
may be expressed in terms of (i) earnings per Share, (ii) Share price,
(iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) revenues, (vii) EBITDA, (viii) market share or market
penetration or (ix) any combination of the foregoing. Performance
Objectives may be in respect of the performance of the Company

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<PAGE> 46
and its Subsidiaries (which may be on a consolidated basis), a
Subsidiary or a Division. Performance Objectives may be absolute or
relative and may be expressed in terms of a progression within a
specified range. The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the Committee by
the earlier of (i) the date on which a quarter of the Performance Cycle
has elapsed or (ii) the date which is ninety (90) days after the
commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remain substantially
uncertain. At the time of grant of a performance-base Award, and to the
extent permitted under Section 162(m) of the Code and the regulations
thereunder, the Committee may provide for the manner in which the
Performance Objectives will be measured to reflect the impact of
specified corporate transactions, extraordinary events, accounting
changes and other similar events. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Award
that is intended to be performance-based compensation, made to a
Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives
have been satisfied.

6.5. Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards or accept the surrender of
outstanding Shares of Restricted Stock (to the extent the restrictions on such
Shares have not yet lapsed) and grant new Awards in substitution for them.
Notwithstanding the foregoing, no modification of an Award shall adversely alter
or impair any rights or obligations under the Agreement without the Grantee's
consent.

6.6. Treatment of Dividends. At the time an Award is granted, the
Committee may, in its discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on Shares covered by
the Award shall be (i) deferred until the lapsing of the restrictions imposed
upon such Shares and (ii) held by the Company for the account of the Grantee
until such time. In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in Shares (which
shall be held as additional Shares of Restricted Stock) or held in cash. If
deferred dividends are to be held in cash, there may be credited at the end of
each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine. Payment of deferred dividends in respect of Shares of Restricted
Stock (whether held in cash or as additional Shares of Restricted Stock),
together with interest accrued thereon, if any, shall be made upon the lapsing
of restrictions imposed on the Shares in respect of which the deferred dividends
were paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Shares of Restricted Stock shall be forfeited upon
the forfeiture of such Shares.

6.7. Delivery of Shares. Upon the lapse of the restrictions on Shares
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.

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7. Effect of a Termination of Employment.

The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to such Option or
award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company, a Subsidiary or a Division which shall be as
the Committee may, in its discretion, determine at the time the Option or Award
is granted or thereafter.

8. Adjustment Upon Changes in Capitalization.

8.1. Adjustments to Incentive Stock Options. Any adjustment that may be
made pursuant to Section 4.1 hereof in the Shares or other stock or securities
subject to outstanding Incentive Stock Options upon a Change in Capitalization,
(including any adjustments in the purchase price) shall be made in such manner
as not to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the Code.

8.2. Terms of Adjusted Options and Awards. If, by reason of a Change in
Capitalization, a Grantee of an Award shall be entitled to, or an Optionee shall
be entitled to exercise an Option with respect to, new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Award or Option, as
the case may be, prior to such Change in Capitalization.

9. Effect of Certain Transactions.

Except as otherwise provided in an Agreement, in the event of
(i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the Options and
Awards issued hereunder shall continue in effect in accordance with their
respective terms, except that following a Transaction each Optionee and Grantee
shall be entitled to receive in respect of each Share subject to any outstanding
Options or Awards, as the case may be, upon exercise of any Option or payment or
transfer in respect of any Award, the same number and kind of stock, securities,
cash, property or other consideration that each holder of a Share was entitled
to receive in the Transaction in respect of a Share; provided, however, that
such stock, securities, cash, property or other consideration shall remain
subject to all of the conditions, restrictions and performance criteria which
were applicable to the Options and Awards prior to such Transaction.

10. Interpretation.

10.1. Rule 16b-3. The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act, and the Committee shall interpret and
administer the provisions

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of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

10.2. Section 162(m). Unless otherwise expressly stated in the relevant
Agreement, each Option and Award subject to Performance Objectives granted to an
Eligible Individual who may be a "covered employee" under Section 162(m) of the
Code is intended to be performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code. The Committee shall not be entitled to
exercise any discretion otherwise authorized hereunder with respect to any such
Options or Awards if the ability to exercise such discretion or the exercise of
such discretion itself would cause the compensation attributable to such Options
or Awards to fail to qualify as performance-based compensation.

11. Termination and Amendment of the Plan.

The Plan shall terminate on the day preceding the tenth
anniversary of the date of its adoption by the Board and no Option or Award may
be granted thereafter. The Board may sooner terminate the Plan and the Board may
at any time and from time to time amend, modify or suspend the Plan; provided,
however, that: (a) no such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and (b) to the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law.

12. Non-Exclusivity of the Plan.

The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

13. Limitation of Liability.

As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:

(i) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;

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<PAGE> 49

(ii) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;

(iii) limit in any way the right of the Company or
any Subsidiary to terminate the employment of any person at
any time; or

(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person
at any particular rate of compensation or for any particular
period of time.

14. Regulations and Other Approvals; Governing Law.

14.1. Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of North Carolina without giving effect to conflicts
of laws principles thereof.

14.2. The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

14.3. The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.

14.4. Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.

14.5. Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require any individual

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<PAGE> 50

receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.

15. Miscellaneous.

15.1. Multiple Agreements. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Individual or Eligible Director during the term of the Plan,
either in addition to, or in substitution for, one or more Options or Awards
previously granted to that Eligible Individual or Eligible Director.

15.2. Withholding of Taxes.

(a) At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a
"Taxable Event"), the Optionee or Grantee shall pay to the Company an
amount equal to the federal, state and local income taxes and other
amounts as may be required by law to be withheld by the Company in
connection with the Taxable Event (the "Withholding Taxes") prior to
the issuance, or release from escrow, of such Shares or the payment of
such cash. The Company shall have the right to deduct from any payment
of cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company,
the Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the Shares then issuable to
him or her having an aggregate Fair Market Value equal to the
Withholding Taxes.

(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise of
an Incentive Stock Option within the two-year period commencing on the
day after the date of the grant or within the one-year period
commencing on the day after the date of transfer of such Share or
Shares to the Optionee pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof,
by delivery of written notice to the Company at its principal executive
office.

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15.3. Effective Date. The effective date of this Plan (the "Effective
Date") shall be _____________, subject only to the approval by the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of North Carolina within twelve
(12) months of the adoption of the Plan by the Board.

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<PAGE> 52
PROXY

Delhaize America, Inc.
This Proxy is Solicited on Behalf of the
Board of Directors of Delhaize America, Inc.

The undersigned, having received the Notice of Meeting and the Proxy
Statement, hereby appoints Bill McCanless and Joseph C. Hall, Jr., and each of
them, as proxies with full power of substitution, for and in the name of the
undersigned, to vote all shares of Class B Common Stock of Delhaize America,
Inc. owned of record by the undersigned on the matters listed on the reverse
side hereof and, in their discretion, on such other matters as may properly come
before the Meeting of Shareholders to be held at ________________on Thursday,
May 4, 2000 at 9:00 a.m., and any adjournments or postponements thereof.

If you plan to attend the Meeting of Shareholders in person, please mark
the appropriate box on the reverse side of this card.

You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot vote
your shares unless you sign and return this card.

SEE REVERSE SIDE

*FOLD AND DETACH HERE*

[X] Please mark your votes as in this example.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted "FOR" all of the Board of Directors' nominees and "FOR" Proposals 2, 3
and 4. The proxies are authorized to vote upon such other business as may
properly come before the Meeting unless otherwise specified herein.

The Board of Directors recommends a vote FOR all Proposals.

FOR WITHHELD
1. Election of Directors [ ] [ ] Pierre-Olivier Beckers, Dr.
Jacqueline Kelly Collamore,
Jean-Claude Coppieters 't Wallant,
Pierre Dumont, William G. Ferguson,
Dr. Bernard W. Franklin, Joseph C.
Hall, Jr., Margaret H. Kluttz, Bill
McCanless, Dominique Raquez

For, except vote withheld from the following nominee(s):

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

FOR AGAINST ABSTAIN
2. Approval of Bylaw Amendments [ ] [ ] [ ]

FOR AGAINST ABSTAIN
3. Approval of Delhaize America, Inc. [ ] [ ] [ ]
2000 Stock Incentive Plan

FOR AGAINST ABSTAIN
4. Appointment of PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants for the fiscal year
ending December 30, 2000.

YES No
Do you plan to attend the Meeting of Shareholders in person? [ ] [ ]

SIGNATURE(S) ____________________ DATE _______________, 2000

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

* FOLD AND DETACH HERE*