SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: July 26, 1994
(Date of earliest event reported)
HANNAFORD BROS. CO.
(Exact name of registrant as specified in its charter)
Maine 1-7603 01-0085930
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
145 Pleasant Hill Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (207) 883-2911
<PAGE>
Item 2: Acquisition or Disposition of Assets.
On July 26, 1994 Hannaford Bros. Co. ("Hannaford" or the "Registrant")
acquired a chain of 20 supermarkets operating under the trade name of Wilson's
Supermarkets. In the same transaction the Registrant acquired five
supermarket sites, of which three are under construction and several shopping
centers.
The supermarket chain is based in Wilmington, North Carolina, and most of
the acquired supermarkets and related properties are located in southeastern
North Carolina. The acquired assets also include 2 supermarkets in South
Carolina, three supermarket sites under construction, two in the Raleigh,
North Carolina metropolitan area and one in Fayetteville, North Carolina.
Hannaford intends to continue to operate all of the acquired supermarkets,
including those presently under construction.
This acquisition was made through the purchase of all the outstanding
capital stock of the operator of the stores (a privately-held corporation
named Boney Wilson & Sons, Inc.) and the purchase of certain real estate from
a related partnership (named Wilson Brothers Partnership). The former owners
include Lawrence A. Wilson, Sr. and members of his immediate family. None of
the owners is affiliated with Hannaford or is an affiliate or associate of any
Hannaford director or officer.
The total cost of the acquisition, including assumed liabilities and
capital leases, is approximately $127 million, which exceeds the preliminary
estimated fair value of the acquired net assets by approximately $67 million.
The excess will be recorded as goodwill and amortized on the straight line
method over 20 years. Included within the assets acquired was approximately
$4 million of cash and $4.5 million of cash advances to certain whole-
salers. This amount was determined by negotiation between the parties. Of
the total purchase price, $2 million was paid in the form of Hannaford common
stock; $4.5 million was paid through delivery of a promissory note of
Hannaford payable over five years and bearing interest at 6% per annum;
the balance was paid from working capital of Hannaford. Hannaford has also
entered into five-year consulting and noncompetition agreements with certain
of the former owners of the supermarket chain.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of the Businesses Acquired.
The statements listed below are located at pages F-2 through F-14 of
this report. It is impracticable to provide the other required financial
statements for the acquired business at the time of filing of this report.
Pursuant to Item 7(a)(4) of Form 8-K, the other required financial
statements will be filed by the Registrant on or before September 30, 1994.
Report of Independent Accountants dated May 24, 1994
Combined Balance Sheet as of December 31, 1993
Combined Statement of Earnings for the year ended December 31, 1993
<PAGE>
Combined Statement of Changes in Owners' Equity for the year ended
December 31, 1993
Combined Statement of Cash Flows for the year ended December 31, 1993
Notes to Financial Statements
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial
information at the time of filing of this report. Pursuant to Item 7(b)(2)
of Form 8-K, the required pro forma financial information will be filed by
the Registrant on or before September 30, 1994.
(c) Exhibits.
The following are filed with the Commission as exhibits to this report.
2.1 Acquisition Agreement, dated as of June 18, 1994, among the
Registrant, Boney Wilson & Sons, Inc., Wilson Brothers Partnership,
and certain beneficial owners of such entities
2.2 Press release of the Registrant, dated June 22, 1994, announcing the
agreement to acquire Wilson's Supermarkets
2.3 Press release of the Registrant, dated July 26, 1994, announcing
consummation of the acquisition of Wilson's Supermarkets
23 Consent of Accountants
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HANNAFORD BROS. CO.
Date: August 5, 1994 By: s/Charles H. Crockett
Charles H. Crockett
Assistant Secretary
<PAGE>
HANNAFORD BROS. CO.
FINANCIAL STATEMENT INDEX
Description Page
Financial Statements of the Businesses Acquired
Report of Independent Accountants dated May 24, 1994 F-2
Combined Balance Sheet as of December 31, 1993 F-3
Combined Statement of Earnings for the year ended
December 31, 1993 F-5
Combined Statement of Changes in Owners' Equity for
the year ended December 31, 1993 F-6
Combined Statement of Cash flows for the year ended
December 31, 1993 F-7
Notes to Financial Statements F-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Boney Wilson & Sons, Inc.--Combined Entities:
We have audited the accompanying combined balance sheet of Boney Wilson &
Sons, Inc.--Combined Entities as of December 31, 1993, and the related
combined statements of earnings, changes in owners' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Entities' management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Boney Wilson & Sons,
Inc.--Combined Entities as of December 31, 1993, and the combined results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
Portland, Maine
May 24, 1994, except as to
the information included in
Note 7, for which the date
is July 26, 1994.
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
COMBINED BALANCE SHEET
December 31, 1993
ASSETS
Current assets:
Cash $ 4,924,276
Accounts receivable 54,111
Deposits (Note 6) 6,069,185
Inventories 6,514,843
Prepaid expenses 132,030
Total current assets 17,694,445
Property, plant and equipment, at cost (Note 2):
Land 8,971,408
Buildings and improvements 18,556,501
Leasehold interests and improvements 1,701,021
Equipment 14,689,212
Vehicles 291,086
Construction in progress 538,327
44,747,555
Less accumulated depreciation and
amortization 13,994,264
30,753,291
Investment in financing leases, net (Note 3) 199,275
Non-compete agreements, net (Note 5) 591,326
$49,238,337
The accompanying notes are an integral
part of the combined financial statements.
<PAGE>
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Current portion of obligations under
non-compete agreements (Note 5) $ 98,179
Current portion of obligation under capital
lease (Note 2) 5,173
Accounts payable 4,967,136
Accrued expenses 904,701
Deferred revenue 55,077
Total current liabilities 6,040,266
Obligations under non-compete agreements
(Note 5) 590,564
Obligation under capital lease (Note 2) 1,451,645
Deferred compensation (Note 4) 1,127,905
Commitments and contingencies (Notes 2, 4, 7 and 8)
Owners' equity:
Common stock:
Voting - Class A, $.10 par value; authorized
200,000 shares; issued 121,600 shares 12,160
Nonvoting - Class B, $.10 par value; authorized
2,000,000 shares; issued 1,216,000 shares 121,600
Retained earnings 38,757,005
Partners' capital 1,137,192
40,027,957
$49,238,337
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
COMBINED STATEMENT OF EARNINGS
for the year ended December 31, 1993
Sales $186,803,857
Cost of sales 150,048,755
Gross margin 36,755,102
Selling, general and administrative expenses 26,105,572
Operating profit 10,649,530
Other income (expense):
Rental income 604,787
Interest income 359,414
Interest expense (245,965)
Other income 442,858
1,161,094
Net income $ 11,810,624
The accompanying notes are an integral
part of the combined financial statements.
<PAGE>
<TABLE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
COMBINED STATEMENT OF CHANGES IN OWNERS' EQUITY
for the year ended December 31, 1993
<CAPTION>
Common Common
Stock Stock Retained Partners' Combined
Voting Nonvoting Earnings Capital Entities
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1992 $12,160 $121,600 $31,360,123 $1,193,350 $32,687,233
Net income 11,546,182 264,442 11,810,624
S corporation
distributions (4,149,300) (4,149,300)
Partnership
distributions (320,600) (320,600)
Balance,
December 31, 1993 $12,160 $121,600 $38,757,005 $1,137,192 $40,027,957
The accompanying notes are an integral
part of the combined financial statements.
</TABLE>
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
COMBINED STATEMENT OF CASH FLOWS
for the year ended December 31, 1993
Cash flows from operating activities:
Net income $ 11,810,624
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 2,507,246
Increase in accounts receivable (12,056)
Increase in deposits (2,979,185)
Increase in inventories (343,867)
Increase in prepaid expenses (4,235)
Increase in accounts payable 802,732
Increase in other accrued expenses 186,694
Decrease in deferred revenue (55,077)
Net cash provided by operating
activities 11,912,876
Cash flows from investing activities:
Acquisition of property, plant and equipment (11,179,250)
Net activity in financing leases 50,389
Net cash used in investing
activities (11,128,861)
Cash flows from financing activities:
Payments of obligations under non-compete
agreements (90,619)
Net increase in deferred compensation 41,727
Principal payments under capital lease obligation (13,857)
S corporation distributions (4,149,300)
Partnership distributions (320,600)
Net cash used in financing
activities (4,532,649)
Net decrease in cash (3,748,634)
Cash at beginning of year 8,672,910
Cash at end of year $ 4,924,276
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 245,965
The accompanying notes are an integral
part of the combined financial statements.
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. BASIS OF PRESENTATION
The combined financial statements include the accounts of Boney
Wilson & Sons, Inc. (a subchapter S corporation) and Wilson Brothers
Partnership, a partnership which owns certain real estate, the
significant portion of which is leased to the corporation and used
in the ordinary course of business. Both entities are owned and
managed by common management and the fiscal years for both entities
end on December 31.
All significant intercompany accounts and transactions have been
eliminated.
B. NATURE OF BUSINESS
The entities are principally involved in the retail sale of food,
general merchandise and related products through supermarkets. The
Company operates seventeen stores throughout southeastern North
Carolina and two stores located in northeastern South Carolina.
C. INVENTORIES
Meat, produce, and deli/bakery inventories are valued at the lower
of cost, utilizing the first-in, first-out (FIFO) method, or market.
All other inventories, primarily groceries, are valued at the lower
of cost, utilizing the last-in, first-out (LIFO) method, or market.
Approximately 89% of inventories were valued using the LIFO method.
The current cost of all inventory items exceeded the LIFO valuation
by approximately $1,431,600 at December 31, 1993. Had the
inventories which are valued on the LIFO method been valued using
the first-in, first-out method, net income would have been decreased
by approximately $35,800.
D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost and depreciated by
the straight-line method over the estimated useful lives of the
assets. Leasehold interests and improvements are amortized on the
straight-line method over the shorter of estimated useful life
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued:
D. PROPERTY, PLANT AND EQUIPMENT, Continued
or lease term. The estimated useful lives of related assets are
as follows:
YEARS
Buildings and improvements 5 - 30
Leasehold interests and improvements 20 - 30
Equipment 3 - 8
Vehicles 1.5
Depreciation expense for the year ended December 31, 1993 was
$2,404,400.
The costs of repairs and maintenance are expensed as incurred;
renewals and betterments are capitalized. Upon sale or retirement,
the cost and related accumulated depreciation are eliminated from
the respective accounts and any resulting gain or loss is included
in the results of operations.
E. STORE OPENING COSTS
The noncapital expenditures incurred in opening new stores or
remodeling existing stores are expensed in the year in which they
are incurred.
F. NON-COMPETE AGREEMENTS
The intangible asset for the non-compete agreements is stated at an
amount equal to the present value of future payments at the time the
agreements were consumated and is being amortized on a straight-line
basis over the term of the agreements which approximates 10 years.
G. INCOME TAXES
The stockholders of Boney Wilson & Sons, Inc. have elected S
corporation status under Subchapter S of the Internal Revenue Code.
Accordingly, federal and state taxable income of the corporation is
passed through to each stockholder on a pro-rata basis. In
addition, the taxable income of the partnership is reported on the
tax returns of the individual partners.
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
2. LEASED ASSETS AND LEASE COMMITMENTS:
The Company leases certain stores with initial lease terms from 20 to 30
years. Substantially all leases contain renewal options. Most of the
real estate leases provide that the Company pay taxes, insurance and
maintenance costs applicable to the leased property. Certain leases
contain a provision for the payment of contingent rentals based on a
percentage of the sales in excess of stipulated minimums.
The Company's investment in real property under a capital lease at
December 31, 1993 is as follows:
Real property $ 1,519,671
Less accumulated depreciation 223,731
Net real property under capital lease $ 1,295,940
Amortization of property under the capital lease was $50,656 in 1993.
Future minimum rental payments under the capital lease obligation and
operating leases at December 31, 1993, are as follows:
Capital Operating
Lease Leases
1994 $ 154,521 $ 536,853
1995 154,521 651,303
1996 154,521 651,303
1997 154,521 651,303
1998 154,521 651,303
1999 and thereafter 3,178,266 7,657,848
Total minimum lease payments 3,950,871 $10,799,913
Less imputed interest (at 6.5%) 2,484,053
Present value of net minimum lease
payments 1,466,818
Less current obligation 15,173
Long-term obligation $1,451,645
Total rent expense for the year ended December 31, 1993 of approximately
$654,400.
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
3. DIRECT FINANCING LEASES:
The entities lease certain retail store facilities to other retailers
with terms generally ranging between five and twenty years.
The leases require the lessee to be responsible for the payment of
property taxes, insurance and maintenance costs related to the leased
property. In addition, several leases provide for contingent rentals
based on sales performance in excess of specified minimums.
Future minimum rentals to be received under non-cancelable lease
arrangements as of December 31, 1993 are as follows:
Capital Operating
Lease Lease
Rentals Rentals
Receivable Receivable
1994 $154,425 $ 489,277
1995 154,425 374,951
1996 151,758 351,736
1997 53,625 289,597
1998 53,625 289,597
1999 and thereafter 53,225 950,464
Total minimum lease
payments receivable 621,083 $2,745,622
Less unearned income 421,808
Present value of net
minimum lease payments $199,275
Contingent rental income for the year ended December 31, 1993 was
$63,654.
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
4. DEFERRED COMPENSATION PLANS:
The Company has a deferred compensation agreement with a former employee
which provides for payments upon retirement, death or disability; upon
death of the individual, the remaining amounts will be paid to the
individual's estate. The agreement, as amended, has been in effect
since October 1989, and provides for monthly payments of $9,671 over a
period of 10 years. Interest expense charged to operations, based on
the present value of estimated future payments to be made, approximated
$45,900 for the year ended December 31, 1993. This agreement shall
terminate and all remaining related rights and benefits shall be
forfeited by the former employee if the provisions of an agreement
not-to-compete entered into by the Company and the former employee are
not upheld (Note 5).
Additionally, the Company has a deferred compensation agreement with a
current employee which provides for payments upon retirement, death or
disability. This agreement has been in effect since December 1987, and
provides for annual payments of $200,000 over a period of 10 years.
Expense under this agreement approximated $112,000 for the year ended
December 31, 1993. This agreement will terminate and all rights and
benefits will be forfeited upon the sale of the Company (Note 7).
5. OBLIGATION UNDER NON-COMPETITION AGREEMENTS:
The Company has non-compete agreements with certain former officers and
stockholders. These agreements have been in effect since 1989 and
provide for aggregate monthly payments of $12,500 for 10 years and are
being amortized over their contractual lives. If at any time during the
term of such agreements, any person breaches the terms of the
agreements, payments will be terminated and all rights of the contract
holders will be forfeited.
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
5. OBLIGATION UNDER NON-COMPETITION AGREEMENTS, Continued:
Payments under the agreements are as follows:
1994 $149,988
1995 149,988
1996 149,988
1997 149,988
1998 149,988
1999 112,491
Total minimum payments under the agreements 862,431
Less imputed interest at 8% 173,688
Present value of net minimum payments under
agreements 688,743
Less current portion 98,179
Long-term obligations under non-compete
agreements $590,564
The charge to interest expense for payments made for the year ended
December 31, 1993 approximated $59,000.
6. DEPOSITS:
Deposits represent cash advances to two wholesalers under forward buying
arrangements, principally for grocery products, made in the ordinary
course of business. These arrangements are in place to receive certain
volume discounts being offered by suppliers. The volume of products
being purchased under these arrangements typically represents a five to
eight week supply.
7. SUBSEQUENT EVENT:
On July 26, 1994 the shareholders of the Boney Wilson & Sons, Inc. and
the partners of Wilson Brothers Partnership sold the stock of the
Company and the majority of the real estate assets.
Continued
<PAGE>
BONEY WILSON & SONS, INC.--COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
8. WORKERS' COMPENSATION:
During a portion of 1992 and in 1993, Boney Wilson & Sons, Inc. was a
participant in a group workers' compensation self-insured trust fund.
Workers' compensation expense is based on premiums paid plus the
Company's prorata share of any excess of liabilities over plan assets.
Workers' compensation expense was approximately $300,000 in 1993.
The Company remains jointly liable, in connection with the group
workers' compensation self-insured trust fund, for:
1. Any lawful obligation of the trust fund which it might become
legally obligated to pay, in respect to any fund year or part
thereof that the Company participated in the Fund.
2. All necessary assessments and charges, as determined by the fund
trustee, to be paid into the Fund at required intervals.
Effective December 31, 1993, the Company terminated their participation
in the Fund and joined a different self-insured trust fund.
While termination releases the Company from responsibility for future
assessments and liabilities for any period subsequent to termination, it
remains liable for assessments relating to the period of time that it
was an active participant. No liability has been recorded for any
assessments, nor does Company management believe that such potential
assessment, if ultimately made, would have a material impact on the
financial statements.
<PAGE>
HANNAFORD BROS. CO.
EXHIBIT INDEX
Exhibit
Number Description Page
2.1 Acquisition Agreement, dated as of June 18, 1994, 20
among the Registrant, Boney Wilson & Sons, Inc.,
Wilson Brothers Partnership, and certain beneficial
owners of such entities */
2.2 Press release of the Registrant, dated June 22, 69
1994, announcing the agreement to acquire Wilson's
Supermarkets
2.3 Press release of the Registrant, dated July 26, 70
1994, announcing consummation of the acquisition
of Wilson's Supermarkets
23 Consent of Accountants 71
*/ Pursuant to Item 601(b)(2) of Regulation S-K, the exhibits and schedules
of the Acquisition Agreement have been omitted. A listing of the omitted
exhibits and schedules appears in the table of contents of the agreement.
The Registrant undertakes to furnish supplementally a copy of any omitted
exhibit or schedule to the Commission upon request.
Exhibit 2.1
ACQUISITION AGREEMENT
dated as of June 18, 1994
among
HANNAFORD BROS. CO.
and
BONEY WILSON & SONS, INC., WILSON BROTHERS PARTNERSHIP,
LAWRENCE A. WILSON, SR. (INDIVIDUALLY AND AS TRUSTEE
UNDER CERTAIN TRUST AGREEMENTS), LAURA B. WILSON,
LAWRENCE A. WILSON, JR., LANNY T. WILSON,
LINDA J. WILSON, AND MICHAEL L. WILSON
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Closing". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Deposit". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Descriptive Memorandum" . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Employee Benefit Plan". . . . . . . . . . . . . . . . . . . . . . 2
1.8 "ERISA". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Facilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Financial Statements" . . . . . . . . . . . . . . . . . . . . . . 2
1.11 "Hannaford Stock". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Hazardous Material" . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 "HSR Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 "Liability". . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 "Net Income" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Owners' Representative" . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Partnership Assets" . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 "Significant Contract" . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Stock". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Stores" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Transaction". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 The word "person". . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Purchase of Stock and Partnership Assets . . . . . . . . . . . . . 4
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Special Distributions; Adjustment of Purchase Price. . . . . . . . 5
2.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Escrow of Deposit. . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNERS,
THE COMPANY, AND THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . 9
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Capital Stock of the Company . . . . . . . . . . . . . . . . . . . 10
3.3 Partners in the Partnership. . . . . . . . . . . . . . . . . . . . 10
3.4 Corporate and Partnership Records. . . . . . . . . . . . . . . . . 11
3.5 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Absence of Material Changes. . . . . . . . . . . . . . . . . . . . 12
3.8 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 Real Estate Owned or Operated. . . . . . . . . . . . . . . . . . . 14
3.11 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.12 Personal Property and Fixtures . . . . . . . . . . . . . . . . . . 17
3.13 Inventories; Supplies; Etc.. . . . . . . . . . . . . . . . . . . . 17
3.14 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Significant Contracts. . . . . . . . . . . . . . . . . . . . . . . 18
3.16 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 18
3.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.18 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 21
3.19 Trade Names, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
3.20 Bank Accounts, Etc . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21 No Subsidiaries, Etc.. . . . . . . . . . . . . . . . . . . . . . . 24
3.22 Certain Tax Schedules. . . . . . . . . . . . . . . . . . . . . . . 24
3.23 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.24 Actions Since December 31, 1993. . . . . . . . . . . . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . . . . . . . . . . 24
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Financial Resources. . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
COVENANTS OF THE OWNERS, THE COMPANY,
AND THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Conduct Prior to Closing . . . . . . . . . . . . . . . . . . . . . 25
5.2 Certain Required Activities. . . . . . . . . . . . . . . . . . . . 26
5.3 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . 27
5.4 Ownership of Hannaford Stock . . . . . . . . . . . . . . . . . . . 27
5.5 Consulting and Non-Competition Agreement . . . . . . . . . . . . . 27
5.6 Exclusive Dealing. . . . . . . . . . . . . . . . . . . . . . . . . 27
5.7 Section 338 Election . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Conduct After Closing. . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Audited Financial Statements . . . . . . . . . . . . . . . . . . . 29
6.4 Real Estate Due Diligence Period . . . . . . . . . . . . . . . . . 30
6.5 Release of Information . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Brokers; Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Certain Future Activities by Purchaser . . . . . . . . . . . . . . 31
ARTICLE VII
CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Conditions to Purchaser's Obligations. . . . . . . . . . . . . . . 31
7.2 Conditions to Owners' Obligations. . . . . . . . . . . . . . . . . 33
7.3 Effect of Closing. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.1 By the Partnership and the Owners. . . . . . . . . . . . . . . . . 34
8.2 By the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Right of Set Off . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Notice of Third Party Claims . . . . . . . . . . . . . . . . . . . 37
8.5 Notice of Direct Claims. . . . . . . . . . . . . . . . . . . . . . 38
8.6 Insured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
<PAGE>
9.3 Applicable Law; Remedies . . . . . . . . . . . . . . . . . . . . . 39
9.4 Entire Agreement; Survival . . . . . . . . . . . . . . . . . . . . 39
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.6 Amendments; Consent. . . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
EXHIBITS
A Promissory Note
B Form of Deed
C Escrow Agreement
D Investment Letter
E Consulting and Non-Competition Agreement
F1 Legal Opinion to Purchaser
F2 Legal Opinion from Purchaser's Counsel
G Resignation of Officer/Director
H Consents of Shareholders and Directors
I Owners' Master Adoption Agreement
SCHEDULES
1.17 Partnership Assets to be Acquired
1.20 List of Stores
2.1B Partnership Liabilities to be Assumed
2.2 Allocation of Purchase Price
2.3B 1993 Income Tax of Shareholders
3.2 Ownership of Stock
3.3 Ownership of Partnership Interests
3.5 Required Consents from Third Parties
3.7 Certain Labilities
3.9 Legal Proceedings
3.10A Facilities Owned
3.10B Leases of Facilities Owned
3.10C Other Real Estate Leased
3.10D Zoning Matters
3.11 Condition of Facilities
3.12 Title to Personal Property and Fixtures
3.14 Receivables
3.15 Significant Contracts
3.16 Employment Matters
3.17 Insurance Matters
3.18B Hazardous Materials
3.18C Underground Storage Tanks
3.19 Trade Names, Etc.
3.20 Bank Accounts, Etc.
3.24 Certain Actions Since 12/31/93
5.2 Stores Under Construction
<PAGE>
ACQUISITION AGREEMENT
AGREEMENT dated as of June 18, 1994 among Hannaford Bros. Co., a Maine
corporation (the "Purchaser"), Boney Wilson & Sons, Inc., a North Carolina
corporation (the "Company"); Wilson Brothers Partnership, a North Carolina
general partnership (the "Partnership"); and Lawrence A. Wilson, Sr.,
individually and as Trustee under four trust agreements, all dated December
31, 1992, one for the benefit of Alexander Wilson Ventriglia, one for the
benefit of Laura Wilson Ventriglia, one for the benefit of Leigh Meredith
Wilson, and one for the benefit of Lawrence A. Wilson, III; Laura B. Wilson;
Lawrence A. Wilson, Jr.; Lanny T. Wilson; Linda J. Wilson; and Michael L.
Wilson (collectively, the "Owners").
WHEREAS, the Company owns and operates Wilson's Supermarkets, a
supermarket chain based in Wilmington, North Carolina, and the Partnership
leases certain real estate to the Company and others;
WHEREAS, certain of the Owners, as designated on Schedule 3.2 hereto (the
"Shareholders"), own all of the outstanding capital stock of the Company; and
certain of the Owners, as designated on Schedule 3.3 hereto (the "Partners"),
constitute all of the partners of the Partnership; and
WHEREAS, the Purchaser wishes to acquire and the respective Owners wish
to sell, on the terms and conditions set forth in this Agreement, all of the
outstanding capital stock of the Company and specified assets of the
Partnership;
NOW, THEREFORE, intending to be bound by the terms hereof, the parties to
this Agreement do hereby agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement, the following terms shall have the meanings set forth
below:
1.1 "Agreement" shall mean this Acquisition Agreement and all exhibits
and schedules attached hereto. The terms "hereof," "herein," and the like
when used in this document shall refer to the entire Agreement.
1.2 "Closing" shall mean the consummation of the purchase and sale of
the Stock and the Partnership Assets, and the simultaneous exchange of
consideration and other documents, as contemplated by Section 2.5 below. The
target date for the Closing is July 8, 1994, subject however to notice of the
actual date and time of Closing pursuant to Section 2.5.
<PAGE>
1.3 "Closing Date" shall mean the effective date of the Closing as set
forth in Section 2.4 below. The effective time of the Closing will be deemed
to have occurred at the commencement of business on the Closing Date. The
target Closing Date is June 19, 1994, subject to change pursuant to Section
2.4.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended (and
where the context so requires, any predecessor statutes), and all rules,
regulations, and Department of Treasury requirements promulgated thereunder.
1.5 "Deposit" shall mean the sum of $2,000,000 (net of any interest
thereon), placed in escrow by the Purchaser pursuant to Section 2.6.
1.6 "Descriptive Memorandum" shall mean the Descriptive Memorandum
distributed by NationsBank Investment Banking, a copy of which was provided to
the Purchaser.
1.7 "Employee Benefit Plan" shall mean a plan described in Section 3(3)
of ERISA.
1.8 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all rules, regulations, and Department of Labor
requirements promulgated thereunder.
1.9 "Facilities" shall mean and include all real properties owned or
leased by the Company or included in the Partnership Assets, including land,
buildings, improvements, and fixtures, together with all appurtenances,
rights, privileges, and easements benefiting, belonging, or pertaining
thereto. "Facility" shall mean any one of the Facilities.
1.10 "Financial Statements" shall mean (i) the 1993 Financial Report of
the Company as of and for the periods ending December 31, 1993 and 1992,
compiled by McGladrey & Pullen (the "1993 Financial Report"), (ii) the
financial statements and financial statement schedules contained in the
Descriptive Memorandum (but excluding any projections of future financial
performance), and (iii) the 1994 interim financial statements and financial
statement schedules of the Company provided to the Purchaser prior to the date
hereof (as supplemented from time to time).
1.11 "Hannaford Stock" shall mean Hannaford Bros. Co. Common Stock, par
value $.75 per share.
1.12 "Hazardous Material" shall have the meaning set forth in Section
3.18 below.
1.13 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. "HSR Clearance" shall mean the expiration of any
applicable waiting period under the HSR Act without any suit to enjoin the
<PAGE>
Transaction having been filed by the United States Department of Justice or
Federal Trade Commission under Title 15 of the United States Code, or any
party to this Agreement having received notice of an intent to file such suit.
1.14 "Liability" shall mean and include any debt, liability, account
payable, unpaid expense, or other obligation of any kind (whether known or
unknown, contingent or absolute, or recorded on the obligor's books or not).
1.15 "Net Income" shall mean corporate income of the Company, net of any
deductions, attributable to shareholders under Sections 1361 through 1379 of
the Code (corresponding to the relevant amounts reportable on Schedule K of
Form 1120S for the relevant period), as properly computed under the Code using
recognized tax accounting principles consistently applied; provided, however,
that for purposes of this Agreement, Net Income shall not include (i) any
Section 338 Income, (ii) any capital gain income resulting from the Section
338 election pursuant to Section 5.7 below, or (iii) any other capital gain
income (including without limitation that from transfer of property at Bragg
Boulevard and Middle Sound Loop Road as contemplated by Section 5.1(b)(4)
below) not arising in the ordinary course of business. The term "Section 338
Income" shall mean all of the ordinary income component (if any) of any gain,
net of any Code Section 1231 losses, to be reported and recognized by the
Company pursuant to the Section 338 elections specified in Section 5.7 below.
1.16 "Owners' Representative" shall mean the person designated as such
for purposes of the Owners' Master Adoption Agreement described in Section 9.6
below.
1.17 "Partnership Assets" shall mean the assets of the Partnership to be
purchased by the Purchaser, as described on Schedule 1.17 hereto, but
excluding those assets identified as "Excluded Assets" in such schedule. For
purposes hereof, the Facility located in Warsaw, North Carolina (which may be
owned of record by the Partners directly) shall be treated as a Partnership
Asset.
1.18 "Significant Contract" means any agreement, understanding,
commitment, or other contract (written or otherwise) to which the Company or
the Partnership is a party (or by which any of their respective properties is
bound in any material respect), other than any contract in the ordinary course
of business which (a) is terminable by the Company or the Partnership on not
more than one month's notice and does not involve payments or obligations (on
termination or otherwise) of more than $5,000 in any given month or (b)
involves aggregate payments or obligations of less than $35,000.
<PAGE>
1.19 "Stock" shall mean all outstanding shares of common stock of the
Company and any other beneficial interest in capital stock of the Company.
1.20 "Stores" shall mean and include the Company's existing and proposed
supermarkets, as listed on Schedule 1.20.
1.21 "Transaction" shall mean the acquisition of the Stock and the
Partnership Assets by the Purchaser as provided in Article II hereof.
1.22 The word "person" shall include any individual, corporation,
government department or agency, association, partnership, or other entity,
whether such person is acting in an individual, fiduciary, or other capacity.
ARTICLE II
THE TRANSACTION
2.1 PURCHASE OF STOCK AND PARTNERSHIP ASSETS. (a) Subject to the terms
and conditions of this Agreement, the Owners agree to sell to the Purchaser at
Closing, and the Purchaser agrees to purchase, all Stock of the Company, free
and clear of all claims, liens, restrictions, charges, and other encumbrances
of any kind.
(b) Subject to the terms and conditions of this Agreement, the
Partnership and the Owners agree to sell to the Purchaser at Closing, and the
Purchaser agrees to purchase, all of the Partnership Assets, free and clear of
all claims, liens, restrictions, charges, and other encumbrances of any kind
except those permitted under Section 3.10(a) or 3.10(b) below. Except for
such permitted encumbrances, the Purchaser is not assuming any Liabilities of
the Partnership whatsoever in connection with the purchase of such assets or
otherwise in connection with this Agreement (other than the obligations
specifically described on Schedule 2.1B hereto).
2.2 PURCHASE PRICE. (a) The aggregate purchase price for the Stock and
the Partnership Assets is $118,901,788, subject to any adjustment under
Section 2.3 below. The purchase price shall be allocated among the Stock and
the Partnership Assets as set forth in Schedule 2.2 hereto.
(b) The Deposit of $2,000,000, made by the Purchaser in accordance
with Section 2.6 below, shall be disbursed to the Owners at Closing as part of
the purchase price for the Stock.
(c) The following portion of the purchase price shall be paid by
the Purchaser at the Closing:
<PAGE>
(i) The sum of $3,000,000 (subject to any adjustment under
Section 2.3(g) below) shall be paid by wire transfer to an account
designated by the Partnership.
(ii) The sum of $107,401,788 (subject to any adjustments
under Sections 2.3(d) and 2.3(e) below) shall be paid by wire transfer to
an account designated jointly by the Owners.
(iii) Shares of Hannaford Stock having a market value of
$2,000,000 and recorded in the names of certain of the Owners (as
designated by them) shall be delivered to such Owners. Alternatively, at
the Purchaser's option, the Purchaser may pay such Owners $2,000,000 in
cash by wire transfer in lieu of delivering Hannaford Stock. For
purposes hereof, the market value of any Hannaford Stock delivered
hereunder shall be deemed to equal the average of the closing price per
share on the New York Stock Exchange for each trading day during the 30
calendar days immediately prior to June 18, 1994, and the number of
shares to be delivered will be rounded to the nearest whole number.
(iv) The Purchaser shall deliver a Promissory Note in the
form of Exhibit A in the principal amount of $4,500,000, with 6% simple
interest per annum. The principal balance of the Promissory Note shall
be payable in five equal annual installments, commencing on the first
anniversary of the Closing Date.
Item (i) represents the purchase price for the Partnership Assets. Items
(ii), (iii), and (iv) represent payment against the purchase price for the
Stock, after crediting of the full amount of the Deposit. At least three
business days prior to the Closing, the Owners' Representative shall provide
the Purchaser with written instructions concerning the payment or delivery of
the foregoing items; any payment or delivery made by the Purchaser in
accordance with such instructions shall be deemed to have been received by the
Owners or, as the case may be, the Partnership.
(d) The Owners shall be responsible for allocating among themselves
the consideration paid for the Stock and the consideration paid for the
Partnership Assets, and for payment of any taxes on the transfer of the Stock
or the Partnership Assets. In addition, the Shareholders shall be responsible
for allocating among themselves any cash distributions by the Company in a
manner consistent with the Company's election to be treated as an S
corporation for purposes of federal and state income taxes.
2.3 SPECIAL DISTRIBUTIONS; ADJUSTMENT OF PURCHASE PRICE. (a) There
shall be an interim closing of the books of the Company as of the last day
prior to the Closing Date, so that the Net Income of the Company subsequent to
December 31, 1993 may be computed and apportioned as of such date. A draft
<PAGE>
tax return for such period shall be prepared by Coopers & Lybrand and shall be
subject to review and approval as set forth in subsection (f) below. As set
forth in Sections 2.4 and 6.2(b) below, the Purchaser or its agents shall
conduct a physical count of the Company's inventory in connection with the
interim closing of the books. Such count shall be completed within seven days
after the Closing Date.
(b) From January 1, 1994 through the day before the Closing Date,
the Company shall pay the following sums:
(i) Aggregate bonuses to the Owners (including members of
their immediate families) equal to $87,500 for 1993.
(ii) Aggregate distributions to the Shareholders of
$673,000, to cover the unpaid portion of the Shareholders' 1993 federal
and state income taxes as set forth on Schedule 2.3B.
(iii) Aggregate distributions to the Shareholders equal to
the greater of (x) $1,354,347 or (y) 110% times Pro Rata Company Income
times 45.469%, payable to the Shareholders pro rata in accordance with
their share ownership. For these purposes, Pro Rata Company Income means
$10,875,880 per year prorated for the number of days in 1994 through the
latest date for which the Shareholders must pay estimated income taxes to
the Internal Revenue Service.
(iv) Aggregate distributions to the Shareholders of
$598,212.
(c) At Closing, the Company shall pay the following sums:
(i) The unpaid balance (if any) of the 1993 bonuses payable
pursuant to subsection (b)(i) above.
(ii) Aggregate bonuses to the Owners (including members of
their immediate families) at the rate of $87,500 per year, prorated for
the number of days in 1994 through the Closing.
(iii) A retirement bonus to Lawrence A. Wilson, Sr. in the
amount of $30,000.
(d) Between the Closing Date and the Closing, Coopers & Lybrand is
to prepare a written estimate of Net Income of the Company for the interim
period described in subsection (a) above. On the basis of this preliminary
estimate, the Company at Closing shall pay a distribution to the Shareholders
(declared on a formula basis immediately prior to the Closing Date and payable
<PAGE>
to them pro rata in accordance with their share ownership) in an amount equal
to the Applicable Tax Rate (as defined below) times the estimated Net Income
of the Company for such interim period, less the amount of any permitted
distributions previously paid by the Company to the Shareholders under
subsection (b)(iii) above. Provided, however, that if the distributions under
subsection (b)(iii) exceed the estimated interim Net Income times the
Applicable Tax Rate, then the purchase price for the Stock shall be reduced by
the amount of the excess. For these purposes, the "Applicable Tax Rate" means
45.469%, except that with respect to long-term capital gain during 1994 such
percentage shall be adjusted to 33.869%. Solely for purposes of computing the
amount of this distribution (or purchase price reduction, as the case may be)
to be made at Closing, the parties agree to be bound by the Coopers &
Lybrand's written estimate of interim Net Income. The final calculation of
interim Net Income shall be made in accordance with subsection (f) below. In
the case of any adjustment in interim Net Income pursuant to subsection (f),
the amount of the distribution for the interim Net Income shall be
recalculated, with any net increase in the distribution to be paid to the
Shareholders by an additional distribution to them, and any net decrease in
the distribution to be returned to the Purchaser by setoff against amounts
otherwise due under the Promissory Note delivered under Section 2.2(c)(iv)
above.
(e) Subject to any right under Section 7.1 not to consummate the
Transaction, the aggregate purchase price for the Stock shall be further
reduced by the amount of any payment by the Company during 1994 to or for the
benefit of the Owners or members of their immediate families other than
payments of a type permitted by Section 5.1 (including without limitation
salaries, benefits, and rent paid through the Closing in the ordinary course
of business) and distributions and bonus payments expressly permitted by this
Section 2.3.
(f) At the Company's expense, Coopers & Lybrand shall prepare a
draft tax return for the interim period described in subsection (a) above,
setting forth a calculation of the Company's interim period Net Income. Such
draft shall be presented to the Company and the Shareholders within 75 days
after the Closing Date (or such later date as may be reasonably agreeable to
the Company and the Shareholders). At the option and expense of the
Shareholders, such draft shall be subject to a review by McGladrey & Pullen.
If McGladrey & Pullen is of the opinion (as set forth in a letter addressed
and delivered to Coopers & Lybrand, with a copy to the Purchaser) that the
calculation of Net Income by Coopers & Lybrand has not been made in accordance
with recognized tax accounting principles consistently applied, then the
Shareholders may give the Purchaser written notice of their objection to the
calculation of Net Income, specifying in reasonable detail their own
calculation of such amount. Such notice shall be effective only if signed by
<PAGE>
the Owners' Representative and given within 20 days after delivery by Coopers
& Lybrand of the draft tax return. Thereafter the Purchaser and the
Shareholders shall promptly negotiate in good faith to attempt to arrive at a
mutually acceptable calculation of Net Income. If no such agreement is
reached within 10 days after the date of such notice of objection, then at
either party's request the dispute shall be submitted to a mutually acceptable
firm of certified public accountants of national repute having no prior
dealings with any signatory to this Agreement. The parties agree that the
calculation of Net Income by such firm shall be binding on all parties to the
dispute, and that all fees and expenses of such firm shall be divided equally
between the Shareholders on the one hand and the Purchaser or the Company on
the other. The parties also agree that final federal and state tax returns
for the Company for the relevant period shall be filed not more than two weeks
prior to the due dates thereof.
(g) The Purchaser, the Partnership, and the Partners agree that
accrued but unpaid expenses relating to the Partnership Assets (other than
those expressly set forth on Schedule 2.1B, which are being assumed by the
Purchaser) shall be prorated as of the effective time of the Closing. Subject
to the right under Section 7.1 not to consummate the Transaction, the purchase
price for the Partnership Assets shall be reduced by the net unpaid amount of
any pro ratable expenses accrued as of the effective time of the Closing.
2.4 CLOSING DATE. The Company shall conduct an inventory count as of
June 18, 1994, and the Closing Date shall be deemed to occur the next day as
of the commencement of business.
2.5 CLOSING. The Closing shall take place at the offices of Ward and
Smith, P.A. in Wilmington, North Carolina as soon as practicable after the
Closing Date, at a date and time to be specified by written notice from the
Purchaser to the Company. Without the consent of the Company, the Closing
shall in no event be extended past the first to occur of (i) August 31, 1994
or (ii) five days after the satisfaction of all closing conditions set forth
in Article VII below. The sale of the Stock to the Purchaser shall be
effected at the Closing by the delivery of stock certificates for all
outstanding shares of Stock, duly endorsed for transfer to the Purchaser or
accompanied by duly executed stock powers in form and substance satisfactory
to the Purchaser. Immediately following transfer of the Stock to the
Purchaser, the sale of the Partnership Assets shall be effected by the
delivery (to the Purchaser or to the Company or one or more other nominees of
the Purchaser) of warranty deeds in the form of Exhibit B hereto and warranty
bills of sale, releases, assignments, and other instruments of transfer and
conveyance in such form, and including such warranties of title, as shall
reasonably be requested by the Purchaser. All documentary or revenue stamps,
if any, relating to the sale of the Partnership Assets shall be paid for and
provided by the Partnership and the Owners. At the Closing, the Purchaser
<PAGE>
shall make payment of the purchase price as provided in Section 2.2 above, and
the parties shall deliver the certificates, opinions, and other documents
called for in this Agreement. The Purchaser may elect to have the transfer of
Partnership Assets be made by the Partnership directly to the Company
immediately following purchase of the Stock by the Purchaser.
2.6 ESCROW OF DEPOSIT. (a) Upon execution of this Agreement, the
parties shall execute an Escrow Agreement substantially in the form of Exhibit
C hereto, and the Purchaser shall deposit the sum of $2,000,000 in an
interest-bearing escrow account in accordance with such agreement. Interest
earned on the Deposit through the Closing (or the date of termination, as the
case may be) shall be paid over to the Purchaser from time to time at its
request.
(b) If the Transaction fails to close due to a material breach of
this Agreement by the Purchaser, then the Company, the Partnership, and the
Owners shall be entitled to receive, as full liquidated damages (including any
and all anticipated damages), the sum of $5,000,000, of which $2,000,000 shall
be paid by release of the Deposit to them and an additional $3,000,000 shall
be paid to them by the Purchaser in cash. Following payment of this amount,
none of the parties hereto shall be under any further obligation pursuant to
this Agreement except as otherwise specifically provided herein.
(c) If the Transaction fails to close for any other reason, then
the Deposit shall promptly be returned to the Purchaser.
(d) The provisions of Section 6.7 below (requiring a $3,000,000
payment by the Purchaser under certain circumstances) shall survive any
termination of this Agreement, except as provided therein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNERS,
THE COMPANY, AND THE PARTNERSHIP
The Owners, the Company, and the Partnership jointly and severally
represent and warrant to the Purchaser as of the date hereof and as of the
Closing as set forth below in this Article III. Provided, however, that no
Owner who is not a partner in the Partnership hereby makes any representation
or warranty concerning the Partnership, and no Owner who is not a shareholder
of the Company hereby makes any representation or warranty concerning the
Company. Provided further that references in this Article to the "knowledge"
of the Company, the Partnership, or any of the Owners shall be construed to
require the actual knowledge of at least one of the Owners. Actual or
constructive knowledge on the part of an employee of the Company (other than
<PAGE>
one of the Owners) shall not constitute actual knowledge on the part of the
Company or any of the Owners.
3.1 DUE ORGANIZATION. (a) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of North
Carolina; is duly qualified to do business and is in good standing in South
Carolina and each other jurisdiction where its ownership or leasing of
property or the conduct of its business requires it to be so qualified; and
has all requisite corporate power and authority to carry on its business as it
is now being conducted. The Company possesses all governmental permits,
licenses, and approvals presently required to operate each of the Stores.
(b) The Partnership is a general partnership duly organized and
validly existing under the laws of the State of North Carolina, and has all
requisite power and authority to carry on its business as it is now being
conducted. The assumed name of the Partnership and the names of its partners
have been duly registered in each county where such registration is required
by law and the Partnership is otherwise duly qualified to transact business in
each jurisdiction in which its ownership of property or the conduct of its
business requires it to be so qualified.
3.2 CAPITAL STOCK OF THE COMPANY. The Company is authorized to issue
200,000 shares of Class A Common Stock and 2,000,000 shares of Class B Common
Stock, each having a par value of $.10 per share. The Company has no other
authorized classes of stock. The issued and outstanding stock of the Company
consists solely of 121,600 shares of Class A Common Stock and 1,216,000 shares
of Class B Common Stock, all of which are owned, beneficially and of record,
by the Owners as described in Schedule 3.2. All of the outstanding shares of
Common Stock are duly authorized, validly issued, fully paid, and
nonassessable and are free and clear of any pledge or other claim or lien
thereon. There are no outstanding claims pursuant to shareholder preemptive
rights, and no outstanding options, warrants, calls, or commitments of any
kind that would require the Company to issue additional shares of stock.
There are no outstanding options, warrants, calls, or commitments of any kind
(other than those in favor of the Purchaser as provided in this Agreement)
that would require any Owner to transfer any record or beneficial interest in
any of the Stock.
3.3 PARTNERS IN THE PARTNERSHIP. The Partners constitute the only
partners in the Partnership. All of the general partnership interests in the
Partnership are owned, beneficially and of record, by the Partners as
described in Schedule 3.3. There are no outstanding options, rights, or
<PAGE>
commitments of any kind that would require the Partnership or any of the
Owners to subdivide or transfer any portion of such partnership interests.
3.4 CORPORATE AND PARTNERSHIP RECORDS. Copies of the articles of
incorporation, bylaws, minute books of all directors' and shareholders'
meetings, and stock records and transfer books have been delivered to the
Purchaser, and such copies are accurate and complete. The stock records and
transfer books reflect all material stock transactions pertaining to the
Company. Accurate and complete copies of the partnership agreement and all
other organizational documents of the Partnership, as amended to date, have
been delivered to the Purchaser.
3.5 AUTHORIZATION. (a) The Company, the Partnership, and the Owners
each have all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by the Company and the
Partnership have been duly authorized by all necessary corporate or
partnership action. This Agreement constitutes a binding contract which is
enforceable against the Company, the Partnership, and each of the Owners in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to the enforcement
of creditors' rights generally or by general principles of equity.
(b) The execution, delivery, and performance of this Agreement by
the Company, the Partnership, and the Owners do not and will not (1) conflict
with or result in a breach of any of the provisions of the articles of
incorporation or bylaws of the Company or the partnership agreement of the
Partnership; (2) contravene any federal, state, or local law (subject to the
receipt of HSR Clearance prior to Closing); (3) contravene any judicial or
administrative order, judgment, or decree specific to the Company, the
Partnership, or any of the Owners or to their respective properties; (4)
conflict with or result in any breach or default under any lease, loan
agreement, deed of trust, mortgage, security agreement, or other instrument or
agreement to which the Company, the Partnership, or any of the Owners is a
party, or by which any of their respective properties may be affected, other
than as described in Schedule 3.5 hereto (all of which conflicts shall be
waived or cured prior to the Closing); (5) require the authorization, consent,
approval, or license of any third party other than as described in
Schedule 3.5 (all of which, except governmental approvals needed for
participation in food stamp and WIC programs and except for ABC permits, shall
be obtained prior to the Closing); or (6) constitute grounds for the loss or
suspension of any permits, licenses, or other authorizations used in the
business of the Company or the Partnership.
<PAGE>
(c) The Partnership has good and marketable title to the
Partnership Assets, free and clear of any and all claims, liens, restrictions,
charges, encumbrances, and other defects in title, except (with respect to
real estate) as expressly provided in Section 3.10 below.
3.6 FINANCIAL STATEMENTS. The Financial Statements have been prepared
in the manner described therein in accordance with recognized accounting
principles consistently applied (except as noted therein) during the periods
involved, and present fairly and accurately the financial condition, revenues,
expenses, and retained earnings of the Company as of the dates and for the
periods set forth therein.
3.7 ABSENCE OF MATERIAL CHANGES. Except as described in Schedule 3.7:
(a) The Company has no material Liability which is not reflected or
reserved against in the 1993 Financial Report, except Liabilities incurred
since December 31, 1993 in the ordinary course of business and consistent with
past practice of the Company. Schedule 3.7 hereto describes each Liability of
the Company exceeding $35,000, other than (i) trade payables incurred by the
Company in the ordinary course of business, (ii) insured claims noted in the
loss runs attached to Schedule 3.17 hereto, and (iii) obligations apparent on
the face of a deed, lease, easement, or other real estate document if properly
recorded and indexed before the day of the Closing in the Registry of Deeds
(or Clerk of Court's Office, in the case of South Carolina) for the county in
which the Facility to which such instrument relates is located.
(b) Since December 31, 1993, there has not been (1) any material
adverse change in the business, condition (financial or otherwise),
operations, or prospects of the Company or the Partnership; (2) any damage or
loss (whether covered by insurance or not) having a material adverse effect on
the business, condition (financial or otherwise), operations, or prospects of
the Company or the Partnership; (3) any entry into or termination of any
material commitment, contract, agreement, or transaction (including without
limitation, any material borrowing or capital expenditure or sale or other
disposition of any material asset for assets) by the Company or the
Partnership, other than agreements executed or terminated in the ordinary
course of business; (4) any change in beneficial ownership of the Company or
the Partnership; (5) any dividend or distribution declared, set aside, or paid
by the Company to any shareholder thereof except as permitted in Section 2.3
above; (6) any other payment by the Company, directly or indirectly, to any of
the Owners or members of their immediate families other than payments
permitted by Section 2.3 above or Section 5.1 below (including without
limitation payment of salaries, benefits, and rent in the ordinary course of
business through Closing); (7) any transfer by the Company or the Partnership
<PAGE>
of, or right granted by the Company or the Partnership under, any material
lease, license, agreement, trademark, trade name, or copyright; (8) any sale
or other disposition of any asset of the Company or the Partnership, or any
mortgage, pledge, or imposition of any lien or other encumbrance on any asset
of the Company or Partnership, other than in the ordinary course of business,
or any agreement relating to the foregoing; or (9) any material default or
breach by the Company or Partnership under any contract, note, license, or
permit.
(c) Since December 31, 1993, the Company and the Partnership have
conducted their businesses only in the ordinary and usual course, and, without
limiting the foregoing, no material changes have been made in (i) executive
compensation levels; (ii) the manner in which other employees of the Company
or the Partnership are compensated; (iii) supplemental benefits provided to
any such executive or other employees; or (iv) the relative quality or (except
in the ordinary course of business) the quantity of inventories for the Stores
taken as a whole.
3.8 TAX MATTERS. (a) The Company, the Partnership, and (in all respects
material to the business of the Company or the Partnership) the Owners (i)
have properly and accurately filed or caused to be filed all tax returns,
reports, information statements, and declarations required by applicable tax
laws to be filed by them (including without limitation those relating to any
income tax, payroll tax, employment tax, sales tax, excise tax, ad valorem or
other property tax, or franchise tax imposed by any relevant federal, state,
local, or foreign jurisdiction) except as set forth in Section 3.8(d) below
and (ii) have paid all federal, state, local, and foreign income taxes,
payroll taxes, employment taxes, sales taxes, and other taxes incurred for the
periods covered by the required filings. Except for the personal property tax
matter involving Brunswick County, North Carolina (the files as to which have
been made available to the Purchaser), there are no pending disputes, audits,
or investigations as to taxes of any nature paid or payable by or with respect
to the Company or the Partnership, and neither the Company nor any of the
Owners has been notified of the commencement of any such audit. Except for
sales tax audits by the North Carolina Department of Revenue and unemployment
tax audits by the South Carolina Department of Revenue (the files as to which
have been made available to the Purchaser), neither the Company nor the
Partnership has been audited by any governmental tax authority within the past
seven years. There are no outstanding extensions of the statute of
limitations on the assessments or payment of taxes described in this Section
3.8.
(b) The Company has no liability for any taxes of any other person
(i) as a member of an affiliated group, (ii) as a transferee or successor, or
(iii) by contract or otherwise.
<PAGE>
(c) Since January 1, 1983 the Company, with all requisite consent
of its shareholders, has continuously and validly elected to be treated as an
S corporation under Section 1362 of the Code and under the corresponding
provisions (if any) of applicable state and local law in effect from time to
time. Such elections have never been terminated or revoked, are currently in
effect, and will remain in effect until such time as they terminate due to the
purchase of the Stock by the Purchaser at Closing. Such termination shall be
deemed to occur as of the effective time of the Closing. Since the date of
the original election of S corporation status, no shares of capital stock of
the Company have been held by any person that was ineligible to be an
S corporation shareholder.
(d) The Company in 1994 received notice from the Internal Revenue
Service that it filed its Form 5500 for 1992 without attaching the requisite
audit report. This filing will be corrected before the Closing and will not
result in any penalty to the Company.
3.9 LEGAL PROCEEDINGS. Set forth in Schedule 3.9 hereto is a
description and complete listing of each action, suit, arbitration, mediation,
governmental investigation or review, or other proceeding pending or (to the
knowledge of the Owners) threatened against or affecting the Company, the
Partnership, or any of the Owners. No such proceeding is material to the
transactions contemplated under this Agreement.
3.10 REAL ESTATE OWNED OR OPERATED. (a) There is set forth in Schedule
3.10A hereto a brief description (by type, location, and deed recording
reference) of each and every Facility owned by either the Company or the
Partnership. The Company or the Partnership (as the case may be) owns in fee
simple each Facility described in Schedule 3.10A (including all appurtenant
access, drainage, utility and other rights and easements necessary for the
operation of each store or other business or activity currently being
conducted thereon or intended by the Owners to be conducted thereon), with a
good and marketable title thereto, free and clear of any and all claims,
liens, mortgages, restrictions, charges, encumbrances and other defects in
title, except
(i) restrictions or nonmonetary encumbrances of record
(including without limitation utility line easements servicing adjoining
real estate, reciprocal operating agreements, maintenance agreements,
declarations of restrictions and covenants, development agreements, road
maintenance agreements, cross easements, party wall agreements, and the
like) which do not have, and cannot reasonably be expected in the future
to have, a material and adverse effect upon the use and enjoyment of the
Facility, upon the operation of any Store located or to be located
<PAGE>
thereon, or upon any other business or activity currently being conducted
thereon or intended by the Owners to be conducted thereon;
(ii) utility easements given for the purpose of servicing
the Facility; and
(iii) any lease or other agreement listed in Schedule 3.10B.
There exist no encroachments upon or from adjacent properties and no
waterways, wetlands, gores, or other physical features that would be revealed
by a survey of the Facility and that materially and adversely affect the use
of the Facility, the operation of any Store located or currently proposed to
be located thereon, or any other business or activity currently being
conducted or planned by the Owners to be conducted thereon.
(b) There is set forth in Schedule 3.10B hereto an accurate and
complete list of (i) all leases affecting any Facility owned by the Company,
the Partnership, or any of the Owners and (ii) each other agreement to which
the Company, the Partnership, or any of the Owners is a party and which
affects any such Facility. The Company and the Partnership have delivered to
the Purchaser, or will deliver to the Purchaser within 15 days after the date
hereof, accurate and complete copies of all such leases and agreements and all
amendments, modifications, and supplements thereto. Such leases and
agreements are in full force and effect and there exists no breach or default
(or other condition that with the passage of time or the giving of notice, or
both, would constitute a breach or default) under any such lease or agreement
except as otherwise described in Schedule 3.10B. Transfer of the Stock and
the Partnership Assets to the Purchaser will not impair the enforceability of
any such lease or agreement, other than as described in Schedule 3.10B hereto
(all of which restrictions on or impediments to transfer shall be waived or
cured prior to the Closing). Provided, however, that recorded agreements (as
defined below) need not be listed on Schedule 3.10B, and copies thereof have
already been obtained by the Purchaser. For purposes of this subsection only,
the term "recorded agreement" means any agreement (other than a lease) which
affects a Facility and was properly recorded and indexed on or before June 6,
1994 in the Registry of Deeds (or Clerk of Court's Office, in the case of
South Carolina) for the county in which the Facility is located.
(c) There is set forth in Schedule 3.10C hereto an accurate and
complete list of all leases under which the Company leases a Facility from any
person other than the Partnership. There is included in Schedule 3.10C a true
and correct summary of the length of term, available option terms, minimum and
percentage rent, and certain other provisions with respect to each such lease.
Each Facility leased by the Company includes all appurtenant access, drainage,
<PAGE>
utility and other rights and easements necessary for the operation of each
store or other business or activity currently being conducted thereon or
intended by the Owners to be conducted thereon and is free and clear of all
claims, liens, mortgages, restrictions, charges, encumbrances, and other
defects in title that are superior to the Company's lease, except for
(i) restrictions or nonmonetary encumbrances (including
without limitation utility line easements servicing adjoining real
estate, reciprocal operating agreements, maintenance agreements,
declarations of restrictions and covenants, development agreements, road
maintenance agreements, cross easements, party wall agreements, and the
like) which do not have, and cannot reasonably be expected in the future
to have, a material and adverse effect upon the use and enjoyment of the
Facility in accordance with the terms and conditions of the lease, upon
the operation of any Store located or to be located thereon, or upon any
other business or activity currently being conducted or intended by the
Owners to be conducted thereon; and
(ii) any mortgage, deed of trust, or ground or underlying
lease with respect to which the Company has (or will have at Closing) a
valid and binding agreement with all holders thereof providing that the
Company will not be disturbed in its use and possession of the Facility
in the event of any foreclosure, termination, or other action taken under
any such mortgage, deed of trust, or ground or underlying lease by any
holder thereof.
The Company has delivered to the Purchaser, or will deliver to the Purchaser
within 15 days after the date hereof, accurate and complete copies of all
leases required to be listed in Schedule 3.10C, together with accurate and
complete copies of all agreements which amend, modify, extend, or supplement
any of the same, and together with accurate and correct copies of any
nondisturbance agreements that pertain thereto. All such leases,
nondisturbance agreements, and other agreements are in full force and effect,
and there exists no breach or default (or other condition that with the
passage of time or the giving of notice, or both, would constitute a breach or
default) under any such lease, nondisturbance agreement, or other agreement
except as otherwise described in Schedule 3.10C. Transfer of the Stock and
the Partnership Assets to the Purchaser will not impair the enforceability of
any such lease, nondisturbance agreement, or other agreement, other than as
described in Schedule 3.10C (all of which restrictions on or impediments to
transfer shall be waived or cured prior to the Closing).
(d) The Company or the Partnership (as the case may be) has
obtained all zoning, land use, construction, and building licenses, permits,
approvals, and authorizations presently required with respect to the
<PAGE>
development and use of the Facilities and the operation of any Store,
warehouse facility, or other business located or (to the knowledge of the
Owners) planned to be located thereon. Each of the Facilities upon which a
Store is located or is to be located is within an area properly zoned for
retail business purposes, including without limitation the business of a food
supermarket. Each of the Facilities is in compliance with all zoning,
building, and land use laws, ordinances, codes, rules, regulations, and other
governmental requirements applicable thereto (collectively, the "Zoning
Laws"), including, without limitation, the terms, conditions, and requirements
of any licenses, permits, approvals, or other authorizations held by the
Company or the Partnership (as the case may be). Neither the Company nor the
Partnership has received any notice of any alleged violation of any Zoning
Laws except as set forth in Schedule 3.10D hereto. Nothing herein shall be
construed as a representation or warranty that any Facility shall continue to
be in compliance with the Zoning Laws at any future date after the Closing
Date.
3.11 FACILITIES. Except as disclosed in Schedule 3.11 hereto, the
Facilities currently in use are structurally sound as to physical plant and
structure, and are in compliance with all applicable laws (including without
limitation, to the knowledge of the Owners, those pertaining to safety or to
accessibility by persons with disabilities). None of the Facilities currently
in use, nor any of the vehicles or other equipment used by the Company in
connection with its business, has any material defects, and all are in good
operating condition and repair and are adequate for the uses to which they are
being put.
3.12 PERSONAL PROPERTY AND FIXTURES. Except as described in
Schedule 3.12 hereto, the Company or the Partnership (as the case may be) has
good and valid fee simple title to all of the inventory, fixtures, equipment,
furnishings, and leasehold improvements located at the Stores and all
inventory identified to it at warehouses, including without limitation any
such assets listed on Schedule 2.2 hereto. The Company has appropriate
operating rights for all of its computer hardware and software.
3.13 INVENTORIES; SUPPLIES; ETC. (a) All inventories of the Company are
located at the Stores or at warehouses maintained in Warsaw, North Carolina by
Scrivner or in Charleston, South Carolina by SuperValu, and are available for
inspection by Purchaser and its agents and representatives. Substantially all
such inventory is of a quality and quantity usable and salable in the ordinary
course of its business. Between the date hereof and the Closing Date, there
shall be no deterioration in the quality or salability of any material amount
of the inventory. All existing agreements and orders for the purchase of
inventory by the Company have been made in the ordinary course of business and
reflect quantities and prices believed by the Company to be reasonable in
relation to its current levels of business.
<PAGE>
(b) All executory contracts for the purchase of supplies,
machinery, or equipment have been made in the ordinary course of business and
reflect quantities and prices believed by the Company to be reasonable in
relation to its current levels of business.
(c) Article 6 (Bulk Sales Act) of the Uniform Commercial Code, as
in effect in North Carolina and South Carolina as of the Closing Date, is
inapplicable to the sale of the Stock and the Partnership Assets pursuant to
the Transaction.
3.14 RECEIVABLES. All receivables of the Company (including without
limitation all performance monies and other trade receivables, whether or not
reflected in the latest Financial Statements), have arisen in the ordinary
course of business. Schedule 3.14 hereto contains a summary of all vendor
receivables and other receivables of the Company as of the respective dates
specified on such schedule. The Owners shall use their best efforts to assist
the Company and the Purchaser in collecting all uncollected receivables of the
Company incurred prior to Closing.
3.15 SIGNIFICANT CONTRACTS. Set forth in Schedule 3.15 hereto is a list
of each Significant Contract of the Company or the Partnership. Accurate and
complete copies of all Significant Contracts have been provided to the
Purchaser prior to the date hereof. All Significant Contracts are enforceable
by the Company or the Partnership (as the case may be) in accordance with
their terms, except as otherwise set forth in Schedule 3.15 and subject to
limitations by bankruptcy, insolvency, reorganization or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general principles of equity. Except as otherwise described in such schedule,
all Significant Contracts shall remain enforceable notwithstanding the
consummation of the Transaction.
3.16 EMPLOYMENT MATTERS. (a) In all material respects, (i) the Company
has complied with all applicable federal, state, and local laws relating to
the employment of labor, including without limitation those provisions
prohibiting unlawful discrimination and those provisions relating to wages,
hours, workers compensation, occupational safety, collective bargaining,
employee benefits, withholdings, and payment of Social Security taxes or
unemployment compensation taxes, (ii) the Company is not liable for any
arrearages of wages or any tax or penalties for failure to comply with any of
the foregoing or otherwise, (iii) there are no employment-related claims
pending or (to the Owners' knowledge) threatened against the Company or its
officers or employees before any court or governmental authority or tribunal
other than those described on Schedule 3.16, and (iv) no employment-related
claim arising prior to the Closing Date will result in any material recovery
against or expense to the Company (net of amounts covered by insurance).
<PAGE>
During the past three years (and, to the Owners' knowledge, during the seven
years prior thereto), the Company has not been found to be in violation of any
wage and hour, occupational safety, or other employment laws or regulations
except as described on Schedule 3.16, and the Company has not paid or
otherwise been liable for any back wages, penalties, or other damages for
failing to comply with any of the foregoing.
(b) The Company has generally enjoyed a good employer-employee
relationship with its employees, and knows of no reason why that is not likely
to continue. During the past 10 years, none of the Company's employees have
been represented by any collective bargaining agent, and there have been no
attempts by any union or any other person to organize or represent any of such
employees. There is no strike, picketing, organized labor dispute, slowdown,
or work stoppage pending or threatened against the Company, and none has
occurred in the last 10 years. There is no reason to believe that the Company
or the Partnership has taken any action which will result in any claim for
back pay, unpaid wages or benefits, damages, wrongful discharge, breach of
contract, or employment discrimination, or assertion of unfair labor practices
or any claim for any other material matters relating to employee relations,
except as described in Schedule 3.16. All employment records, including
employee personnel files, are complete and accurate in all material respects.
(c) Except as described in Schedule 3.l6 hereto, at any time during
the past three years (i) there have been no Employee Benefit Plans or other
benefit plans, programs, or arrangements (including without limitation bonus,
profit sharing, deferred compensation, vacation, or retiree medical
arrangements) maintained by the Company for the benefit of its directors,
officers, employees, or partners (as the case may be) and (ii) there have been
no written or unwritten employment, consulting, severance, bonus or
indemnification arrangements, agreements, or understandings between the
Company, on the one hand, and any current or former officers, employees, or
partners thereof (as the case may be) or affiliates of such persons, on the
other hand. The Company has provided to the Purchaser (or shall provide
within three days of the execution hereof) accurate and complete copies of
each of the documents referenced in Schedule 3.16, and an accurate and fair
summary of each unwritten arrangement referred to in Schedule 3.16. In
addition, the Company has provided to the Purchaser accurate and complete
copies of each policy, personnel, or employee manual maintained with respect
to employees of the Company over the past three years. All employment by the
Company is on an "at will" basis, and the Company is not now (and following
the Closing will not be) bound by any express or implied contract or agreement
to employ (directly or as a consultant or otherwise) any person for any
specific period of time or until any specific age.
<PAGE>
(d) The Company has provided to the Purchaser an accurate and
complete copy of its 401(k) Plan, and all amendments thereto since the date of
adoption thereof. Other than such 401(k) Plan and the health plans described
on Schedule 3.16, neither the Company nor the Partnership maintains any
"pension plan" or "employee pension benefit plan" as defined in Section 3(2)
of ERISA, or any "welfare plan" or "employee welfare benefit plan" as defined
in Section 3(1) of ERISA.
(e) Neither the Company nor the Partnership has within the past 10
years been a participating employer in any "multiemployer plan" as defined in
ERISA Section 3(37) or Code Section 414(f).
(f) Each Employee Benefit Plan or other benefit plan, program or
arrangement maintained by the Company or the Partnership has been administered
at all times in material compliance with all applicable provisions of the
Code, ERISA, and (to the extent not preempted by ERISA) state law. No
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975
of the Code, has occurred with respect to any Employee Benefit Plan, and no
fines, penalties, or excise taxes have been incurred, assessed, or threatened
with respect to any such plan or any other benefit plan, program, or
arrangement maintained by the Company or the Partnership. There are no
outstanding or threatened legal claims against any Employee Benefit Plan
maintained by the Company or the Partnership or against any fiduciary of such
plan. The Company or the Partnership has made all required contributions
under any Employee Benefit Plan or other benefit plan, program or arrangement
for all periods through and including the Closing.
(g) The Company shall maintain each and every plan, program, and
arrangement included in Schedule 3.16 for all periods through and including
the Closing.
(h) With respect to any life, health, medical, or dental insurance
policy of the Company or the Partnership, there are no Liabilities from early
or off-anniversary cancellation of any such policy, or for claims for benefits
incurred under such policy, whether or not any such claim has been filed prior
to the cancellation date (including without limitation any run-out claim paid
from reserves, or any terminal premium arrangements such as deficit
recoupment, retrospective premiums, or delayed premium payments).
(i) The Purchaser and its counsel shall be provided with such
information relating to the plans, programs, and arrangements included in
Schedule 3.16 as they may reasonably request for the purpose of determining
whether any liability, claim, or potential claim exists on or before the
Closing Date in respect of any such plan, program, or arrangement. In
addition, the Purchaser and its counsel shall be provided with all information
that they reasonably deem necessary to determine whether there have been any
<PAGE>
failures to comply with the continuation health care coverage requirements of
Code Section 4980B and ERISA Sections 601 through 609 as such requirements
have been applied to any group health plan maintained by or for the Company,
which failure occurred with respect to any current or prior employee of the
Company or the Partnership or any spouse, former spouse, dependent child, or
former dependent child of any such employee, on or before the Closing Date.
The Purchaser and its counsel shall also be provided with all information
necessary to correct any such failures and to comply with such continuation
health care coverage requirements, including without limitation the
identification of all covered employees (as defined in Code Section
4980B(f)(7)) and their qualified beneficiaries (as defined in Code Section
4980B(g)(1)), the identification of all qualifying events with respect to such
covered employees or qualified beneficiaries (as defined in Code Section
4980B(f)(3)), and such other information as the Purchaser reasonably deems
necessary to demonstrate compliance with Code Section 4980B and ERISA Sections
601 through 609.
(j) For purposes of this Section 3.16, references to the Company or
the Partnership shall be deemed to include all other entities which are part
of a controlled group of corporations as defined in Code Section 414(b), or a
group of trades or businesses under common control under Code Section 414(c),
or are members of an affiliated service group or other entity that is required
to be aggregated with the Company or the Partnership under Code Section 414(m)
or (o), or ERISA Section 210(c).
(k) The Partnership has not had any employees at any time during
the past five years.
3.17 INSURANCE. Schedule 3.17 hereto contains a list of all current
insurance policies (other than title insurance) and related agreements in
effect over the past four years concerning the activities, or the Stores or
other material assets, of the Company or the Partnership (including without
limitation all liability, casualty, and worker's compensation policies and
claims administrator agreements). The Company and the Partnership have
provided the Purchaser with accurate and complete copies of all such policies
(including endorsements thereto) and agreements. Neither the Company nor the
Partnership within the past three years has received any notice of
cancellation of any insurance policy. Except as referenced in the loss runs
attached to Schedule 3.17, there has not since December 31, 1991 been any
insurance claims (whether settled or still pending) under any such policy in
an amount exceeding $25,000 per claim.
3.18 ENVIRONMENTAL MATTERS. (a) For purposes of this Agreement,
"Hazardous Material" means: (i) "hazardous substances" or "toxic substances"
as those terms are defined by the Comprehensive Environmental Response,
<PAGE>
Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.), or the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 ET SEQ.), both
as amended or hereafter amended; (ii) "hazardous wastes" as that term is
defined by the Resource Conservation and Recovery Act (42 U.S.C. Section 6902
ET SEQ.) as amended or hereafter amended; (iii) any pollutant or contaminant
or hazardous, dangerous, regulated or toxic chemicals, materials, wastes or
substances within the meaning of any other applicable federal, state, or local
law, regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability, responsibility or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance, or material, including without limitation the Clean Water Act, the
Clean Air Act, the Toxic Substances Control Act, the Occupational Safety and
Health Act, the Americans with Disabilities Act, the Federal Insecticide,
Fungicide and Rodenticide Act, any "Superfund" or "Superlien" law and similar
state and local laws, regulations, and ordinances, including without
limitation the North Carolina Coastal Area Management Act, the North Carolina
Oil Pollution and Hazardous Substances Control Act, and the North Carolina
Groundwater and Underground Storage Tank Regulations, all as amended or
hereafter amended; (iv) petroleum products, byproducts and constituents
(including but not limited to, crude oil, diesel oil, fuel oil, gasoline,
lubrication oil, oil refuse, oil mixed with other waste, oil sludge and all
other liquid hydrocarbons regardless of specific gravity); (v) any radioactive
materials, including any source, special nuclear, or by-product material as
defined at 42 U.S.C. section 2011 ET SEQ., as amended or hereafter amended;
(vi) asbestos in any form or condition; (vii) polychlorinated biphenyls
(PCB's) or substances or compounds containing PCB's; and (viii) biological
micro organisms, viruses, fungi, spores, radon or radon gas, formaldehyde or
material containing formaldehyde, fumigants, and any material or substance
comprising or contributing to conditions known as "sick building syndrome" or
similar illness; provided, however, that "Hazardous Material" shall not
include any items lawfully held for resale in connection with any business
conducted at the Facilities.
(b) The Facilities (including any underlying groundwater) are free
and clear of all Hazardous Material and are currently in compliance with all
applicable federal, state and local laws, ordinances, rules, regulations and
orders (including consent decrees and administrative orders) regarding public
health and safety and protection of the environment, including, without
limitation, those statutes, laws, regulations, ordinances and requirements
referred to in subsection (a) above and including federal and state common law
(collectively referred to below as "Environmental Laws"). No generation,
manufacture, storage, treatment, transportation, disposal, discharge, release
(or threatened release) or emission of any Hazardous Material has occurred or
is occurring on or from any of the Facilities, except as described on Schedule
<PAGE>
3.18B. Neither the Company nor the Partnership, nor (to the knowledge of the
Owners) any predecessor in title, interest, or line of business of the Company
or the Partnership, has violated or is violating any Environmental Laws in
connection with the Facilities or with respect to the operations of the
Company or the Partnership. There have been no past, and there are no pending
or threatened, actions or proceedings by any governmental agency or third
parties against the Company, the Partnership, or any of the Facilities
regarding public health risks, or the environmental condition of the
Facilities, or the disposal or presence of Hazardous Material, or otherwise
regarding any Environmental Laws. Neither the Company nor the Partnership nor
any of the Owners is aware of, or has received notice of, any past or pending
violation of any Environmental Laws or any past or pending noncompliance or
any proceedings of any kind relating to Hazardous Material.
(c) Except for any tanks specifically identified on Schedule
3.18C, there are no underground storage tanks located at (or, to the knowledge
of the Owners, adjacent to) any of the Facilities. As used herein, the term
"underground storage tanks" shall mean any containers, tanks, or facilities of
whatever kind, nature, or description, previously or presently used or capable
of being used to hold any type of Hazardous Material, oil or other petroleum
products, liquid petroleum gas, Pargas, or propane, and which are located
wholly or partly below ground level.
(d) The Company and the Partnership have obtained all permits,
licenses, approvals, and other authorizations and made all notifications,
registrations and reports required with respect to the operation of their
respective businesses under the Environmental Laws and are in substantial
compliance with all terms and conditions of all such required permits,
licenses, approvals, authorizations, notifications, registrations and reports,
including payment of all required fees.
(e) The Company and the Partnership have maintained all
environmental and operating documents and records relating to them in the
manner and for the time periods required by the applicable Environmental Laws.
3.19 TRADE NAMES, ETC. Schedule 3.19 hereto identifies each trade name,
fictitious business name, or other similar name under which the Company or the
Partnership has conducted any part of its business during the past 10 years.
Neither the Company nor the Partnership nor any of the Owners has registered
under applicable federal or state statutes any trademark, service mark, or
copyright relating to the business of the Company or the Partnership. To the
knowledge of the Company, the Partnership, and the Owners, there has never
been any claim of infringement relating to the Company's or the Partnership's
use of the name "Wilson's".
<PAGE>
3.20 BANK ACCOUNTS, ETC. Schedule 3.20 hereto identifies all bank
accounts, brokerage accounts, and the like, and all safe deposit boxes,
maintained by or on behalf of the Company.
3.21 NO SUBSIDIARIES, ETC. Neither the Company nor any of the Owners
directly or indirectly owns or controls 25% or more of the voting securities
of any corporation or other business entity other than the Company and the
Partnership.
3.22 CERTAIN TAX SCHEDULES. In all material respects, Schedule 2.3B
accurately sets forth the aggregate federal and state income tax liability of
each of the Shareholders for the calendar year 1993 and the amounts prepaid in
1993 toward such taxes.
3.23 FULL DISCLOSURE. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Company, the Partnership,
and any of the Owners to the Purchaser pursuant to the provisions of this
Agreement, taken together in the aggregate, do not and will not contain any
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements made, in the light of the circumstances under
which they were made, not misleading.
3.24 ACTIONS SINCE DECEMBER 31, 1993. Except as set forth in
Schedule 3.24 hereto, since December 31, 1993 no actions have been taken by
the Company, the Partnership, or the Owners that would be prohibited under the
provisions of this Agreement (without the prior consent of the Purchaser)
after the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Owners, the Company, and the
Partnership as of the date hereof and as of the Closing as follows:
4.1 DUE ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maine,
and has all requisite corporate power and authority to carry on its business
as it is now being conducted.
4.2 AUTHORIZATION. (a) The Purchaser has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement by the Purchaser has been duly authorized by all necessary
corporate action. This Agreement constitutes a binding contract which is
enforceable against the Purchaser in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
<PAGE>
similar laws relating to the enforcement of creditors' rights generally or by
general principles of equity.
(b) The execution, delivery, and performance of this Agreement by
the Purchaser does not and will not (1) conflict with or result in a breach of
any of the provisions of the articles of incorporation or bylaws of the
Purchaser; (2) contravene any federal, state, or local law (subject to the
receipt of HSR Clearance prior to Closing); (3) contravene any judicial or
administrative order, judgment, or decree specific to the Purchaser; (4)
conflict with or result in any breach or default under any lease, loan
agreement, mortgage, security agreement, or other instrument or agreement to
which the Purchaser is a party, or by which any of its properties may be
affected; or (5) require the authorization, consent, approval, or license of
any third party.
4.3 LEGAL PROCEEDINGS. There is no action, suit, proceeding,
arbitration, or governmental investigation or review pending or (to the
knowledge of the Purchaser) threatened against or affecting the Purchaser,
other than matters which are not material to the transactions contemplated
under this Agreement.
4.4 FINANCIAL RESOURCES. The Purchaser has sufficient financial
resources to be able to pay the Purchase Price at Closing and to perform its
other obligations under this Agreement.
4.5 FULL DISCLOSURE. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Purchaser to the Owners
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit
to state any material fact necessary to make the statements made, in the light
of the circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS OF THE OWNERS, THE COMPANY,
AND THE PARTNERSHIP
5.1 CONDUCT PRIOR TO CLOSING. (a) Through the Closing, the Company and
the Partnership shall conduct their affairs in the ordinary course of business
(except as expressly contemplated in Section 5.2 below), and shall use their
best efforts to keep intact the business organization and goodwill of the
Company and maintain good relations with the suppliers, landlords, creditors,
customers, and employees of the Company and others having business or
financial relationships with the Company or the Partnership. The Owners shall
immediately notify the Purchaser of any event or occurrence material to, and
not in the ordinary course of business of, the Company or the Partnership.
<PAGE>
(b) Through the Closing and except as expressly permitted in
Section 5.2 below or as expressly consented to in writing by the Purchaser,
the Company and the Partnership shall not: (1) issue any securities or
otherwise alter in any way the ownership of the Company or the Partnership;
(2) amend the organizational documents of the Company or the Partnership; (3)
declare or pay any dividend, make any distribution, or purchase or redeem any
capital stock (except for the distributions provided for in Section 2.3
above); (4) alter title to the Facilities or otherwise (except in the ordinary
course of business) transfer any assets, except that the Company shall be
permitted to transfer by quitclaim deed to the Owners or their assigns those
certain properties described in deeds recorded in Book 910, Page 71 (Bragg
Boulevard) and Book 1232, Page 1702 (Middle Sound Loop Road), New Hanover
County, North Carolina Register of Deeds Office and may sell an automobile to
Laura B. Wilson or Lawrence A. Wilson, Sr. on terms previously discussed with
the Purchaser, and except that the Partners may transfer to the Partnership
any Facilities owned by them (such as the Facility in Warsaw, North Carolina);
(5) incur or assume any obligations for money borrowed or create or incur any
security interest, lien, deed of trust, mortgage, claim, or other encumbrance
on any of the Facilities; (6) adopt or amend any employment contract or bonus,
profit sharing, pension, retirement, or other employee benefit plan or
arrangement for the benefit of employees of the Company, or, except in the
ordinary course of business, increase the compensation of its employees; (7)
enter into or terminate any Significant Contract; (8) materially change their
accounting methods; (9) invest any cash of the Company or the Partnership
other than in short-term money market instruments consistent with past
practice; (10) acquire assets, or make or authorize any capital improvements,
exceeding $35,000 in cost except with prior notice to and consent from the
Purchaser (which consent shall not be unreasonably withheld), other than
purchases of inventory in the ordinary course of business and purchases
required under Significant Contracts currently in effect; or (11) enter into
any agreement, commitment, or understanding (written or otherwise) with
respect to any of the foregoing.
(c) The Owners shall cause the Company and the Partnership to
perform their obligations under this Section and Section 5.2 below.
5.2 CERTAIN REQUIRED ACTIVITIES. Notwithstanding the provisions of
Section 5.1 above,
(a) The Company shall continue construction or renovation of the
Stores listed on Schedule 5.2 hereto, consistent with timetables and
commitments described in such schedule or otherwise in effect as of December
31, 1993, subject however to reasonable change orders consented to by the
Purchaser, which consent shall not be unreasonably withheld.
<PAGE>
(b) The Company, the Partnership, and the Owners shall use their
best efforts to (i) obtain the consents and approvals identified in
Schedule 3.5 hereto, (ii) cure any defects in title to the Facilities, and
(iii) otherwise satisfy the conditions to any party's obligation to consummate
the Transaction.
(c) The Company and the Partnership shall permit the taking of
samples, the making of test borings, and similar activities as an
environmental or engineering firm retained by the Purchaser determines in good
faith to be appropriate in connection with inspections of the Facilities to
determine their condition or the presence of Hazardous Materials; provided,
however, that the Purchaser shall restore the Facilities to their condition
prior to such activities.
5.3 UPDATING OF EXHIBITS AND SCHEDULES. The Owners shall promptly
notify the Purchaser of any circumstance which causes any information set
forth (or required to be set forth) in any exhibit or schedule to this
Agreement to be materially inaccurate, incomplete, or misleading.
5.4 OWNERSHIP OF HANNAFORD STOCK. The Owners acknowledge that any
shares of Hannaford Stock acquired from the Purchaser at the Closing will be
unregistered and therefore will constitute "restricted securities" within the
meaning of Securities and Exchange Commission Rule 144. Transfer of the
shares will be restricted by applicable securities laws, generally for two
years. Each of the Owners acquiring such shares shall deliver at Closing an
investment letter in the form of Exhibit D. The Company, the Partnership, and
the Owners agree that they will not directly or indirectly purchase (except at
the Closing) or sell Hannaford Stock prior to the Closing, and prior to
Closing will not divulge to any other person any nonpublic information
concerning the Purchaser or the terms of this Agreement, except as may be
necessary to perform their respective obligations under this Agreement or to
carry out the business of the Company or the Partnership, but in any event
only pursuant to a confidential relationship or a confidentiality agreement
restricting the recipient of that information from trading in Hannaford Stock
while in possession of material nonpublic information.
5.5 CONSULTING AND NON-COMPETITION AGREEMENT. At Closing the
Partnership and the Owners shall enter into a Consulting and Non-Competition
Agreement in the form of Exhibit E hereto. Failure to perform any stated
obligation under such agreement shall be deemed a material breach of the terms
and conditions of this Agreement.
5.6 EXCLUSIVE DEALING. Neither the Owners nor any of the officers,
directors, or agents of the Company or the Partnership shall, directly or
indirectly, solicit or encourage any inquiry or proposal by, or enter into or
continue discussions with, any third party in connection with a possible
proposal regarding acquisition of, or a change in control of, the Company or
<PAGE>
the Partnership or any of the Facilities. The Owners will notify the
Purchaser immediately upon the receipt of any such inquiry, offer, or
proposal.
5.7 SECTION 338 ELECTION. In connection with their transfer of stock to
the Purchaser at the Closing, the Owners shall execute and deliver to the
Purchaser (in such form and at such time as the Purchaser reasonably requests)
such statements, consents, and other instruments as may be necessary to permit
the Purchaser to make an election pursuant to Code Sections 338(b)(3) and
338(h)(10). The Company, the Partnership, and the Owners make no
representation or warranty as to the availability of any Section 338 elections
to the Purchaser.
5.8 CONDUCT AFTER CLOSING. Following the Closing the Owners and the
Partnership shall provide (at the Purchaser's expense) such incidental
assistance as the Purchaser may reasonably request with regard to the transfer
of vehicles, bank accounts, and other assets and the collection of
receivables; shall surrender all keys to the Stores or other transferred
assets; shall promptly surrender all books and records of the Company not
otherwise delivered at the Closing; and shall make available for inspection
from time to time books and records of the Partnership or any of the Owners
pertaining to the Facilities or otherwise pertaining to the operation of the
Company.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 ADDITIONAL DOCUMENTS. Each party, at the request of another party
hereto, agrees to execute and deliver such other instruments and do and
perform such other acts and things as may be, in the opinion of counsel for
the requesting party, necessary or desirable to facilitate consummation of
this Agreement and the transactions contemplated hereby. The Company, the
Partnership, and the Owners agree to cooperate with the Purchaser (and vice
versa) in the preparation of all notices and filings necessary to secure HSR
Clearance.
6.2 ACCESS AND INFORMATION. (a) The Company and the Partnership shall
give the Purchaser and its authorized representatives such access as the
Purchaser may reasonably request, during regular business hours, to the
Company's or the Partnership's premises, contracts, books, records, deeds,
surveys, title insurance, tax returns, files, and (with the Company's prior
consent, which will not be unreasonably withheld) personnel. The Purchaser
shall promptly be furnished with internal monthly financial statements when
and as available, and such other information as the Purchaser may reasonably
request concerning the Company's or the Partnership's business, properties,
and personnel. No investigation by the Purchaser shall affect any
<PAGE>
representations or warranties hereunder or the conditions to the obligation of
the Purchaser to consummate the Transaction. If the Transaction is not
consummated, the Purchaser will, and will cause its representatives to,
deliver to the Company all copies of financial statements, reports, tax
returns, leases, contracts, or other instruments received from the Company,
the Partnership, or the Owners on a confidential basis. The Purchaser and its
representatives shall conduct their investigations hereunder in a manner
reasonably calculated to minimize (to the extent practicable) interference
with the business of the Company and the Partnership.
(b) The inventory count referred to in Section 2.3(a) above shall
be conducted by a professional inventory service selected by the Purchaser and
reasonably satisfactory to the Owners. The Owners and the Purchaser each
agree to pay one-half of the reasonable fees and expenses of such inventory
service. For purposes of computing Net Income of the Company and the
resulting special distribution to the Owners, the inventory count certified by
the inventory service shall be binding upon both the Purchaser and the Owners.
(c) The Purchaser undertakes to advise the Company in writing of
any facts discovered by the Purchaser which prior to the Closing cause the
Purchaser to believe that any representation or warranty of the Company, the
Partnership, or the Owners is materially inaccurate, other than facts which
the Purchaser has reason to believe are already known to one or more of the
Owners. The parties agree that this undertaking is given on a best efforts
basis and that the Owners (and not the Purchaser) are responsible for the
accuracy of all representations and warranties by them, the Company, and the
Partnership under this Agreement. The parties further agree that the only
remedy of the Owners, the Company, or the Partnership for any failure or delay
by the Purchaser in so advising the Company is that any claim for indemnity
under Section 8.1 below shall be reduced by the Resulting Incremental
Liability (as defined below), if any. For purposes hereof, the term
"Resulting Incremental Liability" means incremental liability of the Owners or
the Partnership under Section 8.1 that the indemnifying party proves would
have been avoided if the Purchaser had promptly advised the Company of the
existence of facts known to the Purchaser, but only if the indemnifying party
further proves that the Purchaser's failure or delay in doing so constituted
an intentional breach of the undertaking contained in the first sentence of
this subsection (c).
6.3 AUDITED FINANCIAL STATEMENTS. Coopers & Lybrand has been retained
by the Company to prepare audited financial statements for the Company's 1993
fiscal year. The Purchaser agrees to bear all expenses of Coopers & Lybrand
in connection therewith, and all parties agree to cooperate fully with the
accountants in their preparation of such statements.
<PAGE>
6.4 REAL ESTATE DUE DILIGENCE PERIOD. The Purchaser shall have a period
of 15 days after the Company and Partnership have delivered to the Purchaser
complete copies of all leases and agreements referred to in Section 3.10 above
(but in any event not less than 15 days after the execution of this Agreement)
to examine the copies of such leases and agreements. If the Purchaser
determines in its reasonable judgment that such leases and agreements contain
obligations, terms, conditions, or provisions which in the aggregate
materially and adversely affect the value of the Company as assumed by the
Purchaser and reflected in the purchase price, the Purchaser may terminate
this Agreement by giving written notice of termination to the Company, the
Partnership, and the Owners within such 15-day period, and upon the giving of
such notice this Agreement shall be terminated and the Deposit shall be
returned to the Purchaser. Failure to exercise this 15-day right of
termination shall not constitute a waiver of any representation or warranty of
the Company, the Partnership, or the Owners.
6.5 RELEASE OF INFORMATION. The parties hereto agree to cooperate in
releasing information concerning this Agreement and the transactions
contemplated hereby. At the insistence of the Owners and in order to avoid
disruption of the Company's business, the Purchaser has agreed not to make any
public announcement of the existence of this Agreement or the transactions
contemplated hereby until June 22, 1994 or, if earlier, (i) the pendency of
the Transaction otherwise becomes generally known among the Company's
employees or (ii) notwithstanding this covenant the Purchaser determines in
good faith that it is required by applicable securities laws or New York Stock
Exchange rules to make a public announcement regarding this Agreement. The
Company, the Partnership, and the Owners have likewise agreed not to make any
public disclosure of the Transaction without the Purchaser's prior consent.
In no event will any party make any public announcement concerning this
Agreement without first taking reasonable steps to ensure that both the
Company and the Purchaser are aware of such pending announcement and have been
provided an opportunity to discuss such announcement with each other. Where
possible, the Company and the Purchaser shall furnish to each other drafts of
all public announcements prior to publication. Nothing contained herein shall
prevent either party at any time from promptly furnishing any information
required by any governmental authority or (in the case of the Purchaser) the
New York Stock Exchange.
6.6 BROKERS; EXPENSES. The Owners have retained NationsBank Investment
Banking to assist in the solicitation of potential purchasers and shall pay
all expenses associated therewith. The Purchaser has retained, at its
expense, such consultants and other advisors as it has deemed appropriate in
connection with the transactions contemplated by this Agreement. The Owners
and the Purchaser shall each be responsible for their respective expenses in
connection with the preparation, signing, and consummation of this Agreement,
<PAGE>
and neither the Company nor the Partnership shall pay for or incur the expense
of any third-party consultant or advisor except as the Purchaser may expressly
consent in writing.
6.7 CERTAIN FUTURE ACTIVITIES BY PURCHASER. The Purchaser acknowledges
that, in connection with the Transaction, it has received store sales
information and other propriety information from the Company that could be of
significant competitive benefit to the Purchaser if the Transaction were not
consummated. In the event that this Agreement is terminated and the
Purchaser, on or before September 25, 1996, opens one or more supermarkets
(through a purchase of an existing store or otherwise) in any town or towns in
which the Company was operating a Store as of March 25, 1994, then the
Purchaser shall pay to the Company, as full consideration for the benefit and
use of such information, the sum of $3,000,000. Provided, however, that this
payment provision (i) shall not apply if termination of this Agreement follows
the material breach by the Company, the Partnership, or any of the Owners of a
representation or warranty in connection with this Agreement or the material
failure by any of them to perform any of their respective obligations
hereunder and (ii) shall not apply to any purchase of a store by the Purchaser
or its affiliates as part of a single acquisition of five or more existing
supermarkets. In the event of a good faith dispute over the existence of a
breach or failure under clause (i) above, the sum of $3,000,000 shall be
placed by the Purchaser in a separate account pending resolution of the
dispute.
ARTICLE VII
CLOSING CONDITIONS
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The Purchaser's obligations
to consummate the Transaction are subject to the satisfaction at or before the
Closing of the following conditions (any of which the Purchaser may waive at
Closing):
(a) This Agreement and the transactions contemplated hereby shall
have received all requisite approvals, consents, authorizations, and waivers
from governmental authorities (including HSR Clearance) and other third
parties (including lessors and creditors), as reasonably determined by the
Purchaser.
(b) There shall not be in effect a preliminary or permanent
injunction or other order by any federal or state court which prohibits or
materially adversely affects the consummation of the Transaction.
(c) The Company, the Partnership, and the Owners shall have
performed in all material respects each of their obligations contained in this
Agreement and required to be performed at or prior to Closing and shall have
<PAGE>
complied with all material governmental requirements, rules, and regulations
affecting the Transaction.
(d) No material adverse change shall have taken place in the
business, condition (financial or otherwise), operations, or prospects of the
Company since December 31, 1993, other than those (if any) that result from
the changes permitted by this Agreement, as reasonably determined by the
Purchaser.
(e) The representations and warranties of the Company, the
Partnership, and the Owners set forth in this Agreement shall be true in all
material respects as of the date of this Agreement and as of the Closing, as
reasonably determined by the Purchaser.
(f) The Purchaser shall have received from the Company, the
Partnership, and the Owners duly executed certificates, dated the Closing, as
to the satisfaction of the conditions in subsections (c), (d), and (e) above.
(g) The Purchaser shall have received, at and as of the Closing, an
opinion of counsel to the Company and the Partnership, in form and substance
reasonably satisfactory to the Purchaser, substantially in the form of
Exhibit F1 hereto.
(h) The Purchaser shall have received from each lessor or lessee
with which the Company or the Partnership has a lease of real property,
certificates satisfactory in form and substance to the Purchaser as to the
continuing validity of such leases, and the absence of any basis for the
termination thereof.
(i) The Purchaser shall have received a commitment from a
nationally recognized title insurance company acceptable to the Purchaser for
issuance to the Purchaser of standard policies of title insurance at standard
rates covering each of the Facilities as of the Closing, subject only to
encumbrances, easements, and restrictions expressly permitted by Section 3.10
above, and the title company which has issued such commitments shall not have
refused to issue a title insurance policy or binder pursuant thereto at or
before Closing. The costs for such commitments and the premiums for such
policies shall be borne solely by the Purchaser.
(j) The receipt by the Purchaser of a duly executed Consulting and
Non-Competition Agreement from the Owners in the form of Exhibit E hereto.
(k) Coopers & Lybrand shall have certified, in accordance with
generally accepted accounting principles and generally accepted auditing
standards, financial statements of the Company for fiscal 1993.
<PAGE>
(l) The officers and directors of the Company shall submit
resignations in the form of Exhibit G hereto, dated as of the Closing,
acknowledging that they have no pending claims against the Company except
those arising in connection with this Agreement.
(m) The Company shall deliver duly executed unanimous consents of
directors and shareholders in the form of Exhibit H hereto, dated as of the
Closing, ratifying all actions taken by the Company prior to such date,
including without limitation all bonus payments and distributions referred to
in Section 2.3 above.
7.2 CONDITIONS TO OWNERS' OBLIGATIONS. The obligations of the Owners,
the Company, and the Partnership (collectively, the "Sellers") to consummate
the Transaction are subject to the satisfaction at or before the Closing of
the following conditions (any of which the Sellers may waive at Closing):
(a) This Agreement and the transactions contemplated hereby shall
have received all requisite approvals, consents, authorizations, and waivers
from governmental authorities (including HSR Clearance) and other third
parties (including lessors and creditors), as reasonably determined by the
Owners.
(b) There shall not be in effect a preliminary or permanent
injunction or other order by any federal or state court which prohibits or
materially adversely affects the consummation of the Transaction.
(c) The Purchaser shall have performed in all material respects
each of its obligations contained in this Agreement and required to be
performed at or prior to the Closing and shall have complied with all material
governmental requirements, rules, and regulations affecting the Transaction.
(d) The representations and warranties of the Purchaser, set forth
in this Agreement shall be true in all material respects as of the date of
this Agreement and as of the Closing, as reasonably determined by the Owners.
(e) The Owners shall have received from the Purchaser, a duly
executed certificate, dated the Closing, as to the satisfaction of the
conditions in subsections (c) and (d) above.
(f) The Owners shall have received, at and as of the Closing, an
opinion of counsel to the Purchaser, in form and substance reasonably
satisfactory to the Owners, substantially in the form of Exhibit F2 hereto.
7.3 EFFECT OF CLOSING. (a) Representations and warranties contained in
Sections 3.7(a), 3.7(b)(1) and (2), 3.9, 3.11, and 3.16(a)(i) and (iii), as
well as in the first three sentences of Section 3.16(b) and the first, second,
<PAGE>
and fourth sentences of Section 3.18(b), shall survive the Closing only
insofar as such representations and warranties relate to matters and
circumstances in existence on or before the effective time of the Closing.
Provided, however, that the foregoing limitation on survival shall not be
construed to diminish the obligation of the Company, the Partnership, or any
of the Owners to make full and fair disclosure under Section 3.23 or to
otherwise perform their respective obligations under this Agreement.
(b) Following the Closing, the Owners and the Partnership shall
have no right of contribution, subrogation, or other recovery against the
Company for a breach by the Company of any representation, warranty, or
covenant under this Agreement, except for a failure to pay post-Closing
distributions to the shareholders as expressly provided herein.
ARTICLE VIII
INDEMNIFICATION
8.1 BY THE PARTNERSHIP AND THE OWNERS. (a) Subject to the provisions of
subsections (b) and (c) below, the Partnership and each of the Owners, jointly
and severally, shall indemnify, hold harmless, and defend the Purchaser, and
its officers, directors, agents, employees, and affiliates, from and against
any and all litigation, claims, costs, liabilities, penalties, fines, damages,
injuries, or expenses (including costs of investigation and reasonable
attorneys' fees) of whatever kind or nature, known or unknown, contingent or
otherwise, arising out of or in any way related to (i) any material breach or
falsity of the representations and warranties of the Company, the Partnership,
or any of the Owners contained in this Agreement or any material default in
the performance of any obligation of such parties under this Agreement, (ii)
any claim, lien, or encumbrance arising from any nonpayment (or alleged
nonpayment) of taxes, or other failure (or alleged failure) to comply with
applicable tax laws, by the Company, the Partnership, or any of the Owners as
to taxes arising before, or allocable to the period before, the effective time
of the Closing, (iii) any breach by the Partnership or any of the Owners of
any covenant under the Consulting and Non-Competition Agreement, (iv) any
Liability of the Partnership not listed on Schedule 2.1B, (v) any personal
injury (including wrongful death) or property damage (real or personal)
arising out of or related to any tortious conduct or violation of law
committed by the Company, the Partnership, or any of the Owners (or their
respective agents) prior to the effective time of the Closing, (vi) any
Hazardous Materials which prior to the effective time of the Closing were
present, disposed, released, or threatened to be released within, under, upon,
from, or into the Facilities prior to the effective time of the Closing, and
any lawsuit or governmental action relating thereto. Nothing in this
subsection shall be construed to require indemnification against (w) the
<PAGE>
Company's liability for accrued but unpaid trade payables, lease obligations,
construction and development payments, equipment purchases, advertising
expenses, wages to employees, ad valorem taxes, routine repairs and
maintenance expenses, utilities, or insurance premiums incurred (in each case)
in the ordinary course of business prior to the Closing, (x) a liability
disclosed prior to execution of this Agreement in items 1 through 8 of
Schedule 3.7 or in items 1, 2, 4-6, 9, 10, and 12-21 of Schedule 3.9, (y) a
liability that is apparent on the face of a Significant Contract disclosed in
a timely manner or that is apparent on the face of a deed, lease, easement, or
other real estate document properly recorded and indexed before the day of the
Closing in the Registry of Deeds (or Clerk of Court's Office, in the case of
South Carolina) for the county in which the Facility to which such instrument
relates is located, or (z) a liability that is less than $15,000 in amount and
as of the Closing was covered by insurance or was being contested in good
faith by the Company. Subject to Section 7.3(b) above, nothing in this
subsection shall be construed to limit any right of subrogation of an
indemnifying party.
(b) The Purchaser's aggregate recovery pursuant to the right of
indemnification contained in subsection (a) above is subject to the following
limitations:
(i) The amount recoverable by the Purchaser under subsection
(a) shall be limited to the aggregate sum of $10,000,000 (the "Indemnity
Cap") except as provided in subsection (b)(ii) below.
(ii) No recovery or claim by the Purchaser under clauses
(ii) or (iv) of subsection (a) shall be subject to or applied against the
Indemnity Cap. No recovery or claim by the Purchaser under the other
enumerated clauses of subsection (a) shall be subject to or applied
against the Indemnity Cap if one or more of the Owners, as of the
Closing, had knowledge of facts and circumstances giving rise to the
Purchaser's claim for indemnification thereunder. For purposes of this
subsection (b)(ii), "knowledge" shall be construed to require the actual
knowledge of at least one of the Owners; actual or constructive knowledge
on the part of an employee of the Company (other than one of the Owners)
shall not constitute actual knowledge on the part of any of the Owners.
(iii) None of the four trusts (the "Trusts") owning Stock in
the Company (none of which is a partner in the Partnership) shall be
personally liable under clauses (i) or (iii) of subsection (a) for a
breach of a representation or warranty, or a default in the performance
of an obligation, insofar as the breach or default relates only to the
Partnership or the Partners. Neither Laura B. Wilson (who is not a
shareholder of the Company) nor the Partnership shall be personally
<PAGE>
liable under clauses (i) or (iii) of subsection (a) for a breach of a
representation or warranty, or a default in the performance of an
obligation, insofar as the breach or default relates only to the Company
or the Shareholders.
(iv) None of the Trusts shall be personally liable under
subsection (a) for an amount exceeding its allocable portion of the
purchase price paid or to be paid by the Purchaser under Section 2.2
above.
(v) The limitations on personal liability set forth in
subsections (b)(iii) and (b)(iv) above shall not be construed to limit
the joint and several nature of the liability of the other Owners and
shall not be construed to otherwise limit the joint and several nature of
the liability of the Partnership.
(vi) Except as provided in subsection (b)(vii) below, no
claim for indemnification under subsection (a) shall be made unless
notice of the claim has been given in accordance with Section 8.4 or 8.5
below within five years after the Closing Date.
(vii) Notwithstanding subsection (b)(vi) above, a claim for
indemnification under clause (ii) of subsection (a) may be given at any
time. Notwithstanding subsection (b)(vi) above, the time period for
giving notice of a claim for indemnification under any other clause of
subsection (a) shall be extended to 10 years if one or more of the
Owners, as of the Closing, had knowledge of facts and circumstances
giving rise to the Purchaser's claim for indemnification thereunder.
(c) The Purchaser shall not be entitled to any recovery under
subsection (a) for (i) the first $100,000 of claims (in the aggregate) that
would otherwise be subject to indemnification under that subsection or (ii)
one-half of the next $150,000 of claims (in the aggregate) that would
otherwise be subject to indemnification under that subsection (the "Indemnity
Exclusion"). Provided, however, that the Indemnity Exclusion shall not apply
to any claim excluded from the Indemnity Cap by subsection (b)(ii) above,
other than the claim described in item 8 of Schedule 3.9.
(d) For purposes of applying the Indemnity Cap and Indemnity
Exclusion in subsections (b) and (c) above, any recovery or claim by an
officer, director, agent, employee, or affiliate of the Purchaser for
indemnification under subsection (a) above shall be treated as a recovery or
claim by the Purchaser for indemnification thereunder, and application of the
Indemnity Exclusion shall not be construed to reduce the Indemnity Cap.
<PAGE>
8.2 BY THE PURCHASER. The Purchaser hereby agrees to indemnify, hold
harmless, and defend each of the Owners against any and all litigation,
claims, costs, liabilities, penalties, fines, damages, injuries, or expenses
(including costs of investigation and reasonable attorneys' fees) of whatever
kind or nature, known or unknown, contingent or otherwise, arising out of or
in any way related to any material breach or falsity of the representations
and warranties of the Purchaser contained in this Agreement or any material
default in the performance of any obligation of the Purchaser under this
Agreement, the Promissory Note, or the Consulting and Non-Competition
Agreement, or any failure of the Purchaser to restore Facilities as provided
in Section 5.2(c) above. Nothing in this subsection shall be construed to
limit any right of subrogation of an indemnifying party.
8.3 RIGHT OF SET OFF. Any indemnified party shall have a right of set
off against any amounts otherwise payable to the indemnifying party, including
without limitation any payments pursuant to this Agreement, the Promissory
Note, or the Consulting and Non-Competition Agreement.
8.4 NOTICE OF THIRD PARTY CLAIMS. Any party seeking indemnification
pursuant to the provisions of this Article VIII (an "Indemnified Party"), upon
receiving notice of the assertion of any claim by a third party (a "Third
Party Claim") with respect to which the Indemnified Party reasonably believes
another party or parties to this Agreement (each an "Indemnifying Party") has
an indemnification obligation pursuant to Article VIII (or would have such an
obligation but for the limitations set forth in Section 8.1(b) or 8.1(c)
above) shall notify the Indemnifying Party of such Third Party Claim within 30
days after the Indemnified Party receives written notice thereof. Failure to
notify the Indemnifying Party within the prescribed time period shall not
relieve the Indemnifying Party of its obligations under this Article VIII,
except to the extent that the delay in providing such notice diminishes the
legal rights of the Indemnifying Party with respect to such Third Party Claim.
In addition, if the Indemnified Party retains outside counsel in connection
with a Third Party Claim, such party shall also give prompt notice of such
retention to the Indemnifying Party; provided, however, that failure to so
notify the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations under this Article VIII, except to the extent that the delay in
providing such notice increases the costs of defense borne by the Indemnifying
Party with respect to such claim. The Indemnifying Party will have the right
to participate in or, by giving written notice to the Indemnified Party, to
elect to assume the defense of any Third Party Claim at the Indemnifying
Party's cost and expense; provided, however, that the Indemnified Party may
elect, if it reasonably believes that its interests differ from those of the
Indemnifying Party, to be represented by independent counsel of its own
choosing, and such election shall not in any way limit the indemnification
<PAGE>
obligations of the Indemnifying Party. If the Indemnifying Party assumes the
defense of a Third Party Claim, the Indemnifying Party shall have the right to
settle such claim, provided that no such claim may be settled without the
consent of the Indemnified Party (which consent shall not be unreasonably
withheld).
8.5 NOTICE OF DIRECT CLAIMS. The Indemnified Party, upon learning of
facts giving rise to any claim with respect to which the Indemnified Party
reasonably believes an Indemnifying Party has an indemnification obligation
pursuant this Article VIII (or would have such an obligation but for the
limitations set forth in Section 8.1(b) or 8.1(c) above), shall notify the
Indemnifying Party of such claim within 30 days of learning of the existence
of any such claim. Failure to notify the Indemnifying Party within the
prescribed time period shall not relieve the Indemnifying Party of its
obligations under this Article VIII, except to the extent that the delay in
providing such notice diminishes the legal rights of the Indemnifying Party
with respect to such claim. After receipt of notice of any claim by the
Indemnified Party to indemnification pursuant to this Article VIII, the
Indemnifying Party may contest the Indemnified Party's right to such
indemnification by delivering written notice of such contest to the
Indemnified Party within 30 days of receipt of notice of the Indemnified
Party's claim. In the event that no notice of contest is timely delivered,
the Indemnifying Party shall be deemed to have accepted and acknowledged its
indemnification obligation pursuant to Article VIII to the full extent of the
Indemnified Party's claim.
8.6 INSURED CLAIMS. In the case of an insured claim, the Indemnified
Party shall give the Indemnifying Parties notice of the claim as provided
above, but shall not seek recovery under the indemnification rights contained
in this Article VIII until the claim has been filed with the insurer and shall
seek recovery only to the extent that the Indemnified Party suffers a loss or
incurs expense, whether due to denial of coverage, coinsurance obligations, or
otherwise. Nothing in this Section 8.6 shall limit an Indemnifying Party's
obligation under Article VIII to pay or reimburse the actual out-of-pocket
expenses incurred by the Indemnified Party (including without limitation
expenses reasonably incurred by the Indemnified Party in defending or
investigating any claim).
ARTICLE IX
MISCELLANEOUS
9.1 ASSIGNMENT. The Purchaser has the right, in its sole discretion, to
assign all or any portion of this Agreement and any of the undertakings
described herein to one or more of its affiliated entities, provided that any
such assignee agrees in writing to be bound by the terms and conditions
contained herein. Upon any such assignment, the Purchaser shall continue to
<PAGE>
be liable for the performance of each of its obligations hereunder. Except as
expressly permitted by this Agreement, none of the Owners, the Company, or the
Partnership shall make any assignment hereunder.
9.2 BENEFIT. This Agreement shall inure to the benefit of and be
binding upon all parties hereto, and their respective heirs, legal
representatives, successors, and assigns. Prior to the execution of this
Agreement, no party hereto shall be legally obligated with respect to the
transactions contemplated by this Agreement except to the extent that a
written contract has been duly executed by all parties. All conditions of the
obligations of the parties hereto, and all undertakings herein, are solely and
exclusively for the benefit of the parties hereto, and no other person shall
be deemed a third-party beneficiary of any such conditions or undertakings.
9.3 APPLICABLE LAW; REMEDIES. This Agreement shall be construed and
enforced in accordance with the laws of the State of North Carolina without
giving effect to the choice-of-law rules thereunder. The rights and remedies
(including any right of set off) provided for under this Agreement and related
exhibits shall be valid and enforceable to the fullest extent permitted by
applicable law and shall not be deemed exclusive of other rights and remedies
available under applicable law. Notwithstanding the foregoing, specific
dollar amounts designated herein as damages or compensation are intended to be
exclusive of any other right of recovery, such dollar amounts being considered
to represent a reasonable level of recovery in circumstances not generally
amenable to a ready calculation of damages. Each of the parties agrees that
the exclusive forum for any actions between the parties arising out of this
Agreement (except for actions in rem or concerning title to property located
outside North Carolina and any action against one of the Owners seeking to
restrain his or her activities outside North Carolina) shall be the federal or
state courts of North Carolina, and each party irrevocably consents to the
personal jurisdiction of any federal or state court in North Carolina.
9.4 ENTIRE AGREEMENT; SURVIVAL. This Agreement (together with any note
or other agreement entered into pursuant to this Agreement) shall constitute
the complete and exclusive statement of the terms of agreement among the
parties, and shall supersede all prior proposals, agreements, and other
communications, written or oral, between the parties relating to the subject
matter hereof. This Agreement, including without limitation the
representations, warranties, and covenants contained herein, shall not be
merged into the documents executed at the Closing, but shall survive the
Closing and remain in full force and effect except to the extent otherwise
expressly provided herein. Except as otherwise expressly provided herein, the
provisions of this Agreement shall not survive a termination hereof prior to
Closing.
<PAGE>
9.5 NOTICES. All notices and other communications given hereunder shall
be in writing and shall be deemed given if delivered personally (by courier or
otherwise); or mailed by registered or certified mail (postage prepaid), or
sent by facsimile transmission, as follows:
If to the Purchaser:
Hannaford Bros. Co. Hannaford Bros. Co.
P.O. Box 1000 145 Pleasant Hill Road
Portland, ME 04104 Scarborough, ME 04074
Attn: Larry A. Plotkin Attn: Larry A. Plotkin
Fax No.: (207) 885-2875 (if by courier or other
hand delivery)
with a copy to:
Verrill & Dana
One Portland Square
P.O. Box 586
Portland, ME 04112-0586
Attn: Peter B. Webster, Esq.
Fax No.: (207) 774-7499
If to the Company, the Partnership, or any of the Owners:
Boney Wilson & Sons, Inc.
c/o Lanny T. Wilson
1442 Quadrant Circle
Wilmington, NC 28405
with a copy to:
Murchison, Taylor, Kendrick, Gibson & Davenport, L.L.P.
16 North Fifth Avenue
Wilmington, NC 28401
Attn: Fred B. Davenport, Jr.
Fax No.: (910) 763-6561
Facsimile notices shall be deemed given upon receipt of any automatic answer-
back or other acknowledgement of receipt. Any other notice or communication
shall be deemed effective upon delivery to such person's address set forth
above or, in the case of mailed notice, on the fifth business day after proper
posting thereof, whether or not actually received by the other party.
9.6 AMENDMENTS; CONSENT. This Agreement shall not be amended, modified,
or terminated except in a writing signed by the parties sought to be bound.
The Company, the Partnership and each of the Owners has executed an Owners'
Master Adoption Agreement in the form of Exhibit I hereto, appointing Lanny T.
<PAGE>
Wilson as Owners' Representative and attorney-in-fact, and the Purchaser shall
be authorized to rely thereon.
9.7 HEADINGS. Headings and captions contained herein are intended for
convenience of reference and shall not affect the interpretation of this
Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be executed in their respective corporate names by their
respective President/Senior Vice President/Vice President and attested by the
respective Secretary/Assistant Secretary and sealed with the respective
corporate seal; the Partnership has caused this Agreement to be executed by
its general partners, has adopted as its seal the typewritten word "SEAL"
appearing beside its name and each of the general partners has hereunto set
his/her hand and adopted as his/her respective seal the typewritten word
"SEAL" appearing beside his/her respective name; and each individual Owner has
hereunto set his/her hand and adopted as his/her seal the typewritten word
"SEAL" appearing beside his/her name, and the Trustee Owner has hereunto set
his hand and adopted as his seal the typewritten word "SEAL" appearing beside
his name as Trustee of the respective trust indicated and within the authority
granted him as such Trustee, all as of the date and year first above written.
THE PURCHASER:
HANNAFORD BROS. CO.
By: s/Larry A. Plotkin
Larry A. Plotkin, Senior Vice
President - Corporate
Development and Planning
ATTEST:
s/Andrew P. Geoghegan (CORPORATE SEAL)
_________________
_____ Secretary
THE COMPANY:
BONEY WILSON & SONS,INC.
By: s/Lawrence A. Wilson, Sr.
___________________________
_____ President
ATTEST:
s/Lanny Wilson (CORPORATE SEAL)
_________________
_____ Secretary
<PAGE>
THE PARTNERSHIP:
WILSON BROTHERS PARTNERSHIP(SEAL)
A North Carolina General
Partnership
By: s/Lawrence A. Wilson, Sr.(SEAL)
Lawrence A. Wilson, Sr.
General Partner
By: s/Laura B. Wilson (SEAL)
Laura B. Wilson
General Partner
By: s/Lawrence A. Wilson, Jr.(SEAL)
Lawrence A. Wilson, Jr.
General Partner
By: s/Lanny T. Wilson (SEAL)
Lanny T. Wilson
General Partner
By: s/Linda J. Wilson (SEAL)
Linda J. Wilson
General Partner
By: s/Michael L. Wilson (SEAL)
Michael L. Wilson
General Partner
THE OWNERS:
s/Lawrence A. Wilson, Sr.(SEAL) s/Lawrence A. Wilson, Jr. (SEAL)
Lawrence A. Wilson, Sr. Lawrence A. Wilson, Jr.
s/Lanny T. Wilson (SEAL) s/Linda J. Wilson (SEAL)
Lanny T. Wilson Linda J. Wilson
s/Michael L. Wilson (SEAL)
Michael L. Wilson
s/Lawrence A. Wilson, Sr. (SEAL)
Lawrence A. Wilson, Sr., Trustee
under Agreement dated December 31,
1992 for the benefit of
Alexander Wilson Ventriglia
s/Lawrence A. Wilson, Sr. (SEAL)
Lawrence A. Wilson, Sr., Trustee
under Agreement dated December 31,
1992 for the benefit of
Laura Wilson Ventriglia
<PAGE>
s/Lawrence A. Wilson, Sr. (SEAL)
Lawrence A. Wilson, Sr., Trustee
under Agreement dated December 31,
1992 for the benefit of
Leigh Meredith Wilson
s/Lawrence A. Wilson, Sr. (SEAL)
Lawrence A. Wilson, Sr., Trustee
under Agreement dated December 31,
1992 for the benefit of
Lawrence A. Wilson, III
Exhibit 2.2
June 22, 1994 Helen Chase
Director, Corporate Communications
x2345
HANNAFORD LAUNCHES EXPANSION INITIATIVE IN SOUTHEAST WITH
ACQUISITION OF NORTH CAROLINA BASED RETAILER
Scarborough, ME--Hannaford Bros. Co. (NYSE-HRD) today announced an expansion
initiative in the Southeast. The company has reached agreement to purchase
Wilson's Supermarkets, a privately-held company based in Wilmington, North
Carolina, for $120 million. In addition to the acquisition, Hannaford is
negotiating the purchase of other supermarket sites in the region. Together,
they represent a strategic approach to Hannaford's growth in the Southeast.
The purchase of Wilson's includes the company's 20 stores in North and South
Carolina, five additional store sites, three of which are now under
construction, and several shopping centers. Wilson's currently employs
approximately 1600 people. The company's retail sales for 1994 are expected
to exceed $200 million. Representatives of Hannaford and Wilson's signed the
purchase and sale agreement on June 21, 1994. Subject to the satisfaction of
the various conditions set forth in the purchase and sale agreement, the
parties expect to complete the transaction in July. The acquisition will be
financed by cash and cash items, short-term investments and existing lines of
credit.
"The acquisition of Wilson's Supermarkets represents a great opportunity for
Hannaford. It enables us to diversify geographically and to secure a portion
of the market in a growing and vibrant region of the country," said Hugh G.
Farrington, Hannaford President and Chief Executive Officer. "The acquisition
is a prudent investment for Hannaford. It creates opportunities for company
growth while maintaining and, over the long term, increasing shareholder
value."
"The Wilson's stores form a solid base on which we can grow our business in
the region," continued Farrington. "The company is established and
profitable. The Wilson family and the people who work in their stores have
done an excellent job of building a loyal customer base and a healthy and
growing business. We can learn from them and build on their success, as we go
about acquiring new store sites and opening new stores in the region.
"We plan to rely on members of the Wilson family to manage the Wilson's
stores. We will also continue to operate the stores under the Wilson's name,"
concluded Farrington.
Hannaford Bros. Co. is a Maine-based food retailer with annual sales in excess
of $2 billion and over 15,000 associates at locations throughout northern New
England and New York. Retail sales are made through the company's 95
supermarkets in Maine, New Hampshire, Massachusetts, Vermont and New York
which operate under the names of Shop 'n Save, Alexander's Shop 'n Save,
Martin's, and Sun Foods.
Exhibit 2.3
Charles H. Crockett
Assistant Secretary
FOR IMMEDIATE RELEASE
July 26, 1994
HANNAFORD BROS. CO. COMPLETES WILSON'S ACQUISITION
SCARBOROUGH, MAINE; Hannaford Bros. Co. (NYSE-HRD), announced today
that it has consummated its acquisition of Wilson's Supermarkets,
a privately-held company based in Wilmington, North Carolina.
Hannaford's execution of an agreement to purchase Wilson's was
announced on June 22, 1994.
The purchase of Wilson's includes the company's 20 supermarkets in
North and South Carolina, five additional store sites, three of
which are now under construction, and several shopping centers.
Acquisition of this chain provides Hannaford the opportunity to
diversify geographically and to secure a portion of the market in
a growing and vibrant region of the country.
Hannaford has purchased all of the capital stock of Boney Wilson &
Sons, Inc., the operator of the Wilson's stores, and will continue
the stores' operations through that wholly-owned subsidiary.
Hannaford is now a multi-regional retail food distributor with an
estimated $2.3 billion in annual sales and nearly 17,000 employees
in Northern New England, New York, North Carolina and South
Carolina.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements of Hannaford Bros. Co. and subsidiaries on Form S-8 (File Nos.
2-77902, 2-77903, 2-98387, 33-1281, 33-22666, 33-31624, and 33-41273) of our
report dated May 24, 1994, except as to the information included on Note 7,
for which the date is July 26, 1994, on our audit of the combined financial
statements of Boney Wilson & Sons, Inc. -- Combined Entities as of
December 31, 1993 and for the year then ended, which report is included
in this Report on Form 8-K.
s/Coopers & Lybrand
Portland, Maine
August 5, 1994
