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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DELCHAMPS, INC.
(Name of Subject Company)
DELCHAMPS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE
AND ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS
(Title of Class of Securities)
246615 10 8
(CUSIP Number of Class of Securities)
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TIMOTHY E. KULLMAN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
DELCHAMPS, INC.
305 DELCHAMPS DRIVE
MOBILE, ALABAMA 36602
(334) 433-0431
(Name, address and telephone number of person authorized to receive notice and
communications on behalf of the person(s) filing statement)
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WITH A COPY TO:
L. R. MCMILLAN, II
JONES, WALKER, WAECHTER,
POITEVENT, CARRERE & DENEGRE, L.L.P.
201 ST. CHARLES AVENUE
NEW ORLEANS, LOUISIANA 70170-5100
(504) 582-8000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Delchamps, Inc., an Alabama corporation
(the "Company"). The address of the principal executive offices of the Company
is 305 Delchamps Drive, Mobile, Alabama 36602. The title of the class of equity
securities to which this statement relates is the common stock, par value $0.01
per share, of the Company (the "Common Stock") and the associated Preferred
Share Purchase Rights ("Rights") issued pursuant to the Rights Agreement
described below. The Common Stock and associated Rights are referred to herein
as the "Shares."
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to a tender offer by Delta Acquisition Corporation,
an Alabama corporation ("Offeror"), and a wholly-owned subsidiary of
Jitney-Jungle Stores of America, Inc., a Mississippi corporation ("Parent"),
disclosed in a Tender Offer Statement on Schedule 14D-1, dated July 14, 1997
(the "Schedule 14D-1"), to purchase all outstanding Shares at a price of $30 per
share (the "Offer Price"), net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
July 14, 1997 (the "Offer to Purchase") and the related Letter of Transmittal
(which together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 8, 1997 (the "Merger Agreement"), among Parent, Offeror and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement, Offeror will be
merged with and into the Company (the "Merger"), and the Company will continue
as the surviving corporation (the "Surviving Corporation"). At the time of the
consummation of the Merger (the "Effective Time"), each then outstanding Share
(other than Shares owned by the Company, Parent, the Offeror, any other wholly
owned subsidiary of Parent, or by shareholders, if any, who are entitled to and
who properly exercise dissenters' rights under the Alabama Business Corporation
Act (the "ABCA")) will be converted automatically into the right to receive
$30.00 in cash without interest. The Merger Agreement has been filed herewith as
Exhibit (c)(1) and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of
Offeror and Parent are located at 1770 Ellis Avenue, Suite 200, Jackson,
Mississippi 39204.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and (i) its executive officers, directors or affiliates or (ii) Offeror, its
executive officers, directors or affiliates, is set forth below.
CERTAIN AGREEMENTS
Certain contracts, arrangements, agreements and undertakings between the
Company and certain of its directors and executive officers are described in
"Compensation of Directors," "Summary of Executive Compensation," "Employment,
Indemnity and Change of Control Agreements," "Director Compensation Plan" and
"Compensation Committee Report on Executive Compensation" in the Company's
Information Statement Pursuant to Section 14(f) of the Securities Exchange Act
of 1934 (the "Exchange Act") and Rule 14f-1 thereunder, which appears as
Schedule I hereto. Information regarding the Company's Directors' Stock Option
Plan, the 1993 Stock Incentive Plan and the 1987 Restricted Stock Plan appears
below under the caption "The Merger Agreement--Company Stock Plans."
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THE MERGER AGREEMENT
A copy of the Offer to Purchase is enclosed with this Schedule 14D-9. The
summary of the Merger Agreement contained in the Offer to Purchase is
incorporated herein by reference. Such summary should be read in its entirety
for a more complete description of the terms and provisions of the Merger
Agreement, which has been filed as Exhibit (c)(1) hereto and is incorporated
herein by reference. The following is a summary of certain portions of the
Merger Agreement that relate to arrangements among the Company, Offeror, Parent,
and the Company's executive officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon
payment by Offeror for the Shares pursuant to the Offer, Offeror shall be
entitled to designate such number of directors, rounded up to the next whole
number, as will give Offeror representation on the Board of Directors of the
Company (the "Board") equal to the percentage of Shares held by Offeror, and the
Company shall, at such time, use its best efforts to cause the appropriate
number of directors who are currently members of the Board to resign and
Offeror's designees to be appointed or elected; provided, however, that until
the Effective Time there shall be, to the extent they are willing to continue to
serve, at least three directors on the Board who are currently directors and who
are not designees nor officers, directors, employees or affiliates of Parent or
Offeror nor are employees of the Company or any of its subsidiaries (the
"Independent Directors"). The Merger Agreement provides that if the number of
Independent Directors shall be reduced below three for any reason, the Board
shall, subject to the approval of the remaining Independent Directors, if any,
designate a person or persons to fill the vacancy or vacancies who are directors
on the date of the Merger Agreement and not an officer, director, employee or
affiliate of Parent or Offeror nor an employee of the Company. Any vacancies
that cannot be filled in the foregoing manner shall be filled by the Board at
its discretion. Information required pursuant to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder with respect to the foregoing appears as Schedule
I hereto.
COMPANY STOCK PLANS. The Merger Agreement provides that prior to the
Effective Time the Company may elect to accelerate the exercisability of options
granted and outstanding prior to the date of the Merger Agreement under the
Directors' Stock Option Plan and the 1993 Stock Incentive Plan and the vesting
of restricted shares granted and outstanding prior to the date of the Merger
Agreement under the 1987 Restricted Stock Plan and may waive the two-year
holding period for stock issued pursuant to the Director Compensation Plan. In
addition, the Company has the right prior to the Effective Time to pay to any
holder of an outstanding option to purchase Shares an amount equal to the
difference between the Offer Price and the per Share exercise price of a stock
option held by such holder multiplied by the number of Shares then subject to
such option (whether or not then exercisable), less any amounts required to be
withheld for taxes, in exchange for the surrender and cancellation of such stock
option. Prior to the Effective Time, the Company may adopt any amendments to its
Directors' Stock Option Plan, 1993 Stock Incentive Plan or 1987 Restricted Stock
Plan or any agreements thereunder as may be necessary or appropriate to
effectuate the foregoing, provided that no such amendment may reduce the per
Share exercise price of such options. In accordance with the Merger Agreement,
the Company has amended the Director Compensation Plan to eliminate future
issuances of Shares thereunder.
As of July 8, 1997, non-employee directors of the Company as a group held
options granted on July 29, 1996 under the Directors' Stock Option Plan to
purchase an aggregate of 30,000 Shares at an exercise price of $23.00 per Share.
By their terms, the options become exercisable in one-third annual increments
beginning July 29, 1997, but the plan provides that the options become
exercisable immediately in the event of a change of control of the Company, and
that the Compensation Committee may accelerate the exercisability of any option
at any time in its discretion. Pursuant to the Company's Director Compensation
Plan, non-employee directors of the Company may use compensation received as a
director to purchase Shares at a discount. Shares issued through the plan are
subject to a two-year holding period requirement, which may be waived by the
Compensation Committee.
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As of July 8, 1997, executive officers of the Company as a group held
options granted under the Company's 1993 Stock Incentive Plan to purchase an
aggregate of 319,000 Shares, of which 233,333 were vested. By their terms, the
options automatically become exercisable in the event of a change of control of
the Company and the Compensation Committee has the right to accelerate the
exercisability of the options in its discretion.
As of July 8, 1997, three executive officers of the Company held an
aggregate of 8,400 restricted Shares issued under the 1987 Restricted Stock
Plan. The plan provides for the automatic acceleration of vesting of the
restricted Shares as of the effective date of any transaction that has a
reasonable likelihood of causing the Shares to cease to be registered under
Section 12 of the Exchange Act or neither be listed on any national securities
exchange nor be authorized to be quoted on an inter-dealer quotation system of
any registered national securities association. The Compensation Committee has
the authority to accelerate the expiration of the restrictions on the restricted
Shares.
It is a condition to the consummation of the Offer that prior to the
expiration of the Offer all of the Company's directors and substantially all of
the holders of the options who are employees of the Company shall have exercised
such options or shall have entered into agreements with the Company to exercise
such options prior to the Effective Time (or such later time as may be specified
by Parent) or otherwise permit the Company to "cash-out" the options as
described above. The Company has agreed to use its commercially reasonable best
efforts to cause all options to be exercised prior to the Effective Time. The
Company has been advised by its directors that they will exercise all options
held by them prior to the consummation of the Offer. The Company anticipates
that the Compensation Committee will accelerate the exercisability of all
options and the vesting of all restricted Shares and that the two-year holding
period for Shares issued under the Director Compensation Plan will be waived so
that all options may be exercised or "cashed-out" and all related Shares may be
tendered in connection with the Offer.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE. The Merger Agreement
provides that the Company, and from and after the Effective Time the Surviving
Corporation, shall indemnify, defend and hold harmless each director or officer
or former director or officer of the Company or any of its subsidiaries against
all losses, claims, damages, costs and expenses (including attorneys' fees),
liabilities, judgments and settlement amounts that are paid or incurred in
connection with any claim, action, suit, proceeding or investigation that arises
out of the fact that such person is or was a director or officer of the Company
or any of its subsidiaries and (i) arises out of any action or omission
occurring or allegedly occurring at or prior to the Effective Time, or (ii)
arises out of the Merger Agreement or the transactions contemplated thereby, in
each case to the full extent a corporation is permitted under applicable law to
indemnify its own directors or officers. In addition, the Merger Agreement
provides that the Company and the Surviving Corporation will pay expenses in
advance of the final disposition of any such claim, action, suit, proceeding or
investigation to each indemnified party to the full extent permitted by
applicable law.
The Merger Agreement also provides that Parent, Offeror and the Company will
not take any action so as to amend, modify or repeal the provisions for
exculpation of directors or indemnification of directors or officers contained
in the articles of incorporation or bylaws of the Surviving Corporation and its
subsidiaries in such a manner as would adversely affect in any material respect
the rights of any individual who shall have served as a director or officer of
the Company or any of its subsidiaries prior to the Effective Time to be
exculpated or to be indemnified by such corporations in respect of their serving
in such capacities prior to the Effective Time. The Company's articles of
incorporation contain a provision that eliminates any liability of the Company's
directors for monetary damages for breach of their fiduciary duty of care. In
addition, the Company's bylaws contain a provision requiring the Company to
indemnify any officer or director of the Company to the full extent permitted by
the ABCA. In addition, the Merger Agreement provides that the Company will honor
in accordance with their respective terms each of the indemnity agreements
between the Company and each of its directors as in effect on the date of the
Merger Agreement and will not terminate such agreements prior to the Effective
Time.
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The Merger Agreement further provides that the Company shall, and after the
consummation of the Offer, Parent shall cause the Company to, until the sixth
anniversary of the Effective Time and for so long thereafter as any claim
asserted prior to such date has not been fully adjudicated by a court of
competent jurisdiction, cause to be maintained in effect the policies of
directors' and officers' liability insurance maintained by the Company and its
subsidiaries as of the date of the Merger Agreement (or policies providing at
least the same coverage amounts and containing terms that are no less
advantageous to the insured parties) with respect to claims arising from facts
or events that occurred or are alleged to have occurred at or prior to the
Effective Time; provided, that the Company shall endeavor to obtain such
coverage at the lowest premium cost reasonably available and that the Company
shall not, and Parent shall not be obligated to cause the Surviving Corporation
to, pay an aggregate premium (whether over time or on a one-time basis) in
excess of $600,000.
CHANGE OF CONTROL AGREEMENTS. The Merger Agreement provides that the
Company shall, and after the consummation of the Offer Parent shall cause the
Company to, honor in accordance with their respective terms each of the change
of control agreements between the Company and its employees as in effect on the
date of the Merger Agreement.
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality and
Standstill Agreement (the "Confidentiality Agreement") dated April 8, 1997
between the Company, on the one hand, and Parent and Bruckmann, Rosser, Sherrill
& Co., Inc., an affiliate of Parent's majority shareholder ("BRS"), on the other
hand, filed as Exhibit (c)(2) hereto and incorporated herein by reference. The
summary is qualified in its entirety by reference to the Confidentiality
Agreement. Pursuant to the Confidentiality Agreement, Parent and BRS agreed,
among other things, to keep confidential certain nonpublic confidential or
proprietary information of the Company furnished to Parent and BRS by or on
behalf of the Company and to use the confidential information solely for the
purpose of evaluating a possible transaction with the Company. Parent and BRS
also agreed that for a period of two years from the date of the Confidentiality
Agreement, none of Parent, BRS nor any of their affiliates shall, directly or
indirectly, without the prior written invitation of the Board, (i) in any manner
acquire, agree to acquire or make any proposal to acquire, any securities or
property of the Company or any of its subsidiaries or (ii) otherwise seek, alone
or in concert with others, to control or influence the management, Board or
policies of the Company. The Merger Agreement provides that the standstill
provision of the Confidentiality Agreement terminates if the Termination Fee and
Expense Fee (as defined in the Merger Agreement) are, or are required to be,
paid.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board has unanimously approved the Offer, the Merger, and the Merger
Agreement, has determined that the consideration to be paid for the Shares in
the Offer and the Merger is fair to the shareholders of the Company and that the
Offer and the Merger are otherwise in the best interests of the Company and its
shareholders. The Board unanimously recommends that all shareholders accept the
Offer and tender their Shares pursuant to the Offer and, if a shareholder vote
on the Merger is required by the ABCA, vote in favor of the Merger.
(B) BACKGROUND; REASONS FOR THE RECOMMENDATION.
(1) BACKGROUND. From time to time over the past two years, Mr. Bruce C.
Bruckmann, a director of Parent and a principal in Bruckmann, Rosser, Sherrill &
Co., Inc. ("BRS"), an affiliate of Parent's majority shareholder, and Mr.
Timothy E. Kullman, the Company's Chief Financial Officer, had general
discussions regarding recent developments and trends in the supermarket industry
and the strategic direction of Parent and the Company. In mid-January 1997, Mr.
Bruckmann contacted Mr. Kullman to arrange a meeting between representatives of
Parent and the Company to discuss the possibility of a friendly business
combination between Parent and the Company.
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On January 31, 1997, Mr. Bruckmann and Mr. Harold O. Rosser, II and Mr.
Stephen C. Sherrill, also directors of Parent and principals in BRS, met with
Mr. David W. Morrow, the Company's Chairman and Chief Executive Officer, Mr.
Kullman and Mr. Richard W. LaTrace, the Company's President, to discuss
generally the companies' businesses and philosophies and the framework for a
potential transaction. During the meeting, Parent's representatives discussed
generally the possibility of a strategic merger of the two companies in which
the Company would acquire Parent for common stock under terms to be negotiated.
Mr. Morrow indicated that the Company would review the matter and inform Parent
if the Company wished to further pursue a possible transaction.
At a regularly scheduled Board meeting in February 1997, management of the
Company provided the Board with a comprehensive review of the Company's
financial condition, results of operations and future prospects, and a review of
current developments in the supermarket industry in the Company's market areas.
Among other things, management reported that it was not optimistic that
financial results could improve significantly over the next several years if the
Company remained independent and made no major acquisitions. Management's view
was based primarily on the substantial increase since 1994 in the number and
quality of competitive stores opened in the Company's market areas by other
well-financed and cost-efficient supermarket and food store chains, and the
effect of those competitive openings on the Company's gross margins and same
store sales. Management noted, however, that the Company's operations could
provide a good fit with those of certain other supermarket chains that might
wish to enter or expand their operations in the Company's market areas and that
representatives of several chains, including Parent, had expressed an interest
in acquiring the Company. After discussion of management's report, the Board
concluded that it would be in the best interest of the Company's shareholders to
explore the Company's strategic alternatives, including the possibility of a
sale of the Company, and authorized management to interview one or more
investment banking firms and explore their views concerning the Company's
alternatives.
On February 12, 1997, the Company retained Credit Suisse First Boston
Corporation ("CSFB") as its exclusive financial advisor with respect to
strategic alternatives available to the Company. In mid February, Mr. Kullman
called Mr. Bruckmann and informed him that the Company had retained CSFB as its
financial advisor to assist the Company in reviewing and evaluating its
strategic alternatives and that the Company or CSFB would contact Parent if
appropriate. In early April, at the Company's direction, CSFB contacted Mr.
Bruckmann to ascertain whether Parent would be interested in pursuing the
acquisition of
the Company as part of a managed sale process. Mr. Bruckmann indicated that
Parent would be interested in participating in the process. Additionally, over
the course of the next several months, CSFB conducted an analysis of the Company
and its financial and competitive situation, and, as directed by management of
the Company, contacted ten other potential purchasers believed to be likely to
have both an interest in and the capability of acquiring the Company. Four of
the potential purchasers indicated that they were not interested in proceeding.
Beginning in early April, CSFB and management provided detailed information
about the Company to the seven remaining potential purchasers, including Parent,
following the execution of confidentiality and standstill agreements with each
of them. See "Item 3. Identity and Background-- Confidentiality Agreement."
Members of management and representatives of CSFB also met with representatives
of each potential purchaser to answer questions and provide additional
information.
In late April, Parent advised CSFB that it had been approached by
representatives of another supermarket chain through Donaldson, Lufkin &
Jenrette Securities Corporation (an affiliate of a shareholder of Parent)
regarding the possibility of a joint acquisition of the Company and requested a
waiver of the standstill provisions of the Confidentiality Agreement to enable
Parent to pursue discussions with the other chain, which the Company granted.
As part of the managed sale process, CSFB, on behalf of the Company,
requested that the potential purchasers submit nonbinding indications
of interest in acquiring the Company. In response to that request, in
early May, Parent submitted a non-binding indication of interest in
pursuing jointly with the other supermarket chain an acquisition of
the Company for approximately $27 to $31 per Share in cash. In
addition, three other potential purchasers submitted non-binding indications of
interest. All such potential
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purchasers were then given access to a data room containing financial and other
records of the Company and access to the Company's stores and its Hammond,
Louisiana, distribution center.
At the Board's regularly scheduled meeting on April 29, 1997, management
reported in detail on the preliminary contacts with potential purchasers.
On June 2, CSFB, on behalf of the Company, requested that formal proposals
be submitted by prospective purchasers on June 18, 1997 and provided prospective
purchasers with the Company's draft of the proposed Merger Agreement. In early
June, Parent advised CSFB that Parent had terminated its discussions with the
other supermarket chain and wished to pursue on its own an acquisition of the
Company. Only Parent responded by June 18 with a formal proposal. One other
potential purchaser provided the Company with an indication of interest but did
not submit a formal proposal until a subsequent date.
Parent's June 18 proposal contemplated the acquisition of the Company in a
cash merger for a price of $27 per Share. Shortly thereafter, CSFB advised
Parent that its proposed price and the financing condition contained in Parent's
proposal were unacceptable and that the transaction would have to be structured
as a tender offer in order to accelerate the closing of the transaction.
Following additional negotiations, Parent eliminated the financing condition and
offered the Company a choice between a tender offer at $28.50 per Share or a
merger transaction at $30 per Share, reflecting Parent's higher estimated costs
to finance a tender offer.
After further negotiations, Parent proposed a tender offer for all Shares at
$30 per Share in cash, followed by a merger in which non-tendering shareholders
would also receive $30 per Share in cash. Parent's proposal did not contain a
financing condition but required a tender offer period of up to 60 calendar days
to provide Parent with sufficient time to obtain permanent financing. Parent
also advised the Company that the transaction would be subject to Parent's
ability to obtain the consent of the holders of at least a majority in aggregate
principal amount of its senior notes. In addition, Parent informed the Company
that it was unwilling to proceed with further discussions unless the Company
provided it with a five-day period to negotiate with the Company on an exclusive
basis.
The Board held a special meeting on June 27, 1997 to discuss Parent's
revised proposal in light of current conditions and available alternatives. At
the meeting, representatives of CSFB made a presentation to the Board regarding
the status of discussions with Parent and other potential purchasers, including
one such potential purchaser that had indicated its intention to submit a formal
offer to the Company, as well as CSFB's preliminary valuation analyses of the
Company. Representatives of the Company's management also made a presentation
regarding the Company's historical financial performance and management's view
of the Company's future financial prospects. After discussion, the Board
authorized management, CSFB and Company counsel to continue their negotiations
with Parent and authorized management to enter into a short-term exclusivity
agreement if and when deemed advisable.
On June 30, the Company provided Parent with a revised draft Merger
Agreement and related documents reflecting the status of negotiations to date.
Thereafter, representatives of Parent and the Company negotiated these documents
and held discussions regarding various legal and business issues, and
representatives of Parent continued due diligence activities. ']
On July 2 and 3, representatives of Parent and the Company met to
continue negotiations on the Merger Agreement. The principal issues
discussed included the conditions to the Offer generally; the time
periods and terms upon which Parent could or would be required to extend
the Offer; the conditions upon which Parent would be required to pursue
antitrust approval; the conditions upon which the Company could
entertain third party offers for the Company after the execution
of the Merger Agreement; the bases upon which the Company could
modify its position with respect to the Offer or terminate the Merger
Agreement as a result of certain third party offers; and the amount of the
termination and expense fees and the circumstances under which they would be
payable by the Company.
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Over the next four days, representatives of the Company and Parent continued
these discussions and finalized the Merger Agreement and related documentation.
At a meeting of the Board held on July 7, 1997, Company counsel and
representatives of CSFB reported on the status of negotiations with Parent and
reviewed the terms of the Offer and the Merger. Representatives of CSFB also
reviewed the terms of an offer, which were not equal in price or terms to those
of the Offer and the Merger, that had been made by the other prospective
purchaser. CSFB reviewed again its valuation analyses of the Company and
delivered to the Board its written opinion dated July 7, 1997 that, as of such
date and based upon and subject to the matters set forth therein, the
consideration to be received by the holders of Shares in the Offer and the
Merger was fair from a financial point of view to such holders.
Following discussion, the Board unanimously approved the Merger Agreement
and determined to recommend that shareholders accept the Offer and tender their
Shares pursuant to the Offer. The Merger Agreement was executed and publicly
announced on the morning of July 8, 1997. On July 14, 1997, Offeror commenced
the Offer.
(2) REASONS FOR THE RECOMMENDATION. In approving the Merger Agreement and
the transactions contemplated thereby, and in recommending that all holders of
Shares tender them pursuant to the Offer, the Board considered a number of
factors, including:
(i) the terms of the Merger Agreement;
(ii) the financial condition, results of operations, business and
prospects of the Company;
(iii) the significant and continuing increase in competition in the
Company's markets from other large, well-financed supermarket
chains and other discount retailers, and the effects of such
competition on the Company's margins and comparable same store
sales;
(iv) that the $30 per Share cash consideration to be received by the
shareholders represented a premium of almost 50% over the trading
price of the Shares in early February 1997, when the Board began
the process of exploring strategic alternatives;
(v) the opinion dated July 7, 1997 of CSFB that, as of such date and
based upon and subject to the matters set forth therein, the
consideration to be received by the holders of Shares in the Offer
and the Merger was fair from a financial point of view to such
holders;
(vi) that the Merger Agreement, while not permitting the Company to
continue to solicit or initiate discussions with other prospective
purchasers, permits the Company to furnish information to, and
negotiate or participate in discussions with, third parties that
have not previously engaged in substantive discussions with the
Company;
(vii) that before recommending the Offer and Merger Agreement, CSFB
solicited acquisition interest from third parties that did not
result in alternative proposals on more favorable terms;
(viii) the reasonableness of the termination fee and expense reimbursement
requirements in the Merger Agreement; and
(ix) the limited number of conditions to the obligations of Parent and
Offeror to consummate the Offer and the Merger, including the
absence of a financing condition of the Offer.
The Board did not assign relative weights to the foregoing factors or
determine that any factor was of more importance than other factors. Rather, the
Board viewed its position and recommendation as being based on the totality of
the information presented to and considered by it.
A copy of the written opinion of CSFB, which sets forth the factors
considered, assumptions made and limitations on the review conducted by CSFB, is
attached as Exhibit (a)(6) to this Schedule 14D-9 and is
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incorporated herein by reference. Shareholders are urged to read the opinion of
CSFB carefully and in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated February 12, 1997 (the "Engagement
Letter") between CSFB and the Company, the Company retained CSFB to act as its
exclusive financial advisor with respect to strategic alternatives available to
the Company, including the possible Sale (as defined in the Engagement Letter)
of the Company. Under the terms of the Engagement Letter, the Company agreed to
pay CSFB a financial advisory fee of $100,000 upon execution of the Engagement
Letter and a transaction fee in an amount equal to 1% of the aggregate
consideration, payable upon consummation of the Offer. In addition, the
Engagement Letter provides that the Company will reimburse CSFB for its
out-of-pocket expenses and will indemnify CSFB against certain liabilities,
including liabilities arising under the federal securities laws.
In the past, CSFB has performed certain investment banking services for
Parent and has received customary fees for such services. With the consent of
the Company, CSFB will act as an underwriter for the offering of debt securities
proposed to be made by Parent in connection with the Offer and the Merger, and
Credit Suisse First Boston, an affiliate of CSFB, may participate in the bridge
financing for the Offer and the Merger, for which, in each case, CSFB and Credit
Suisse First Boston will receive customary fees for their services.
In the ordinary course of its business, CSFB and its affiliates may actively
trade the equity securities of the Company and the debt securities of Parent for
their own accounts and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in Shares have been effected during the past 60 days by
the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company, except for the
issuance of Shares to certain non-employee directors under the Director
Compensation Plan pursuant to elections, made by such directors more than one
year ago, to receive Shares as compensation for services as a director.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director, affiliate and subsidiary of the Company currently intends to tender to
Offeror all Shares held of record or beneficially by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) There are no transactions, board resolutions, agreements in principle,
or signed contracts in response to the Offer, other than as described in Item
3(b) or in Item 8 of this Schedule 14D-9 (which is hereby incorporated herein by
reference), which relate to or would result in one or more of the matters
referred to in Item 7(a)(i), (ii), (iii) or (iv).
9
<PAGE>
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
RIGHTS AGREEMENT
The Board entered into a Rights Agreement (the "Rights Agreement") dated as
of October 14, 1988, with First Alabama Bank, as Rights Agent (the "Agent"),
which was amended by an Amendment dated as of October 16, 1992 between the
Company and the Agent (the "First Amendment") and further amended by a Second
Amendment dated July 8, 1997 between the Company and the Agent (the "Second
Amendment"). The purpose of the Rights Agreement is to protect the shareholders
of the Company against rapid accumulations of Shares by raiders and unsolicited
coercive tender offers at inadequate prices by offerors who decline to negotiate
with the Board as the representative of the shareholders. The Rights may cause
substantial ownership dilution to a person or group who attempts to acquire the
Company without the approval of the Board.
Pursuant to the Rights Agreement, on October 14, 1988, the Board declared a
dividend of one preferred share purchase right (a "Right") for each outstanding
share of Common Stock. Under certain conditions, each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock, no par value, (the "Preferred
Shares"), of the Company at a price of $70 per one one-hundredth of a Preferred
Share, subject to adjustment. The Rights, which do not have any voting
privileges, expire on October 27, 1998, and may be redeemed by the Company at a
price of $0.01 per Right at any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial ownership of 50% or more
of the outstanding Shares.
The Rights may not be exercised until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired beneficial ownership of
15% or more of the outstanding Shares or (ii) 10 business days (or such later
date as may be determined by action of the Board prior to such time as any
Person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Shares (the earlier of such dates being
called the "Distribution Date"). The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the Shares.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that (i) any
person or group of affiliated or associated persons becomes the beneficial owner
of 15% or more of the outstanding Shares (unless such person first acquired 15%
or more of the outstanding Shares by a purchase pursuant to a tender offer for
all of the Shares for cash, which purchase increases such person's beneficial
ownership to 80% or more of the outstanding Shares) or (ii) during such time as
there is an Acquiring Person, there shall be a reclassification of securities or
a recapitalization or reorganization of the Company or other transaction or
series of transactions involving the Company which has the effect of increasing
by more than 1% the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its subsidiaries beneficially
owned by the Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Shares having a market value of two times the exercise
price of the Right.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Shares and prior to the acquisition by such person or group of 50% or more of
the outstanding Shares, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one Share, or one one-hundredth of a Preferred Share (or of
a share of a class or series of the Company's preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment).
10
<PAGE>
As of October 16, 1992, the Company entered into the First Amendment. The
purpose of the First Amendment was to allow a bidder to require a shareholders'
meeting under certain circumstances to vote on redemption of the Rights.
Consistent with the Board's approval and adoption of the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, and
its recommendation that all shareholders accept the Offer and tender their
Shares in response to it, the Board approved on July 8, 1997 the Second
Amendment exempting the Merger Agreement, the Offer and the Merger from the
restrictions imposed on offerors generally by the Rights Agreement, rescinding
the First Amendment and providing that the Rights will expire at the
consummation of the Offer.
ARTICLES OF INCORPORATION
Article Eleven of the articles of incorporation of the Company contains
provisions that are intended to protect shareholders against a second-step
forced merger with a raider at an inadequate price following a successful
unsolicited coercive tender offer. For the reasons described in the preceding
paragraph, the Board voted on July 8, 1997 to exercise the authority conferred
on it by Article Eleven of the Company's articles of incorporation to exempt the
Merger Agreement and the transactions contemplated thereby from the restrictions
imposed by Article Eleven.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- ------------
<S> <C>
(a)(1)*+ Offer to Purchase dated July 14, 1997.
(a)(2)*+ Letter of Transmittal.
(a)(3) Press release issued by Parent and the Company dated July 8, 1997 (incorporated by reference to
Exhibit (99) to the Company's Current Report on Form 8-K, dated July 8, 1997).
(a)(4)* Letter to shareholders of the Company dated July 14, 1997.
(a)(5)+ Form of Summary Advertisement dated July 14, 1997.
(a)(6)* Opinion dated July 7, 1997 of Credit Suisse First Boston Corporation.
(c)(1) Agreement and Plan of Merger dated as of July 8, 1997 by and among the Company, Parent and Offeror
(incorporated by reference to Exhibit (2) to the Company's Current Report on Form 8-K, dated July 8,
1997).
(c)(2) Confidentiality and Standstill Agreement dated April 8, 1997 between the Company, Bruckmann, Rosser,
Sherrill & Co., Inc., and Parent.
(c)(3) Employment Agreement dated as of January 1, 1997 between the Company and David W. Morrow
(incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the
13-week period ended March 29, 1997).
(c)(4) 1993 Stock Incentive Plan (incorporated by reference to Exhibit 4.3 to the Company's Form S-8 filed
on October 25, 1993 (Registration Number 33-70772)).
(c)(5) Directors' Stock Option Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q
filed on November 15, 1996, for the quarter ending September 28, 1996).
(c)(6) Director Compensation Plan (incorporated by reference to Exhibit 4.3 to the Company's Form S-8 filed
on November 14, 1994 (Registration Number 33-56447)).
(c)(7) Form of Director Indemnity Agreement (incorporated by reference to Exhibit 10 to the Company's Form
10-Q filed on November 15, 1996, for the quarter ending September 28, 1996).
(c)(8) Management Incentive Compensation Plan.
(c)(9) 1987 Restricted Stock Plan.
(c)(10) Form of Change of Control Agreement.
(c)(11) Second Amendment dated July 8, 1997 to the Rights Agreement (incorporated by reference to Exhibit
(4) to the Company's Form 8-A/A dated July 8, 1997)
</TABLE>
- ------------------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to Offeror's Tender Offer Statement on Schedule 14D-1
dated July 14, 1997 and incorporated herein by reference.
11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
Date: July 14, 1997 DELCHAMPS, INC.
By: /s/ DAVID W. MORROW
------------------------------------------
David W. Morrow
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
</TABLE>
12
<PAGE>
[LOGO]
<TABLE>
<S> <C>
DAVID W. MORROW
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
</TABLE>
July 14, 1997
Dear Shareholder:
I am pleased to announce that on July 8, 1997, Delchamps, Inc. (the
"Company"), Jitney-Jungle Stores of America, Inc. ("Parent") and Delta
Acquisition Corporation ("Offeror"), a wholly owned subsidiary of Parent,
entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant
to which Offeror has agreed to acquire the Company. Pursuant to the Merger
Agreement, Offeror has today commenced a tender offer (the "Offer") for all
outstanding shares of the common stock, par value $.01 per share, of the Company
("Common Stock") at $30 cash per share. The shares of Common Stock not acquired
in the Offer will be converted to the right to receive $30 per share in cash
pursuant to the merger of Offeror with and into the Company (the "Merger"). The
Offer is conditioned on, among other things, at least two-thirds of the shares
of Common Stock outstanding on a fully diluted basis being validly tendered.
The Board of Directors of the Company has unanimously approved the Offer,
the Merger, and the Merger Agreement, has determined that the consideration to
be paid for the shares of Common Stock in the Offer and the Merger is fair to
the shareholders of the Company and that the Offer and the Merger are otherwise
in the best interests of the Company and its shareholders. The Board of
Directors unanimously recommends that all shareholders accept the Offer and
tender their shares of Common Stock pursuant to the Offer and, if a shareholder
vote on the Merger is required by the Alabama Business Corporation Law, vote in
favor of the Merger.
Enclosed for your consideration are copies of the Offer materials and the
Company's Schedule 14D-9, which is being filed today with the Securities and
Exchange Commission. These documents should be read carefully. In particular, I
call your attention to Item 4 of the Schedule 14D-9, which describes the reasons
for the Board's recommendation with respect to the Offer.
Sincerely,
/s/ DAVID W. MORROW
-------------------------------
David W. Morrow
CHIEF EXECUTIVE OFFICER AND
Chairman of the Board
DELCHAMPS, INC. - P.O. BOX 1668 - MOBILE, AL 36633-1668 - 305 DELCHAMPS
DRIVE - MOBILE, AL 36602 - (334) 433-0431
<PAGE>
Credit Suisse First Boston Corporation Letterhead
July 7, 1997
Board of Directors
Delchamps, Inc.
305 Delchamps Drive
Mobile, Alabama 36602
Members of the Board:
You have asked Credit Suisse First Boston ("CSFBC") to advise you with respect
to the fairness to the shareholders of Delchamps, Inc. ("Delchamps" or the
"Company") from a financial point of view of the consideration to be received by
such shareholders pursuant to the terms of the Agreement and Plan of Merger (the
"Merger Agreement") among Jitney-Jungle Stores of America, Inc.
("Jitney-Jungle"), Delta Acquisition Corporation, a wholly-owned subsidiary of
Jitney-Jungle ("Sub"), and the Company. The Merger Agreement provides for a
tender offer (the "Tender Offer") by Sub for all of the outstanding shares of
the Company's common stock, $.01 par value per share, and the associated
preferred share purchase rights (together, the "Shares") at $30.00 per Share,
net to the seller in cash, followed by the merger (the "Merger") of Sub with and
into the Company pursuant to which the Company will become a wholly owned
subsidiary of Jitney-Jungle and each outstanding Share (other than Shares owned
by the Company as treasury stock and Shares owned by Jitney-Jungle, Sub or any
other wholly-owned subsidiary of Jitney-Jungle) will be converted into the right
to receive $30.00 in cash.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company, as well as a draft dated July
6, 1997 of the Merger Agreement. We have also reviewed certain other
information, including financial forecasts, provided to us by Delchamps and have
met with the Company's management to discuss the business and prospects of
Delchamps.
We have also considered certain financial and stock market data of Delchamps,
and we have compared those data with similar data for other publicly held
companies in businesses similar to that of the the Company, and we have
considered the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not been requested to make, and have not made, an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof. In
connection with our engagement, we approached third parties to solicit
indications of interest in the possible acquisition of the Company and held
preliminary discussions with certain of these parties prior to the date hereof.
We have acted as financial advisor to the Company in connection with the Tender
Offer and the Merger and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Tender Offer. In the
past, CSFBC has performed certain investment banking services for Jitney-Jungle
and has received customary fees for such services. With the consent of the
Company, CSFBC will act as an underwriter for the offering of high-yield
securities proposed to be made by Jitney-Jungle in connection with the Tender
Offer and the Merger, and Credit Suisse First Boston, an affiliate of CSFBC
("CSFB"), has committed to provide senior bank and bridge financing for the
Tender Offer and the Merger for which, in each case, CSFBC and CSFB will receive
customary fees for their services.
<PAGE>
In the ordinary course of CSFBC's business, CSFBC and its affiliates may
actively trade the equity securities of Delchamps and the debt securities of
Jitney-Jungle for their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Tender Offer and the
Merger, does not constitute a recommendation to any holder of Shares as to
whether such holder should tender Shares pursuant to the Tender Offer or how
such holder should vote with respect to the Merger and is not to be quoted or
referred to, in whole or in part, in any disclosure document distributed in
connection with the Tender Offer or any proxy statement or information statement
distributed in connection with the Merger, or used for any other purposes,
without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the holders of Shares in the Tender
Offer and the Merger is fair from a financial point of view to such holders.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
CONFIDENTIALITY AND STANDSTILL AGREEMENT
April 8, 1997
Mr. Bruce C. Bruckmann
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
New York, NY 10022
Dear Mr. Bruckmann:
Delchamps, Inc. ("DLCH"), Bruckmann, Rosser, Sherrill & Co., Inc. and
Jitney-Jungle Stores of America, Inc. (Bruckmann, Rosser, Sherrill & Co.,
Inc. and Jitney-Jungle Stores of America, Inc., together, "BRS") are prepared
to engage in discussions with respect to a possible negotiated business
combination involving BRS and DLCH (the "Transaction"), and during the course
of such discussions DLCH may disclose and make available to BRS certain
information concerning DLCH's business, prospects, financial condition,
operations, assets and liabilities. All such information furnished to BRS or
its Representatives (as defined below) by or on behalf of DLCH (irrespective
of the form of communication and whether such information is so furnished on
or after the date hereof), and all analyses, compilations, data, studies,
notes, interpretations, memoranda or other documents prepared by BRS or its
Representatives containing or based in whole or in part on any such furnished
information are collectively referred to herein as the "Confidential
Information." As a condition to being furnished with the Confidential
Information, BRS agrees as follows:
1. Non-Disclosure of Confidential Information. (a) BRS shall (i) use
the Confidential Information solely for the purpose of evaluating a possible
Transaction and for no other competitive or other purpose; (ii) not disclose
the Confidential Information to any third party, except for disclosures to
its directors, officers, employees and representatives of its advisors (such
as independent accountants, investment bankers, attorneys and financing
sources) acting on its behalf (such directors, officers, employees and
representatives being referred to hereinafter collectively as its
"Representatives") who in each case, in its reasonable judgment, need to know
such information for the purpose of evaluating a possible Transaction; (iii)
inform its Representatives of the confidential nature of the Confidential
Information and direct its Representatives to treat the Confidential
Information confidentially; (iv) take all additional reasonable precautions
necessary to prevent the disclosure of the Confidential Information by its
Representatives to any third party; and (v) be responsible for any breach of
this Agreement by its respective Representatives who have not entered into a
written agreement with DLCH to be bound by the terms hereof.
<PAGE>
Mr. Bruce C. Bruckmann
April 8, 1997
Page 2
(b) If BRS or its Representatives is requested (by interrogatories,
requests for information or documents, subpoena, civil investigative demand
or similar process) to disclose any Confidential Information, it is agreed
that BRS will provide DLCH with prompt notice of such request so that DLCH
may seek an appropriate protective order and/or waive BRS's compliance with
the provisions of this Agreement. BRS and its Representatives may disclose
without liability hereunder only that portion of the Confidential Information
that BRS is advised by written opinion of counsel is legally required to be
disclosed; provided that BRS gives to DLCH written notice of the information
to be disclosed as far in advance of its disclosure as is practicable and,
upon DLCH's request and at DLCH's expense, uses reasonable efforts to obtain
assurances that confidential treatment will be accorded to such information.
2. Non-Disclosure of Negotiations or Agreements. Except as required
by law, or in circumstances where the law is unclear as advisable in the
written opinion of counsel in order to protect the disclosing party, neither
BRS or its Representatives, on the one hand, nor DLCH or its Representatives,
on the other hand, shall disclose to any person the existence, status or
terms of any discussions, negotiations or agreements concerning a possible
Transaction, including without limitation any offer, letter of intent,
proposal, price, value or valuation, or any similar terms, agreements or
understandings between BRS and DLCH with respect thereto, or that BRS has
received from DLCH Confidential Information, without obtaining the prior
written consent of DLCH or BRS, as the case may be, which consent will not be
unreasonably withheld.
3. Return of Confidential Information. All written Confidential
Information delivered by or on behalf of DLCH to BRS pursuant to this
Agreement shall be and remain the property of DLCH, and upon the written
request of DLCH, BRS shall (i) promptly return such Confidential Information
and shall not retain any copies or other reproductions or extracts thereof,
(ii) destroy or have destroyed all memoranda, notes, reports, analyses,
compilations, studies, interpretations, or other documents derived from or
containing Confidential Information, and all copies and other reproductions
and extracts thereof, and (iii) provide a certificate to DLCH certifying that
the foregoing materials have, in fact, been destroyed or returned, signed by
an authorized officer supervising such destruction or return.
Notwithstanding the return or destruction of the Confidential Information,
BRS and its Representatives will continue to be bound by the confidentiality
and other obligations hereunder.
4. Information Not Deemed Confidential Information. The term
"Confidential Information" does not include information that (i) is or
becomes generally available to the public other than as a result of a
disclosure by BRS or its Representatives in violation of this Agreement; or
(ii) was or becomes available to BRS on a non-confidential basis from a
source other than DLCH or its Representatives, provided that such source is
not known by BRS to be bound by an obligation of confidentiality to DLCH or
its Representatives.
<PAGE>
Mr. Bruce C. Bruckmann
April 8, 1997
Page 3
5. No Representations or Warranties. Neither DLCH nor any of its
respective officers, directors, employees, representatives or agents makes
any representation or warranty, express or implied, as to the accuracy and
completeness of any Confidential Information provided by it, and no liability
shall result to DLCH from its use, except as set forth in a definitive
agreement for a Transaction. Only the representations and warranties that
are made in a definitive agreement for a Transaction, when, as, and if it is
executed, and subject to such limitations and restrictions as may be
specified therein, shall have any legal effect.
6. No Agreement. DLCH has the absolute right to determine what
information, properties and personnel it wishes to make available to BRS.
Unless a definitive agreement regarding a Transaction between BRS and DLCH
has been executed and delivered, neither DLCH, BRS nor any of their
stockholders or affiliates will be under any legal obligation of any kind
whatsoever with respect to such a Transaction by virtue of this letter
Agreement or any other written or oral expression with respect to such
Transaction except, in the case of this Agreement, matters specifically
agreed to herein. Each party further acknowledges and agrees that each party
reserves the right, in its sole discretion, to reject any and all proposals
made by the other party or any of its Representatives with regard to a
Transaction, and to terminate discussions and negotiations with the other
party at any time.
7. Contact Persons; No Solicitation. All requests by BRS for
Confidential Information, meetings with personnel or inspection of properties
and all other communications regarding a possible Transaction shall be made
only to the contacts designated by DLCH (the "Contact Persons"). BRS agrees
that, for a period of two years from the date of this Agreement, it will not
initiate contact (except in the ordinary course of business and except to the
extent permitted by paragraph 9) with any director, officer, employee,
distributor or customer of DLCH regarding its business operations, prospects
or finances, except as may be permitted by the Contact Persons for due
diligence purposes. It is expressly understood that this Agreement is not
intended to preclude the ability of the companies to compete with one another
in the ordinary course. BRS further agrees that, for a period of two years
from the date hereof, it will not hire any of DLCH's officers, zone managers
and/or district managers without DLCH's written consent and will not solicit
for hire (other than by means of a general advertisement) any of DLCH's
non-store level employees other than clerical and administrative employees.
8. Non-public Information. DLCH has outstanding publicly-held securities
and the Confidential Information contains material non-public information. BRS
acknowledges that it is (i) aware, and has advised or will advise its
Representatives, that the United States securities laws prohibit any person in
possession of material non-public information about a company from purchasing or
selling securities of such company, and from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person may purchase or sell such securities and (ii) familiar with the
<PAGE>
Mr. Bruce C. Bruckmann
April 8, 1997
Page 4
Securities and Exchange Act of 1934, as amended, and the rules and
regulations thereunder, and BRS agrees that it will neither use nor permit
any of its Representatives to use any Confidential Information in violation
of such Act or rules or regulations, including without limitation, Rule 10b-5.
9. Standstill. BRS agrees that, until the expiration of two years
from the date of this Agreement, without prior written invitation (on an
unsolicited basis) of DLCH's Board of Directors, it and its affiliates will
not (i) in any manner acquire, agree to acquire or make any proposal or offer
or otherwise seek to acquire, directly or indirectly, any securities (or
rights in respect thereof), assets or property of DLCH or any of its
subsidiaries or of any successor thereto or person in control thereof,
whether such agreements or proposals or offers are made with or to DLCH or
any of its subsidiaries (or a successor thereto or person in control thereof)
or a third party; (ii) enter into or agree, offer, seek or propose to enter
into or otherwise be involved in or part of, directly or indirectly, any
merger, acquisition transaction or other business combination relating to
DLCH or any of its subsidiaries or any of their respective assets; (iii)
make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) to vote, or
seek to advise or influence any person with respect to the voting of, any
voting securities of DLCH or any of its subsidiaries or of any successor
thereto or person in control thereof, (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any voting securities of DLCH or any of its
subsidiaries or of any successor thereto or person in control thereof; (v)
seek or propose, alone or in concert with others, to control or influence the
management, Board of Directors or policies of DLCH; (vi) directly or
indirectly enter into any discussions, negotiations, arrangements or
understandings with any other person (except internal discussions and
planning activities involving its Representatives) with respect to any of the
foregoing activities or propose any of such activities to any other person
(other than its Representatives); (vii) directly or indirectly advise,
encourage, assist, act as a financing source for or otherwise invest in any
other person in connection with any of the foregoing; (viii) publicly
disclose any intention, plan or arrangement inconsistent with the foregoing.
BRS also agrees that, during such two-year period, neither it nor any of its
affiliates will: (i) request DLCH or its advisors, directly or indirectly, to
(1) amend or waive any provision of this paragraph (including this sentence)
or (2) otherwise consent to any action inconsistent with any provision of
this paragraph (including this sentence); or (ii) take any initiative with
respect to DLCH or any of its subsidiaries that could be reasonably be
expected to require DLCH to make a public announcement regarding (1) such
initiative, (2) any of the activities referred to in this paragraph, (3) the
possibility of a Transaction or any similar transaction or (4) the
possibility of BRS or any other person acquiring control of DLCH, whether by
means of a business combination or otherwise. Additionally, BRS's Chief
Executive Officer may contact DLCH's Chief Executive Officer for the purpose
of expressing continuing or renewed interest in a Transaction or in any other
business relationship, provided that, unless invited to do so by DLCH's Chief
Executive Officer, no offer or proposal shall be made that would require
<PAGE>
Mr. Bruce C. Bruckmann
April 8, 1997
Page 5
disclosure or formal consideration by DLCH or its Board of Directors.
10. Person. The term "person" as used in this Agreement will be
interpreted broadly to include the media and any corporation, company, group,
partnership, governmental body or other entity or individual.
11. No Waiver. No failure or delay by DLCH or BRS in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof, or the exercise of any right, power or privilege hereunder.
12. Remedies. It is understood and agreed that money damages would not
be a sufficient remedy for any breach of this Agreement and that the
non-breaking party shall be entitled to equitable relief, including specific
performance and injunction, as a remedy for any such breach or threatened
breach. Each party agrees to waive, and use its best efforts to cause its
directors, officers, employees or agents to waive, any requirement for the
securing or posting of any bond or other security in connection with such
remedy. Such remedies shall not be deemed to be the exclusive remedies for a
breach of this Agreement, but shall be in addition to all other remedies
available at law or in equity, including remedies pursuant to applicable laws
relating to trade secrets.
13. Benefits: Governing Law. This Agreement is for the benefit of DLCH
and its respective directors, officers, employees, representatives and agents
and its respective successors and assigns and shall be governed by and
construed in accordance with the internal substantive laws and not the choice
of law rules of the State of Alabama.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same Agreement.
15. Severability. If any provision of this Agreement is invalid or
unenforceable, such invalidity or unenforceability shall not be deemed to
affect any other provision hereof or the validity of the remainder of this
Agreement, and such invalid or unenforceable provision shall be deemed
deleted herefrom to the minimum extent necessary to cure such invalidity or
unenforceability.
16. Modifications. No provision of this Agreement may be waived,
amended or modified except by the written agreement of BRS and DLCH.
<PAGE>
Mr. Bruce C. Bruckmann
April 8, 1997
Page 6
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon this letter
Agreement shall become a binding agreement between us.
DELCHAMPS, INC.
By: /s/ Timothy E. Kullman
----------------------------------------
Timothy E. Kullman
Senior Vice President and
Chief Financial Officer
Accepted and agreed to as of the
day of April, 1997.
- ----
BRUCKMANN, ROSSER, SHERRILL & CO., INC.
By: /s/ Bruce C. Bruckmann
------------------------
Bruce C. Bruckmann
Authorized Signatory
and
JITNEY-JUNGLE STORES OF AMERICA, INC.
By: /s/ Roger P. Friou
---------------------------------
Name: Roger P. Friou
-----------------------------
Title: President
-----------------------------
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Exhibit (c)(8)
MANAGEMENT INCENTIVE COMPENSATION PLAN DESCRIPTION
Executive officers are eligible for incentive awards. These awards are
not in addition to market level compensation but are designed to place a
significant part of an executive's annual compensation at risk. The Chief
Executive Officer's award is based on corporate performance measured against
pre-tax profit objectives set by the Committee at the beginning of the year.
Awards to other executive officers are based on the same corporate
performance measure and on individual achievement of specified objectives
established by the Chief Executive Officer at the beginning of the year.
Targeted awards are a percentage of the executive officer's base salary
ranging from 15% to 50% based on the officer's position and salary grade.
Awards based on Company performance may range from 25% of target for
exceeding a threshold profit level to a maximum award of 50% greater than
target for achieving or exceeding a maximum pre-tax profit goal. At year-end,
individual performance of the other executive officers is evaluated against
pre-established objectives. Mr. Morrow was not eligible to receive an annual
incentive award for fiscal year 1996.
The combination of base salary and an annual incentive award are
intended to provide an executive the opportunity to earn total compensation
slightly above the 50th percentile of the competitive marketplace if Company
and individual goals are achieved.
<PAGE>
AMENDED AND RESTATED
1987 RESTRICTED STOCK PLAN
OF
DELCHAMPS, INC.
1. PURPOSE OF PLAN.
The purpose of the Plan is to promote the best interests of Delchamps, Inc.
and its shareholders by providing key employees of Delchamps, Inc. and its
subsidiaries with an opportunity to acquire a proprietary interest in Delchamps,
Inc. thereby providing a stronger incentive for them to exert maximum effort for
the continued success and growth of Delchamps, Inc. In addition, the opportunity
to acquire a proprietary interest in Delchamps, Inc. will aid in attracting and
retaining key personnel.
2. DEFINITIONS.
Unless the context otherwise requires, the following terms shall have the
meanings set forth below:
(a) 'Company" shall mean Delchamps, Inc., an Alabama Corporation.
(b) 'Subsidiary' shall mean a subsidiary corporation of the Company as
defined in Section 425(f) of the Internal Revenue Code of 1986.
(c) 'Plan" shall mean the 1987 Restricted Stock Plan of the Company.
(d) "Share" or "Shares" shall mean the $.01 par value Common Stock of
the Company.
(e) 'Purchase Right" shall mean a right to purchase Shares granted
pursuant to Paragraph 6 of the Plan.
(f) 'CER" shall mean a cash equivalent right granted in connection with
a Purchase Right pursuant to Paragraph 7 of the Plan.
(g) 'Employees" shall mean those individuals who are full-time employees
of the Company or its Subsidiaries, from among whom the Committee may select
the holders of Purchase Rights.
(h) 'Holder" shall mean an Employee to whom a Purchase Right has been
granted.
(i) 'Purchaser" shall mean a Holder who has exercised a Purchase Right
and purchased Shares pursuant thereto.
(j) 'Committee" shall mean the Committee of the Board of Directors
constituted as provided in Paragraph 4 of the Plan.
(k) 'Purchase Right Agreement" shall mean the agreement between the
Company and an Employee whereby a Purchase Right is granted to such
Employee.
3. SHARES RESERVED UNDER PLAN.
The aggregate number of Shares which may be sold under the Plan shall not
exceed 150,000 Shares, which may be Treasury Shares or authorized but unissued
Shares, or a combination of the two, subject to adjustment as provided in
paragraph 12 hereof. Any Shares subject to a Purchase Right which expires or
terminates for any reason (whether by voluntary surrender, lapse of time,
termination of employment or otherwise) and is unexercised as to such Shares and
any Shares repurchased by the Company pursuant to the restriction provisions set
forth in Paragraph 6, may again be the subject of a Purchase Right under the
Plan.
No Employee shall be eligible to receive under this Plan Purchase Rights for
Shares aggregating more than fifteen percent (15%) of the Shares reserved under
the Plan.
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4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee shall consist
of not fewer than two members of the Board of Directors of the Company, each of
whom qualifies as a "non-employee" director under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended.
The Committee shall have sole authority in its discretion, but always
subject to the express provisions of the Plan, to determine the purchase price
of the Shares covered by each Purchase Right, the Employees to whom and the time
or times at which Purchase Rights shall be granted, the number of Shares to be
subject to each Purchase Right, and the extent to which Purchase Rights may be
exercised in installments; to interpret the Plan; to prescribe, amend, and
rescind rules and regulations pertaining to the Plan; to determine the terms and
provisions of the respective Purchase Right Agreements; and to make all other
determinations and interpretations deemed necessary or advisable for the
administration of the Plan. The Committee's determination of the foregoing
matters shall be conclusive and binding on the Company, all Employees, all
Holders, all Purchasers and all other persons.
5. ELIGIBILITY.
Only Employees shall be eligible to receive Purchase Rights under the Plan.
In determining the Employees to whom Purchase Rights shall be granted and the
number of Shares to be covered by each Purchase Right, the Committee may take
into account the nature of the services rendered by the respective Employees,
their present and potential contributions to the success of the Company, and
such other factors as the Committee in its discretion shall deem relevant. An
Employee who has been granted a Purchase Right under the Plan may be granted
additional Purchase Rights under the Plan if the Committee shall so determine.
The Company shall effect the granting of Purchase Rights under the Plan by
execution of Purchase Right Agreements in such form as shall be approved by the
Committee. No Purchase Right may be granted under the Plan to any person who is
then a member of the Committee.
6. PURCHASE RIGHTS.
(a) Grant of Purchase Rights. The Committee may grant Purchase Rights under
the Plan to such Employees as it may determine, and a Purchase Right Agreement
shall be executed by the Company to effect each grant of a Purchase Right. Any
Purchase Right granted under this Plan may include a cash equivalent right,
which may be granted either at the time of grant of the Purchase Right or
subsequent thereto, as provided in Paragraph 7.
(b) Exercise. The Committee in its absolute discretion shall determine the
period during which a Holder shall have the right to exercise a Purchase Right
granted under this Plan; provided, however, that such period shall in no event
exceed sixty (60) days after the date of grant of the Purchase Right by the
Committee. A Holder may exercise a Purchase Right as to all or any part of the
Shares subject to such Purchase Right. Shares sold pursuant to Purchase Rights
shall sometimes be referred to hereinafter as "Restricted Shares."
(c) Purchase Price. The purchase price at a which each Share shall be sold
to employees pursuant to Purchase Rights granted hereunder shall be determined
by the Committee, but shall not be less than par nor more than ten percent (10%)
of the then fair market value per share, as determined by the Committee in
conformity with applicable laws and regulations of the Securities and Exchange
Commission.
(d) Restrictions. All Shares sold pursuant to Purchase Rights shall be
subject to the following restrictions:
(1) In the event that a Purchaser shall sell, assign, convey, donate,
bequeath, pledge, transfer or otherwise dispose of or encumber any
Restricted Shares, the Company shall have the right and option, in addition
to such other rights and remedies available to it (including the right to
restrain or set aside such transfer), exercisable by written notice to the
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transferee thereof at any time within ninety (90) days after its discovery
of such transaction, to repurchase for cash all or any part of such
Restricted Shares at an amount equal to the price paid for such Restricted
Shares by the Purchaser (the "Repurchase Price").
(2) The nature and extent of any additional restrictions and the period
for which shares shall be restricted shall be determined by the Committee;
provided, however, that such periods of restriction shall not be less than
one nor more than ten consecutive years measured from the day of the month
in which such shares are purchased (the "Restricted Period"). Except as
otherwise determined by the Committee, the Restricted Period shall be ten
years and the restrictions imposed upon Restricted Shares shall
automatically be removed as to one-fifth of the aggregate number of
Restricted Shares so purchased upon the expiration of each of the sixth,
seventh, eighth, ninth and tenth years after the date of purchase of such
Restricted Shares.
(3) In the event that a Purchaser's employment with the Company or a
Subsidiary is terminated for any reason, the Company shall have the right
for ninety (90) days following the termination of such employment to buy for
cash all or any part of the Restricted Shares purchased hereunder by such
terminating Purchaser which on the date of such termination of employment
are subject to the restrictions imposed thereon by virtue of this
Subparagraph (d) and such Restricted Shares shall be repurchased at the
Repurchase Price. The right to repurchase Restricted Shares granted to the
Company in this Subparagraph (d)(3) shall be exercisable by the Committee
and it may decide whether or not to exercise each such right in its sole
discretion.
(4) In the event a Purchaser hereunder terminates his employment with
the Company or a Subsidiary because of normal retirement (as defined in the
Company's Retirement Plan), death, disability (as defined in Section 105 (d)
(4) of the Internal Revenue Code), or early retirement with the consent of
the Committee, then the Company shall not have the right to repurchase any
of the Restricted Shares pursuant to Subparagraph (d) (3) and all such
restrictions which would otherwise be in effect by virtue of this
Subparagraph (d) shall immediately terminate.
(5) Prior to the lapse, expiration or other termination of the
Restricted Period, Purchasers shall have the right to vote Restricted
Shares, the right to receive and retain all regular cash dividends (and such
other distributions as the Committee may designate) paid or distributed on
Shares and all other rights as a holder of Shares, except that the Company
will retain custody of the stock certificates representing Restricted Shares
during the Restricted Period.
(6) Notwithstanding anything to the contrary herein contained, the
restrictions provided in this Subparagraph 6(d) shall automatically cease as
of the effective date of any dissolution of the Company or any merger or
consolidation in which the Company is a party but not the surviving
corporation, or any other transaction or series of transactions which has a
reasonable likelihood or a purpose of causing the Shares to (a) cease to be
registered under Section 12 of the Securities Exchange Act of 1934; or (b)
neither be listed on any national securities exchange nor be authorized to
be quoted on an inter-dealer quotation system of any registered national
securities association; and as of the effective date or time of any such
transaction all Restricted Shares shall be treated as ordinary Shares of the
Company and the holders thereof shall be entitled to receive the same
consideration thereupon payable to the holders of outstanding shares of the
Company.
7. CASH EQUIVALENT RIGHTS.
A cash equivalent right ("CER") may be granted by the Committee in
connection with the award of Purchase Rights under the Plan. A CER granted under
the Plan shall entitle a Purchaser of Restricted Shares to a cash payment in an
amount and at such time as set forth under Subparagraph 7(a). The Committee may
grant a CER at any time from the date of grant of a Purchase Right, through and
including the time of the exercise of a Purchase Right, or at any time
3
<PAGE>
thereafter up to, and including, any date thirty (30) days after the date of the
lapse, expiration or other termination of the restrictions on Restricted Shares
imposed under Subparagraph 6(d).
(a) Amount and Time of Payment. Not later than ninety (90) days after the
date of the lapse, expiration or other termination of the restrictions on
Restricted Shares imposed under Subparagraph 6(d), or if a Purchaser shall make
an election under Section 83(b) of the Internal Revenue Code as to Restricted
Shares purchased hereunder, not later than ninety (90) days after the date of
notice to the Company of such election, the holder of a CER shall be entitled to
receive from the Company a cash amount up to 100% of the excess of the market
price per Share on the Recognition Date over the price paid by the Purchaser,
multiplied by the number of Restricted Shares so released from restrictions or
as to which a Section 83(b) election is made. The "Recognition Date" shall be
the date of the lapse, expiration or other termination of the restrictions on
Restricted Shares purchased hereunder, except that in the case of an election by
the Purchaser under Section 83(b) of the Internal Revenue Code the "Recognition
Date" shall be the date of purchase of the Restricted Shares as to which such
election is made. The market price per Share on the Recognition Date for a CER
shall be the mean of the closing bid and asked prices of a Share in the
over-the-counter market as quoted on NASDAQ for such Recognition Date, or such
other market price as the Committee may determine in conformity with pertinent
law and regulations of the Treasury Department.
(b) Repurchase of Shares. In the event of a Purchaser's termination of
employment with the Company or a Subsidiary which under the Plan shall entitle
the Company to buy all or any part of the Restricted Shares purchased by the
terminating Purchaser, and the Company's exercise of such right to repurchase
such Restricted Shares, the CERs theretofore granted to such Purchaser with
respect to such repurchased Restricted Shares shall automatically be canceled
forthwith and have no further force or effect; provided, however, that any CER
cash amounts paid prior to such termination as a result of a Section 83(b)
election under the Internal Revenue Code by the Purchaser shall not be
recoverable by the Company, and the Purchaser shall not be liable therefor. The
filing by the Purchaser of an election under Section 83(b) as to Restricted
Shares purchased under the Plan shall in no way affect or impair the Company's
right to repurchase such Restricted Shares as provided in Subparagraph 6(d),
above.
(c) Notice of Election. If a Purchaser makes an election under Section 83(b)
as to any of the Restricted Shares for which the purchaser has been granted a
CER, such Purchaser shall be entitled to payment of such CER only if the
Purchaser notified the Secretary of the Company of such election within thirty
(30) days of such election.
8. TERMINATION OF EMPLOYMENT.
(a) Any Holder whose employment with the Company or a Subsidiary is
terminated due to retirement on such Holder's normal retirement date (as defined
in the Company's Retirement Plan) or due to early retirement with the consent of
the committee shall have:
The continuing right to exercise any Purchase Right granted hereunder
after the date of such termination of employment; provided, however, that no
Purchase Right shall be exercisable subsequent to sixty (60) days after its
date of grant,
provided that on the date of termination of employment the Holder then had a
present right to exercise such Purchase Right.
(b) Any Holder whose employment with the Company or a Subsidiary is
terminated due to disability (as defined in Section 105(d)(4) of the Internal
Revenue Code) shall have:
The continuing right to exercise any Purchase Right granted hereunder
after the date of such termination of employment; provided, however, that no
Purchase Right shall be exercisable subsequent to sixty (60) days after its
date of grant, provided that on the date of termination of employment the
Holder then had a present right to exercise such Purchase Right.
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<PAGE>
(c) In the event of the death of a Holder while in the employ of the Company
of a Subsidiary, any Purchase Right theretofore granted to such Holder shall be
exercisable:
(1) For the remaining term of a Purchase Right, but in no event later
than sixty (60) days from its date of grant;
(2) Only by the personal representative, administrator or other
representative of the estate of the deceased Holder or by the person or
persons to whom the deceased Holder's rights under the Purchase Right shall
pass by will or the laws of descent and distribution; and
(3) Only to the extent that the deceased Holder would have been entitled
to exercise such Purchase Right on the date of the Holder's death.
(d) If a Holder's employment is terminated for a reason other than those
specified above, to the extent a Purchase Right is not effectively exercised
prior to such termination, it shall Lapse immediately upon termination.
(e) The Plan shall not confer upon any Holder any right with respect to
continuation of employment by the Company or a Subsidiary, nor shall it
interfere in any way with the right of the Company or such Subsidiary to
terminate any Holder's employment at any time.
9. TRANSFERABILITY.
Purchase Rights and CERs granted to a Holder under this Plan shall be not
transferable and during the lifetime of the Holder shall be exercisable only by
the Holder. A Holder shall have the right to transfer Purchase Rights and CERs
granted to such Holder upon such Holder's death, either by the terms of such
Holder's will or under the laws of descent and distribution, subject to the
limitations set forth in Paragraph 8, and all such distributees shall be subject
to all terms and conditions of this Plan to the same extent as would the Holder
if still alive, except as otherwise expressly provided herein.
10. EXERCISE.
A Purchase Right Agreement may provide for exercise of the Purchase Right in
such amounts and at such times as shall be specified therein; provided, however,
except as provided in Paragraph 8, no Purchase Right may be exercised unless the
holder is then in the employ of the Company or a Subsidiary and shall have been
continuously so employed since its date of grant. A Purchase Right granted under
the Plan shall not be exercisable at any time at which the purchase price (as
provided in Subparagraph 6 (c)) is greater than ten percent (10%) of the then
fair market value per Share, as determined by the Committee in conformity with
applicable laws and regulations of the Securities and Exchange Commission. A
Purchase Right shall be exercisable by a Holder's giving written notice of
exercise to the Secretary of the Company accompanied by payment of the required
purchase price. The Company shall have the right to delay the issue or delivery
of any Shares under the Plan until (a) the completion of such registration or
qualification of such Shares under any federal of state law, ruling or
regulation as the company shall determine to be necessary or advisable, and (b)
receipt from the Holder of such documents and information as the Committee may
deem necessary or appropriate in connection therewith.
11. SECURITIES LAWS.
Each Purchase Right Agreement shall contain such representations, warranties
and other terms and conditions as shall be necessary in the opinion of counsel
to the Company to comply with all applicable federal and state securities laws.
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12. ADJUSTMENT PROVISIONS.
If the Company shall effect a subdivision or consolidation of Shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction in the number of Shares outstanding, without receiving
consideration therefor in money, services or property, the number of Shares then
remaining subject to or available for Purchase Rights (including Shares as to
which Purchase Rights have been granted but which remain unexercised, Restricted
Shares and Shares reserved for Purchase Rights) and the amounts payable for CERs
shall be appropriately adjusted by the Company's Board of Directors upon the
recommendation of the Committee, subject to the express terms and conditions of
this Plan.
Subject to any required action by the Company's stockholders, if the Company
shall be a party to any merger or consolidation in which the Company is not the
surviving corporation or any other transaction or series of transactions which
has a reasonable likelihood or a purpose of causing the Shares to be neither
listed on any national securities exchange nor authorized to be quoted on an
inter-dealer quotation system of any registered national securities association,
or registered under Section12 of the Securities Exchange Act of 1934, each
outstanding Purchase Right shall pertain to and apply to the securities which a
Holder of the number of Shares subject to the Purchase Right would have been
entitled to receive pursuant to such transaction, with any such adjustment in
the exercise price as the Committee shall deem appropriate. A dissolution of the
Company or a sale of all or substantially all of the assets and property of the
Company shall cause each outstanding Purchase Right to terminate forthwith;
provided, however, that the Holders of outstanding Purchase Rights may exercise
such Purchase Rights to the extent exercisable immediately prior to such
dissolution or sale.
13. TIME OF GRANTING.
Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or the stockholders of the Company and no action taken
by the Committee shall constitute the granting of any Purchase Right hereunder.
The granting of a Purchase Right pursuant to the Plan shall take place only when
a Purchase Right Agreement shall have been duly executed by and on behalf of the
Company.
14. TAXES.
The Company shall be entitled to pay or withhold the amount of any tax which
it believes is required as a result of the grant or exercise of any Purchase
Right or CER under the Plan, and the Company may defer making delivery with
respect to cash and/or Shares obtained pursuant to exercise of any Purchase
Right or CER until arrangements satisfactory to it have been made with respect
to any such withholding obligations.
At any time that an Employee is required to pay to the Company an amount
required to be withheld under the applicable income tax laws in connection with
the the lapse of restrictions on Restricted Shares issued under the Plan, the
Employee may, subject to the Committee's right of disapproval, satisfy this
obligation in whole or in part by electing (the "Election") to have the Company
withhold Shares having a value equal to the amount required to be withheld. The
value of the Shares withheld shall be based on the Fair Market Value of the
Shares on the date that the amount of tax to be withheld shall be determined
(the "Tax Date").
The Committee may disapprove of any Election or may suspend or terminate the
right to make Elections. If a participant makes an election under Section 83(b)
of the Internal Revenue Code with respect to Restricted Shares, an Election is
not permitted to be made.
An Employee may also satisfy his or her total tax liability related to
Restricted Shares by delivering Shares that have been owned by the participant
for at least six months. The value of the Restricted Shares delivered shall be
based on the Fair Market Value of the Shares on the Tax Date.
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15. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective, upon approval of the Company's Board of
Directors, on September 1, 1987, subject to ratification of the Plan by the vote
of the holders of a majority of Shares present or represented and entitled to
vote at an annual or special meeting of the Company duly called and held.
16. TERMINATION AND AMENDMENT.
Unless the Plan shall theretofore have been terminated as hereinafter
provided, it shall terminate on, and no Purchase Right or CER hereunder shall be
granted after August 31, 1997. The Plan may be terminated, modified or amended
by the shareholders of the Company. The Board of Directors of the Company may
also terminate the Plan or make such modifications or amendments thereof as it
shall deem advisable, including such modifications or amendments as it shall
deem advisable in order to conform to any law or regulation applicable thereto;
provided, however, that the Board of Directors may not, unless otherwise
permitted under the federal securities laws, without further approval of the
holders of a majority of the Shares voted at any annual or special meeting at
which a quorum is present and voting, adopt any amendment of the Plan which (a)
materially increases the number of Shares which may be issued under the Plan,
(b) materially increases the benefits accruing to Employees under the Plan, or
(c) materially modifies the requirements for eligibility for participation in
the Plan. No termination, modification or amendment of the Plan may, without the
consent of the Holder, adversely affect the rights of such Holder under an
outstanding Purchase Right then held by the Holder.
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CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between Delchamps, Inc., an Alabama corporation (the
"Company"), and (the "Executives") dated as of the
-----------------
day of 1994.
- -------- ---------
The Board of Directors of the Company (the "Board"), has determined that
it is in the best interest of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section l(b)) on
which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and
if the Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination of employment.
<PAGE>
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"), the Change
of Control Period shall be automatically extended so as to terminate three
years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
2. Change of Control. For the purposes of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company or any of its subsidiaries, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iv) any acquisition by any
corporation with respect to which, following such acquisition, more than 60%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in substantially
<PAGE>
the same proportions as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; provided further, however, that
notwithstanding anything in the foregoing definition of beneficial ownership
to the contrary, Outstanding Company Common Stock or Outstanding Company
Voting Securities beneficially owned by any individual or entity who is a
party to the Agreement Among Shareholders dated as of October 14, 1988 or any
renewal or extension of such agreement (such agreements being referred to as
the "Stockholders' Agreements") shall not be deemed to be beneficially owned
by any other individual or entity who is a party to the Stockholders'
Agreements by virtue of the terms of such Stockholders' Agreements; or
(b) A development whereby the individuals who, as of the date hereof
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
<PAGE>
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Effective Date and
ending on the third anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at
<PAGE>
a time during the 90-day period immediately preceding the Effective Date and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any office
or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary, payable in equal monthly
installments, at least equal to twelve times the highest monthly base salary
paid or payable to the Executive by the Company and its affiliated companies
during the twelve-month period immediately preceding the month in which the
Effective Date occurs ("Annual Base Salary"). During the Employment Period,
the Annual Base Salary shall be reviewed at least annually and shall be
<PAGE>
increased at any time and from time to time as shall be substantially
consistent with increases in base salary generally awarded in the ordinary
course of business to other peer executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the term Annual
Base Salary as utilized in this Agreement shall refer to Annual Base Salary
as so increased. As used in this Agreement, the term "affiliated companies"
shall include any company controlled by, controlling or under common control
with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period,
an annual bonus (the "Annual Bonus") in cash at least equal to the average
annual bonus paid or payable to the Executive by the Company and its
affiliated companies in respect of the three fiscal years (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) immediately preceding the fiscal year in which the Effective
Date occurs (the "Recent Average Bonus"). Each such Annual Bonus shall be
paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Special Bonus. In addition to Annual Base Salary and Annual Bonus
payable as hereinabove provided, if the Executive remains employed with the
Company and its affiliated companies through the first anniversary of the
Effective Date, the Company shall pay to the Executive a special bonus (the
"Special Bonus") in recognition of the Executive's services during the
crucial one-year transition period following the Change of Control in cash
equal to the sum of (A) the Executive's Annual Base Salary and (B) the
greater of (1) the Annual Bonus paid or payable to the Executive (and
annualized for any fiscal year consisting of less than twelve full months
<PAGE>
or for which the Executive has been employed for less than twelve full
months) for the most recently completed fiscal year during the Employment
Period, if any, and (2) the Recent Average Bonus (such greater amount shall
be hereinafter referred to as the "Highest Annual Bonus"). The Special Bonus
shall be paid no later than 30 days following the first anniversary of the
Effective Date.
(iv) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect
at any time during the 90-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally to other peer
executives of the Company and its affiliated companies at any time after the
Effective Date.
(v) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
<PAGE>
programs in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally to other peer executives of the Company
and its affiliated companies at any time after the Effective Date.
(vi) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices
and procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
with respect to other peer executives of the Company and its affiliated
companies at any time thereafter.
(vii) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally with respect to other peer executives of the Company and its
affiliated companies at any time thereafter.
(viii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally with respect to other peer executives
of the Company and its affiliated companies at any time thereafter.
(ix) Vacation. During the Employment Period, the Executive shall be
<PAGE>
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies
as in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally with respect to other peer executives of
the Company and its affiliated companies at any time thereafter.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during
the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean (i) repeated violations by the Executive of the Executive's
obligations under Section 4(a) of this Agreement (other than as a result of
incapacity due to physical or mental illness) which are demonstrably willful
and deliberate on the Executive's part, which are committed in bad faith or
without reasonable belief that such violations are in the best interest of the
<PAGE>
Company and which are not remedied in a reasonable period of time after
receipt of written notice from the Company specifying such violations or (ii)
the conviction of the Executive of a felony involving moral turpitude.
(c) Good Reason: Window Period. The Executive's employment may be
terminated (i) during the Employment Period by the Executive for Good Reason
or (ii) during the Window Period by the Executive without any reason. For
purposes of this Agreement, the "Window Period" shall mean the 30-day period
immediately following the first anniversary of the Effective Date. For
purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office or
location other than that described in Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
<PAGE>
(v) any failure by the Company to comply with and satisfy Section ll(c)
of this Agreement, provided that such successor has received at least ten
days prior written notice from the Company or the Executive of the
requirements of Section ll(c) of the Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive without any reason during the Window Period or for Good
Reason, shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b) of this Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date on
<PAGE>
which the Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Good Reason or
during the Window Period; Other Than for Cause. Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall
terminate employment either for Good Reason or without any reason during the
Window Period:
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts
(such aggregate shall be hereinafter referred to as the "Special Termination
Amount"):
A. the sum of (1) the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) the product of (x) the
Highest Annual Bonus and (y) a fraction, the numerator of which is the number
of days in the current fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) the Special Bonus, if due to the
Executive pursuant to Section 4(b)(iii) of this Agreement, to the extent not
theretofore paid and (4) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2), (3) and (4) shall be
hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (l) three and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the Highest Annual Bonus;
provided, however, that such amount shall be paid in lieu of, and the
Executive hereby waives the right to receive, any other amount of severance
relating to salary or bonus continuation to be received by the Executive
<PAGE>
upon such termination of employment under any severance plan, policy or
arrangement of the Company; and
(ii) for the remainder of the Employment Period, or such longer period
as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 4(b)(v) of this
Agreement if the Executive's employment had not been terminated in accordance
with the most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer executives
and their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
with respect to other peer executives of the Company and its affiliated
companies and their families at any time thereafter, provided, however, that
if the Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable
period of eligibility. For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained employed
until the end of the Employment Period and to have retired on the last day of
such period; and
(iii) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required
to be paid or provided or which the Executive is eligible to receive pursuant
to this Agreement and any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
<PAGE>
without further obligations to the Executive's legal representatives under
this Agreement, other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. All Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable benefits provided by
the Company and any of its affiliated companies to surviving families of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to family death benefits, if any,
as in effect with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive's family, as in effect
on the date of the Executive's death with respect to other peer executives of
the Company and its affiliated companies and their families.
(c) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or provision of Other
Benefits. All Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Executive shall be entitled
after the Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
<PAGE>
generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously deferred by the
Executive, in each case to the extent theretofore unpaid, and the timely
payment or provision of Other Benefits. If the Executive terminates
employment during the Employment Period, excluding a termination either for
Good Reason or without any reason during the Window Period, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits; in
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination.
7. Non-Exclusivity of Rights. Except as provided in Sections 6(a)(i)(B)
and 6(a)(ii) of this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
<PAGE>
defense or other claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and,
except as provided in Section 6(a)(ii) of this Agreement, such amounts shall
not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
<PAGE>
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made
by Peat, Marwick Main & Co. (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within
15 business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive
and the Company shall mutually appoint another accounting firm to make the
determinations required hereunder. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's applicable
federal income tax return would not result in the imposition of a negligence
or similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
<PAGE>
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
<PAGE>
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 9(c),
a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
<PAGE>
forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representative.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
<PAGE>
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Alabama without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal representative.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
At the home address reflected in the Company's personnel records.
If to the Company:
Delchamps, Inc.
305 Delchamps Drive
P. O. Box 1668
Mobile, Alabama 36633
Attention: The President
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
<PAGE>
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, may be terminated by either the Executive
or the Company at any time. Moreover, if prior to the Effective Date the
Executive's employment with the Company terminates, then the Executive shall
have no further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
---------------------------
[Executive]
DELCHAMPS, INC.
By:
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