UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 29, 2001 Commission file number 1-5039
WEIS MARKETS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 24-0755415
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
1000 South Second Street, Sunbury, PA 17801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 570-286-4571
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, no par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
The aggregate market value of Common Stock held by non-affiliates of the Registrant is approximately $396,014,000. Shares of common stock outstanding as of February 20, 2002 - 27,203,707.
The index to Exhibits is located in Part IV, Item 14(c).
DOCUMENTS INCORPORATED BY REFERENCE:
Selected portions of the Weis Markets, Inc. definitive proxy statement dated March 8, 2002 are incorporated by reference in Part III of this Form 10-K.
Weis Markets, Inc.
PART I
Item 1. Business:
(a) Weis Markets, Inc. is a Pennsylvania business corporation
formed in 1924. The company is engaged principally in the
retail sale of food and pet supplies in Pennsylvania and
surrounding states. There was no material change in the nature
of the company's business during fiscal 2001.
(b) The principal business activity that the company has been
engaged in for the last five fiscal years is the retail sale of
food.
(c)(1)(i) The company operates 132 retail food markets in Pennsylvania,
23 in Maryland, 4 in New Jersey, 2 in New York, 1 in Virginia,
and 1 in West Virginia. The stores trade under the name Weis
Markets, except for 18 Pennsylvania stores which trade as Mr.
Z's Food Mart, 6 Pennsylvania stores that trade as King's
Supermarkets, 3 Pennsylvania stores which trade as Save-A-Lot,
3 Pennsylvania stores which trade as Scot's Lo Cost and 1
Pennsylvania store which trades as Cressler's Marketplace.
During the past fiscal year, 2 new stores were opened. One
store was closed for financial reasons and 1 store was closed
and is in the process of being rebuilt. SuperPetz, a pet
supply chain, operated 2 stores in Alabama, 1 store in Georgia,
1 store in Indiana, 1 store in Kentucky, 1 store in Maryland, 2
stores in Michigan, 8 stores in Ohio, 1 store in North
Carolina, 7 stores in Pennsylvania, 5 stores in South Carolina,
and 4 stores in Tennessee. The company supplies its retail
stores from distribution centers in Sunbury, Northumberland,
and Milton, Pennsylvania. The percentage of net sales
contributed by each class of similar products for each of the
five fiscal years ended December 29, 2001 was:
Year Grocery Meat Produce Pharmacy Pet Supply Other
1997 56.00 13.84 11.06 5.25 4.43 9.42
1998 55.63 13.74 11.60 5.94 4.01 9.08
1999 55.56 13.88 11.97 6.62 3.27 8.70
2000 57.13 15.09 12.65 7.75 3.15 4.23
2001 57.28 15.41 12.84 8.82 3.23 2.42
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(c)(1)(vi) The company has its own distribution centers located within a 15 mile radius of its corporate offices in Sunbury, Pennsylvania. The company is required to use a significant amount of working capital to provide for the required amount of inventory to meet demand for its products through efficient use of buying power and effective utilization of space in the warehouse facilities.
(c)(1)(x) The business of the company is highly competitive. The number of competitors and the amount of competition experienced by the company's stores vary by market area. National, regional and local food chains, as well as independent food stores comprise the company's principal competition, although the company also faces substantial competition from convenience stores, membership warehouse clubs, specialty retailers, supercenters and large-scale drug and pharmaceutical chains. The company competes based on price, quality, location and service.
(c)(1)(xiii) The company has approximately 19,000 employees.
Item 2. Properties:
The company owns and operates 81 of its retail food stores, and leases and operates 82 stores under operating leases for varying periods of time up to the year 2024. SuperPetz leases all 33 of its retail store locations. The company owns all of its trade fixtures and equipment in its stores and several parcels of vacant land which are available as locations for possible future stores or other expansion.
Weis Markets, Inc.
The company owns and operates one warehouse in Milton, Pennsylvania of approximately 1,109,000 square feet, and one in Northumberland, Pennsylvania totaling approximately 76,000 square feet. The company also owns one warehouse in Sunbury, Pennsylvania totaling approximately 551,000 square feet of which 290,000 is sublet. The company operates an ice cream plant, meat processing plant and milk processing plant in the remaining 261,000 square feet at its Sunbury location.
Item 3. Legal Proceedings:
Neither the company nor any subsidiary is presently a party to, nor is any of their property subject to, any pending legal proceedings, other than routine litigation incidental to the business.
Item 4. Submission of Matters to a Vote of Security Holders:
There were no matters submitted to a vote of security holders during the fourth quarter of 2001.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters:
The trading symbol for the company's common stock on the NYSE is "WMK." The approximate number of shareholders including individual participants in security positions listings on December 29, 2001 as provided by the company's transfer agent was 5,983. The following table sets forth, for the periods indicated, the high and low stock prices for the company's common stock as reported by NYSE and the dividends paid per share.
2001 2000
Stock Price Dividend Stock Price Dividend
Quarter High Low Per Share High Low Per Share
First $ 38.25 $ 32.48 $ .27 $ 45.25 $ 34.19 $ .26
Second 35.70 31.45 .27 35.81 32.00 .26
Third 35.30 25.80 .27 37.13 32.44 .27
Fourth 29.76 26.52 .27 42.75 34.31 .27
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Item 6. Selected Financial Data:
The following selected historical financial information has been derived from the company's audited consolidated financial statements. This information should be read in connection with the company's Consolidated Financial Statements and the Notes thereto, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in Item 7.
Weis Markets, Inc.
Five Year Review of Operations
52 Weeks 53 Weeks 52 Weeks 52 Weeks 52 Weeks
(dollars in thousands, Ended Ended Ended Ended Ended
except per share amounts) Dec. 29, 2001 Dec. 30, 2000 Dec. 25, 1999 Dec. 26, 1998 Dec. 27, 1997
Net sales $ 1,988,246 $ 2,060,976 $ 2,004,947 $ 1,867,492 $ 1,818,816
Costs and expenses 1,925,306 1,980,893 1,911,912 1,791,066 1,733,686
_________________________________________________________________________________________________________
Income from operations 62,940 80,083 93,035 76,426 85,130
Other income and expense 18,907 36,729 30,980 58,072 33,452
_________________________________________________________________________________________________________
Income before provision
for income taxes 81,847 116,812 124,015 134,498 118,582
Provision for income taxes 31,792 42,989 44,290 50,815 40,388
_________________________________________________________________________________________________________
Net income 50,055 73,823 79,725 83,683 78,194
Retained earnings,
beginning of year 1,069,986 1,040,354 1,003,170 960,419 921,572
_________________________________________________________________________________________________________
1,120,041 1,114,177 1,082,895 1,044,102 999,766
Stock purchase
and cancellation 434,317 --- --- --- ---
Cash dividends 37,202 44,191 42,541 40,932 39,347
_________________________________________________________________________________________________________
Retained earnings,
end of year $ 648,522 $ 1,069,986 $ 1,040,354 $ 1,003,170 $ 960,419
_________________________________________________________________________________________________________
Weighted-average
shares outstanding 32,298,696 41,695,347 41,718,188 41,775,991 41,842,583
_________________________________________________________________________________________________________
Cash dividends per share $ 1.08 $ 1.06 $ 1.02 $ .98 $ .94
_________________________________________________________________________________________________________
Basic and diluted
earnings per share $ 1.55 $ 1.77 $ 1.91 $ 2.00 $ 1.87
_________________________________________________________________________________________________________
Working capital $ 102,331 $ 496,906 $ 481,728 $ 489,475 $ 471,562
Total assets $ 704,185 $ 1,085,904 $ 1,058,221 $ 1,029,202 $ 971,752
Long-term obligations $ 25,000 $ --- $ --- $ --- $ ---
Shareholders' equity $ 525,364 $ 947,886 $ 918,477 $ 890,641 $ 847,333
Number of grocery stores 163 163 163 158 154
Number of pet supply stores 33 33 34 36 43
4
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Weis Markets, Inc.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations:
Results of Operations
Sales of $1.988 billion generated during the 52-week fiscal year ended December 29, 2001 compared to sales of $2.061 billion in the 53 weeks of fiscal 2000 and $2.005 billion in the 52 weeks of fiscal 1999. These sales amounts reflect a decrease of 3.5% in fiscal 2001 compared to 2000 and an increase of 2.8% in 2000 compared to 1999. Same store sales decreased 1.5% in 2001 and increased 2.5% and 4.0% in 2000 and 1999, respectively.
Total sales in 2001 compared to the prior year decreased as a result of the sale of the company's regional food service division in the second quarter of 2000, an additional week of business in 2000, a weak economy and increasing competitive activity. Excluding sales from year-over-year comparisons that were generated from the food service division and from the additional week in 2000, the company's sales increased .2%. Adjusting for the extra week of sales, same store sales increased .5% in 2001 and .4% in 2000.
Gross profit as a percentage of sales increased from 25.4% in 1999 to 26.3% in 2000 and to 26.7% in 2001. Gross profit dollars realized on sales in 2001 decreased $11.7 million, or 2.2%, to $531.2 million compared to 2000 and increased $34.3 million in 2000 compared to 1999. Over the past three years, the gross profit rate was impacted by the sale of the food service division and by LIFO inventory adjustments. The food service division's lower gross profit rate slightly decreased the company's overall gross profit percentage in prior years. Although the company cannot precisely measure the effects of inflation or deflation upon its operations because of changes in product mix, pricing and competitive influences, it does not believe that either inflation or deflation have had a material effect on sales or results of operations for the past three years.
Operating, general and administrative expenses in 2001 totaled $468.2 million or 23.6% of sales, compared to 22.4% in 2000 and 20.7% in 1999. On May 7, 2001, the company repurchased approximately 14.5 million shares of its common stock from the family of the late Sigfried Weis for $434.3 million in cash. The company incurred $5.3 million in non-recurring expenses associated with this transaction, accounting for a substantial portion of the overall increase in operating expenses in 2001. The remaining increase in operating expenses was attributable to rising labor and benefit costs, building and equipment repairs and advertising expenditures.
In 2001, the company's investment income of $9.9 million or .5% of sales, decreased $8.7 million or 46.9% compared to the same period a year ago. The company sold the majority of its investment portfolio in the first half of 2001 in order to complete the all cash stock repurchase transaction. In 2000, the company earned $18.6 million in investment income, a $1.3 million decrease from 1999. The company realized gains on the sale of marketable securities of $.6 million in 2001, $1.3 million in 2000 and $3.5 million in 1999.
The company's other income and expense is generated from rental payments, coupon-handling fees, cardboard salvage, gain or loss on the sale of fixed assets and interest expense. Other income in 2001 of $10.4 million or .5% of sales, decreased $7.7 million or 42.6% compared to 2000. In 2000, the company realized $5.8 million in other income from the sale of its food service division. The remaining difference between the years presented is due largely to gains or losses realized on closed store facilities.
Interest expense in 2001 totaled $1.4 million compared to no interest expense in 2000 or 1999. The company entered into a bank credit agreement in fiscal 2001 in order to complete the previously mentioned stock repurchase transaction and to provide funds for general corporate purposes.
The company's combined federal and state effective tax rate was 38.8% in 2001, 36.8% in 2000 and 35.7% in 1999. The tax rate increased in 2001 after the company sold its large position in tax-free investments in order to complete the stock repurchase.
Net income in 2001 was $50.1 million or 2.5% of sales compared with $73.8 million or 3.6% of sales in 2000 and $79.7 million or 4.0% of sales in 1999. Basic and diluted earnings per share of $1.55 in 2001 compared to $1.77 in 2000 and $1.91 in 1999. Several unusual items notably affected net income and basic and diluted earnings per share in all three years as previously noted in this report. Basic and diluted earnings per share are computed using weighted-average shares outstanding. At the end of 2001, the company had 27.2 million shares of common stock outstanding, a reduction of 14.5 million shares compared to the prior year. The impact from the company's large stock repurchase was partially realized in the company's earnings per share results for 2001 and will be fully realized in 2002.
As of the end of the fiscal year, Weis Markets, Inc. operated 163 retail food stores and 33 SuperPetz pet supply stores. The company currently operates supermarkets in Pennsylvania, Maryland, New Jersey, New York, Virginia and West Virginia. SuperPetz operates stores in Alabama, Georgia, Indiana, Kentucky, Maryland, Michigan, North Carolina, Ohio, Pennsylvania, South Carolina and Tennessee.
Weis Markets, Inc.
Liquidity and Capital Resources
Net cash provided by operating activities was $113.9 million in 2001 compared with $125.6 million in 2000 and $111.9 million in 1999. Accounts payable increased $15.0 million in 2001 compared to 2000 due to improved cash management. Accounts receivable decreased in 2000 after the sale of the company's food service division. Working capital decreased 79.4% in 2001, increased 3.2% in 2000, and decreased 1.6% in 1999. The considerable decline in working capital in the current year resulted from the sale of most of the company's investment portfolio in order to fund the large repurchase of common stock.
Net cash provided by investing activities during 2001 was $322.8 million compared to $82.4 million used in 2000 and $70.0 million used in 1999. In 2000 and 1999, these funds were used primarily for the purchase of new securities and the purchase of property and equipment. Property and equipment purchases during fiscal 2001 totaled $48.1 million compared to $56.3 million in 2000 and $86.7 million in 1999. Intangible and other assets increased $13.4 million in 2000 with grocery store acquisitions. As a percentage of sales, capital expenditures were 2.4%, 3.4% and 4.3% in 2001, 2000 and 1999, respectively.
The capital expansion program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the company's processing and distribution facilities. Company management estimates that its current development plans will require an investment of approximately $67.4 million in 2002.
Net cash used in financing activities during 2001 was $446.8 million compared to $44.4 million in 2000 and $44.8 million in 1999. The repurchase and cancellation of 14.5 million shares of common stock in May cost the company $434.3 million. The company entered into a bridge credit agreement to provide funds for general corporate purposes in May of 2001. The availability under the bridge loan is on a revolving basis with a final maturity of March 29, 2002. As of December 29, 2001, the unused portion of the credit line was $20 million. The company signed a commitment letter to establish a three-year unsecured revolving credit facility in the amount of $100 million to provide funds to refinance the bridge loan facility and for general corporate purposes including working capital and letters of credit. Management anticipates completion of this new long-term credit facility before the March bridge loan maturity date.
Total cash dividend payments on common stock amounted to $1.08 per share in 2001 compared to $1.06 in 2000 and $1.02 in 1999. Treasury stock purchases in the last three years were minimal. The Board of Directors' 1996 resolution authorizing the purchase of 1,000,000 shares of treasury stock has a remaining balance of 564,677 shares. The company has no other commitment of capital resources as of December 29, 2001, other than the lease commitments on its store facilities under operating leases that expire at various dates up to 2024.
The company's earnings and cash flows are subject to fluctuations due to changes in interest rates as they relate to available-for-sale securities and long-term debt. The company's marketable securities currently consist of Pennsylvania tax-free state and municipal bonds, U.S. Treasury securities, equity securities and other short-term investments. The fair value of the variable rate notes classified under long-term debt is sensitive to changes in LIBOR.
By their nature, these financial instruments inherently expose the holders to market risk. The extent of the company's interest rate and other market risk is not quantifiable or predictable with precision due to the variability of future interest rates and other changes in market conditions. However, the company believes that its exposure in this area is not material.
Under its current policies, the company invests primarily in high-grade marketable securities and does not use interest rate derivative instruments to manage exposure to interest rate fluctuations. Historically, the company's principal investment strategy of obtaining marketable securities with maturity dates between one and five years helps minimize market risk and maintains a balance between risk and return. The equity securities owned by the company consist primarily of stock held in large capitalized companies trading on public security exchange markets. Weis Markets' management continually monitors the risk associated with its marketable securities. A quantitative tabular presentation of risk exposure is located in item 7A.
Forward-Looking Statements
In addition to historical information, this Annual Report may contain forward-looking statements. Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; business conditions in the retail industry; the regulatory environment; rapidly changing technology and competitive factors, including increased competition with regional and national retailers; and price pressures. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the company files periodically with the Securities and Exchange Commission.
Weis Markets, Inc.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk:
Quantitative Disclosures About Market Risk
(dollars in thousands) Expected Maturity Dates Fair Value
December 29, 2001 2002 2003 2004 2005 2006 Thereafter Total Dec. 29, 2001
Rate sensitive assets:
Fixed interest rate securities $ 15 $ 1,000 $ 1,500 $ --- $ --- $ --- $ 2,515 $ 2,584
Average interest rate 4.97% 4.48% 4.40% --- --- --- 4.73%
Variable interest rate securities $ 11,930 --- --- --- --- --- $ 11,930 $ 11,930
Average interest rate 2.80% --- --- --- --- --- 2.80%
Rate sensitive liabilities:
Variable interest rate securities $ 25,000 $ --- $ --- $ --- $ --- $ --- $ 25,000 $ 25,000
Average interest rate 3.00% --- --- --- --- --- 3.00%
(dollars in thousands) Expected Maturity Dates Fair Value
December 30, 2000 2001 2002 2003 2004 2005 Thereafter Total Dec. 30, 2000
Rate sensitive assets:
Fixed interest rate securities $ 301,531 $ 29,675 $ 20,920 $ 13,850 $ 25,820 $ --- $ 391,796 $ 392,405
Average interest rate 4.29% 4.30% 4.30% 4.33% 4.43% --- 4.31%
Variable interest rate securities $ 1,446 $ --- $ --- $ --- $ --- $ --- $ 1,446 $ 1,446
Average interest rate 4.00% --- --- --- --- --- 4.00%
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Other relevant market risks
The company's equity securities at December 30, 2000 had a cost basis of
$3,131,000 and a fair value of $16,367,000. The dividend yield realized on
these equity investments was 2.52% in 2000. The company's equity
securities at December 29, 2001 had a cost basis of $3,125,000 and a fair
value of $14,161,000. The dividend yield realized on these equity
investments was 2.90% in 2001. Market risk, as it relates to equities
owned by the company, is discussed within the "Liquidity and Capital
Resources" section of "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained within item 7.
Weis Markets, Inc.
Item 8. Financial Statements and Supplementary Data:
Consolidated Balance Sheets
(dollars in thousands)
December 29, 2001 and December 30, 2000 2001 2000
______________________________________________________________________________
Assets
Current:
Cash $ 3,255 $ 3,389
Marketable securities 28,675 410,218
Accounts receivable, net 26,530 25,080
Inventories 169,952 168,541
Prepaid expenses 8,294 6,821
Income taxes recoverable 3,395 3,144
______________________________________________________________________________
Total current assets 240,101 617,193
______________________________________________________________________________
Property and equipment, net 439,977 441,819
Intangible and other assets, net 24,107 26,892
______________________________________________________________________________
$ 704,185 $ 1,085,904
==============================================================================
Liabilities
Current:
Accounts payable $ 98,382 $ 78,162
Accrued expenses 11,043 18,360
Accrued self-insurance 15,040 12,959
Payable to employee benefit plans 8,672 8,663
Deferred income taxes 4,633 2,143
______________________________________________________________________________
Total current liabilities 137,770 120,287
______________________________________________________________________________
Deferred income taxes 16,051 17,731
Long-term debt 25,000 ---
______________________________________________________________________________
Shareholders' Equity
Common stock, no par value,
100,800,000 shares authorized,
32,978,037 and 47,453,979 shares
issued, respectively 7,630 7,594
Retained earnings 648,522 1,069,986
Accumulated other comprehensive income
(Net of deferred taxes of $4,595 in 2001
and $5,166 in 2000) 6,479 7,284
______________________________________________________________________________
662,631 1,084,864
Treasury stock at cost, 5,774,830 and
5,766,122 shares, respectively (137,267) (136,978)
______________________________________________________________________________
Total shareholders' equity 525,364 947,886
______________________________________________________________________________
$ 704,185 $ 1,085,904
==============================================================================
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See accompanying notes to consolidated financial statements.
Weis Markets, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share amounts)
For the Fiscal Years Ended December 29, 2001,
December 30, 2000 and December 25, 1999 2001 2000 1999 ______________________________________________________________________________ Net sales $ 1,988,246 $ 2,060,976 $ 2,004,947 Cost of sales, including warehousing and distribution expenses 1,457,066 1,518,113 1,496,375 ______________________________________________________________________________ Gross profit on sales 531,180 542,863 508,572 Operating, general and administrative expenses 468,240 462,780 415,537 ______________________________________________________________________________ Income from operations 62,940 80,083 93,035 Investment income 9,860 18,557 19,892 Other income and expense 9,047 18,172 11,088 ______________________________________________________________________________ Income before provision for income taxes 81,847 116,812 124,015 Provision for income taxes 31,792 42,989 44,290 ______________________________________________________________________________ Net income $ 50,055 $ 73,823 $ 79,725 ============================================================================== Weighted-average shares outstanding 32,298,696 41,695,347 41,718,188 Cash dividends per share $ 1.08 $ 1.06 $ 1.02 Basic and diluted earnings per share $ 1.55 $ 1.77 $ 1.91 ______________________________________________________________________________ |
See accompanying notes to consolidated financial statements.
Weis Markets, Inc.
Consolidated Statements of Shareholders' Equity
Accumulated
(dollars in thousands) Other Total
For the Fiscal Years Ended December 29, 2001, Common Retained Comprehensive Treasury Shareholders'
December 30, 2000 and December 25, 1999 Stock Earnings Income Stock Equity
_______________________________________________________________________________________________________________________
Balance at December 26, 1998 $ 7,471 $ 1,003,170 $ 14,436 $ (134,436) $ 890,641
Net income --- 79,725 --- --- 79,725
Other comprehensive income --- --- (7,093) --- (7,093)
____________
Comprehensive income 72,632
____________
Shares issued for options (3,300 shares) 88 --- --- --- 88
Treasury stock purchased (67,269 shares) --- --- --- (2,343) (2,343)
Dividends paid --- (42,541) --- --- (42,541)
________________________________________________________________________________________________________________________
Balance at December 25, 1999 7,559 1,040,354 7,343 (136,779) 918,477
Net income --- 73,823 --- --- 73,823
Other comprehensive income --- --- (59) --- (59)
____________
Comprehensive income 73,764
____________
Shares issued for options (1,250 shares) 35 --- --- --- 35
Treasury stock purchased (5,268 shares) --- --- --- (199) (199)
Dividends paid --- (44,191) --- --- (44,191)
________________________________________________________________________________________________________________________
Balance at December 30, 2000 7,594 1,069,986 7,284 (136,978) 947,886
Net income --- 50,055 --- --- 50,055
Other comprehensive income --- --- (805) --- (805)
____________
Comprehensive income 49,250
____________
Shares issued for options (1,300 shares) 36 --- --- --- 36
Shares purchased and cancelled (14,477,242 shares) --- (434,317) --- --- (434,317)
Treasury stock purchased (8,708 shares) --- --- --- (289) (289)
Dividends paid --- (37,202) --- --- (37,202)
________________________________________________________________________________________________________________________
Balance at December 29, 2001 $ 7,630 $ 648,522 $ 6,479 $ (137,267) $ 525,364
========================================================================================================================
See accompanying notes to consolidated financial statements.
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Weis Markets, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
For the Fiscal Years Ended December 29, 2001,
December 30, 2000 and December 25, 1999 2001 2000 1999
______________________________________________________________________________
Cash flows from operating activities:
Net income $ 50,055 $ 73,823 $ 79,725
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 43,755 44,169 41,097
Amortization 7,222 6,682 5,179
(Gain) loss on sale of fixed assets 1,629 (5,913) (525)
Gain on sale of other assets --- --- (3,413)
Gain on sale of marketable securities (570) (1,279) (123)
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Changes in operating assets and liabilities:
Increase in inventories (1,411) (1,395) (8,208)
(Increase) decrease in accounts receivable
and prepaid expenses (2,923) 8,508 (2,695)
(Increase) decrease in income
taxes recoverable (251) 1,194 (4,338)
Increase (decrease) in accounts payable and
other liabilities 14,993 (2,696) 11,399
Decrease in income taxes payable --- --- (6,421)
Increase in deferred income taxes 1,381 2,472 209
______________________________________________________________________________
Net cash provided by operating activities 113,880 125,565 111,886
______________________________________________________________________________
Cash flows from investing activities:
Purchase of property and equipment (48,046) (56,331) (86,660)
Proceeds from the sale of property
and equipment 86 11,714 1,641
Proceeds from the sale of other assets --- --- 8,012
Purchase of marketable securities (299,064) (259,574) (62,565)
Proceeds from maturities of
marketable securities 556,141 108,154 69,479
Proceeds from sale of
marketable securities 123,660 127,043 125
Increase in intangible and other assets (19) (13,379) ---
______________________________________________________________________________
Net cash provided by (used in) investing
activities 322,758 (82,373) (69,968)
______________________________________________________________________________
Cash flows from financing activities:
Proceeds from long-term debt, net 25,000 --- ---
Proceeds from issuance of common stock 36 35 88
Dividends paid (37,202) (44,191) (42,541)
Purchase and cancellation of stock (434,317) --- ---
Purchase of treasury stock (289) (199) (2,343)
______________________________________________________________________________
Net cash used in financing activities (446,772) (44,355) (44,796)
______________________________________________________________________________
Net decrease in cash (134) (1,163) (2,878)
Cash at beginning of year 3,389 4,552 7,430
______________________________________________________________________________
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See accompanying notes to consolidated financial statements.
Weis Markets, Inc.
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies utilized
in preparing the company's consolidated financial statements:
(a) Description of Business Weis Markets, Inc. is a Pennsylvania business corporation formed in 1924. The company is engaged principally in the retail sale of food and pet supplies in Pennsylvania and surrounding states. There was no material change in the nature of the company's business during fiscal 2001.
(b) Definition of Fiscal Year The company's fiscal year ends on the last Saturday in December. Fiscal 2001, 2000 and 1999 were comprised of 52 weeks, 53 weeks and 52 weeks, respectively.
(c) Principles of Consolidation The consolidated financial statements include the accounts of the company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
(d) Marketable Securities Marketable securities consist of Pennsylvania tax-free state and municipal bonds, U.S. Treasury securities, U.S. Government federal agency notes, equity securities and other short-term investments. By policy, the company invests primarily in high-grade marketable securities. The company classifies all of its marketable securities as available-for-sale.
Available-for-sale securities are recorded at fair value as determined by quoted market price. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders' equity until realized. A decline in the market value below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security. Dividend and interest income is recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities.
(e) Inventories Inventories are valued at the lower of cost or market, using both the last- in, first-out (LIFO) and average cost methods.
(f) Property and Equipment Property and equipment are carried at cost. Depreciation is provided on the cost of buildings and improvements and equipment principally using accelerated methods. Leasehold improvements are amortized over the terms of the leases or the useful lives of the assets, whichever is shorter.
Maintenance and repairs are expensed and renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the respective accounts and any profit or loss on the disposition is credited or charged to income.
(g) Intangible Assets Intangible assets are generally amortized over periods ranging from 15 to 20 years.
(h) Insurance Programs The company maintains self-insurance programs for the majority of its employee health care benefits and workers compensation claims. Self- insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred but not reported. The company is liable for employee health claims up to a lifetime aggregate of $1,000,000 per member and for workers compensation claims up to $1,000,000 per claim. Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $0 to $500,000.
Weis Markets, Inc.
(i) Incentive Plans
The company has elected to follow the Accounting Principles Board's Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for Stock-Based Compensation," (Statement No. 123) requires use of option valuation models that were not developed for use in valuing employee stock options. The effect of applying Statement No. 123's fair value method to the company's stock-based awards results in pro forma net income and earnings per share that are not materially different from amounts reported.
(j) Income Taxes Under the asset and liability method of the FASB Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (Statement No. 109), deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
(k) Revenue Recognition Revenues from the sale of products to the company's customers are recognized at the point of sale.
(l) Advertising Costs The company expenses advertising costs as incurred. The company recorded advertising expense of $26.3 million in 2001, $25.4 million in 2000 and $22.9 million in 1999.
(m) New Accounting Standards As of December 30, 2001, the company adopted Emerging Issues Task Force Issue Nos. 00-14, "Accounting for Certain Sales Incentives;" 00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales Incentives Offers, and Offers for Free Products or Services to Be Delivered in the Future;" and 00-25, "Vendor Income Statement Characterization of Consideration from a Vendor to a Retailer" (EITF Issues). These EITF Issues establish new rules for accounting for certain sales incentives, loyalty programs and vendor contracts; however, the adoption of these EITF Issues will not have an impact on the company's net income or shareholders' equity. These EITF Issues require certain sales incentives, which prior to adoption were reported as expenses or costs of goods sold, to be classified as a reduction of revenue. Prior year financial statements will be reclassified to conform to the requirements of these EITF Issues.
In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations" (Statement No. 141) and No. 142, "Goodwill and Other Intangible Assets" (Statement No. 142) effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the statements. Other intangible assets will continue to be amortized over their useful lives.
The company will apply Statement No. 142 beginning in the first quarter of fiscal 2002. Application of the statement is expected to result in an increase in pre-tax income of approximately $1.4 million for fiscal 2002 due to the elimination of amortization of goodwill. During fiscal 2002, the company will perform the required impairment tests of goodwill. The company has not yet determined what the effect of these impairment tests will be on the earnings and financial position of the company.
(n) Earnings Per Share Basic and diluted earnings per share are the same amounts for each period presented.
(o) Use of Estimates Management of the company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
Weis Markets, Inc.
Note 2 Marketable Securities
Marketable securities, as of December 29, 2001 and December 30, 2000,
consisted of:
Gross Gross
Unrealized Unrealized
(dollars in thousands) Amortized Holding Holding Fair
December 29, 2001 Cost Gains Losses Value
______________________________________________________________________________
Available-for-sale:
Pennsylvania state and municipal bonds $ 1,524 $ --- $ --- $ 1,524
U.S. Treasury securities 1,022 38 --- 1,060
Equity securities 3,125 11,036 --- 14,161
Other short-term investments 11,930 --- --- 11,930
______________________________________________________________________________
$ 17,601 $ 11,074 $ --- $ 28,675
==============================================================================
Gross Gross
Unrealized Unrealized
(dollars in thousands) Amortized Holding Holding Fair
December 30, 2000 Cost Gains Losses Value
______________________________________________________________________________
Available-for-sale:
Pennsylvania state and municipal bonds $ 145,075 $ 90 $ 884 $ 144,281
U.S. Treasury securities 1,022 8 --- 1,030
U.S. Government federal agency notes 247,094 --- --- 247,094
Equity securities 3,131 13,236 --- 16,367
Other short-term investments 1,446 --- --- 1,446
______________________________________________________________________________
$ 397,768 $ 13,334 $ 884 $ 410,218
==============================================================================
|
Maturities of marketable securities classified as available-for-sale at December 29, 2001, were as follows:
Amortized Fair
(dollars in thousands) Cost Value
______________________________________________________________________
Available-for-sale:
Due within one year $ 11,945 $ 11,945
Due after one year through five years 2,531 2,569
Equity securities 3,125 14,161
______________________________________________________________________
$ 17,601 $ 28,675
======================================================================
|
See additional disclosures regarding marketable securities in notes 1(d) and 12.
Weis Markets, Inc.
Note 3 Inventories
Merchandise inventories, as of December 29, 2001 and December 30, 2000,
were valued as follows:
(dollars in thousands) 2001 2000
______________________________________________________________________________
LIFO $ 134,544 $ 135,632
Average cost 35,408 32,909
______________________________________________________________________________
$ 169,952 $ 168,541
==============================================================================
|
If all inventories were valued on the average cost method, which approximates current cost, total inventories would have been $41,014,000 and $42,908,000 higher than as reported on the above methods as of December 29, 2001 and December 30, 2000, respectively.
Although management believes the use of the LIFO method for valuing certain inventories represents the most appropriate matching of costs and revenues in the company's circumstances, the following summary of net income and per share amounts based on the use of the average cost method for valuing all inventories is presented for comparative purposes.
(dollars in thousands, except per share amounts) 2001 2000 1999 _________________________________________________________________________ Net income $ 48,947 $ 73,477 $ 79,368 Basic and diluted earnings per share $ 1.52 $ 1.76 $ 1.90 ========================================================================= |
Note 4 Property and Equipment
Property and equipment, as of December 29, 2001 and December 30, 2000,
consisted of:
Useful Life
(dollars in thousands) (in years) 2001 2000
______________________________________________________________________________
Land $ 69,103 $ 63,341
Buildings and improvements 10-60 325,775 312,462
Equipment 3-12 475,472 462,079
Leasehold improvements 5-20 99,692 97,310
______________________________________________________________________________
Total, at cost 970,042 935,192
Less accumulated depreciation
and amortization 530,065 493,373
______________________________________________________________________________
$ 439,977 $ 441,819
==============================================================================
15
|
Weis Markets, Inc.
Note 5 Lease Commitments
At December 29, 2001, the company leased approximately 59% of its open
store facilities under operating leases that expire at various dates up to
2024. These leases generally provide for fixed annual rentals; however,
several provide for minimum annual rentals plus contingent rentals as a
percentage of annual sales and a number of leases require the company to
pay for all or a portion of insurance, real estate taxes, water and sewer
rentals, and repairs, the cost of which is charged to the related expense
category rather than being accounted for as rent expense. Most of the
leases contain multiple renewal options, under which the company may extend
the lease terms from 5 to 20 years.
Rent expense on all leases consisted of:
(dollars in thousands) 2001 2000 1999
______________________________________________________________________________
Minimum annual rentals $ 29,706 $ 27,685 $ 25,794
Contingent rentals 219 297 286
______________________________________________________________________________
$ 29,925 $ 27,982 $ 26,080
==============================================================================
|
The following is a schedule by year of future minimum rental payments required under operating leases that have initial or remaining non- cancelable lease terms in excess of one year as of December 29, 2001.
(dollars in thousands)
______________________________________________________________________________
2002 $ 28,861
2003 28,122
2004 26,892
2005 23,415
2006 21,370
Thereafter 155,982
______________________________________________________________________________
$ 284,642
==============================================================================
|
The company has $1,435,000 accrued for future minimum rental payments due on previously closed stores, reduced by the estimated sub-rental income to be received. The future minimum rental payments required under operating leases for these locations are included in the above schedule.
As of December 29, 2001, the future minimum rentals to be received under non-cancelable leases and subleases were $5,431,000.
Note 6 Retirement Plans
The company has a contributory retirement savings plan (401(k)) covering
substantially all full-time employees, a noncontributory profit-sharing
plan covering eligible employees, a noncontributory employee stock bonus
plan covering eligible employees and two supplemental retirement plans
covering certain officers of the company. An eligible employee as defined
in the Weis Markets, Inc. Profit Sharing Plan includes salaried employees,
store management and administrative support personnel. The company's
policy is to fund 401(k), profit-sharing and stock bonus costs accrued, but
not supplemental retirement costs. Contributions to the 401(k) plan, the
profit-sharing plan and the stock bonus plan are made at the sole
discretion of the company.
The company's supplemental retirement plans provide for the payment of specific amounts of annual retirement benefits to the officers or to their beneficiaries over an actuarially computed normal life expectancy. The actuarial present value of accumulated benefits amounted to $7,551,000 and $7,536,000 at December 29, 2001 and December 30, 2000, respectively.
Retirement plan costs amounted to:
(dollars in thousands) 2001 2000 1999
___________________________________________________________________________
Retirement savings plan $ 955 $ 945 $ 907
Profit-sharing plan 850 850 850
Employee stock bonus plan 40 40 40
Supplemental retirement plans 303 617 600
___________________________________________________________________________
$ 2,148 $ 2,452 $ 2,397
===========================================================================
|
The company has no other post-retirement benefit plans.
Weis Markets, Inc.
Note 7 Incentive Plans
(a) Stock Option Plan
The company has an incentive stock option plan for officers and other key
employees under which 191,039 shares of common stock are reserved for
issuance at December 29, 2001. Under the terms of the plan, option prices
are 100% of the "fair market value" of the shares on the date granted.
Options granted are immediately exercisable and expire ten years after date
of grant.
Changes during the three years ended December 29, 2001, in options outstanding under the plan were as follows:
Weighted-Average Shares
Exercise Price Under Option
____________________________________________________________________________
Balance, December 26, 1998 $31.14 59,618
Granted $37.53 41,761
Exercised $26.79 (3,300)
Forfeited $31.46 (12,359)
____________________________________________________________________________
Balance, December 25, 1999 $34.37 85,720
Granted $35.13 35,450
Exercised $27.30 (1,250)
Forfeited $33.53 (3,400)
____________________________________________________________________________
Balance, December 30, 2000 $34.70 116,520
Granted $32.72 5,750
Exercised $27.81 (1,300)
Forfeited $35.40 (950)
____________________________________________________________________________
Balance, December 29, 2001 $34.68 120,020
============================================================================
|
Exercise prices for options outstanding as of December 29, 2001 ranged from $26.25 to $37.94. The weighted-average remaining contractual life of those options is 5.9 years. As of December 29, 2001, all options are exercisable.
(b) Company Appreciation Plan Under the company appreciation plan, officers and other employees are awarded rights equivalent to shares of company common stock. At the maturity date, usually one year after the date of award, the value of any appreciation from the original date of issue is paid in cash to the participants.
During 2001, 2000 and 1999, 20,100, 56,750 and 55,200 rights, respectively, were awarded under the program. Earnings were credited $188,000 in 2001, credited $95,000 in 2000 and charged $295,000 in 1999 for appropriate changes to the accrued expense for this plan.
Note 8 Long-Term Debt
The company entered into an unsecured $60 million bridge credit agreement
on May 7, 2001, to provide funds for general corporate purposes. The
availability under the bridge credit agreement, which was reduced to $45
million on November 15, 2001, is on a revolving basis with a final maturity
of March 29, 2002. As of December 29, 2001, the unused portion of the
facility was $20 million, of which the company incurs a commitment fee of
.25% on the unused balance. The debt amount outstanding at December 29,
2001 is classified as long-term based upon management's intent to refinance
under this facility.
On June 18, 2001, the company signed a commitment letter to establish a three-year unsecured revolving credit facility in the amount of $100 million to provide funds to repay the bridge loan facility and for general corporate purposes including working capital and letters of credit. Management anticipates completion of this new long-term credit facility before the March bridge loan maturity date.
The weighted-average interest rate for funds borrowed via the credit facility was 3.0% as of December 29, 2001.
Weis Markets, Inc.
Note 9 Income Taxes
The provision for income taxes consists of:
(dollars in thousands) 2001 2000 1999
__________________________________________________________________________
Currently payable:
Federal $ 26,637 $ 31,367 $ 31,998
State 3,773 9,150 12,083
Deferred:
Federal 1,005 2,151 1,546
State 377 321 (1,337)
__________________________________________________________________________
$ 31,792 $ 42,989 $ 44,290
==========================================================================
|
The following is a reconciliation between the applicable income tax expense and the amount of income taxes that would have been provided at the Federal statutory rate. The statutory rate was 35% in 2001, 2000 and 1999.
(dollars in thousands) 2001 2000 1999 __________________________________________________________________________ Tax at statutory rate $ 28,646 $ 40,884 $ 43,405 State income taxes, net of federal income tax benefit 2,697 5,204 7,282 Other (principally tax-exempt |
Cash paid for income taxes was $30,051,000, $39,729,000 and $52,809,000 in 2001, 2000 and 1999, respectively.
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 29, 2001 and December 30, 2000, are presented below:
(dollars in thousands) 2001 2000
___________________________________________________________________
Deferred tax assets:
Accounts receivable $ 675 $ 858
Compensated absences 680 692
Employee benefit plans 4,852 4,606
General liability insurance 1,699 1,178
Litigation settlement --- 2,033
Nondeductible accruals and other 310 306
___________________________________________________________________
Total deferred tax assets 8,216 9,673
___________________________________________________________________
Deferred tax liabilities:
Inventories (8,254) (6,650)
Unrealized gain on marketable securities (4,595) (5,166)
Depreciation (16,051) (17,731)
___________________________________________________________________
Total deferred tax liabilities (28,900) (29,547)
___________________________________________________________________
Net deferred tax liability $ (20,684) $ (19,874)
___________________________________________________________________
Current deferred liability - net $ (4,633) $ (2,143)
Noncurrent deferred liability - net (16,051) (17,731)
___________________________________________________________________
Net deferred tax liability $ (20,684) $ (19,874)
===================================================================
18
|
Weis Markets, Inc.
Note 10 Comprehensive Income
(dollars in thousands) 2001 2000 1999
_____________________________________________________________________________
Net income $ 50,055 $ 73,823 $ 79,725
Other comprehensive income by
component, net of tax: Unrealized
holding gains (losses) arising during
period(Net of deferred taxes of $335,
$488 and $(5,031), respectively) (471) 690 (7,093)
Reclassification adjustment for gains
included in net income(Net of deferred
taxes of $236, $530 and $0, respectively) (334) (749) ---
_____________________________________________________________________________
Other comprehensive income, net of tax (805) (59) (7,093)
_____________________________________________________________________________
|
Note 11 Summary of Quarterly Results (Unaudited)
Quarterly financial data for 2001 and 2000 are as follows:
Net sales $ 489,095 $ 492,414 $ 498,832 $ 507,905
Gross profit on sales 130,186 131,195 135,854 133,945
Net income 17,194 8,706 11,703 12,452
Basic and diluted
earnings per share .41 .26 .43 .46
Fourteen
(dollars in thousands, Weeks
|
Net sales $ 519,750 $ 508,957 $ 485,875 $ 546,394 Gross profit on sales 130,063 134,878 133,326 144,596 Net income 17,878 21,658 19,103 15,184 Basic and diluted earnings per share .43 .52 .46 .36 |
Note 12 Fair Value Information
The carrying amounts for cash, accounts receivable and accounts payable
approximate fair value because of the short maturities of these
instruments. The fair values of the company's marketable securities, as
disclosed in Note 2, are based on quoted market prices. The carrying
amount for long-term debt approximates fair value based upon the company's
incremental borrowing rates.
Note 13 Acquisitions
On January 17, 2000 and January 31, 2000, the company acquired two stores
located in central Pennsylvania and two stores in Maryland from Fleming
Food Companies, Inc. On February 22, 1999, the company acquired four
stores located in central Pennsylvania from Penn Traffic, Inc. These
acquisitions were cash-only transactions accounted for by the purchase
method. Goodwill arising from these transactions, which is not material,
is currently amortized over a 15-year period on a straight-line basis.
Note 14 Contingencies
The company is involved in various legal actions arising out of the normal
course of business. In the opinion of management, the ultimate disposition
of these matters will not have a material adverse effect on the company's
consolidated financial position, results of operations or liquidity.
Weis Markets, Inc.
Report of Independent Auditors
The Board of Directors and Shareholders
Weis Markets, Inc.
Sunbury, Pennsylvania
We have audited the accompanying consolidated balance sheets of Weis Markets, Inc. as of December 29, 2001 and December 30, 2000, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 29, 2001. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Weis Markets, Inc. at December 29, 2001 and December 30, 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 29, 2001, in conformity with accounting principles generally accepted in the United States.
Harrisburg, PA Ernst & Young LLP January 31, 2002
Weis Markets, Inc.
PART III
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure:
None.
Item 10. Directors and Executive Officers of the Registrant:
"Election of Directors" on pages 5 and 6 of the Weis Markets, Inc. definitive proxy statement dated March 8, 2002 is incorporated herein by reference.
Officers not listed in the Weis Markets, Inc. definitive proxy statement dated March 8, 2002:
Robert P. Hermanns. The company hired Mr. Hermanns in 2001 as Vice President Chief Operating Officer. Mr. Hermanns served as Chief Executive Officer of Shopeze in 1999 and 2000 and was Chief Operating Officer for Procurement and Logistics at American Stores Company from 1995 through 1997.
Edward W. Rakoskie, Jr. The company has employed Mr. Rakoskie since 1962 in various operations positions. Mr. Rakoskie served as Vice President Store Operations from 1995 through 1997 and was promoted to Vice President of Operations in 1998.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that directors and officers of the Company and beneficial owners of more than 10% of its Common Stock file reports with the Securities and Exchange Commission with respect to changes in their beneficial ownership of equity securities of the company. Ellen W. P. Wasserman became a ten percent owner, on May 7th 2001, due to the company buy back of 14,447,242 shares from the family members of the late Sigfried Weis. The required Form 3 was not filed within 10 days of the event, but was filed at a later date. Mrs. Wasserman's ownership was reported correctly in the Company Proxy Statement dated May 28, 2001.
Item 11. Executive Compensation:
"Committees of the Board and Meeting Attendance," Compensation Committee Interlocks and Insider Participation," "Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year," "Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values," "Board Compensation Committee Report on Executive Compensation," "Shareholder Return Performance," "Comparative Five-Year Total Returns," and "Retirement Plans," on pages 6 through 11 of the Weis Markets, Inc. definitive proxy statement dated March 8, 2002 are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
"Outstanding Voting Securities and Voting Rights" on page 4 of the Weis Markets, Inc. definitive proxy statement dated March 8, 2002 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions:
Other Arrangements: Central Properties, Inc., a Pennsylvania corporation ("Central Properties"), owns the land under a company store and an adjacent parking lot in Lebanon, Pennsylvania. Central Properties leased these properties to the company for $80,049 in 2001. The stockholders of Central Properties include Michael M. Apfelbaum and certain of his family members, Jonathan H. Weis and Robert F. Weis, each of whom is a director of the company.
Weis Markets, Inc.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form
8-K:
(a) See Part II Item 8 "Financial Statements and Supplementary
Data" contained within this document. All other schedules for
which provision is made in the applicable accounting regulation
of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and
therefore have been omitted.
(b) There were no reports on Form 8-K filed during the quarter
ended December 29, 2001.
(c) A listing of exhibits filed or incorporated by reference is as
follows:
Exhibit No.
|
3-A Articles of Incorporation
3-B By-Laws
10-A Profit Sharing Plan
10-B Stock Bonus Plan
10-C Company Appreciation Plan
10-D Stock Option Plan
10-E Supplemental Employee Retirement Plan
10-F Executive Employment Contract
21 Subsidiaries of the Registrant
Exhibits 10-A and 10-B have been filed as exhibits under Part IV, Item 14(c) in Form 10-K for the fiscal year ended December 31, 1994 and are incorporated herein by reference.
The foregoing exhibits are available upon request from the Secretary of the company at a fee of $10.00 per copy.
Weis Markets, Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WEIS MARKETS, INC.
(Registrant)
Date 03/08/2002 /s/ Robert F. Weis
__________ ___________________________
Robert F. Weis
Chairman of the Board of
Directors,
and Treasurer and Director
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date 03/08/2002 /s/ Robert F. Weis
__________ ___________________________
Robert F. Weis
Chairman of the Board of
Directors,
and Treasurer and Director
Date 03/08/2002 /s/ Norman S. Rich
__________ ___________________________
Norman S. Rich
President and Director
Date 03/08/2002 /s/ William R. Mills
__________ ___________________________
William R. Mills
Vice President Finance, Secretary
and Director
Date 03/08/2002 /s/ Jonathan H. Weis
__________ ___________________________
Jonathan H. Weis
Vice President Property
Management and Development
and Director
Date 03/07/2002 /s/ Richard E. Shulman
__________ ___________________________
Richard E. Shulman
Director
|
Weis Markets, Inc.
Date 03/08/2002 /s/ Michael M. Apfelbaum
__________ ___________________________
Michael M. Apfelbaum
Director
|
Date 03/07/2002 /s/ Steven C. Smith
__________ ___________________________
Steven C. Smith
Director
|
Weis Markets, Inc.
EXHIBIT 21
WEIS MARKETS, INC.
SUBSIDIARIES OF THE REGISTRANT
Percent
State of Owned by
Incorporation Registrant
Albany Public Markets, Inc. New York 100%
Dutch Valley Food Company, Inc. Pennsylvania 100%
King's Supermarkets, Inc. Pennsylvania 100%
Martin's Farm Market, Inc. Pennsylvania 100%
Shamrock Wholesale Distributors, Inc. Pennsylvania 100%
SuperPetz, LLC. Pennsylvania 100%
Weis Transportation, Inc. Pennsylvania 100%
WMK Financing, Inc. Delaware 100%
WMK Holdings, Inc. Delaware 100%
|
The consolidated financial statements include the accounts of the company and its subsidiaries.
AMENDED AND RESTATED BY-LAWS
of
WEIS MARKETS, INC.
(a Pennsylvania corporation)
ARTICLE I
OFFICES
Section 1.1 Registered Office. The registered office of the corporation in Pennsylvania shall be at the place designated in the Articles of Incorporation, subject to transfer upon notice to the Secretary of the Commonwealth of Pennsylvania as may be permitted by law.
Section 1.2 Other Offices. The corporation may also have offices at such other places as the Board of Directors may from time to time appoint or the business of the corporation may require.
ARTICLE II
SEAL
The corporation's seal shall have inscribed thereon the name of the corporation, the year of its incorporation and the words "Corporate Seal Pennsylvania." Such seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE III
SHAREHOLDERS MEETINGS
Section 3.1 Place of Meetings. All meetings of the shareholders shall be held at the registered office of the corporation or at such other place, within or without the Commonwealth of Pennsylvania, as the Board of Directors may from time to time determine.
Section 3.2 Annual Meeting. An annual meeting of the shareholders shall be held each year at such time and on such date as shall be designated by resolution of the Board of Directors for the election of Directors and the transaction of such other business as may properly be brought before the meeting.
Section 3.3 Special Meetings.
(a) Special meetings of the shareholders may be called at any time by a resolution adopted by a majority of the Board of Directors or by written request given to the Secretary of the corporation by the Chairman of the Board, by the Chief Executive Officer or by the holders of at least 40% of the voting power of the outstanding shares of the corporation which would be entitled to vote at the special meeting.
(b) If called by a majority of the Board of Directors, a resolution of the Board of Directors shall state the purpose or purposes of the meeting. If called by the Chairman of the Board, the Chief Executive Officer or shareholders, a request for a special meeting shall state the purpose or purposes of the meeting.
(c) Upon receipt of a proper request for a special meeting, it shall be the duty of the Secretary to fix (unless fixed in the resolution of the Board calling the meeting) the time and date of such meeting to be held not less than thirty (30) days nor more than ninety (90) days (60 days in the case of a meeting called pursuant to statutory right) after receipt of the request, and to give notice stating the time, date, place and purpose or purposes of the meeting. If the Secretary shall fail to fix the time and date of the meeting and give notice thereof on or before the latest date that such notice may be given under law and the Articles and By-Laws of the corporation, the person or persons calling the meeting may do so at any time within 30 days thereafter by giving notice of the meeting to be held not less than 30 nor more than 60 days after the date such notice is given.
(d) The business transacted at a special meeting shall be confined to the purpose or purposes stated in the notice of the meeting and matters germane thereto.
Section 3.4 Notice of Meetings.
(a) Notice of every meeting of the shareholders shall be given by or at the direction of the Secretary to each shareholder of record entitled to vote at the meeting, at least five (5) days prior to the date named for the meeting, unless a greater period of notice is required by law in a particular case. Such notice need not be given to shareholders not entitled to vote at the meeting unless such shareholders are entitled by law to such notice in a particular case.
(b) Notice may be given to the shareholder personally or by sending a copy thereof by first class or express mail, postage prepaid, or courier service, charges prepaid, to his postal address appearing on the books of the corporation, and any notice so sent shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a courier service for delivery to that person. To the extent permitted by law, notice may also be sent to a shareholder by other classes of United States mail to his postal address, or by facsimile transmission, e-mail or other electronic communication to his facsimile number or his address for e-mail or other electronic communications supplied by him to the corporation for the purpose of notice and, unless otherwise provided by law, any notice so sent shall be deemed to have been given to the person entitled thereto when sent.
(c) Such notice shall specify the day and hour and the geographic location, if any, of the meeting, and, in the case of a special meeting, shall state the general nature of the business to be transacted and, in the case of an annual meeting, shall state the nature of the business to be transacted if and to the extent required by law.
(d) Upon adjournment of an annual or special meeting of shareholders it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken.
Section 3.5 Waiver of Notice. Whenever any notice is required to be given to a shareholder under the provisions of applicable law or by the Articles or these By-Laws, a waiver thereof in writing, signed by such shareholder either before or after the time stated therein, and whether before or after the meeting, shall be deemed equivalent to the giving of due notice. Neither the business to be transacted at, nor the purpose of, the meeting need be specified in the waiver of notice of such meeting. Attendance of any shareholder, either in person or by proxy, at any meeting shall constitute a waiver of notice of such meeting unless such shareholder entitled to notice attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened.
Section 3.6 Quorum. The presence, in person or by proxy, of the shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on the particular matter shall constitute a quorum for the purpose of considering such matter at any meeting of the shareholders for the election of Directors or for the transaction of other business except as otherwise provided by statute or in the Articles or these By-Laws. The shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If, however, any meeting of shareholders cannot be organized because a quorum has not attended, the shareholders entitled to vote thereat present, in person or by proxy, shall have the power to adjourn the meeting to such time and place as they may determine and in the case of any meeting called for the election of Directors, those who attend such adjourned meeting, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing Directors.
Section 3.7 Shareholders Entitled to Vote. Subject to the provisions of this Section and Section 3.9 and except as may be otherwise provided by law or in the Articles of Incorporation, every shareholder shall have the right at every shareholders' meeting to cast one vote for every share having voting power standing in his name on the books of the corporation. In the event the Board of Directors shall fix a time, not less than ten (10) or more than ninety (90) days prior to the date of any meeting of shareholders, as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting, only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to notice of, or to vote at, such meeting notwithstanding any transfer of shares on the books of the corporation after such record date. If a record date shall not be fixed by the Board of Directors for a particular shareholders' meeting, the record date for determining the shareholders entitled to notice of and to vote at the meeting shall be the close of business on the fifth business day preceding the date notice of the meeting was first given by the corporation.
Section 3.8 Shareholders May Vote in Person or by Proxy. Every shareholder entitled to vote at a meeting of shareholders may authorize another person to act for him by proxy. Every proxy shall be executed or authenticated by the shareholder or his duly authorized attorney-in-fact and filed with or transmitted to the Secretary of the corporation or its designated agent. A shareholder or his duly authorized attorney-in-fact may execute or authenticate a writing or transmit an electronic message to the Secretary or the corporation's designated agent authorizing another person to act for him by proxy. A telegram, telex, cablegram, datagram, e-mail, Internet communication or other means of electronic transmission from a shareholder or attorney-in- fact, or a photographic, facsimile or similar reproduction of a writing executed by a shareholder or attorney-in-fact, may be treated by the judges of election as properly executed or authenticated for purposes of this Section and shall be so treated if it sets forth or utilizes a confidential and unique identification number or other mark furnished by the corporation to the shareholder for purposes of the particular meeting.
A proxy, unless coupled with an interest, shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until notice thereof has been given to the Secretary of the corporation or its designated agent. No unrevoked proxy shall be valid after eleven (11) months from the date of its execution, authentication or transmission, unless a longer time is expressly provided therein, but in no event shall a proxy, unless coupled with an interest, be valid to vote with respect to more than one meeting (and any adjournment thereof) or to vote at any annual meeting other than the next annual meeting (and any adjournment thereof) to be held after the date of execution, authentication or transmission thereof. A proxy shall not be revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, written notice of such death or incapacity is given to the Secretary of the corporation.
Section 3.9 Elections of Directors; Cumulative Voting. Elections for Directors need not be by ballot unless required by vote of the shareholders before the voting for election of Directors begins. In each election for Directors, every shareholder entitled to vote therein shall have the right, in person or by proxy, to multiply the number of votes to which he may be entitled by the total number of Directors to be elected in the same election, and he may cast the whole number of such votes for one candidate or he may distribute them among any two or more candidates. The candidates receiving the highest number of votes validly cast, up to the number of Directors to be elected in the particular election, shall be elected.
Section 3.10 Voting Lists. The officer or agent having charge of the transfer books for shares of the corporation shall make a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, with the address of and the number of shares held by each, which list shall be produced and kept open at the time and place of the meeting, and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof, except that if the corporation has five thousand or more shareholders, in lieu of the making of such list, the corporation may make the information therein available at the meeting by any other means.
Section 3.11 Judges of Election. In advance of any meeting of shareholders, the Board of Directors may appoint Judges of Election, who may but need not be shareholders, to act at such meeting or any adjournment thereof. If Judges of Election be not so appointed, the Chairman of any such meeting may, and on the request of any shareholder or his proxy shall, make such appointment at the meeting. The number of Judges shall be one or three. If appointed at the meeting on the request of one or more shareholders or proxies, the question whether one or three Judges are to be appointed shall be determined by the Chairman of the meeting. No person who is a candidate for office to be filled at the meeting shall act as a Judge. In case any person appointed as Judge fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Board of Directors in advance of the convening of the meeting, or at the meeting by the person acting as Chairman. The Judges of Election shall have the power to determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, to receive votes or ballots, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes and determine the result and to do such acts as may be proper to conduct the election or vote with fairness to all shareholders. They shall, if requested by the Chairman of the meeting or any shareholder or his proxy, make a written report of any matter determined by them and execute a certificate of any fact found by them, which shall be prima facie evidence of the facts stated therein. If there be three Judges of Election, the decision, act or certificate of a majority shall be effective in all respects as the decision, act, or certificate of all.
Section 3.12 Informal Action by Shareholders. Except as may be otherwise provided by statute or in the Articles of Incorporation, notwithstanding anything to the contrary contained in these By-Laws, any action which may be taken at a meeting of the shareholders may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders who would be entitled to vote at a meeting for such purpose and shall be filed with the Secretary of the corporation.
Section 3.13 Notice of Business to be Presented at Shareholder Meetings.
(a) Annual Meetings of Shareholders. The proposal of business to be
considered by the shareholders at an annual meeting of shareholders may be made
(i) pursuant to the corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) by any shareholder of the corporation who was
a shareholder of record at the time of giving of notice provided for in this
Section, who is entitled to vote at the meeting and who has complied with the
notice procedures set forth in this Section. For business to be properly
brought before an annual meeting by a shareholder pursuant to clause (iii) of
the preceding sentence, such business must be a proper matter for shareholder
action, the shareholder must have given timely notice thereof in writing to
the Secretary of the corporation and such notice must comply with the following
requirements:
(1) To be timely, a shareholder's notice given pursuant to this Section must be received at the principal executive offices of the corporation, addressed to the Secretary, not less than 120 calendar days before the date of the corporation's proxy statement released to shareholders in connection with the previous year's annual meeting or, if none, its most recent previous annual meeting. Notwithstanding the preceding sentence, if the date of the annual meeting at which such business is to be presented has been changed by more than 30 days from the date of the most recent previous annual meeting, a shareholder's notice shall be considered timely if so received by the corporation (i) on or before the later of (x) 150 calendar days before the date of the annual meeting at which such business is to be presented or (y) 30 days following the first public announcement by the corporation of the date of such annual meeting and (ii) not later than 15 calendar days prior to the scheduled mailing date of the corporation's proxy materials for such annual meeting. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above.
(2) A shareholder's notice given pursuant to this Section shall set forth (A) the name and address of the shareholder who intends to make the proposal and the classes and numbers of shares of the corporation's stock beneficially owned by such shareholder; (B) a representation that the shareholder is and will at the time of the annual meeting be a holder of record of stock of the corporation entitled to vote at such meeting on the proposal(s) specified in the notice and intends to appear in person or by proxy at the meeting to present such proposal(s), (C) a description of the business the shareholder intends to bring before the meeting, including the text of any proposal or proposals to be presented for action by the shareholders, (D) the name and address of any beneficial owner(s) of the corporation's stock on whose behalf such business is to be presented and the class and number of shares beneficially owned by each such beneficial owner and (E) the reasons for conducting such business at the meeting and any material interest in such business of such shareholder or any such beneficial owner.
(b) Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to Section 3.3.
(c) General. (i) Only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth or referred to in this Section. The Chairman of the meeting shall have the power and the duty to determine whether any business proposed to be brought before a meeting was proposed in accordance with the procedures set forth in this Section and, if any business is not in compliance with this Section, to declare that such defective proposal shall be disregarded.
(ii) For purposes of this Section and Section 3.14, (A) "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, the Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and (B) "beneficial ownership" shall be determined in accordance with Rule 13d-3 under the Exchange Act or any successor rule.
(iii) Notwithstanding the foregoing provisions of this Section, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section and Section 3.14. Nothing in this Section shall be deemed to affect any rights of a shareholder to request inclusion of a proposal in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, or any successor rule, or to present for action at an annual meeting any proposal so included.
Section 3.15 Notice of Nominations of Director Candidates.
(a) Notice of Nominations. The nomination of any candidate or candidates for election as a Director of the corporation at an annual meeting of shareholders or a special meeting called for the election of Directors may be made (i) pursuant to the corporation's Proxy Statement, (ii) by or at the direction of the Board of Directors or (iii) by any shareholder of the corporation who was a shareholder of record at the time of giving of notice provided for in this Section, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section. For the nomination of any Director candidate or candidates to be properly brought before an annual or special meeting by a shareholder pursuant to clause (iii) of the preceding sentence, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation and such notice must comply with the following requirements:
(1) To be timely, a shareholder's notice given pursuant to this Section must be received at the principal executive offices of the corporation, addressed to the Secretary,
(A) in the case of an annual meeting of shareholders, not less than 120 calendar days before the date of the corporation's proxy statement released to shareholders in connection with the previous year's annual meeting or, if none, its most recent previous annual meeting. Notwithstanding the preceding sentence, if the date of the annual meeting at which such nomination is to be presented has been changed by more than 30 days from the date of the most recent previous annual meeting, a shareholder's notice shall be considered timely if so received by the corporation (i) on or before the later of (x) 150 calendar days before the date of the annual meeting at which such business is to be presented or (y) 30 days following the first public announcement by the corporation of the date of such annual meeting and (ii) not later than 15 calendar days prior to the scheduled mailing date of the corporation's proxy materials for such annual meeting.
(B) in the case of a special meeting of shareholders called to elect one or more Directors, not later than 10 calendar days after the date of the first public announcement by the corporation announcing the call of a special meeting of shareholders to elect one or more Directors and containing at least the following information: (i) the earliest date at which such special meeting may be held and (ii) the maximum number of Directors to be elected at such meeting.
In no event shall the public announcement of an adjournment of an annual or special meeting commence a new time period for the giving of a shareholder's notice as described above.
(2) A shareholder's notice given pursuant to this Section shall set forth (A) the name and address of the shareholder who intends to make the nominations and of each proposed nominee; (B) a representation that the shareholder is and will at the time of the meeting be a holder of record of stock of the corporation entitled to vote at such meeting in the election of Directors and intends to appear in person or by proxy at the meeting to place in nomination the names of the candidates named in the notice, (C) a description of all arrangements or understandings between the notifying shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the notifying shareholder; (D) the classes and numbers of shares of the corporation's stock beneficially owned by the notifying shareholder, each proposed nominee and each other person identified pursuant to clause (C); (D) such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated by the Board of Directors; and (E) the written consent of each nominee to serve as a Director of the corporation if elected.
(b) Validity of Nominations. Only those candidates whose names have been placed in nomination at the meeting prior to the commencement of voting and in accordance with the procedures set forth in this Section shall be eligible for election as a Director at any meeting of shareholders. The Chairman of the meeting shall have the power and duty to determine whether any candidate for election as a Director has been nominated in accordance with the procedures set forth in this Section, and if any nomination is not in compliance with this Section, to declare that such candidate is ineligible for election. Votes in favor of any candidate not nominated and eligible for election in accordance with the procedures set forth in this Section shall be disregarded.
ARTICLE IV
DIRECTORS
Section 4.1 Number; Term of Office; Independent Directors.
(a) The business and affairs of the corporation shall be managed by a Board of not less than five (5) Directors who shall be persons of full age. Initially the number of Directors shall be as stated in the Articles of Incorporation, and thereafter it shall be such number as shall have been last specified by resolution (if any) of the Board of Directors or shareholders. Directors need not be residents of Pennsylvania or shareholders in the corporation. At each annual meeting the Directors shall be elected by the shareholders to serve for a term of one (1) year and until their respective successors shall be elected and shall qualify.
(b) The Board of Directors shall include at least three (3) "Independent"
Directors (as that term is defined in Section 303.01 of the Listed Company
Manual of the New York Stock Exchange or any successor provision thereto). For
the avoidance of doubt, none of Robert F. Weis, his spouse and his children
(collectively, "Robert Weis Family Members") shall be considered "Independent"
for purposes of that definition. Notwithstanding the foregoing, if the Board of
Directors shall, due to death, disability, resignation or otherwise, at any time
temporarily not include three Independent Directors, such failure to have three
(3) Independent Directors shall not affect the validity of actions taken by the
Board of Directors.
Section 4.2 Vacancies. Vacancies in the Board of Directors, whether or not caused by an increase in the number of Directors, may be filled by a majority of the remaining members of the Board though less than a quorum, and each person so elected shall be a Director to serve for the balance of the unexpired term.
Section 4.3 Place of Meetings. The meetings of the Board of Directors may be held at such place within or without the Commonwealth of Pennsylvania as a majority of the Directors may from time to time by resolution appoint, or as may be designated in the notice or waiver of notice of a particular meeting; in the absence of specification, such meetings shall be held at the registered office of the corporation.
Section 4.4 First Meeting. The first meeting of each newly elected Board of Directors shall be held without notice immediately after the annual meeting of the shareholders at the place where the shareholders' meeting was held, for the purpose of organization, the election of officers and the transaction of other business; or such meeting may convene at such other time and place as may be fixed by resolution of the shareholders adopted at the meeting at which the Directors were elected, or by the consent in writing of all the Directors.
Section 4.5 Regular Meetings. Regular meetings of the Board of Directors may be held at such times as the Board may by resolution determine. If any day fixed for a regular meeting shall be a legal holiday, then the meeting shall be held at the same hour and place on the next succeeding secular day.
Section 4.6 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the Chief Executive Officer, and shall be called upon the written request of any two or more Directors delivered to the Secretary. Any such request by Directors shall state the time, place and purpose or purposes of the proposed meeting, and upon receipt of such request it shall be the duty of the Secretary to issue the notice for such meeting promptly. If the Secretary shall neglect to issue such notice, the Directors making the request may do so.
Section 4.7 Notice of Meetings. Regular meetings of the Board of Directors may be held without notice, unless any such meetings are held at other than the usual time or place, in which event, written notice shall be given to each Director at least five (5) days prior to the day fixed for the meeting. Written notice of a special meeting shall be given to each Director in a manner reasonably calculated to be received by him or at his address at least twenty- four (24) hours before the meeting. Any written notice herein required may be given to a Director personally or by sending a copy thereof by first class or express mail, postage prepaid, or courier service, charges prepaid, to his postal address appearing on the books of the corporation or supplied by him to the corporation for the purpose of notice, and any notice so sent shall be deemed to have been given to the Director when deposited in the United States mail or with a courier service for delivery to the Director. To the extent permitted by law, notice may also be sent to a Director by facsimile transmission, e-mail or other electronic communication to his facsimile number or his address for e-mail or other electronic communications supplied by him to the corporation for the purpose of notice, and, unless otherwise provided by law, any notice so sent shall be deemed to have been given to the Director when sent. Such notice shall specify the place, day and hour of the meeting, and, in the case of a special meeting, shall also state the general nature of the business to be transacted at the meeting. The business transacted at a special meeting shall be confined to the purposes stated in the notice of the meeting and matters germane thereto.
Section 4.8 Waiver of Notice. Whenever any written notice is required by law or the Articles of Incorporation or these By-Laws to be given to a Director, a waiver thereof in writing, signed by him either before or after the time stated therein, and whether before or after the meeting, shall be deemed equivalent to the giving of due notice. Neither the business to be transacted at nor the purpose of the meeting need be specified in the waiver of notice of such meeting. Attendance of any Director at any meeting shall constitute a waiver of notice of such meeting except where such Director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened.
Section 4.9 Quorum. At all meetings of the Board of Directors, the presence or participation by other lawful means of a majority of the Directors in office shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the Directors present or lawfully participating at a meeting at which a quorum is present shall be the acts of the Board of Directors, except as may otherwise be specifically provided by statute, or by the Articles of Incorporation, or by these By-Laws.
Section 4.10 Action. Resolutions of the Board of Directors shall be adopted, and any action of the Board of Directors at a meeting upon any matter shall be taken and be valid, with the affirmative vote of at least a majority of the Directors present at a meeting duly organized, except as otherwise provided herein, in the Articles of Incorporation or by law. The Chairman of the Board, or in his absence the Chief Executive Officer, shall preside at all meetings of the Board of Directors. The Secretary shall take the minutes at all meetings of the Board of Directors. In the absence of the foregoing officers, the Directors present shall select a member of the Board of Directors to preside; and in the absence of the Secretary, the presiding officer shall designate any person to take the minutes of the meeting. The yeas and nays shall be taken and recorded in the minutes at the request of any Director present at a meeting.
Section 4.11 Participation Other Than By Attendance. One or more of the Board of Directors may participate in any regular or special meeting of the Board or of a committee of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting are able to hear each other, or by any other lawful means in lieu of attendance. All Directors so participating shall be deemed present at the meeting.
Section 4.12 Emergency Provisions. Notwithstanding any other provisions of law, the Articles of Incorporation or these By-Laws, during any emergency period caused by war or any other national catastrophe or local disaster of sufficient severity to prevent the conduct and management of the business and affairs of the corporation by its Board of Directors and officers as contemplated by the other provisions of these By-Laws, a majority of the available Directors (or the sole such Director) who have not been rendered incapable of acting because of incapacity or the difficulty of communication or transportation to the place of meeting shall constitute a quorum for the sole purpose of electing Directors to fill such vacancies or to reduce the size of the full Board or both; and a majority of the Directors (or the sole survivor) present at such a meeting may take such action. Directors so elected shall serve until the absent Directors are able to attend meetings or until the shareholders act to elect Directors to succeed them. During such an emergency period, if the Board of Directors is unable or fails to meet, any action appropriate to the circumstances may be taken by such officers of the corporation as may be present and able. Questions as to the existence of a national catastrophe or local disaster and the number of surviving members capable of acting shall be conclusively determined at the time by the Directors or the officers so acting.
Section 4.13 Presumption of Assent. Minutes of each meeting of the Board of Directors shall be made available to each Director at or before the next succeeding regular meeting. Every Director shall be presumed to have assented to such minutes unless his objection thereto shall be made to the Secretary within two days after such next regular meeting.
Section 4.14 Resignations. Any Director may resign by submitting to the Chairman of the Board or the Chief Executive Officer his resignation, which (unless otherwise specified therein) need not be accepted to make it effective and shall be effective immediately upon its receipt by such officer or at such later time as specified therein.
Section 4.15 Adjournment. Adjournment or adjournments of any regular or special meeting may be taken, and it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which such adjournment is taken. At any adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting originally called.
Section 4.16 Informal Action. Notwithstanding anything to the contrary contained in these By-Laws, any action which may be taken at a meeting of the Directors or the members of the executive committee may be taken without a meeting, if consent in writing setting forth the action so taken shall be signed by all of the Directors or the members of the executive committee, as the case may be, and shall be filed with the Secretary of the corporation.
Section 4.17 General Powers. The Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute, by the Articles of Incorporation or by these By-Laws, directed or required to be exercised and done by the shareholders. Without limiting the generality of the foregoing, the powers of the Board shall include power to authorize increases in the corporation's indebtedness and to mortgage and pledge its assets.
Section 4.18 Compensation of Directors. Directors may receive such reasonable compensation for their services as such as shall be provided by a resolution adopted by a majority of the whole Board of Directors.
Section 4.19 Removal of Directors.
(a) The Board of Directors may declare vacant the office of a Director who has been judicially declared of unsound mind or convicted of an offense punishable by imprisonment for more than one year, or for fraudulent or dishonest acts, or gross abuse of authority or discretion with reference to the corporation, or if, within sixty (60) days after notice of his election, he does not accept such office either in writing or by attending a meeting of the Board.
(b) The entire Board of Directors or any individual Director may be removed from office, without assigning any cause, in the manner provided by law. In case the Board of Directors or any one or more Directors be so removed, new Directors may be elected at the same meeting. Unless the entire Board be removed, no individual Director shall be removed in case the votes of a sufficient number of shares are cast against the resolution for his removal, which if cumulatively voted at an annual election would be sufficient to elect one or more Directors.
Section 4.20 Committees.
(a) Executive Committee. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate two or more of its members to constitute an executive committee, which, to the extent provided in such resolution and not prohibited by law, shall have and exercise the authority of the Board of Directors in the management of the business of the corporation. Vacancies in the membership of the executive committee shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. The executive committee shall keep regular minutes of its proceedings and report the same to the Board at each regular meeting of the Board of Directors.
(b) Audit Committee. The Board of Directors shall designate at least three (3) of its members to constitute an audit committee, which committee shall have and exercise audit and similar oversight authority over the affairs of the corporation. The audit committee shall be comprised entirely of "Independent" Directors (as that term is defined in Section 4.1(b)). The audit committee shall keep regular minutes of its proceedings and report the same to the Board of Directors at each regular meeting of the Board of Directors.
(c) Special Transactions Committee. If the corporation proposes to enter
into any transaction or series of transactions (a) with a Robert Weis Family
Member (as that term is defined in Section 4.1) or a Robert Weis Family Entity
(as defined below), other than any transactions arising in connection with such
person's employment by the corporation or service as Director of the corporation
and any transactions that would not be disclosable under Item 404 of Regulation
S-K promulgated under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (or any successor thereto), or (b) the result
of which would be to increase by more than 10% the aggregate Ownership
Percentage (as defined below) of the Robert Weis Family Members and Robert Weis
Family Entities, then, in each case, prior to entering into any such transaction
or series of transactions, the Board of Directors shall designate at least two
(2) of its members to constitute a special transactions committee, the purpose
of which committee shall be to review the terms and conditions of such
transaction or series of transactions and assess the fairness of such
transaction or series of transactions to the corporation. The approval of a
majority of the members of the special transactions committee shall be a
condition to the consummation by the corporation of any such transaction or
series of transactions. The special transactions committee shall be comprised
entirely of "Independent" Directors (as that term is defined in Section 4.1(b)).
For purposes of this Section 4.20, (i) "Robert Weis Family Entity" shall mean
any trust for the benefit of a Robert Weis Family Member or a group of Robert
Weis Family Members or any other entity controlled by a Robert Weis Family
Member or a group of Robert Weis Family Members, and (ii) "Ownership Percentage"
shall mean, with respect to any person or entity, the number of shares of common
stock, no par value, of the corporation beneficially owned (as defined in
Section 3.13) by such person or entity expressed as a percentage of the total
number of issued and outstanding shares of common stock, no par value, of the
corporation. The special transactions committee shall keep regular minutes of
its proceedings and report the same to the Board of Directors at each regular
meeting of the Board of Directors.
(d) Other Committees. By resolution adopted by a majority of the whole Board of Directors, the Board may from time to time appoint other standing or temporary committees, each consisting of one or more Directors. Any such committee shall have and may exercise the powers and authority of the Board of Directors to the extent provided in the resolution by which it was established or by another resolution adopted by a majority of the whole Board of Directors.
(e) Term; Vacancies; Absence or Disqualification. All committee members appointed by the Board of Directors shall serve during the pleasure of the Board of Directors, which may fill vacancies and may designate one or more Directors as alternate members of any committee to take the place of any absent or disqualified member at any meeting or for the purposes of any written action by the committee. In the absence or disqualification of any member or alternate member of any committee or committees, the member or members thereof participating at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another Director to act at the meeting in the place of any such absent or disqualified member or alternate member.
(f) Organization; Finality of Action. All committees shall keep such record of the transactions of their meetings as the Board of Directors or these By-Laws shall direct. All committees shall determine their own organization, procedures, and times and places of meeting, unless otherwise directed by the Board of Directors and except as otherwise provided in these By-Laws. Any action taken by any committee shall be subject to alteration or revocation by the Board of Directors; provided, however, that third parties shall not be prejudiced by such alteration or revocation.
ARTICLE V
OFFICERS, AGENTS AND EMPLOYEES
Section 5.1 Executive Officers. The executive officers of the corporation shall be elected annually by the Board of Directors and shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Treasurer. Other executive officers, including one or more Vice Presidents, and such other officers and assistant officers also may be elected or appointed as the Board of Directors may authorize from time to time. The Chief Executive Officer and the President may, but need not be, the same individual. Any two other offices, except those of Chief Executive Officer or President and Vice President or those of Chief Executive Officer and Secretary, may be filled by the same person. In addition to the powers and duties prescribed by these By-Laws, the officers and assistant officers shall have such authority and shall perform such duties as from time to time shall be prescribed by the Board. The officers and assistant officers of the corporation shall hold office until their successors are chosen and have qualified, unless they are sooner removed from office as provided by these By-Laws. The Board of Directors may add to the title of any officer or assistant officer a word or words descriptive of his powers or the general character of his duties. If the office of any officer or assistant officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors.
Section 5.2 Agents or Employees. The Board of Directors may by resolution designate the officer or officers who shall have authority to appoint such agents or employees as the needs of the corporation may require. In the absence of such designation, this function may be performed by the Chief Executive Officer and may be delegated by the Chief Executive Officer to others in whole or in part.
Section 5.3 Salaries. The salaries of all officers of the corporation shall be fixed by the Board of Directors or by authority conferred by resolution of the Board. The Board also may fix the salaries or other compensation of assistant officers, agents and employees of the corporation, but in the absence of such action this function shall be performed by the Chief Executive Officer or by others under the Chief Executive Officer's supervision.
Section 5.4 Removal of Officers, Agents or Employees. Any officer, assistant officer, agent or employee of the corporation may be removed or his authority revoked by resolution of the Board of Directors whenever, in its judgment, the best interests of the corporation will be served thereby, but such removal or revocation shall be without prejudice to the rights, if any, of the person so removed, to receive compensation or other benefits in accordance with the terms of existing contracts. Any agent or employee of the corporation likewise may be removed by the Chief Executive Officer or, subject to the Chief Executive Officer's supervision, by the person having authority with respect to the appointment of such agent or employee.
Section 5.5 Chairman of the Board, Chief Executive Officer and President; Powers and Duties.
(a) The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. He shall be the senior officer of the corporation and shall have such powers and duties as the Board may prescribe.
(b) The Chief Executive Officer shall have general charge and supervision of the business of the corporation and shall exercise or perform all the powers and duties usually incident to the office of Chief Executive Officer. In the absence of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the shareholders and of the Board of Directors. He shall from time to time make such reports of the affairs of the corporation as the Board may require and shall annually present to the annual meeting of the shareholders a report of the business of the corporation for the preceding fiscal year.
(c) The Chairman of the Board and the Chief Executive Officer shall be, ex officio, members of the executive committee (if any) and, except as otherwise provided in these By-Laws, of every other committee appointed by the Board of Directors.
(d) If the President shall be an individual other than the Chief Executive Officer, then the President shall have such powers and duties as the Board may prescribe, and in the absence or disability of the Chief Executive Officer, the President shall perform the duties and exercise the powers of the Chief Executive Officer.
Section 5.6 Vice President; Powers and Duties. The Vice President shall, in the absence or disability of the Chief Executive Officer and the President, perform the duties and exercise the powers of the Chief Executive Officer; and if there be more than one Vice President, their seniority in performing such duties and exercising such powers shall be determined by the Board of Directors or, in default of such determination, by the order in which they were first elected. Each Vice President also shall have such powers and perform such duties as may be assigned to him by the Board of Directors.
Section 5.7 Secretary; Powers and Duties. The Secretary shall attend all sessions of the Board of Directors and all meetings of the shareholders and act as clerk thereof, and record all the votes and minutes thereof in books to be kept for that purpose; and shall perform like duties for the executive committee of the Board of Directors when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board or by the Chief Executive Officer. The Secretary shall keep in safe custody the corporate seal of the corporation, and may affix the same to any instrument requiring it and attest the same.
Section 5.8 Treasurer; Powers and Duties. The Treasurer shall be the chief financial officer and shall cause full and accurate accounts of receipts and disbursements to be kept in books belonging to the corporation. The Treasurer shall see to the deposit of all moneys and other valuable effects in the name and to the credit of the corporation in such depositary or depositaries as may be designated by the Board of Directors, subject to disbursement or disposition upon orders signed in such manner as the Board of Directors shall prescribe. The Treasurer shall render to the Chief Executive Officer and to the Directors, at the regular meetings of the Board of Directors or whenever the Chief Executive Officer or the Board may require it, an account of all his or her transactions as Treasurer and of the results of operations and financial condition of the corporation.
Section 5.9 Delegation of Officers' Duties. Any officer may delegate duties to his assistant (if any) appointed by the Board of Directors; and in case of the absence of any officer or assistant officer of the corporation, or for any other reason that the Board of Directors may deem sufficient, the Board may delegate or authorize the delegation of his or her powers or duties, for the time being, to any person.
ARTICLE VI
SHARES OF CAPITAL STOCK
Section 6.1 Certificates of Shares. Subject to requirements prescribed by law, the share certificates of the corporation shall be in such form as shall be approved by the Board of Directors. All certificates representing shares shall be registered in the share register as they are issued, and those of the same class or series shall be consecutively numbered. Every share certificate shall bear the signature of the Chief Executive Officer, the President or a Vice President and of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and shall be sealed with the corporate seal. Whenever a certificate is countersigned by a transfer agent, one or both of the officers' or assistant officers' signatures and the seal may be in facsimile, engraved or printed. In case any officer or assistant officer whose signature appears on any share certificate shall have ceased to be such because of death, resignation or otherwise, before the certificate is issued, it may be issued by the corporation with the same effect as if he had not ceased to be such at the date of its issue.
Section 6.2 Registered Shareholders. The corporation shall be entitled to treat the registered holder of any share or shares as the holder thereof in fact and law and shall not be bound to recognize any equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as otherwise expressly provided by statute.
Section 6.3 Transfers of Shares. Shares of the corporation shall be transferred only on its books upon the surrender to the corporation or its transfer agent of the share certificate or certificates therefor duly endorsed by the person named therein, or accompanied by proper evidence of succession, assignment or authority to transfer such shares. Subject to Section 6.4, upon transfer the surrendered certificate or certificates shall be cancelled, a new certificate or certificates shall be issued to the person entitled thereto, and the transaction shall be recorded upon the books of the corporation.
Section 6.4 Restrictions on Transfer. Transfers of shares may be restricted in any lawful manner by law, or by contract if a copy of the contract is filed with the corporation, provided that notice of the restrictions shall be typed or printed conspicuously on the share certificate.
Section 6.5 Replacement of Certificates. New certificates for shares of stock may be issued to replace certificates alleged to have been lost, stolen, destroyed or mutilated upon such terms and conditions, including an affidavit of loss or destruction and the giving of a satisfactory bond of indemnity, as the Board of Directors from time to time may determine.
ARTICLE VII
RECORD DATE
The Board of Directors may fix a time not less than ten (10) nor more than
ninety (90) days prior to (a) the date of any meeting of the shareholders, or
(b) the date fixed for the payment of any dividend or distribution or for the
allotment of rights, or (c) the date when any change or conversion or exchange
of shares will be made or go into effect, as a record date for the determination
of the shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive any such dividend, distribution or allotment of rights, or
to exercise the rights in respect to any such change, conversion or exchange of
shares. In any such case, only the shareholders who are shareholders of record
on the date so fixed shall be entitled to notice of and to vote at such meeting,
or to receive such dividend, distribution or allotment of rights, or to exercise
such rights, as the case may be, notwithstanding any transfer of shares on the
books of the corporation after the record date so fixed.
ARTICLE VIII
DIVIDENDS
Subject to the limitations prescribed by law and the provisions of the Articles of Incorporation relating thereto, if any, the Board of Directors, at any regular or special meeting, may declare dividends upon the outstanding shares of the corporation out of assets legally available for such dividends to such extent as the Board may deem advisable. Dividends may be paid in cash, in property, or in shares of the corporation.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Corporate Records. The corporation shall keep complete and accurate books and records of account, minutes of the proceedings of the shareholders and Directors and a share register giving the names and addresses of all shareholders and the number and class of shares held by each. The share register may be kept at either the registered office of the corporation in Pennsylvania, at its principal office wherever situated or at the office of its registrar or its transfer agent. Any books, minutes or other records may be in written form or in any other form capable of being converted into written form within a reasonable time.
Section 9.2 Execution of Written Instruments. All contracts, deeds, mortgages, obligations, documents and instruments, whether or not requiring a seal, may be executed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and attested by the Secretary or the Treasurer or an Assistant Secretary or Assistant Treasurer, or may be executed or attested, or both, by such other person or persons as may be specifically designated by resolution of the Board of Directors. All checks, notes, drafts and orders for the payment of money shall be signed by such one or more officers or agents as the Board of Directors may from time to time designate.
Section 9.3 Personal Liability of Directors. A Director of this corporation
shall not be personally liable for monetary damages as such for any action
taken as a Director, including duties as a member of any committee of the Board,
or any failure to take any action, unless: (1) the Director has breached or
failed to perform the duties of his office in good faith, in a manner he
reasonably believes to be in the best interests of the corporation, and with
such care, including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances; and (2) the breach or
failure to perform constitutes self-dealing, willful misconduct or recklessness.
[This Section was adopted by the shareholders at the annual meeting held April
7, 1987.]
Section 9.4 Indemnification of Directors, Officers and Others.
(a) Right to Indemnification. To the fullest extent permitted pursuant to
a By-Law authorized by Section 1746 of the Pennsylvania Business Corporation
Law, every Director and officer of the corporation shall be entitled as of right
to be indemnified by the corporation against expenses and any liability paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, civil, criminal, administrative, investigative or
other, whether brought by or in the right of the corporation or otherwise, in
which he or she may be involved, as a party, witness or otherwise, or is
threatened to be made so involved, by reason of such person being or having been
a Director or officer of the corporation or by reason of the fact that such
person is or was serving at the request of the corporation as a Director,
officer, employee, fiduciary or other representative of another corporation,
partnership, joint venture, trust, employee benefit plan or other entity (any
such claim, action, suit or proceeding hereinafter being referred to as an
"Action"); provided that no such right of indemnification shall exist with
respect to an Action (including any counterclaim) brought by an indemnitee (as
hereinafter defined) against the corporation other than an Action for indemnity
or advancement of expenses as provided in Subsection (c). Persons who are not
Directors or officers of the corporation may be similarly indemnified in respect
of service to the corporation or to another such entity at the request of the
corporation to the extent the Board of Directors at any time denominates any of
such persons as entitled to the benefits of this Section. As used in this
Section, (i) "indemnitee" shall include each Director and officer of the
corporation and each other person denominated by the Board of Directors as
entitled to the benefits of this Section, (ii) "expenses" shall mean expenses
actually and reasonably incurred by an Indemnitee in the preparation,
investigation, defense, appeal or settlement of an Action, but (except in
an Action for indemnity or advancement of expenses as provided in Subsection
(c)) shall include fees and expenses of counsel selected by the indemnitee only
if the corporation has not at its expense assumed the defense of the Action on
behalf of the indemnitee with appropriate counsel selected by the corporation
and (iii) "liability" shall include amounts of judgments, excise taxes, fines,
penalties and, if approved by the Board of Directors, amounts paid in
settlement.
(b) Right to Advancement of Expenses. Every indemnitee shall be entitled as of right to have his or her expenses in defending any Action or in initiating and pursuing an Action under Subsection (c) paid in advance by the corporation prior to final disposition of such Action, provided that the corporation receives a written undertaking by or on behalf of the indemnitee to repay the amount advanced if it should ultimately be determined that the Indemnitee is not entitled to be indemnified for such expenses. The financial ability of an indemnitee to repay an advance shall not be a prerequisite to the making of such advance.
(c) Right of Indemnitee to Initiate Action. If a written claim under
Subsection (a) or Subsection (b) of this Section is not paid in full by the
corporation within thirty days after such claim has been received by the
corporation, the indemnitee may at any time thereafter initiate an Action
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the indemnitee shall also be entitled to be paid
the expense of prosecuting such Action. The only defense to any Action to
recover a claim for indemnification otherwise properly asserted under Subsection
(a) of this Section shall be that the indemnitee's conduct was such that under
Pennsylvania law the corporation is prohibited from indemnifying the indemnitee
for the particular liability or expense claimed, but the burden of proving such
defense shall be on the corporation. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel and its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances, nor
an actual determination by the corporation (including its Board of Directors,
independent legal counsel or its shareholders) that the indemnitee's conduct
was such that indemnification is prohibited by law, shall be a defense to such
Action or create a presumption that the indemnitee's conduct was such that
indemnification is prohibited by law. The only defenses to any such Action to
receive payment of expenses in advance under Subsection (b) of this Section
shall be that the claim does not properly constitute an "expense" as defined in
Subsection (a) or that the indemnitee failed to provide the undertaking required
by Subsection (b).
(d) Insurance and Funding. The corporation may purchase and maintain insurance to protect itself and any person eligible to be indemnified hereunder against any liability or expense asserted or incurred by such person in connection with any Action, whether or not the corporation would have the power to indemnify such person against such liability or expense by law or under the provisions of this Section. The corporation may establish and fund a self- insurance indemnification reserve fund, create a trust fund, grant a security interest, cause a letter of credit to be issued or use other means (whether or not similar to the foregoing) to ensure the payment of such sums as may become necessary to effect indemnification as provided herein.
(e) Non-Exclusivity; Nature and Extent of Rights. The right of
indemnification and advancement of expenses provided for in this Section shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or By-Law, charter provision, vote of shareholders or Directors or otherwise
(ii) be deemed to create contractual rights in favor of each indemnitee who
provides services at any time while this Section is in effect (and each
indemnitee shall be deemed to be so serving in reliance upon the provisions of
this Section), (iii) continue as to each person who has ceased to have the
status pursuant to which he or she was entitled or was designated as entitled to
indemnification under this Section as to an Action based upon actions or
inaction occurring during such service, (iv) inure to the benefit of the heirs
and legal representatives of each indemnitee and (v) be applicable to Actions
commenced after the adoption of this Section, whether arising from acts or
omissions occurring before or after the adoption of this Section. Any amendment
or repeal of this Section or adoption of any other By-Law or provision of the
Articles which limits in any way the rights to indemnification and advancement
of expenses provided in this Section shall operate prospectively only and shall
not affect any action taken, or failure to act, by an indemnitee prior to the
adoption of such amendment, repeal, By-Law or other provision.
(f) Partial Indemnity. If an indemnitee is entitled under this Section to indemnification by the corporation for some or a portion of the expenses or liabilities paid or incurred by the indemnitee in the preparation, investigation, defense, appeal or settlement of any Action, including an action under Subsection (c), but not, however, for the total amount thereof, the corporation shall indemnify the indemnitee for the portion of such expenses of liability to which the indemnitee is entitled. If an Action involves more than one claim, issue or matter, the determination as to whether the indemnitee is entitled to indemnification or advancement of expenses shall be severable as to each claim, issue or matter.
Section 9.5 (a) Control Transactions. The Board of Directors shall not take any action to approve any amendment contemplated by Section 2541(a)(4)(ii) of the Pennsylvania Business Corporation Law unless such amendment is approved by at least a majority of the "Independent" Directors (as that term is defined in Section 4.1(b)).
(b) Certain Matters Relating to Pennsylvania Act No. 36 of 1990.
(1) Subchapter G, Control-Share Acquisitions, of Chapter 25 of the Pennsylvania
Associations Code, as amended, shall not be applicable to the Company and
(2) Subchapter H, Disgorgement by Certain Controlling Shareholders Following
Attempts to Acquire Control, of Chapter 25 of the Pennsylvania Associations
Code, as amended, shall not be applicable to the Company. [Note: This
Subsection reflects an amendment to the By-Laws adopted by the Board of
Directors on July 10, 1990].
ARTICLE X
AMENDMENT OF BY-LAWS
These By-Laws may be altered, amended, supplemented or repealed by affirmative
vote of a majority of the whole Board of Directors or of shareholders entitled
to cast at least a majority of the votes which all shareholders are entitled to
cast thereon, at any regular or special meeting of the Board or of the
shareholders, as the case may be, convened after notice of that purpose; or by
unanimous action of all the Directors or all of the shareholders entitled to
vote thereon, without a meeting. Notwithstanding the foregoing, during the
period of time up to and ending on May 7, 2006, no alteration, amendment,
supplement or repeal of any of Section 3.9 (Election of Directors; Cumulative
Voting), Section 4.1 (Number; Term of Office; Independent Directors), Section
4.20(b) (Audit Committee), the second sentence of Section 4.20(c) (Special
Transactions Committee), Section 9.4(a) (Control Transactions) or this Section
10.1 of these By-Laws shall be valid unless such alteration, amendment,
supplement or repeal is approved by at least a majority of the "Independent"
Directors (as that term is defined in Section 4.1(b)). No alteration, amendment
or repeal by the Board of Directors of Section 3.3 which would adversely the
right of holders of 40% of the voting power of the outstanding shares to call a
special meeting as provided in that section shall be effective unless approved
by the affirmative vote of at least (a) a majority of the entire membership of
the Board and (b) that number of Directors which is equal to (1) the number of
Directors constituting the entire membership of the Board of Directors, minus
(2) three.
WEIS MARKETS, INC.
COMPANY APPRECIATION PLAN
1. PURPOSE
The Board of Directors of Weis Markets, Inc. (hereinafter referred to as the "Company") believes the Company Appreciation Plan will promote continuity of management and increase incentive and personal interest in the welfare of the Company by those who are primarily responsible for developing and carrying out the long range plans of the Company and its subsidiaries and securing their continued growth and financial success.
2. DEFINITIONS
(a) "Board" shall mean the Board of Directors of Weis Markets, Inc.
(b) "Committee" shall mean the Executive Compensation Committee of the Board of Directors.
(c) "Company" shall mean Weis Markets, Inc. or any successor thereto.
(d) "Designated Period" shall mean the period commencing as of the date on
which Rights are awarded to a Participant, and ending on the date as
of which such Rights mature as fixed by the Board. The Designated
Period may not be less than twelve (12) months no more than sixty-three
(63) months. The Designated Period may vary as among Participants and
as among awards to a Participant.
(e) "Effective Date" of the Plan shall mean April 1, 1980.
(f) "Market Value" shall mean the value of a share of the Company's common capital stock as of the close of trading on a particular date, as reported in the Wall Street Journal or such other source as the Committee believes adequately reflects the trading in the Company's common stock. "Average Market Value" shall mean the average of the Market Value of the Company's common capital stock based on the closing price for all trading days in the 90 calendar day period which ends on the date of reference.
(g) "Participant" shall mean an officer or executive of the Company selected by the Board to participate in the Plan.
(h) "Plan" shall mean the Weis Markets, Inc. Company Appreciation Plan described in this instrument , as it may be amended from time to time.
(i) "Rights" shall mean the awards granted to a Participant from time to time in accordance with the terms of the Plan.
(j) "Retirement" means a Participant's termination of employment with the Company and its subsidiaries after attaining age 65.
Wherever the context so requires, masculine pronouns include the feminine and singular words shall include the plural.
3. ADMINISTRATION
(a) The Plan shall be administered by the Committee as it may be constituted from time to time. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority vote at a meeting duly called and held.
(b) Eligibility for participation in this Plan shall be determined by a two step process. First, the Executive Compensation Committee of the Board of Directors shall make a recommendation of potential Participants to the Board of Directors. This list may be based upon recommendations from the Executive Committee of Weis Markets, Inc. Second, the Board of Directors shall consider the recommendation of the Executive Compensation Committee and make the final determination based upon a majority vote.
4. OPERATION
Employees of the Company who are eligible to participate in the Plan and who have been designated as Plan Participants shall be notified by the Committee in writing of such Participation, which notification shall outline the specific terms applicable to the Participant. The general terms of the Plan applicable to each Participant are as follows:
(a) Plan Participants shall be awarded Rights which mature at the expiration of the Designated Period or Designated Periods applicable to such Rights. As of the date of expiration of the Designated Period, or Period, the Participant shall receive an amount equal to the current value of the Rights.
(b) The current value of the Rights shall be equal to the excess of (1) over (2) below, but in no event greater than the amount set forth in paragraph (c) below.
(1) The greater of
(i) the Average Market Value of the Rights awarded the
Participant as of the date of expiration of the Designated
Periods applicable to such Rights; and
(ii) the market Value of the Rights awarded the Participant as
of the last trading day of the calendar year preceding
the date of expiration of the Designated Period.
(2) The Market Value of the Rights awarded the Participant as of the initial effective date of the award.
The Market Value or Average Market Value of all Rights as of a particular date shall be the Market Value or Average market Value of one Right multiplied by the number of Rights.
(d) Not withstanding any other provision of the Plan, the current value of any Rights shall not exceed 100% of the Market Value of the Rights as of the initial date of the award of such Rights. The current value of Rights, as determined under (b and (c) above, shall be paid to the Participant in cash no later than sixty days following the expiration of the applicable Designated Period.
5. LIMITATION ON RIGHTS
A Participant may receive as many awards of Rights at various times as may be determined appropriate by the Board, but the total Rights granted under this Plan to all Participants shall not exceed 100,000.
6. NATURE OF RIGHTS
The Rights shall be used solely as a device for the measurement and determination of the amount to be paid to Participants as provided in the Plan. The Rights shall not constitute or be treated as property or as a trust fund of any kind. All amounts at any time attributable to the Rights shall be and remain the sole property of the Company and the Participants' rights here under are limited to the rights to receive cash as herein provided.
7. DILUTION
In the event of a stock split, stock dividend, reclassification, reorganization, or other capital adjustment of shares of capital stock of the Company, the number of Rights of a Participant and the number of total Rights which may be issued under the plan provided by paragraph 5 shall be adjusted in the same manner as the Company's capital stock reflected by such Rights would be adjusted.
8. TRANSFERABILITY
Any rights arising under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution, and may be exercised during the life of a Participant only by such Participant.
9. TERMINATION OF EMPLOYMENT
The Plan does not confer upon any Participant any right with respect to continuance of employment by the Company or by a subsidiary of the Company, nor does it nullify his right, or his employer's right, to terminate his employment at any time. In the event that the employment of a Participant by the Company and/or its subsidiaries terminates for any reason other than due to disability, death, or retirement, any outstanding Rights under the Plan shall be forfeited. In the event a Participant terminates employment with the Company and/or its subsidiaries due to death, disability, or retirement, the Designated Period for such Participant shall be deemed to end, with appropriate payment subsequently made to the Participant or his named beneficiary. A Participant shall be deemed to have terminated employment due to disability if, in the opinion of a physician selected by the Committee, as a result of a mental or physical condition he is unable to continue to perform his duties as an employee.
10. WITHHOLDING OF TAX
There shall be deducted from each distribution under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the person entitled to such distribution.
11. TERMINATION AND AMENDMENT OF PLAN
The Board may at any time terminate the Plan, or make such modifications of the Plan as it shall deem advisable, provided that
(a) no termination or amendment of the Plan may, without the consent of a Participant, adversely affect the rights of such Participant, and
(b) any amendment requiring an affirmative vote of the holders of a majority of the shares of the capital stock of the Company shall not be effective until such affirmative vote is obtained.
1995
STOCK OPTION PLAN
WEIS MARKETS, INC.
As Amended and Restated October 1, 1998
I. Definitions.
A. As used in this Plan the following definitions apply to the terms
indicated below:
"Board" means the Board of Directors of Weis Markets, Inc.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Executive Compensation Committee of the Board.
"Company" means Weis Markets, Inc., a Pennsylvania Corporation.
"Eligible employee" means any employee who is at the date of the granting of an option hereunder an executive or administrative employee of the Company or of any subsidiary corporation now or hereafter existent, and who at the time receives regular base compensation from the Company or any subsidiary, or any combination thereof, at a rate or rates aggregating $8,000 or more per year. For the purposes of this Plan the Committee shall have the authority to determine whether or not an employee is an executive or administrative employee, but these terms shall be limited to employees having administrative responsibility involving the use of judgment or discretion in the direction of the activities of others, and any other employees customarily considered as executive line or staff personnel. The determination of base compensation may be made by annualizing the regular base compensation rate in effect with respect to an employee at the payroll period last preceding the date of grant of the option. The term eligible employee shall not include an individual possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation if such entity may exist in the future. Also, the term eligible employee shall not include a member of the Committee.
"Incentive Stock Option" means an Option granted under the Plan pursuant to Section 422 of the Code.
"Nonstatutory Stock Option" means an Option granted under the Plan which does not qualify under Section 422 of the Code.
"Option" means an option for the purchase of Shares under the Plan. Each Option shall be represented by an Option certificate in such form, not inconsistent with the Plan, as the Committee may authorize for general use or for specific cases from time to time, which shall be executed by the Company and the Participant, provided that each Option certificate shall specify whether the underlying Option is intended to be an Incentive Stock Option or a Nonstatutory Stock Option.
"Option period" means a period of time expressed in months from the date of grant of an Option, during which an Option becomes exercisable by its terms.
"Participant" means any holder of an Option granted under the Plan.
"Plan" means this stock option plan.
"Shares" means shares of the Company's capital stock reserved for the purposes of the Plan.
B. An Option shall be effectively "granted" under this Plan on the date specified by the Committee, provided however that grants of Options under the Plan are subject to approval by the Board. Any recipient of an Option who serves on the Board shall abstain from any discussion or vote concerning the grant of any Options.
C. As used herein the masculine includes the feminine and the plural includes the singular.
II. Shares Subject to the Plan. There may be issued pursuant to the Plan Options for the Purchase of not more than 300,000 Shares. In the event of any change in the Shares, as a result of recapitalization, stock split, combination of shares or stock dividend (but in the case of a stock dividend only if and to the extent that all of such stock dividends within one fiscal year shall increase the number of outstanding shares by more than 5%), appropriate adjustment shall be made in the total number of Shares to which the Plan relates, in the number of Shares allocable to any one employee pursuant to Options, and in the number of Shares subject to outstanding unexercised Options, and with respect to the purchase price per Share payable upon exercise, so as to prevent undue appreciation or dilution of the rights conferred by any Option, or of the Shares reserved for the purposes of the Plan. No adjustment or substitution provided for in this Section II shall require the Company to issue or sell a fraction of a Share or other security. Accordingly, all fractional Shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution. If any such adjustment or substitution provided for in this Section II requires the approval of shareholders in order to enable the Company to grant Incentive Stock Options, then no such adjustment or substitution shall be made without the required shareholder approval. Notwithstanding the foregoing, in the case of Incentive Stock Options, if the effect of any such adjustment or substitution would be to cause the Option to fail to continue to qualify as an Incentive Stock Option or to cause a modification, extension or renewal of such Option within the meaning of Section 424 of the Code, the Committee may elect that such adjustment or substitution not be made but rather shall use reasonable efforts to effect such other adjustment of each then outstanding Option as the Committee, in its discretion, shall deem equitable and which will not result in any disqualification, modification, extension or renewal (within the meaning of Section 424 of the Code) of such Incentive Stock Option.
III. Allocation of Shares. The Committee may at any time during the term of this Plan allocate Shares to any eligible employee under and pursuant to an Incentive Stock Option and/or a Nonstatutory Stock Option, subject to prior allocation of Shares under previously granted Options to the same or other persons and provided that Incentive Stock Options and Nonstatutory Stock Options may not be granted in tandem. The aggregate number of Shares allocable to any one employee, pursuant to one or more Options, shall not exceed 20,000 Shares in any one calendar year. Notwithstanding any other provision contained in the Plan or in any Option certificate, the aggregate fair market value, determined as provided in Section V of the Plan on the date of grant, of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an employee during any calendar year under all plans of the corporation employing such employee, any parent or subsidiary corporation of such corporation and any predecessor corporation of any such corporation shall not exceed $100,000. If any Option is canceled, or terminates or lapses in whole or in part for any reason other than the termination of the Plan as a whole, any number of Shares not purchased thereunder shall forthwith become available again for allocation under new Options in accordance with the Plan.
IV. Plan Term. Subject to the provisions hereinafter contained relating to amendment or discontinuance, this Plan shall continue in effect until December 31, 2004; and no Option may be granted hereunder after such date, which is less than ten years from the earlier of the date of the adoption of the Plan by the Board and its approval by the shareholders of the Company. The effective date of the Plan shall be February 1, 1995.
V. Option Price. The price at which the Shares may be purchased pursuant to any Option shall be 100% of the fair market value of the Shares on the date of the grant. The "fair market value" of Shares on any day shall be determined by the Committee in any proper manner in accordance with the following paragraph, including determinations based upon the quotations for the Company's stock on any national securities exchange on which it may be listed at the time, or upon the opinions of one or more brokerage firms. For all purposes under the Plan, fair market value of the Shares shall be the mean between the following prices, as applicable, for the date as of which fair market value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the Shares are listed on the New York Stock Exchange, the highest and lowest sales prices per share of the Shares as quoted in the NYSE-Composite Transactions listing for such date, (b) if the Shares are not listed on such exchange, the highest and lowest sales prices per share of Shares for such date on (or on any composite index including) the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which the Shares are listed, or (c) if the Shares are not listed on any such exchange, the highest and lowest sales prices per share of Shares for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use ("NASDAQ"). If there are no such sale price quotations for the date as of which fair market value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then fair market value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share of the Shares as so quoted on the nearest date before and the nearest date after the date as of which fair market value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which fair market value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which fair market value is to be determined, then fair market value of the Shares shall be the mean between the bona fide bid and asked prices per share of the Shares as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which fair market value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section V. If the fair market value of the Shares cannot be determined on the basis previously set forth in this Section V on the date as of which fair market value is to be determined, the Committee shall in good faith determine the fair market value of the Shares on such date. Fair market value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse.
VI. Option Period.
No Option hereunder shall be exercisable after the expiration of ten
(10) years from the date such Option is granted.
VII. Conditions Relating to Exercise.
A. No Option shall be transferable by the grantee thereof otherwise
than by will or the laws of descent and distribution.
B. All Options granted hereunder shall be exercisable during the lifetime of the grantee only by him.
C. Subject to the foregoing, any Option granted pursuant to the Plan shall be exercisable immediately and to the extent exercisable at any time may be exercised in whole or in part, and the Option shall be no longer exercisable after a period of ten (10) years from the date such Option is granted.
D. Payment for Shares purchased shall be made in full in cash upon exercise.
E. Certificates for Shares purchased shall be issued and delivered at the time when the Option is exercised and payment therefor is received by the Company.
F. An Option shall be exercised by delivering to the Company (or, if mailed to the Company, upon receipt by the Company), at 1000 South Second Street, Sunbury, Pennsylvania, a written notice signed by the Participant stating the number of Shares the Participant desires to purchase, enclosing payment or instructions for delivery against payment for such Shares at the Option price then in effect provided, that for purposes of determining whether any Options have been timely exercised, no Option shall be considered exercised until the Company actually receives the exercise price.
G. Any person exercising an Option shall comply with all regulations and requirements of any Governmental authority having jurisdiction over the issuance or sale of capital stock of the Company, and as a condition to receiving any Shares shall execute all such instruments as the Company in its sole discretion may deem necessary or advisable.
H. The Company may stamp, type or print upon any certificate issued pursuant to exercise of any Option any legend deemed proper by the Company, in its sole judgment and discretion, for the purpose of permitting it to comply, or to facilitate its compliance, with any and all provisions of law now or hereafter in force with respect to the issue or transfer of or reporting with respect to any Shares issued pursuant to an Option.
VIII. Termination of Employment. In the event of termination of a Participant's employment for any cause other than death or dismissal for conduct injurious to the Company's business or interests (as determined by the Board or Committee), the Participant may exercise any portion of the Option, not theretofore exercised, which has or under the terms of the Option become exercisable before the Participant's termination of employment, before the expiration of three months following the date of termination of his employment plus such additional portion or portions, if any, as the Participant may be permitted to exercise with the specific consent of the Committee; provided, however, that if the Participant shall engage in any conduct injurious to the Company's business or interests in any material way (as determined in the sole discretion of the Board or Committee), then all rights under the Option shall forthwith lapse and terminate.
IX. Rights in the Event of Death. In the case of the death of a Participant, any Option then held by him, which shall not have lapsed or terminated prior to death, shall continue in force and shall be exercisable from time to time, to the same extent as though the decedent had remained alive for the entire period of the Option, by this executor, administrator, legatees or distributees of his estate (his "successors"); provided, however, that if his successors shall engage in any conduct injurious to the business or interests of the Company in any material way (as determined in the sole discretion of the Board or Committee), then all rights under the Option shall forthwith lapse and terminate.
X. Powers of the Committee. Except as provided in Section I.B. of the Plan, the Plan shall be administered by the Committee, subject to the general supervision of the Board. The Board is hereby authorized subject to the provisions of the Plan to prescribe, amend and rescind rules and regulations of general application relating to the Plan and to make all other determinations (except as aforesaid) necessary or advisable for its administration. Any power granted to the Committee (except as aforesaid), either in this Plan or by the Board, may at any time be exercised by the Board.
XII. Amendment and Discontinuance.
A. The Board is authorized to make such amendments to the Plan as shall
be necessary to bring it into conformity with any regulation of any
Governmental body having jurisdiction, and may otherwise alter the Plan
subject, however, to prior or subsequent approval by the shareholders of
the Company if the amendment would decrease the Option price or increase
the number of Shares included in the Plan or the number allocable to any
one person, or make any change in the class of employees eligible to
receive Incentive Stock Options under the Plan, or would involve any
factor which in the opinion of counsel for the Company might affect
qualification under the Code in effect at the time or compliance with
applicable SEC regulations. The Board may at any time suspend or
discontinue the Plan. No action of the Board or shareholders may
increase or may impair any Option granted under the Plan except as
herein provided.
B. In the event of merger or consolidation of the Company into any other corporation, or in the event of the adoption of a Plan of complete or partial liquidation by requisite vote of the shareholders of the Company, the Plan and all outstanding Options shall terminate on the effective date of such merger or consolidation, or upon a date specified by the Board in case of a liquidation, provided that the Company shall make reasonable efforts to induce any corporate successor or prospective successor to assume all outstanding unexercised Options, with equitable adjustments of the Option price and number of Shares purchasable thereunder in light of the securities of the successor issued in the merger or consolidation.
C. Neither the Company nor any director or officer shall be liable to any person for anything done or omitted in administration of the Plan or any Option. The issuance of stock upon proper and timely exercise of any Option may be compelled by an order of specific performance by any court of competent jurisdiction provided, however, that the obligation of the Company to issue Shares under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such Shares, if deemed necessary or appropriate by counsel for the Company, (ii) the condition that the Shares shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Shares may then be listed and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
WEIS MARKETS, INC.
The purposes of the Supplemental Executive Retirement Plan for Weis Markets, Inc. ("Plan") are to permit select members of management and highly compensated employees to defer current compensation which cannot be redirected into the Company's 401(k) Plan, and to further supplement retirement benefits payable under the qualified retirement plans of the Company. This Plan is designed to provide retirement benefits and salary deferral opportunities because of the limitations imposed by the Internal Revenue Code and the Regulations implemented by the Internal Revenue Service.
TABLE OF CONTENTS
Page
ARTICLE I TITLE AND EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . 2
ARTICLE II DEFINITIONS AND CONSTRUCTION
OF THE PLAN DOCUMENT . . . . . . . . . . . . . . . . .3
ARTICLE III ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE IV DEFERRAL OF COMPENSATION . . . . . . . . . . . . . . . . . . .6
ARTICLE V PARTICIPANT BOOKKEEPING ACCOUNTS . . . . . . . . . . . . . . .7
ARTICLE VI DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE VII BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . 12
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE X NATURE OF COMPANY'S OBLIGATION . . . . . . . . . . . . . . . 14
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE I
TITLE AND EFFECTIVE DATE
Section 1.01 Title. This Plan shall be known as the Supplemental Executive Retirement Plan for Weis Markets, Inc.
Section 1.02 Effective Date. The effective date of this Plan shall be January 1, 1994.
ARTICLE II
DEFINITIONS AND CONSTRUCTION OF THE PLAN DOCUMENT
As used herein, the following words and phrases shall have the meanings specified below unless a different meaning is clearly required by the context:
Section 2.01 "Account" means the account established as a bookkeeping record for each Participant pursuant to Article V.
Section 2.02 "Beneficiary" means the person or persons or the estate of a participant entitled to receive any benefits under this Plan.
Section 2.03 "Board of Directors" means the Board of Directors of Weis Markets, Inc.
Section 2.04 "Committee" means the Executive Compensation Committee of the Board of Directors.
Section 2.05 "Company" means Weis Markets, Inc. its successors, any subsidiary of affiliated organizations authorized by the Board of Directors or the Committee to participate in this Plan with respect to their Participants, and any organization into which or with which the Company may merge or consolidate or to which all or substantially all of its assets may be transferred.
Section 2.06 "Compensation" means remuneration from the Company reportable on IRS Form W-2, together with any salary reduction contributions under this Plan, the 401(k) Plan or any cafeteria plan under Section 125 of the Internal Revenue Code, but excluding any sick pay.
Section 2.07 "Deferral Agreement" means the written form submitted to the Committee that indicates whether the Participant wishes to defer a portion of his Compensation and indicates the portion of Compensation to be deferred. No Deferral Agreement shall be effective until acknowledged by the Company.
Section 2.08 "Deferred Compensation" means the portion of a Participant's Compensation that has been deferred pursuant to the Plan.
Section 2.09 "ESOP" means the Weis Markets, Inc. Stock Bonus Plan as it may be amended from time to time, and any successor plan.
Section 2.10 "Election Date" means (a) 30 days after notice of adoption of the Plan for Executives who are eligible to participate at the time the Plan is adopted; or (b) 30 days after a newly eligible Executive is notified of his right to participate in the Plan; or (c) December 15 of any calendar year if (a) and (b) above do not apply.
Section 2.11 "Executive" means any member of management of the Company.
Section 2.12 "401(k) Plan" means the Weis Markets, Inc. Retirement Savings Plan, as it may be amended from time to time, and any successor plan.
Section 2.13 "Participant" means an Executive who is participating in the Plan.
Section 2.14 "Plan" means the Supplemental Executive Retirement Plan for Weis Markets, Inc. described in this instrument, as it may be amended from time to time.
Section 2.15 "Profit Sharing Plan" means the Weis Markets, Inc. Profit Sharing Plan, as it may be amended from time to time, and any successor plan.
Section 2.16 "Retirement" means a Participant's termination of employment with the Company and its subsidiaries after attaining age 65.
Section 2.17 "Subaccounts A and B" mean the subdivisions of each Participant's Account created pursuant to Article V.
Section 2.18 "Termination of Service" or similar expression means the termination of the Participant's employment as an employee of the Company and its subsidiaries, other than Retirement or by reason of death or disability.
Section 2.19 Titles. Titles of the Articles of this Plan are included for ease of reference only and are not to be used for the purpose of construing any portion or provision of this Plan document.
Section 2.20 Gender and Number. Wherever the context so requires, masculine pronouns include the feminine and singular words shall include the plural.
ARTICLE III
ELIGIBILITY
Section 3.01 Selection. Eligibility for participation in this Plan shall be determined by a two step process. First, the Executive Compensation Committee of the Board of Directors shall make a recommendation of potential Participants to the Board of Directors. This list may be based upon recommendations from the Executive Committee of Weis Markets, Inc. Second, the Board of Directors shall consider the recommendation of the Executive Compensation Committee and make the final determination based upon a majority vote.
Section 3.02 Participation. An Executive, after having been selected for participation by the Board of Directors, shall continue to participate until his employment with the Company terminates, or such earlier date as of which the Committee suspends his participation.
ARTICLE IV
DEFERRAL OF COMPENSATION
Section 4.01 Salary Deferral. Each Participant may have a percentage of his Compensation deferred in accordance with the terms and conditions of this Plan. The percentage of Compensation to be deferred under this section shall not exceed 15% of Compensation with the amount deferred into the 401(k) Plan first deducted from the deferral amount under this Plan.
Section 4.02 Deferral Agreement. A Participant desiring to have a percentage of his Compensation deferred under the Plan must submit a written Deferral Agreement to the Committee on or before the applicable Election Date. A valid Deferral Agreement filed by the applicable Election Date as provided in Section 2.09 (a) or (b) shall cause Compensation not yet earned to be deferred starting in the calendar year in which such Agreement is made. Deferral Agreements entered into under the conditions of Section 2.08(c) shall cause Compensation to be deferred beginning January 1 of the next calendar year.
Section 4.03 No Deferral Without Agreement. A Participant who has not submitted a valid Deferral Agreement to the Committee before the relevant Election Date may not defer any Compensation for the applicable calendar year under this Plan.
Section 4.04 Duration of Deferral Agreement. Deferral Agreements remain in effect until revoked or modified by the filing of a new Deferral Agreement.
Section 4.05 Revocation or Modification of Deferral. Future deferrals of Compensation may be stopped, reduced or increased at any time by filing a new Deferral Agreement. Such modification shall be effective as soon as feasible for the Company. Notwithstanding the foregoing, no Deferral Agreement filed after incentive compensation is earned shall affect the amount of deferral from such incentive compensation.
ARTICLE V
PARTICIPANT BOOKKEEPING ACCOUNTS
Section 5.01 Maintenance of Account. The Company shall maintain on its books a supplemental retirement account for each Participant. Each Account shall be divided into Subaccounts A and B, to which amounts shall be credited as follows:
(a) Deferred Compensation Credits. As of each date elective deferrals are contributed for a Participant to the 401(k) Plan, or would be contributed but for the Internal Revenue Code limitations thereon, the Participant's Deferred Compensation shall be credited to his Subaccount A.
(b) Profit-Sharing Credits. As of each date the Company makes a contribution under the Profit-Sharing Plan, the Participant's Subaccount B shall be credited with the amount, if any, that would have been allocated to the Participant's Profit Sharing Plan account if
(i) he had not been excluded from participation in the Profit Sharing Plan,
(ii) the Company had increased its Profit Sharing Plan contributed by the amount of the Participant's allocation, and
(iii) the Internal Revenue Code provisions limiting his Profit Sharing Plan allocation did not apply.
(c) ESOP Credits. As of each date the Company makes a contribution to the ESOP, the Participant's Subaccount B shall be credited with the amount, if any, that would have been allocated to the Participant's ESOP account if
(i) he had not been excluded from participation in the ESOP,
(ii) the Company had increased its ESOP contribution by the amount of the Participant's allocation, and
(iii) the Internal Revenue Code provisions limiting his ESOP allocation did not apply.
(d) Discretionary Credits. The Committee may at any time credit additional amounts to the Account(s) of one or more Participants, in its sole discretion.
Section 5.02 Hypothetical Investment Results for Subaccount A. Each amount credited to a Participant's Subaccount A shall be adjusted in the same manner as if such amount had been invested for the Participant in the 401(k) Plan. These amounts shall be credited to Subaccount A at the same intervals as amounts invested in the 401(k) Plan.
Section 5.03 Hypothetical Investment Results for Subaccount B. Each amount credited to a Participant's Subaccount B shall be adjusted periodically in the same manner as if such amount had been invested for the Participant in the Profit Sharing Plan. Amounts credited to Subaccount B shall be adjusted at the same intervals as amounts invested in the Profit-Sharing Plan.
Section 5.04 Conclusion of Company Contributions. A Participant who terminates service prior to Retirement shall not receive credits to Subaccount B from the Company for the year of termination.
ARTICLE VI
DISTRIBUTION
Section 6.01 Distribution of Account Balance. Distribution of the value of a Participant's Subaccount A balance shall be made according to the terms of the Participant's Deferral Agreement and this Plan. Distribution of the vested portion of the Participant's Subaccount B balance shall be made according to the terms of the Participant's Deferral Agreement in the event of the Participant's Retirement or disability. In the event of Participant's Termination of Service, he shall not receive credits to Subaccount B for the year of termination.
Section 6.01.1 Termination of Service. In the event of Termination of Service, the Participant shall receive the value of Subaccount A and the vested portion of Subaccount B as soon as administratively possible upon the occurrence of one of the following events, whichever is sooner:
(a) After five years from the end of the Plan year following the Termination of Service; or
(b) After the end of the Plan year in which the Participant reaches the age of 65.
Section 6.02 Vested Rights. Each Participant shall have a vested right
(a) to the value of his Subaccount A; and
(b) to the value of his Subaccount B to the extent his Profit-Sharing Plan account is vested (or would have been vested if he had not been excluded from the Profit-Sharing Plan).
Section 6.03 Change of Control. All participants shall be vested fully in their Account values in the event of a change of a control of the Company. For purposes of this Plan, change of control means
(a) acquisition of the beneficial ownership of at least 51% of the voting securities of Weis Markets, Inc. by any individual or other person or group of persons who have agreed to act together for the purpose of acquiring, holding, voting or disposing of such securities; or
(b) any merger or consolidation of Weis Markets, Inc., or transfer of all or substantially all of its assets to a buyer, in which stockholders of Weis Markets, Inc. before such merger, consolidation or transfer do not own more than 51% of the outstanding voting power of the surviving entity following such transaction.
Section 6.04 Forfeiture for Cause. Notwithstanding Sections 6.01, 6.01.1 and 6.02, a Participant whose employment is terminated for cause or who engages in competition with the Company shall be subject to forfeiture as set forth below. For purposes of this Section, cause means willful misconduct relating to the business of the Company and competition means competition in the capacity of proprietor, employee, officer, director, independent contractor or owner of more than 5% of the equity interest in an enterprise, with any business in which the Company is engaged, unless specifically authorized by the Board of Directors.
Section 6.04.1 Forfeiture of Subaccount A. A Participant subject to
forfeiture as set forth in Section 6.04 shall be entitled to the lesser of
(i) the Deferred Compensation for the Participant; or (ii) the value of the
Participant's Subaccount A.
Section 6.04.2 Forfeiture of Subaccount B. A Participant subject to forfeiture as set forth in Section 6.04 shall forfeit all of Subaccount B.
Section 6.05 Withholding for Taxes. The Company shall be entitled to withhold any and all taxes of any nature required by any government to be withheld with respect to amounts credited or distributed under the Plan.
ARTICLE VII
BENEFICIARY
Section 7.01 Beneficiary Designation. Each Participant shall designate a Beneficiary to receive benefits under the Plan in the event of his death by completing a Beneficiary designation form furnished by the Committee. A Participant may change his Beneficiary designation by submitting to the Committee another Beneficiary designation form. However, no change of Beneficiary shall be effective until acknowledged in writing by the Company.
Section 7.02 Proper Beneficiary. If no designated Beneficiary survives the Participant, the value of the Participant's Account shall be paid to the Participant's surviving spouse, or if none, to the Participant's issue per stirpes, or if none, to the Participant's estate. If the Company has any doubt as to the proper Beneficiary to receive payments hereunder, the Company shall have the right to withhold such payments until the matter is finally adjudicated. However, any payment made by the Company, in good faith and in accordance with this Plan, shall fully discharge the Company from all further obligations with respect to that payment.
Section 7.03 Minor or Incompetent Beneficiary. In making any payments to or for the benefit of any minor or incompetent Beneficiary, the Committee, in its sole and absolute discretion, may cause distribution to be made to a legal or natural guardian or relative of a minor or incompetent. Or, it may make a payment to any adult with whom the minor or incompetent temporarily or permanently resides. The receipt by a guardian, relative or other person shall be a complete discharge to the Company with respect to the payment. Neither the Committee nor the Company shall have any responsibility to see to the proper application of any payment so made.
ARTICLE VIII
ADMINISTRATION OF THE PLAN
Section 8.01 Committee. The Plan shall be administered by the Committee. The Committee may delegate to one more individuals its powers or responsibilities under the Plan. All resolutions or other actions taken by the Committee shall be voted by a majority of those present, or in writing by all the members at the time in office in the event they act without a meeting.
Section 8.02 Finality of Determination. Subject to the terms of the Plan the Committee shall, from time to time, establish rules, forms and procedures for the administration of the Plan. Except as herein otherwise expressly provided, the Committee shall have the exclusive right and discretion to interpret the Plan and to decide any and all matters arising thereunder or in connection with the administration of the Plan. The decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan.
Section 8.03 Certificates and Reports. The members of the Committee and the officers and directors of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants, and on all opinions given by any duly appointed legal counsel, which legal counsel may be counsel for the Company.
Section 8.04 Indemnification and Exculpation. The Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities relating to the Plan, unless arising out of his willful misconduct. Expenses against which a member of the Committee shall be indemnified hereunder shall include, without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member of the Committee may be entitled.
Section 8.05 Expenses. The expenses of administering the Plan shall be borne by the Company.
ARTICLE IX
CLAIMS PROCEDURE
Section 9.01 Written Claim. The value of a Participant's Account shall be paid in accordance with the provisions of this Plan and any applicable Deferral Agreement. The Participant or Beneficiary shall make a written request for benefits under this Plan. This written claim shall be mailed or delivered to the Committee.
Section 9.02 Denied Claim. If the claim is denied in full or in part, the Committee shall provide a written notice within ninety (90) days setting forth the specific reasons for denial, the Plan provisions on which it is based, any additional material or information that is necessary, and explanation of the steps to be taken if a review of the denial is desired.
Section 9.03 Review Procedure. If the claim is denied and a review is desired, the Participant (or Beneficiary) shall notify the Committee in writing within sixty (60) days after receipt of the written notice of denial (a claim shall be deemed denied if the Committee does not take any action within the aforesaid ninety (90) day period). In requesting a review, the Participant (or Beneficiary) may review the Plan document and other pertinent documents, may submit any written issues and comments, may request an extension of time for such written submission of issues and comments, and may request that a hearing be held, but the decision to hold a hearing shall be within the sole discretion of the Committee.
Section 9.04 Committee Review. The decision on the review of the denied claim shall be rendered by the Committee within sixty (60) days after the receipt of the request for review (if a hearing is not held) or within sixty (60) days after the hearing if one is held. The decision shall be written and shall state the specific reasons for the decision, including reference to specific provisions of this Plan, on which the decision is based.
ARTICLE X
NATURE OF COMPANY'S OBLIGATION
Section 10.01 Company's Obligation. The Company's obligations under this Plan shall be unfunded.
Section 10.02 Creditor Status. Any assets which the Company may acquire or set aside to help cover its financial liabilities are and must remain general assets of the Company subject to the claims of its creditors. Neither the Company nor this Plan gives the Participant any beneficial ownership interest in any asset of the Company. All rights of ownership in any such assets are and remain in the Company and Participants and their Beneficiaries shall have only the rights of general creditors of the Company.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Written Notice. Any notice which shall or be or may be given under the Plan or a Deferral Agreement shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Committee, such notice shall be addressed to 1000 South Second Street, Sunbury, Pennsylvania 17801, and marked for the attention of the Executive Compensation Committee, or if notice to a Participant, addressed to the address shown on the Participant's Deferral Agreement.
Section 11.02 Change of Address. Any Participant or the Committee may, from time to time, change the address to which notices shall be mailed by the other by giving written notice of a new address.
Section 11.03 Amendment and Termination. The Company retains the sole and unilateral right to terminate, amend, modify, or supplement this Plan, in whole or in part at any time. This right includes the right to make retroactive amendments. However, no exercise of this right shall reduce the Account of any Participant or his Beneficiary.
Section 11.04 Nontransferability. Except insofar as prohibited by applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Plan shall be valid or recognized by the Company. Neither the Participant, his spouse, or designated Beneficiary shall have any power to hypothecate, mortgage, commute, modify or otherwise encumber in advance of any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or maintenance, owed by the Participant or his Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. Notwithstanding the foregoing, the Company shall pay benefits in accordance with a qualified domestic relations order as defined in the Employee Retirement Income Security Act of 1974, and benefits payable under the Plan may be applied by the Company to discharge obligations of the Participant, his Beneficiary or estate to the Company.
Section 11.05 Acceleration of Payment. The Company reserves the right to accelerate the payment of any benefits payable under this Plan at any time without the consent of the Participant, his estate, his Beneficiary or any other person claiming through the Participant.
Section 11.06 Applicable Law. This Plan shall be governed by the laws of the United States, and to the extent permitted thereby by the laws of the Commonwealth of Pennsylvania. Any dispute or interpretation of the Plan shall be litigated in the Court of Common Pleas of Northumberland County, Pennsylvania.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officers on this 1st day of January, 1994, effective as of January 1, 1994.
ATTEST: WEIS MARKETS, INC.
//William R. Mills //Robert F. Weis
------------------------------- BY:-----------------------------------
Chairman of the Board
Its:----------------------------------
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EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of January 1, 2002 by and between WEIS MARKETS, INC., a Pennsylvania corporation (the "Company"), and NORMAN S. RICH (the "Executive"),
WITNESSETH THAT:
WHEREAS, the Executive is currently serving as President of the Company, and the Company desires to retain the Executive to continue to serve in such capacity or capacities as the Board of Directors of the Company (the "Board") or the Chairman of the Board (the "Chairman") may from time to time determine, and the Executive is willing to continue to serve in such capacity or capacities, on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto, each intending to be legally bound hereby, agree as follows:
1. Employment. The Company agrees to continue to employ the Executive, and the Executive agrees to continue to be employed by the Company, for the Term provided in Paragraph 3(a) below and upon the other terms and conditions hereinafter provided. The Executive hereby represents and warrants that he has the legal capacity to execute and perform this Agreement, that it is a valid and binding agreement, enforceable against him according to its terms, and that its execution and performance by him do not violate the terms of any existing agreement or understanding to which the Executive is a party.
2. Position and Responsibilities. During the Term, the Executive agrees to serve as the President of the Company or in such other executive capacity or capacities for the Company and/or any of its subsidiaries or affiliated companies as the Board or the Chairman may from time to time determine. The Executive also agrees to serve, if elected and without additional compensation, as a member of the Board and/or as an officer and director of any other parent, subsidiary or affiliate of the Company.
3. Term and Duties.
(a) Term of Agreement. The term of the Executive's employment under this Agreement shall commence on January 1, 2002 and shall continue thereafter through December 31, 2006 (the "Term").
(b) Duties. During the Term, and except for illness or incapacity and reasonable vacation periods of not less than five weeks in any calendar year (or such greater periods as shall be consistent with the Company's policies for other key the Executives), the Executive shall devote all of his business time, attention, skill and efforts exclusively to the business and affairs of the Company and its subsidiaries and affiliates, shall not be engaged in any other business activity, and shall perform and discharge well and faithfully the duties which may be assigned to him from time to time by the Board or the Chairman; provided, however, that nothing in this Agreement shall preclude the Executive from devoting time during reasonable periods required for:
(i) serving, in accordance with the Company's policies and with the prior approval of the Board or the Chairman, which prior approval will not be unreasonably withheld, as a director of any company or organization involving no actual or potential conflict of interest with the Company or any of its subsidiaries or affiliates;
(ii) delivering lectures and fulfilling speaking engagements;
(iii) engaging in charitable and community activities; and
(iv) investing his personal assets in businesses in which his participation is solely that of an investor in such form or manner as will not violate Section 7 below or require any services on the part of the Executive in the operation or the affairs of such business, provided, however, that such activities do not materially affect or interfere with the performance of the Executive's duties and obligations to the Company.
4. Compensation. For all services rendered by the Executive in any capacity required hereunder during the Term, including, without limitation, services as an the Executive, officer, director, or member of any committee of the Company or any subsidiary, affiliate or division thereof, the Executive shall be compensated as set forth below:
(a) Base Salary. The Executive shall be paid a fixed salary ("Base Salary") of $580,000 per annum as of the effective date of this Agreement. The Base Salary amount is subject to periodic review and adjustment by the Board or its Executive Compensation Committee but shall not be less than $580,000 per annum during the Term of this Agreement. Base Salary shall be payable in accordance with the customary payroll practices of the Company, but in no event less frequently than monthly.
(b) Bonus. The Executive shall be eligible to participate in such annual or long-term bonus or incentive plans as the Company shall from time to time maintain for its senior the Executives. The basis for the Executive's participation shall be the same as for other similarly situated the Executives, and it is understood that awards under any such plan may be discretionary.
(c) Equity-Based Compensation. The Executive shall be eligible to participate in, and to be granted stock options, stock appreciation rights or other equity-based awards under, the Company's 1995 Stock Option Plan or such other stock option, stock ownership, stock incentive or other equity-based compensation plans as the Company shall from time to time maintain for its senior the Executives. The basis for the Executive's participation shall be the same as for other similarly situated the Executives, and it is understood that awards under any such plan may be discretionary.
(d) SERP Contribution. During the Term, the Company's annual contributions to the Executive's accounts under the Company's Supplemental Executive Retirement Plan (together with any successor plan, the "SERP") shall not be less than $30,000.
(e) Additional Benefits. Except as modified by this Agreement, the Executive shall be entitled to participate in all compensation or employee benefit plans or programs, and to receive all benefits, perquisites and emoluments, for which any member of senior management at the Company is eligible under any plan or program now or hereafter established and maintained by the Company for senior officers, to the extent permissible under the general terms and provisions of such plans or programs and in accordance with the provisions thereof, including group hospitalization, health, dental care, senior executive life or other life insurance, travel or accident insurance, disability plans, tax-qualified or non-qualified pension, savings, thrift and profit- sharing plans, deferred compensation plans, sick-leave plans, auto allowance or auto lease plans, and executive contingent compensation plans, including, without limitation, capital accumulation programs and stock purchase plans. Notwithstanding the foregoing, the Executive acknowledges and agrees that the severance payments provided in certain circumstances under this Agreement are in lieu of any rights which the Executive might otherwise have under any and all other displacement, separation or severance plans or programs of the Company, and the Executive hereby waives all rights to participate in any of such plans or programs in the event of the termination of his employment during the Term.
5. Business Expenses. The Company shall pay or reimburse the Executive for all reasonable travel and other expenses incurred by the Executive (and his spouse where there is a legitimate business reason for his spouse to accompany him) in connection with the performance of his duties and obligations under this Agreement, subject to the Executive's presentation of appropriate vouchers in accordance with such policies and procedures as the Company from time to time establish for senior officers.
6. Effect of Termination of Employment; Effect of Disability.
(a) Without Cause Termination or Termination by the Executive for Good Reason. Subject to the provisions of Section 7 below, in the event the Executive's employment hereunder terminates due to either a Without Cause Termination (as defined in Section 6(f)(iii)) or a termination by the Executive for Good Reason (as defined in Section 6(f)(ii)):
(i) earned but unpaid Base Salary as of the Date of Termination (as defined in Section 14(b)) and any earned but unpaid bonuses for prior years (collectively, the "Accrued Obligations"), shall be payable in full, and the Company shall, as liquidated damages or severance pay, or both:
(A) continue to pay the Executive's Base Salary, as in effect at the Date of Termination, from the Date of Termination until the end of the Term, and
(B) pay to the Executive for the year of termination and for each subsequent calendar year or portion thereof during the remainder of the Term, an amount (prorated in the case of any partial year) equal to the highest annual incentive bonus received by the Executive for any year in the three years preceding the Date of Termination, such payments to be made at the normal times for payment of bonuses under the Company's annual bonus plan as in effect at the Date of Termination (the "Bonus Plan").
With respect to the payments provided for in this Section 6(a)(i), the Executive shall be entitled, to the extent permitted by law as determined by the Company in good faith, to participate in any compensation deferral plans or arrangements then provided by the Company to senior the Executives on the same basis as if he had remained an employee through the end of the Term.
(ii) Until the end of the Term, the Company shall pay to the Executive, in lieu of Company contributions to the SERP and at the time such contributions would otherwise have been made to the SERP, the amount of $30,000 per year.
(iii) The Company shall continue to provide the Executive and the Executive's spouse through December 31, 2001 with medical, dental, accident, disability and life insurance benefits upon substantially the same terms and conditions (including contributions required by the Executive for such benefits) as those of the applicable employee benefit plans in effect from time to time as applied to employees; provided, however, that if the Executive or his spouse cannot continue to participate under the terms of the Company plans providing such benefits, the Company shall otherwise provide such benefits on (as nearly as reasonably practicable) the same after-tax basis as if continued participation had been permitted. Notwithstanding the foregoing, in the event the Executive becomes re- employed with another employer and becomes eligible to receive welfare benefits from such employer, the welfare benefits described herein shall be secondary to such benefits during the period of the Executive's eligibility, but only to the extent that the Company reimburses the Executive for any increased cost and provides any additional benefits necessary to give the Executive the benefits provided hereunder.
(iv) The Executive shall be entitled to vested benefits under all other compensation or benefit plans in which the Executive participated as of the date of termination, as determined under the terms of the applicable plan or agreement.
(b) Disability. In the event of the Executive's Disability, the Company may, by giving a Notice of Disability as provided in Section 14(c), remove the Executive from active employment and in that event shall provide the Executive with the same payments and benefits as those provided in Section 6(a), except that:
(i) Base Salary payments under Section 6(a)(i)(A) shall be at the rate 50% of the Executive's Base Salary as in effect at the Date of Disability;
(ii) in lieu of the bonus payments provided in Section 6(a)(i)(B), the Executive shall receive, at the same time as bonus payments for the year of Disability would otherwise be made under the Bonus Plan, a prorated bonus for the year of Disability only equal to the amount determined by the Company in good faith (which determination shall be final and conclusive) to be the amount of the bonus award the Executive would have received if he had been employed throughout the bonus year, prorated on a daily basis as of the Date of Disability; and
(iii) except for Accrued Obligations, Base Salary payments shall be offset by any amounts otherwise payable to the Executive under the Company's disability program generally available to other employees.
(c) Retirement. In the event the Executive's employment hereunder terminates due to Retirement:
(i) Accrued Obligations as of the Date of Retirement shall be payable in full;
(ii) the Company shall pay to the Executive, at the same time as bonus payments for the year of Retirement would otherwise be made under the Bonus Plan, a prorated bonus for the year of Retirement only equal to the amount determined by the Company in good faith (which determination shall be final and conclusive) to be the amount of the bonus award the Executive would have received if he had been employed throughout the bonus year, prorated on a daily basis as of the Date of Retirement;
(iii) the Company shall continue to provide the Executive and the
Executive's spouse through December 31, 2011 with medical, dental,
accident, disability and life insurance benefits in accordance with
Section 6(a)(iii) above; and
(iv) the Executive shall receive such retirement and other benefits as he is entitled to receive under the terms of the Company' retirement and other compensation and benefit plans, as determined under the terms of the applicable plan or agreement.
(d) Death. In the event the Executive's employment hereunder terminates due to death:
(i) Accrued Obligations as of the date of death shall be payable in full;
(ii) from the date of the Executive's death until the end of the Term, the Company shall, at the same times Base Salary would otherwise be payable hereunder, make payments at the rate of 50% of the Executive's Base Salary in effect at the date of death to (A) the Executive's spouse at the date of his death, should she survive him and (B) following the death of the Executive's spouse or should she not survive him, to the Executive's estate;
(iii) the Company shall pay to the Executive's estate, at the same time as bonus payments for the year of death would otherwise be made under the Bonus Plan, a prorated bonus for the year of death only equal to the amount determined by the Company in good faith (which determination shall be final and conclusive) to be the amount of the bonus award the Executive would have received if he had been employed throughout the bonus year, prorated on a daily basis as of the date of death; and
(iv) in the event the Executive is survived by his spouse, the Company shall continue to provide the Executive's spouse through December 31, 2011 with medical and dental insurance benefits in accordance with Section 6(a)(iii) above;
(e) Other Termination of Employment. In the event the Executive's employment hereunder terminates due to a Termination for Cause or the Executive terminates employment with the Company other than for Good Reason, Disability, Retirement or death, Accrued Obligations and vested benefits as of the Date of Termination shall be payable in full. No other payments shall be made, or benefits provided, by the Company except for benefits which have already become vested under the terms of employee benefit programs maintained by the Company or its affiliates for its employees generally as provided in Section 10.
(f) Definitions. For purposes of this Agreement, the following terms, when capitalized, shall have the following meanings unless the context otherwise requires:
(i) "Termination for Cause" means, to the maximum extent permitted by applicable law, a termination of the Executive's employment by the Company by a vote of the majority of the Board members then in office, because the Executive (a) has been convicted of, or has entered a plea of nolo contendere to, a criminal offense involving moral turpitude, or (b) has willfully continued to fail to substantially perform his duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such failure subsequent to the Executive being delivered a Notice of Termination without Cause by the Company or delivering a Notice of Termination for Good Reason to the Company) after a written demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties or (c) has committed an improper action resulting in personal enrichment at the expense of the Company or (d) has engaged in illegal or gross misconduct that is materially and demonstrably injurious to the Company, or (e) has violated the representations made in Section 1 above, or the provisions of Section 7 below; provided, however, that the Board has given the Executive advance notice of such Termination for Cause including the reasons therefor, together with a reasonable opportunity for the Executive to appear with counsel before the Board and to reply to such notice.
(ii) a "termination by the Executive for 'Good Reason'" shall mean a termination of his employment by the Executive:
(A) by a Notice of Termination given during the period beginning 30 days and ending 180 days following the occurrence of a Change of Control, regardless of the reason or lack of reason for such termination; or
(B) by a Notice of Termination given otherwise during the period beginning on the date of a Change of Control and ending on the second anniversary of the date of the Change of Control due to:
(1) any change in the duties or responsibilities (including reporting responsibilities) of the Executive that is inconsistent in any material and adverse respect with the Executive's position(s), duties, responsibilities or status with the Company immediately prior to such Change of Control (including any material and adverse diminution of such duties or responsibilities);
(2) a material and adverse change in the Executive's titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change of Control;
(3) a material and adverse change in the aggregate value of the Executive's compensation and benefits as in effect during the 12 months immediately prior to such Change of Control;
(4) any requirement of the Company that the Executive be based anywhere more than 60 miles from the office where the Executive is located at the time of the Change of Control; or
(5) the failure of the Company to obtain the assumption of this Agreement from any Surviving Corporation as contemplated in Section 6(f)(iv)(B)(4).
(C) at any time due to:
(1) any reduction without the consent of the Executive in the Executive's salary below the amount then provided for under Paragraph 4(a) hereof; or
(2) a failure of the Company or its successor to fulfill its obligations under this Agreement in any material respect. An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within 10 days after receipt of notice thereof given by the Executive shall not constitute Good Reason. The Executive's right to terminate employment for Good Reason shall not be affected by the Executive's incapacities due to mental or physical illness and the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that the Executive must provide notice of termination of employment within 180 days following the Executive's knowledge of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.
(iii) "Without Cause Termination" means a termination of the Executive's employment by the Company other than due to Disability or expiration of the Term and other than a Termination for Cause.
(iv) "Change of Control" means the occurrence of any of the following events:
(A) individuals who on the effective date of this Agreement constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the effective date, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection by such Incumbent Directors to such nomination) shall be deemed to be an Incumbent Director; provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or
(B) Any merger, consolidation, division, share exchange, sale or other transfer of assets, liquidation or other transaction or series of related transactions outside the ordinary course of business involving the Company or any of its subsidiaries (a "Business Combination"), unless immediately following such Business Combination there shall be a corporation (the "Surviving Corporation") which meets each of the following requirements: (1) the Surviving Corporation owns, directly or indirectly through subsidiaries, consolidated assets of the Company which immediately prior to the Business Combination had an aggregate book value equal to more than 75% of the book value of the Company's consolidated total assets as of the close of the most recent fiscal quarter ended on or prior to the date of the first public announcement of the Business Combination; (2) at least a majority of the voting power in the election of directors of the Surviving Corporation is held by the shareholders of the Company having such power in the election of the Board immediately prior to the Business Combination and, other than as a result of an election by such shareholders to receive consideration other than in shares of the Surviving Corporation, such voting power is held by such shareholders in substantially the same proportions as immediately prior to the Business Combination; (3) at least a majority of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; and (4) the Surviving Corporation, if other than the Company, shall have expressly assumed in writing the obligations of the Company under this Agreement.
(v) "Disability" for purposes of this Agreement means the Executive shall be disabled so as to be unable to perform for 180 days in any 365-day period, with or without reasonable accommodation, the essential functions of his positions under this Agreement, as determined by a person or entity experienced in this field selected by the Company and acceptable to the Executive or his representative.
(vi) "Retirement" means a voluntary termination of his employment by the Executive (1) on or after attainment of age 65, (2) on not less than 6 months' Notice of Retirement as provided in Section 14 and (4) under circumstances not constituting a Termination for Cause, Without Cause Termination, termination for Good Reason, Disability or death.
(vii) The "Date of Termination," "Date of Disability" and "Date of Retirement" shall have the meanings ascribed to them in Section 14. To the fullest extent permitted by applicable law, to the extent this Agreement requires the payment of Base Salary and/or the provision of coverages and benefits subsequent to the Date of Termination or Date of Disability, the Executive's Date of Termination or Date of Disability, as applicable, shall not be treated as a termination of employment (a "Benefit Plan Termination Date") from the Company for purposes of determining the Executive's rights, responsibilities and tax treatment under any and all employee pension, welfare and fringe benefit plans maintained by the Company. Rather, the Benefit Plan Termination Date shall be the day following the last day for which any Base Salary and/or coverages and benefits are required to be provided by this Agreement.
7. Other Duties of the Executive During and After Term.
(a) Confidential Information. The Executive recognizes and acknowledges that certain information pertaining to the affairs, business, suppliers, or customers of the Company or any of its subsidiaries or affiliates (any or all of such entities hereinafter referred to as the "Business"), as such information may exist from time to time, is confidential information and is a unique and valuable asset of the Business, access to and knowledge of which are essential to the performance of his duties under this Agreement. The Executive shall not, through the end of the Term or at any time thereafter, except to the extent reasonably necessary in the performance of his duties under this Agreement, divulge to any person, firm, association, corporation or governmental agency, any information concerning the affairs, business, suppliers, or customers of the Business (except such information as is required by law to be divulged to a government agency or pursuant to lawful process or such information which is or shall become part of the public realm through no fault of the Executive), or make use of any such information for his own purposes or for the benefit of any person, firm, association or corporation (except the Business) and shall use his reasonable best efforts to prevent the disclosure of any such information by others. All records and documents relating to the Business, whether made by the Executive or otherwise coming into his possession are, shall be, and shall remain the property of the Business. No copies thereof shall be made which are not retained by the Business, and the Executive agrees, on any termination of his employment, or on demand of the Company, to deliver the same to the Company.
(b) Non-Competition. During his employment by the Company, whether during or after the Term, and for a period of four years following the termination of his employment for any reason except for a Without Cause Termination or termination by the Executive for Good Reason, the Executive shall not, without express prior written approval by order of the Board, directly or indirectly, engage in, whether as an officer, director, employee, consultant, agent, partner, joint venturer, proprietor or otherwise, become interested in (other than as a shareholder owning not more than 1% of the outstanding shares of any class of securities registered under Section 12 of the Securities Exchange Act of 1934) or assist any business which (i) is in competition with the Company or any of its affiliates in the retail grocery business or (A) during his employment, in any other business in which the Company or any of its subsidiaries is then engaged or proposes to engage or (B) following the termination of his employment, in any other business which during the 12 months preceding the Executive's Date of Termination accounted for more than 2% of the Company's consolidated revenues and (ii) engages in any such business in any county in which the Company then engages in such business or any county contiguous thereto.
(c) Non-Interference. During his employment with the Company and until four years after the termination of the Executive's employment, whether during or after the Term and notwithstanding the cause of termination, the Executive shall not (i) hire or employ, directly or indirectly through any enterprise with which he is associated, any employee of the Company or any of its affiliates or (ii) recruit, solicit or induce (or in any way assist another person or enterprise in recruiting, soliciting or inducing) any such employee or any consultant, vendor or supplier of the Company or any of its affiliates to terminate or reduce such person's employment, consulting or other relationship with the Company or any of its affiliates.
(d) Remedies. The Company's obligation to make payments or provide for or increase any benefits under this Agreement (except to the extent previously vested) shall cease upon any violation of the provisions of this Section 7; provided, however, that the Executive shall first have the right to appear before the Board with counsel and that such cessation of payments or benefits shall require a vote of a majority of the Board members then in office. In addition, in the event of a violation by the Executive of the provisions of this Section 7, the Company shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, and/or to enforce the specific performance by the Executive of this Section 7 and to enjoin the Executive from any further violation, and may exercise such remedies cumulatively or in conjunction with such other remedies as may be available to the Company at law or in equity. The Executive acknowledges, however, that the remedies at law for any breach by him of the provisions of this Section 7 would be inadequate and agrees that the Company shall be entitled to injunctive relief against him in the event of any such breach.
(d) Survival; Authorization to Modify Restrictions. The covenants of the Executive contained in this Section 7 shall survive any termination of the Executive's employment for the periods stated herein, whether during or after the Term and, except as otherwise provided in this Section 7, regardless of the reason for such termination. The Executive represents that his experience and capabilities are such that the enforcement of the provisions of this Section 7 will not prevent him from earning his livelihood, and acknowledges that it would cause the Company serious and irreparable injury and cost if the Executive were to use his ability and knowledge in competition with the Company or to otherwise breach the obligations contained in this Section 7. Accordingly, it is the intention of the parties that the provisions of this Section 7 shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder thereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof to the extent required in order to render it valid and enforceable.
8. 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, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any
entity which effectuates a Change of Control (or any of its affiliated
entities) to or for the benefit of the Executive (whether pursuant to the
terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 8) (the "Payments")
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (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
Company shall pay to the Executive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all
taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the sum of
(x) the Excise Tax imposed upon the Payments and (y) the product of any
deductions disallowed because of the inclusion of the Gross-Up Payment in
the Executive's adjusted gross income and the highest applicable marginal
rate of federal income taxation for the calendar year in which the Gross-
Up Payment is to be made. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to (i) pay federal income
taxes at the highest marginal rates of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made, (ii) pay
applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes and (iii) have
otherwise allowable deductions for federal income tax purposes at least
equal to the Gross-Up Payment. Notwithstanding the foregoing provisions
of this Section 8(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Payments would not be
subject to the Excise Tax if the Payments were reduced by an amount that
is less than 5% of the portion of the Payments that would be treated as
"parachute payments" under Section 280G of the Code, then the amounts
payable to the Executive under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to the Executive
without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no
Gross-Up Payment shall be made to the Executive. The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing first
the payments under Section 6(a)(ii), unless an alternative method of
reduction is elected by the Executive. For purposes of reducing the
Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of
the amounts payable hereunder would not result in a reduction of the
Payments to the Safe Harbor Cap, no amounts payable under this Agreement
shall be reduced pursuant to this provision.
(b) Subject to the provisions of Section 8(a), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change of Control (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 Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). 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 may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-Up Payment under this Section 8 with respect to any Payments shall be made no later than 30 days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on the Executive's applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish the Executive with a written opinion to such effect. The 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 Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-Up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of the Executive. In the event the amount of the Gross- Up Payment exceeds the amount necessary to reimburse the Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made, and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Executive (to the extent he has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Executive shall cooperate, to the extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
9. Resolution of Disputes. Except as otherwise provided in Section 7(d) hereof, any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Sunbury, Pennsylvania, by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction. In the event of any arbitration, litigation or other proceeding between the Company and the Executive with respect to the subject matter of this Agreement and the enforcement of rights hereunder, the Company shall reimburse the Executive for his reasonable costs and expenses relating to such arbitration, litigation or other proceeding, including attorneys' fees and expenses, to the extent that such arbitration, litigation or other proceeding results in any: (i) settlement requiring the Company to make a payment, continue to make payments or provide any other benefit to the Executive; or (ii) judgment, order or award against the Company in favor of the Executive or his spouse, legal representative or heirs, unless such judgment, order or award is subsequently reversed on appeal or in a collateral proceeding. At the request of the Executive, costs and expenses (including attorneys' fees) incurred in connection with any arbitration, litigation or other proceeding referred to in this Section shall be paid by the Company in advance of the final disposition of the arbitration, litigation or other proceeding upon receipt of an undertaking by or on behalf of the Executive to repay the amounts advanced if it is ultimately determined that he is not entitled to reimbursement of such costs and expenses by the Company as set forth in this Section.
10. Full Settlement; No Mitigation; Non-Exclusivity of Benefits. The Company's obligation to make any payment provided for in this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to the Executive under any other severance plan, arrangement or agreement of the Company and its affiliates, and in full settlement of any and all claims or rights of the Executive for severance, separation and/or salary continuation payments resulting from the termination of his employment. In no event shall the Executive be obligated to seek other employment or to take other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and except as specifically provided herein, such amounts shall not be reduced whether or not the Executive obtains other employment. Except as provided above in this Section 10, 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 affiliates for which the Executive may qualify, nor, except as otherwise specifically provided in this Agreement, 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 affiliates, including without limitation any stock option agreement. Amounts or benefits which are vested benefits or which the Executive is otherwise entitled to receive under any such plan, program, policy, practice, contract or agreement prior to, at or subsequent to any Date of Termination, Date of Disability or Date of Retirement shall be paid or provided in accordance with the terms of such plan, program, policy, practice, contract or agreement except as explicitly modified by this Agreement.
11. Employment and Payments by Affiliates. Except as herein otherwise specifically provided, references in this Agreement to employment by the Company shall include employment by affiliates of the Company, and the obligation of the Company to make any payment or provide any benefit to the Executive hereunder shall be deemed satisfied to the extent that such payment is made or such benefit is provided by any affiliate of the Company.
12. Withholding Taxes. The Company may directly or indirectly withhold from any payments made under this Agreement all Federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
13. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation or entity which assumes this Agreement and all obligations and undertakings of the Company hereunder. Upon such a consolidation, merger or transfer of assets and assumption, the term, "Company" as used herein shall mean such other corporation or entity, and this Agreement shall continue in full force and effect.
14. Notices.
(a) General. All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given when delivered or 5 days after being deposited in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:
(i) To the Company:
Weis Markets, Inc.
1000 S. Second Street
P.O. Box 471
Sunbury, PA 17801
Attention: _______________
(ii) To the Executive:
Norman S. Rich
28 Beth Ellen Drive
Lewisburg, PA 17837
or to such other address as the addressee party shall
have previously specified in writing to the other.
(b) Notice of Termination. Except in the case of death of the
Executive, any termination of the Executive's employment hereunder,
whether by the Executive or the Company, shall be effected only by a
written notice given to the other party in accordance with this Section
14 (a "Notice of Termination"). Any Notice of Termination shall (i)
indicate the specific termination provision in Section 6 relied upon,
(ii) in the case of a termination by the Company for Cause or by the
Executive for Good Reason, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination and (iii)
specify the effective date of such termination of employment (the "Date
of Termination"), which shall not be less than 15 days nor more than 60
days after such notice is given. The failure of the Executive or the
Company to set forth in any Notice of Termination any fact or
circumstance which contributes to a showing of Cause or Good Reason 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.
(c) Notice of Disability. Any finding of Disability by the Company shall be effected only by a written notice given to the Executive in accordance with this Section 14 (a "Notice of Disability"). Any Notice of Disability shall (i) set forth in reasonable detail the facts and circumstances claimed to provide a basis for such finding of Disability and (ii) specify an effective date (the "Date of Disability"), which shall not be less than 10 days after such notice is given. The failure of the Company to set forth in any Notice of Disability any fact or circumstance which contributes to a showing of Disability shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company's rights hereunder.
(d) Notice of Retirement. Retirement shall be effected only by a written notice given by the Executive in accordance with this Section 14 (a "Notice of Retirement"). Any Notice of Retirement shall (i) indicate that it is a Notice of Retirement and (ii) specify an effective date (the "Date of Retirement) which shall not be less than six months after such notice is given.
15. No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect; provided, however, that nothing in this Section 15 shall preclude the assumption of such rights by executors, administrators, or other legal representatives of the Executive or his estate or their assigning any rights hereunder to the person or persons entitled thereto.
16. Source of Payments. Subject to Section 11 hereof, all payments provided for under this Agreement shall be paid in cash from the general funds of the Company. The Company shall not be required to establish a special or separate fund or other segregation of assets to assure such payments, and, if the Company shall make any investments to aid it in meeting its obligations hereunder, the Executive shall have no right, title or interest whatever in or to any such investments except as may otherwise be expressly provided in a separate written instrument relating to such investments. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor.
17. Binding Agreement. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Company and, as permitted by this Agreement, their respective successors, assigns, heirs, beneficiaries and representatives.
18. Governing Law. The validity, interpretation, performance and enforcement of this Agreement shall be governed exclusively by the laws of the Commonwealth of Pennsylvania, without regard to principles of conflicts of laws thereof.
19. Counterparts; Headings. This Agreement may be executed in counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. The underlined Section headings contained in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of any provision hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officer thereunto duly authorized, and the Executive has signed this Agreement, all as of the date first above written.
WEIS MARKETS, INC.
By: //Robert F. Weis
---------------------------
Name: ROBERT F. WEIS
Title: Chairman of the Board
& Treasurer
//Norman S. Rich
---------------------------
NORMAN S. RICH
|
WEIS MARKETS, INC.
1000 S. Second St. P. O. Box 471 Sunbury, PA 17801-0471
As of March 5, 2001
FROM: Robert F. Weis
Norman S. Rich
TO: Robert Hermanns
RE: Employment Agreement ("Agreement")
Dear Mr. Hermanns:
This is to confirm our understanding regarding your employment with Weis Markets, Inc. (the "Company") on the terms stated herein and in accordance with the terms of employment contained in the letter from Norman S. Rich, dated February 22, 2001, which are incorporated herein by reference. The Company agrees to employ you as vice president and chief operating officer until March 5, 2004 to perform such executive duties as are consistent with the position of vice president and chief operating officer. The Company will expect you during such time to diligently and conscientiously devote your full time to such employment and to devote your best efforts in discharging your duties of the Company.
The Company currently expects the President and Chief Executive Officer of the Company to retire on or before January 31, 2003. The Company expects that you will be considered to assume such positions upon his retirement, taking into account your performance before such date and such other factors as the Board of Directors of the Company considers relevant in its sole discretion. If you are offered such positions, it will be on terms and conditions commensurate therewith.
During the term of your employment, for your services, the Company will pay you a salary at a monthly rate of not less than $29,166.67 per month (less all amounts required to be withheld and deducted), subject to increase from time to time at the discretion of the Compensation Committee of the Board of Directors. In addition, you will be entitled to participate in the Company's 401(k) Plan, SERP and Incentive Stock Option Plan, all other incentive, savings and retirement plans, practices and programs applicable generally to other peer executives of the Company and to receive coverage under the Company's health, life, and disability insurance policies and to participate in any other welfare plans, practices or policies and to receive any other fringe benefits and vacation provided by the Company to other peer executives of the Company.
If the Company experiences a change of control:
(i) as a result of the consummation of a reorganization, merger or consolidation involving the Company, or sale or disposition of all or substantially all of the assets of the Company unless, following such transaction, all or substantially all of the persons with beneficial ownership (as defined in Rule 13(d)-3 of the Securities and Exchange Act of 1934, as amended (the "Act") aggregating 50% or more of the Company's outstanding Common Stock as of the date of this Agreement continue to own beneficially at least 50% of the successor corporation's outstanding Common Stock (including a corporation which as a result of such transactions owns all of or substantially all of the assets of the Company),
(ii) as a result of the acquisition by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act) of beneficial ownership (within the meaning of Rule 13d-3 of the Act) aggregating 50% or more of the outstanding Common Stock of the Company, or
(iii) in the event that individuals who as of the date hereof constitute the Board (the "Incumbent Board"), cease to constitute at least a majority of the Board (provided that a director subsequently elected or nominated for election contest or other threat to the composition of the then Incumbent Board, shall be considered a member of the Incumbent Board),
and if, following such change of control (a) your employment is terminated by
the Company other than for Cause (defined below), or (b) you are asked to
relocate geographically to a location that is outside of a 60-mile radius from
the present location of the Company, or (c) your responsibilities or status
are substantially changed from those which you had within the six months prior
to the change of control (excluding for this purpose an isolated,
insubstantial and inadvertent action which is remedied promptly following
notice thereof given by you)(such events described in (a), (b) or
(c) hereinafter being referred to as a "Termination"), you may terminate your
employment with the Company.
Following a Termination under such circumstances, the Company will
continue to pay you, for the balance of the term of this Agreement, on the
same periodic basis as your salary was paid to you prior to the date of
Termination, an amount (less all amounts required to be withheld and deducted)
equal to the higher of (i) the rate of salary you were receiving from the
Company as of immediately preceding the date of such change of control, or
(ii) the rate of salary you were receiving from the Company as of immediately
preceding the date of such Termination. You will also be entitled to receive
such benefits as you were vested in as of the date of Termination. Subject
to the limitations in the following sentence, the Company will provide you,
at no cost to you, with health coverage comparable to that which you had
prior to the change of control, for the term of the contract, or the first
day of the first month in which you obtain new employment providing health
benefits coverage. The Company will attempt to continue your coverage under
its then-existing health insurance policy to the extent permitted by the
insurance company and by law or, if not so permitted, the Company will seek
alternative comparable coverage.
Notwithstanding the foregoing, if you engage in "competition" with the Company, you shall no longer be entitled to receive any payments or benefits from the Company pursuant to this paragraph or otherwise. "Competition" shall mean competition in the capacity of proprietor, employee, officer, director, consultant, independent contractor or shareholder with any business in which the Company is engaged at the time of such competition unless specifically authorized by the Company's Board of Directors.
In the event that, following such Termination and before March 5, 2004, you become employed by a third party as an employee, consultant, independent contractor, agent or otherwise, any amounts owed to you under this Agreement as periodic payments, shall be reduced by an amount equal to any amounts received from such third party.
For purposes of this Agreement, the term "Cause" shall mean, in the
determination of the Board of Directors of the Company, (i) your death;
(ii) your physical or mental disability which prevents you from performing
your duties hereunder for any period of 90 or more consecutive calendar days
or 60 working days in any 120 consecutive calendar day period; (iii) your
conviction of, or pleading guilty or no contest to, a felony or other crime
having as its predicate element fraud or moral turpitude; (iv) your
commission of any wrongful act resulting in your personal enrichment at the
expense of the Company, or other illegal or gross misconduct that is
materially and demonstrably injurious to the Company; or (v) your breach of
this Agreement.
This Agreement and your employment may be terminated by the Company at any time for Cause, subsequent to which you will be entitled to no payments or benefits from the Company pursuant to this Agreement or otherwise. This Agreement shall be binding upon and inure to the benefit of both parties and on all successors and assigns of the Company, shall be governed by the law of Pennsylvania and may only be amended by a writing signed by both parties.
If this letter correctly describes our understanding, please sign two copies of this letter and return a copy to my attention.
Sincerely,
Weis Markets, Inc.
May 21, 1996
FROM: Robert F. Weis
Norman S. Rich
TO: William R. Mills
Dear Mr. Mills:
This is to confirm our understanding regarding your employment with Weis Markets, Inc. (the "Company"). The Company agrees to employ you until January 1, 2003 to perform such executive duties as may be determined and assigned to you from time to time by the Board of Directors of the Company. The Company will expect you during such time to diligently and conscientiously devote your full time to such employment and to devote your best efforts in discharging your duties of the Company.
During the term of your employment, for your services, the Company will pay you a salary at a monthly rate of not less than $10,041.67 per month (less all amounts required to be withheld and deducted), subject to increase from time to time at the discretion of the Compensation Committee of the Board of Directors. In addition, you will be entitled to continue to participate in the Company's 401(k) Plan, SERP, Incentive Stock Option Plan and Stock Appreciation Rights program, all other incentive, savings and retirement plans, practices and programs applicable generally to other peer executives of the Company and to continue to receive such coverage under the Company's health, life, and disability insurance policies as has been provided to you to date and to participate in any other welfare plans practice or policies and to receive any other fringe benefits and vacation provided by the Company to other peer executives of the Company.
If the Company experiences a change of control:
(i) as a result of the consummation of a reorganization, merger or consolidation involving the Company, or sale or disposition of all or substantially all of the assets of the Company unless, following such transaction, all or substantially all of the persons with beneficial ownership (as defined in Rule 13(d)-3 of the Securities and Exchange Act of 1934, as amended (the "Act") aggregating 50% or more of the Company's outstanding Common Stock as of the date of this Agreement continue to own beneficially at least 50% of the successor corporation's outstanding Common Stock (including a corporation which as a result of such transactions owns all of or substantially all of the assets of the Company),
(ii) as a result of the acquisition by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act) of beneficial ownership (within the meaning of Rule 13d-3 of the Act) aggregating 50% or more of the outstanding Common Stock of the Company, or
(iii) in the event that individuals who as of the date hereof constitute the Board (the "Incumbent Board"), cease to constitute at least a majority of the Board (provided that a director subsequently elected or nominated for election contest or other threat to the composition of the then Incumbent Board, shall be considered a member of the Incumbent Board),
and if, following such change of control (a) your employment is terminated other than for Cause (defined below), or (b) you are asked to relocate geographically to a location that is outside of a 60-mile radius from the present location of the Company, or (c) your responsibilities or status are substantially diminished from those which you had within the six months prior to the change of control (excluding for this purpose an isolated, insubstantial and inadvertent action which is remedied promptly following notice thereof given by you) (such events described in (a), (b) or (c) hereinafter being referred to as a "Termination"), you may terminate your employment with the Company.
Following a termination under such circumstances, the Company will continue to pay you, for the balance of the term of this Agreement, on the same periodic basis as your salary was paid to you prior to the date of Termination, an amount (less all amounts required to be withheld and deducted) equal to the higher of (I) the rate of salary you were receiving from the Company as of immediately preceding the date of such change of control, or (ii) the rate of salary you were receiving from the Company as of immediately preceding the date of such Termination. You will also be entitled to receive such benefits as you were vested in as of the date of Termination. Subject to the limitations in the following sentence, the Company will provide you, at no cost to you, with health coverage comparable to that which you had prior to the change of control, for the term of the contract, or the first day of the first month in which you obtain new employment providing health benefits coverage. The Company will attempt to continue your coverage under its then-existing health insurance policy to the extent permitted by the insurance company and by law or, if not so permitted, the Company will seek alternative comparable coverage.
In the event that, following such Termination and before January 1, 2003, you become employed by a third party as an employee, consultant, independent contractor, agent or otherwise, any amounts owed to you under this Agreement as periodic payments, shall be reduced by an amount equal to any amounts received from such third party.
For purposes of this Agreement, the term "Cause" shall mean death, prolonged disability, conviction of a felony, the commission of an act resulting in your personal enrichment at the expense of the Company, or other illegal or gross misconduct that is materially and demonstrably injurious to the Company.
This Agreement may be terminated by the Company at any time for Cause. This Agreement shall be binding upon and inure to the benefit of both parties and on all successors and assigns of the Company, shall be governed by the law of Pennsylvania and may only be amended by a writing signed by both parties.
If this letter correctly describes our understanding, please sign two copies of this letter and return a copy to my attention.
Sincerely, //ROBERT F. WEIS //NORMAN S. RICH -------------------- --------------------- Robert F. Weis Norman S. Rich Chairman & Treasurer President |
Agreed to and Accepted