UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1994
Commission File Number 0-1532
MARSH SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0918179
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9800 CROSSPOINT BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
(Address of principal executive offices) (Zip Code)
(317) 594-2100
(Registrant's telephone number, including area code)
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 twelve months and (2) has been subject to such
filing requirements for at least the past 90 days.
<PAGE>
Number of shares outstanding of each of the issuer's classes
of common stock as of June 1, 1994:
Class A Common Stock - 3,932,598 shares
Class B Common Stock - 4,509,404 shares
---------
8,442,002 shares
=========
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
<CAPTION>
12 Weeks Ended
----------------------
June 25, June 19,
1994 1993
--------- ---------
<S> <C> <C>
Sales and other revenues $302,489 $284,767
Costs and expenses:
Cost of merchandise sold,
including warehousing and
transportation 229,892 215,524
Selling, general and
administrative 61,390 57,561
Depreciation and amortization 4,265 3,808
----- -----
Operating profit 6,942 7,874
Interest and debt expense
amortization 3,144 2,946
----- -----
Income before cumulative effect
of changes in accounting
principles 3,798 4,928
Income taxes 1,418 1,823
----- -----
Income before cumulative
effect of changes in accounting
principles 2,380 3,105
Cumulative effect of changes in
accounting principles (net of
tax benefits) Note B
- 1,941
----- -----
Net income $ 2,380 $ 5,046
========== =========
Earnings per share
Per primary share outstanding:
Before cumulative effect of
accounting changes $ .28 $ .37
Cumulative effect of
accounting changes - .23
Net income $ .28 $ .60
------- -------
Assuming full dilution:
Before cumulative effect of
accounting changes $ .27 $ .34
Cumulative effect of
accounting changes - .20
-------- -------
Net income $ .27 $ .54
======== ========
Dividends per share $ .11 $ .11
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
June 25, 1994 April 2, 1994 June 19, 1993
------------- ------------- -------------
(Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and equivalents $ 24,543 $ 24,112 $ 38,035
Accounts receivable 18,124 16,247 16,893
Inventories, less LIFO reserve; June 25, 1994 -
$18,732; April 2, 1994 - $18,780;
June 19, 1993 - $20,258 82,403 87,806 74,803
Prepaid expenses 3,912 5,261 4,598
Deferred income taxes 2,437 2,399 1,503
-------- --------- ---------
Total current assets 131,419 135,825 135,832
Property and equipment, less allowances
for depreciation 213,418 214,238 197,321
Capitalized lease property, less amortization 7,245 7,439 10,183
Other assets 16,631 17,847 15,469
-------- -------- ----------
Total Assets $368,713 $375,349 $358,805
======== ======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable to bank $ - $ 4,000 $ -
Accounts payable 48,267 50,370 38,228
Accrued liabilities 34,665 35,759 30,752
<PAGE>
Current maturities of long-term liabilities 7,278 7,246 4,486
------------ --------- -----------
Total current liabilities 90,210 97,375 73,466
Long-Term Liabilities:
Long-term debt 138,132 138,484 146,033
Capital lease obligations 10,031 10,334 11,240
------------ ---------- -----------
Total long-term liabilities 148,163 148,818 157,273
Deferred Items:
Income taxes 12,653 12,583 13,556
Other 6,443 6,779 7,675
------------ --------- -----------
Total deferred items 19,096 19,362 21,231
Shareholders' Equity:
Common stock 24,013 24,013 24,029
Retained Earnings 93,654 92,204 89,565
Cost of Common Stock in Treasury ( 6,070) ( 6,070) ( 6,070)
Notes receivable - stock options ( 353) ( 353) ( 337)
Deferred cost - employee stock plan - - ( 352)
------------ ---------- -----------
Total shareholders' equity 111,244 109,794 106,835
------------ ---------- ----------
Total Liabilities and Shareholders' Equity $368,713 $375,349 $358,805
======== ======== ========
Note: The balance sheet at April 2, 1994 has been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by generally accepted accounting principles for
complete financial statements. See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
MARSH SUPERMARKETS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
12 Weeks Ended
----------------
June 25, June 19,
1994 1993
-------- --------
<S> <C> <C>
Operating activities
Net income $ 2,380 $ 5,046
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 4,265 3,808
Amortization of other assets 1,502 1,303
Changes in operating assets and
liabilities 1,433 ( 876)
Other operating activities ( 282) 361
Cumulative effect of accounting changes - ( 1,941)
-------- --------
Net cash provided by operating activities 9,298 7,701
Investing activities
Net acquisition of property, equipment,
and land for expansion ( 2,304) (11,024)
Other investing activities ( 912) ( 1,460)
-------- --------
Net cash used for investing activities ( 3,216) (12,484)
Financing activities
Decrease in short-term borrowings ( 4,000) -
Proceeds of long-term borrowings - 2,500
Repayments of long-term debt and capital
lease obligations ( 722) ( 714)
Proceeds of public stock offering - 854
Cash dividends paid ( 929) ( 921)
Other financing activities - 570
-------- --------
Net cash provided by (used for) financing
activities ( 5,651) 2,289
Net increase (decrease) in cash and
equivalents 431 ( 2,494)
Cash and equivalents at beginning of
period 24,112 40,529
------- -------
Cash and equivalents at end of period $24,543 $38,035
======= =======
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
MARSH SUPERMARKETS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except per share amounts or as otherwise noted)
(Unaudited)
June 25, 1994
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of Marsh Supermarkets, Inc. and subsidiaries were
prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions
to Form 10-Q. Accordingly, they do not include all of the
information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles. This
report should be read in conjunction with the Company's
Consolidated Financial Statements for the year ended April 2,
1994.
The condensed consolidated financial statements for the 12 week
periods ended June 25, 1994 and June 19, 1993 were not audited
by independent auditors. In the opinion of management, the
statements reflect all adjustments (consisting of normal
recurring accruals) considered necessary to present fairly, on a
condensed basis, the financial position, results of operations,
and cash flows for the periods presented.
Certain items were reclassified for the 12 weeks ended June 19,
1993 to conform with the basis of presentation used for the 12
weeks ended June 25, 1994. Since the Company has issued
convertible debentures, earnings per share are reported on both
a "primary shares" and "fully diluted shares" basis. Refer to the
attached Exhibit 11, "Computation of Earnings per Share".
Operating results for the 12 weeks ended June 25, 1994 are not
necessarily indicative of the results that may be expected for
the full fiscal year ending April 1, 1995.
<PAGE>
Note B - Accounting Changes
Effective March 28, 1993, the Company adopted Statements of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" and No. 109,
"Accounting for Income Taxes". The cumulative effect of these
changes which were included in the financial statements for the
twelve weeks ended June 19, 1993, was as follows:
Income/
(Expense)
----------
FASB Statement No. 106 $ (2,700)
Tax effect 1,005
----------
(1,695)
FASB Statement No. 109 3,636
Cumulative effect of
accounting changes $ 1,941
===========
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Results of operations for interim periods are not indicative of
results for a full year and do not necessarily reflect the
results that may be expected for the full fiscal year ending
April 1, 1995.
<TABLE>
The following table sets forth certain income statement
components, expressed as a percentage of sales and other
revenues, and the percentage change in such components.
<CAPTION>
First Quarter
Percent of Revenues
------------------- Percent
1995 1994 Change
---- ---- ------
<S> <C> <C> <C>
Sales and other revenues 100.0% 100.0% 6.2%
Gross Profit 24.0% 24.3% 4.8%
Selling, general and administrative expenses 20.3% 20.2% 6.7%
Depreciation and amortization 1.4% 1.3% 12.0%
Operating profit 2.3% 2.8% (11.8%)
Interest and debt expense amortization 1.0% 1.0% 6.7%
Income taxes .5% .7% (22.2%)
Income before accounting changes .8% 1.1% (23.3%)
Accounting changes - .7% N/M
Net income .8% 1.8% (52.8%)
</TABLE>
<PAGE>
Sales and Other Revenues
Consolidated sales and other revenues increased by $17.7 million,
or 6.2%, to $302.5 million in the first quarter of fiscal year
1995, compared to the first quarter of fiscal year 1994.
Approximately $15.6 million of the increase was attributable to
supermarket and convenience store retail sales, $1.0 million from
wholesale sales to non-related parties by Convenience Store
Distributing Company operations (CSDC), and $.7 million from the
Company's newest division, ALLtimate Catering. Retail sales
(excluding fuel sales) increased 6.5%. The increased retail
sales are primarily attributable to stores opened in the last
twelve months. Additionally, sales in like-stores (open all
weeks of comparable quarters) improved 0.4%. Low rates of food
price inflation and competitive activity in the Indianapolis
market continued to restrain like store sales growth. The
increase at CSDC resulted from a 1.6% increase in the number of
unaffiliated stores serviced, as well as volume increases from
current customers.
<PAGE>
Gross Profit
Gross profit is net of warehousing, transportation, and
promotional expenses. Gross profit increased $3.4 million from
the comparable quarter of the prior year. As a percentage of
revenues, gross profit declined 0.3%. The decrease was primarily
attributable to lower margins in the supermarket division, which
were partially offset by gross margin improvements in the Village
Pantry division. CSDC gross profit, as a percentage of revenue,
had little impact on the change in margins. The Company
attributes the lower margins in the supermarket division to
competitive responses to the entry of a new retailer in the
Indianapolis market and to the introduction of a new frequent
shopper program. The impact of these developments was partially
offset by increased emphasis on perishable departments and an
improved merchandising mix in the new and recently enlarged
stores.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $3.8
million, or 0.1% as a percentage of revenues, from the first
quarter of fiscal year 1994. Savings from the corporate overhead
cost reduction program of $.8 million were offset by $.5 million
in increased advertising, $1.6 million in increased supermarket
division wages and related fringe benefits, and $1.3 million in
other supermarket division retail expenses. The supermarket
division expense increases were primarily attributable to higher
costs associated with stores opened in the last twelve months.
Wage expense in like-stores decreased 0.6% from the first quarter
of fiscal year 1994. As the new stores mature, the Company
expects selling, general and administrative expense to decrease,
as a percentage of revenues.
Depreciation and Amortization Expense
Depreciation and amortization expense, expressed as a percentage
of revenues, was 1.4%, an increase from 1.3% in the same quarter
of fiscal year 1994. The increase of $.5 million was
attributable to stores opened in the last twelve months.
Operating Profit
Operating profit, defined as earnings from continuing operations
before interest and taxes, was $6.9 million for the first quarter
of fiscal year 1995. This was down from $7.9 million in the
first quarter of fiscal year 1994. The decrease was primarily due
to lower gross profit margins and higher selling, general and
administrative expenses.
Interest Expense
Interest expense increased 6.7% as a percentage of revenues, or
$.2 million, in the first quarter of fiscal year 1995, compared
to the first quarter of fiscal year 1994. The increase was
primarily attributable to a reduction in capitalized construction
period interest. In the first quarter of fiscal year 1994, an
expanded construction program was in place, which resulted in an
increased level of interest capitalization. In fiscal year 1995,
the Company's construction program will be more consistent with
historical levels. For purposes of comparing the first quarter of
fiscal year 1995 to the first quarter of fiscal year 1994, the
Company's average interest rate was unchanged at 8.8%.
Income Taxes
The effective rate for income taxes was 37.3% in the first
quarter of fiscal year 1995, compared to 37.0% in the same
quarter of fiscal year 1994. The effective rate increase was due
primarily to an increased statutory federal tax rate which first
impacted the Company in the second quarter of fiscal year 1994.
<PAGE>
Cumulative Effect of Changes in Accounting Principles
Income before the cumulative effect of accounting changes was
$2.4 million, or 0.8% of revenues, for the first quarter of
fiscal year 1994, compared to $3.1 million, or 1.1% of revenues,
for the comparable period of the prior year. The decrease was
primarily due to lower gross profit margins and higher selling,
general and administrative expenses discussed previously.
In the first quarter of fiscal year 1994, the Company adopted
Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and
No. 109, "Accounting for Income Taxes". The cumulative effects of
these changes increased net income $1.9 million and are included
in the financial statements for the twelve weeks ended June 19,
1993.
Net Income
Net Income for the first quarter of fiscal year 1995 was $2.4
million, or 0.8% percent of revenues, compared to $5.0 million,
or 1.8% of revenues, for the first quarter of fiscal year 1994.
Net income for fiscal year 1994 includes the previously discussed
cumulative effect (net of income tax benefits) of adopting FASB
No. 106 and FASB No. 109.
Liquidity and Capital Resources
The Company's capital requirements have traditionally been
financed through internally generated funds, long-term borrowings
and lease financings, including capital and operating leases. In
the third and fourth quarters of fiscal year 1993, the Company
raised approximately $76 million through a private placement of
long-term fixed rate debt and a public offering of convertible
subordinated debentures and Class B Common Stock. Most of these
funds have been used for store expansion over the past 18 months.
During the first quarter of fiscal year 1995, no new stores were
opened, and one Village Pantry convenience store was closed.
The following stores are currently under construction:
Store Type Category Square
Feet Location
---------- -------- ------ --------
Superstore New 81,000 Fishers, IN
Supermarket Replacement 62,000 Muncie, IN
Convenience New 4,525 Plainfield, IN
Convenience Replacement 5,040 Indianapolis, IN
Convenience New 4,525 Indianapolis, IN
Convenience New 4,465 Brownsburg, IN
The Company is also pursuing the following projects; (i) a 4,465
square foot convenience store site in Kokomo, Indiana, and (ii) a
32,500 square foot LoBill in Lebanon, Indiana.
The completion of the 198,520 square feet of retail space from
the above projects, net of 26,400 square feet from closed stores,
will add approximately 5% to the Company's retail square footage.
The Company is also pursuing the acquisition of several
additional sites for future development. The estimated cost of
these projects, plus routine capital expenditures for fiscal year
1995, approximates $35 million. Of this amount, equipment leasing
will fund $8 to $10 million, the replacement supermarket will be
leased, and the Company believes it can finance the balance with
current cash balances and internally generated funds.
The Company's plans with respect to store construction, expansion
and remodeling may be revised in light of changing conditions,
such as competitive influences, the ability to negotiate
successfully site acquisitions or leases, zoning limitations, and
other governmental regulations. The timing of projects is
subject to normal construction and other delays. It is possible
the projects described above may not commence, others may be
added, and a portion of the planned expenditures with respect to
projects commenced during the current fiscal year may carry over
to the subsequent fiscal year.
Since June 19, 1993, the Company's inventories have increased
$7.6 million. Major components of the increase are: (i) $4.6
million at new and larger replacement retail stores, and (ii)
$3.0 million at the distribution centers in order to service the
larger and new retail units. The increase was financed through
increased trade accounts payable.
The Company's revolving credit agreements provide for borrowings
of up to $45 million, none of which was utilized at June 25,
1994. Additionally, the Company has commitments from various
banks for short-term borrowings of up to $15 million at rates
equal to, or below, prime rates of the committed banks.
Of the total long-term debt and capital lease obligations
outstanding at June 25, 1994, fixed rate obligations comprised
97% at an average interest rate of 8.9%. The remaining 3% bear
interest at fluctuating rates averaging 4.7%.
The Company historically has financed expansion through long-term
debt placements and lease financings, including capital and
operating leases. It anticipates continued access to such
financing sources. The Company's senior note agreements preclude
additional long-term borrowings if total long-term liabilities,
including capital lease obligations, would exceed 60% of
consolidated net tangible assets. Under the most restrictive
covenant in these agreements, the Company may incur approximately
$23 million of additional long-term borrowings.
PART II - OTHER INFORMATION
Item 1. Legal Procedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
Exhibit 10 - Amended and Restated 1991 Employee Stock
Incentive Plan.
Exhibit 11 - Statement Re: Computation of Per Share
Earnings
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MARSH SUPERMARKETS, INC.
August 2, 1994 By: /s/ Douglas W. Dougherty
_________________________
Douglas W. Dougherty
Chief Financial Officer
August 2, 1994 By:/s/ Michael D. Castleberry
__________________________
Michael D. Castleberry
Chief Accounting Officer and
Director of Corporate Accounting
MARSH SUPERMARKETS, INC.
1991 EMPLOYEE STOCK INCENTIVE PLAN
(as amended and restated through August 4, 1992)
SECTION 1. Purpose; Definitions.
The purpose of the Marsh Supermarkets, Inc. 1991 Employee
Stock Incentive Plan (the "Plan") is to enable Marsh
Supermarkets, Inc. (the "Corporation") to attract, retain and
reward key employees of the Corporation and its Subsidiaries and
Affiliates, and strengthen the mutuality of interests between
such key employees and the Corporation's shareholders, by
offering such key employees performance-based stock incentives
and/or other equity interests or equity-based incentives in the
Corporation, as well as performance-based incentives payable in
cash. The creation of the Plan shall not diminish or prejudice
other compensation programs approved from time to time by the
Board.
For purposes of the Plan, the following terms shall be
defined as set forth below:
A. "Affiliate" means any entity other than the Corporation
and its Subsidiaries that is designated by the Board as a
participating employer under the Plan, provided that the
Corporation directly or indirectly owns at least 20% of the
combined voting power of all classes of stock of such entity or
at least 20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the
Corporation.
C. "Book Value" means, as of any given date, on a per
share basis (i) the Common Shareholders' Equity in the
Corporation as of the end of the immediately preceding fiscal
year as reflected in the Corporation's consolidated balance
sheet, subject to such adjustments as the Committee shall specify
at or after grant, divided by (ii) the number of then outstanding
shares of Stock as of such year-end date (as adjusted by the
Committee for subsequent events).
D. "Class A Common Stock" means the Corporation's Class A
Common Stock, without par value.
E. "Class B Common Stock" means the Corporation's Class B
Common Stock, without par value.
F. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
G. "Committee" means the Committee referred to in Section
2 of the Plan.
H. "Corporation" means Marsh Supermarkets, Inc., a
corporation organized under the laws of the State of Indiana or
any successor corporation.
I. "Deferred Stock" means an award made pursuant to
Section 8 below of the right to receive Stock at the end of a
specified deferral period.
J. "Disability" means disability as determined under
procedures established for the Corporation's defined benefit
pension plan.
K. "Disinterested Person" shall have the meaning set forth
in Rule 16b-3(c)(2)(i) as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), or any successor
definition adopted by the Commission.
L. "Early Retirement" means retirement, for purposes of
the Plan with the express consent of the Corporation at or before
the time of such retirement, from active employment with the
Corporation and any Subsidiary or Affiliate pursuant to the early
retirement provisions of the Corporation's defined benefit
pension plan.
M. "Fair Market Value" means, as of any given date, unless
otherwise determined by the Committee in good faith, the reported
closing price of a share of such class of Stock on the National
Association of Securities Dealers Automated Quotation National
Market System or such other exchange or market as is the
principal trading market for such class of Stock, or, if no such
sale of a share of such class of Stock is reported on the
National Market System or other exchange or principal trading
market on such date, the fair market value of a share of such
class of Stock as determined by the Committee in good faith.
N. "Incentive Stock Option" means any Stock Option
intended to be and designated as an "Incentive Stock Option"
within the meaning of Section 422 of the Code.
O. "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
P. "Normal Retirement" means retirement from active
employment with the Corporation and any Subsidiary or Affiliate
on or after age 65.
Q. "Other Stock-Based Award" means an award under Section
10 below that is valued in whole or in part by reference to, or
is otherwise based on, Stock.
R. "Plan" means this Marsh Supermarkets, Inc. 1991
Employee Stock Incentive Plan, as hereinafter amended from time
to time.
S. "Restricted Stock" means an award of shares of Stock
that is subject to restrictions under Section 7 below.
T. "Retirement" means Normal or Early Retirement.
U. "Stock" means the Class A Common Stock and Class B
Common Stock.
V. "Stock Appreciation Right" means the right pursuant to
an award granted under Section 6 below to surrender to the
Corporation all (or a portion) of a Stock Option in exchange for
an amount equal to the difference between (i) the Fair Market
Value, as of the date such Stock Option (or such portion thereof)
is surrendered, of the shares of Stock covered by such Stock
Option (or such portion thereof), subject, where applicable, to
the pricing provisions in Section 6(b)(ii); and (ii) the
aggregate exercise price of such Stock Option (or such portion
thereof).
W. "Stock Option" or "Option" means any option to purchase
shares of Stock (including Restricted Stock and Deferred Stock,
if the Committee so determines) granted pursuant to Section 5
below.
X. "Stock Purchase Right" means the right to purchase
Stock pursuant to Section 9.
Y. "Subsidiary" means any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with
the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or
more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
In addition, the terms "Change in Control", "Potential
Change in Control" and "Change in Control Price" shall have the
meanings set forth, respectively, in Sections 11(b), (c) and (d)
below and the term "Cause" shall have the meaning set forth in
Section 5(i) below.
SECTION 2. Administration.
The Plan shall be administered by a Committee of not less
than two Disinterested Persons, who shall be appointed by the
Board and who shall serve at the pleasure of the Board. The
functions of the Committee specified in the Plan may be exercised
by an existing Committee of the Board composed exclusively of
Disinterested Persons. The initial Committee shall be the Salary
Committee of the Board.
The Committee shall have full authority to grant, pursuant
to the terms of the Plan, to officers and other key employees
eligible under Section 4: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock,
(v) Stock Purchase Rights and/or (vi) Other Stock-Based Awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of
the Corporation and its Subsidiaries and Affiliates to whom
Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Stock Purchase Rights and/or Other Stock-
Based Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock
Purchase Rights and/or Other Stock-Based Awards, or any
combination thereof, are to be granted hereunder to one or
more eligible employees;
(iii) to determine the number of shares to be covered by
each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award
granted hereunder (including, but not limited to, the share
price and any restriction or limitation, or any vesting,
acceleration or waiver or forfeiture restrictions regarding
any Stock Option or other award and/or the shares of Stock
relating thereto, based in each case on such factors as the
Committee shall determine, in its sole discretion);
(v) to determine whether and under what circumstances
a Stock Option may be settled in cash, Restricted Stock
and/or Deferred Stock under Section 5(l) or (m), as
applicable, instead of Stock;
(vi) to determine whether, to what extent and under
what circumstances Option grants and/or other awards under
the Plan and/or other cash awards made by the Corporation
are to be made, and operate, on a tandem basis vis-a-vis
other awards under the Plan and/or cash awards made outside
of the Plan, or on an additive basis;
(vii) to determine whether, to what extent and under
what circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant
(including providing for and determining the amount (if any)
of any deemed earnings on any deferred amount during any
deferral period); and
(viii) to determine the terms and restrictions applicable
to Stock Purchase Rights and the Stock purchased by
exercising such Rights.
The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan as
it shall, from time to time, deem advisable; to interpret the
terms and provisions of the Plan and any award issued under the
Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.
All decisions made by the Committee pursuant to the
provisions of the Plan shall be made in the Committee's sole
discretion and shall be final and binding on all persons,
including the Corporation and Plan participants.
SECTION 3. Shares of Stock Subject to Plan.
The aggregate number of shares of Stock reserved and
available for distribution under the Plan shall not exceed
300,000 shares. Any number of Class A Common Stock or Class B
Common Stock may be awarded so long as the total shares of Stock
awarded does not exceed 300,000 shares.
Subject to Section 6(b)(iv) below, if any shares of Stock
that have been optioned cease to be subject to a Stock Option, or
if any such shares of Stock that are subject to any Restricted
Stock or Deferred Stock award, Stock Purchase Right or Other
Stock-Based Award granted hereunder are forfeited or any such
award otherwise terminates without a payment being made to the
participant in the form of Stock, such shares shall again be
available for distribution in connection with future awards under
the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend,
Stock split or other change in corporate structure affecting the
Class A Common Stock or Class B Common Stock, or both, an
appropriate substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan,
in the number and option price of shares subject to outstanding
Options granted under the Plan, in the number and purchase price
of shares subject to outstanding Stock Purchase Rights under the
Plan, and in the number of shares subject to other outstanding
awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a
whole number. Such adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise
of any Stock Appreciation Rights associated with any Stock
Option.
SECTION 4. Eligibility.
Officers and other key employees of the Corporation and its
Subsidiaries and Affiliates (but excluding members of the
Committee and any person who serves only as a director) who are
responsible for or contribute to the management, growth and/or
profitability of the business of the Corporation and/or its
Subsidiaries and Affiliates are eligible to be granted awards
under the Plan.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to or in
tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. Any Stock Option granted under
the Plan shall be in such form as the Committee may from time to
time approve.
Stock Options granted under the Plan may be of two types:
(i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant to any
optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock
Appreciation Rights).
Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the
Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the
Committee at the time of grant but shall be not less than
100% (or, in the case of an employee who owns stock
possessing more than 10 percent of the total combined voting
power of all classes of stock of the Corporation or of any
of its subsidiary or parent corporations, not less than
110%) of the Fair Market Value of the Stock at grant, in the
case of Incentive Stock Options, and not less than 50% of
the Fair Market Value of the Stock at grant, in the case of
Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Incentive Stock Option
shall be exercisable more than ten years (or, in the case of
an employee who owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock
of the Corporation or any of its subsidiary or parent
corporations, more than five years) after the date the
Option is granted.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee at or
after grant; provided, however, that, except as provided in
Section 5(g) and (h) and Section 11, unless otherwise
determined by the Committee at or after grant, no Stock
Option shall be exercisable prior to the first anniversary
date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of
future service at a rate specified at the time of grant, or
that the Stock Option is exercisable only in installments.
If the Committee provides, in its sole discretion, that any
Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at
any time at or after grant in whole or in part, based on
such factors as the Committee shall determine, in its sole
discretion.
(d) Method of Exercise. Subject to whatever
installment exercise restrictions apply under Section 5(c),
Stock Options may be exercised in whole or in part at any
time during the option period, by giving written notice of
exercise to the Corporation specifying the number of shares
to be purchased.
Such notice shall be accompanied by payment in full of
the purchase price, either by check, note or such other
instrument as the Committee may accept. As determined by
the Committee, in its sole discretion, at or after grant,
payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or, in the
case of the exercise of a Non-Qualified Stock Option,
Restricted Stock or Deferred Stock subject to an award
hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the option is exercised, as determined
by the Committee). If payment of the exercise price is made
in part or in full with Stock, the Committee may award to
the employee a new Stock Option to replace the Stock which
was surrendered.
If payment of the option exercise price of a Non-
Qualified Stock Option is made in whole or in part in the
form of Restricted Stock or Deferred Stock, such Restricted
Stock or Deferred Stock (and any replacement shares relating
thereto) shall remain (or be) restricted or deferred, as the
case may be, in accordance with the original terms of the
Restricted Stock award or Deferred Stock award in question,
and any additional Stock received upon the exercise shall be
subject to the same forfeiture restrictions or deferral
limitations, unless otherwise determined by the Committee,
in its sole discretion, at or after grant.
No shares of Stock shall be issued until full payment
therefor has been made. An optionee shall generally have
the rights to dividends or other rights of a shareholder
with respect to shares subject to the Option when the
optionee has given written notice of exercise, has paid in
full for such shares, and, if requested, has given the
representation described in Section 14(a).
(e) Non-Transferability of Options. In the case of a
Non-Qualified Stock Option, the Committee in its discretion
may award at the time of grant or thereafter the right to
receive upon exercise of such Stock Option a cash bonus
calculated to pay part or all of the Federal income tax
incurred by the optionee upon such exercise.
(f) Bonus for Taxes. In the case of a Non-Qualified
Stock Option, the Committee in its discretion may award at
the time of grant or thereafter the right to receive upon
exercise of such Stock Option a cash bonus calculated to pay
part or all of the Federal income tax incurred by the
optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if
an optionee's employment by the Corporation and any
Subsidiary or Affiliate terminates by reason of death, any
Stock Option held by such optionee may thereafter be
exercised, to the extent such option was exercisable at the
time of death or on such accelerated basis as the Committee
may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), by
the legal representative of the estate or by the legatee of
the optionee under the will of the optionee, for a period of
one year (or such shorter period as the Committee may
specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option,
whichever period is the shorter.
(h) Termination by Reason of Disability. Subject to
Section 5(k), if an optionee's employment by the Corporation
and any Subsidiary or Affiliate terminates by reason of
Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it
was exercisable at the time of termination or on such
accelerated basis as the Committee may determine at or after
grant (or as may be determined in accordance with procedures
established by the Committee), for a period of three years
(or such shorter period as the Committee may specify at
grant) from the date of such termination of employment or
until the expiration of the stated term of such Stock
Option, whichever period is the shorter; provided, however,
that, if the optionee dies within such three-year period (or
such other period as the Committee shall specify at grant),
any unexercised Stock Option held by such optionee shall
thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of twelve
months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is
the shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Non-Qualified Stock
Option.
(i) Termination by Reason of Retirement. Subject to
Section 5(k), if an optionee's employment by the Corporation
and any Subsidiary or Affiliate terminates by reason of
Normal or Early Retirement, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the
extent it was exercisable at the time of such Retirement or
on such accelerated basis as the Committee may determine at
or after grant (or as may be determined in accordance with
procedures established by the Committee), for a period of
three years (or such shorter period as Committee may specify
at grant) from the date of such termination of employment or
the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that, if
the optionee dies within such three-year period (or such
shorter period as the Committee may specify at grant), any
unexercised Stock Option held by such optionee shall
thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of twelve
months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is
the shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, the option
will thereafter be treated as a Non-Qualified Stock Option.
(j) Other Termination. Unless otherwise determined by
the Committee (or pursuant to procedures established by the
Committee) at or after grant, if an optionee's employment by
the Corporation and any Subsidiary or Affiliate is
involuntarily terminated for any reason other than death,
Disability or Normal or Early Retirement, the Stock Option
shall thereupon terminate, except that such Stock Option may
be exercised, to the extent otherwise then exercisable, for
the lesser of three months or the balance of such Stock
Option's term if the involuntary termination is without
Cause. For purposes of this Plan, "Cause" means a felony
conviction of a participant or the failure of a participant
to contest prosecution for a felony, or a participant's
willful misconduct or dishonesty, any of which is directly
and materially harmful to the business or reputation of the
Corporation or any Subsidiary or Affiliate. If an optionee
voluntarily terminates employment with the Corporation and
any Subsidiary or Affiliate (except for Disability, Normal
or Early Retirement), the Stock Option shall thereupon
terminate; provided, however, that the Committee at grant or
thereafter may extend the exercise period in this situation
for the lesser of three months or the balance of such Stock
Option's term.
(k) Incentive Stock Options. Anything in the Plan to
the contrary notwithstanding, no term of this Plan relating
to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under
the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the
optionee(s) affected, to disqualify any Incentive Stock
Option under such Section 422.
No Incentive Stock Option shall be granted to any
participant under the Plan if the aggregate fair market
value (as of the date the Incentive Stock Option is granted)
of the Stock with respect to which all Incentive Stock
Options issued after December 31, 1986 are exercisable for
the first time by such participant during any calendar year
(under all such plans of the Company and any Subsidiary)
exceeds $100,000.
To the extent permitted under Section 422 of the Code
or the applicable regulations thereunder or any applicable
Internal Revenue Service pronouncement:
(i) if (x) a participant's employment is
terminated by reason of death, Disability or Retirement
and (y) the portion of any Incentive Stock Option that
is otherwise exercisable during the post-termination
period specified under Section 5(g), (h) or (i),
applied without regard to the $100,000 limitation
contained in Section 422(d) of the Code, is greater
than the portion of such option that is immediately
exercisable as an "incentive stock option" during such
post-termination period under Section 422, such excess
shall be treated as a Non-Qualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option
is accelerated by reason of a Change in Control, any
portion of such option that is not exercisable as an
Incentive Stock Option by reason of the $100,000
limitation contained in Section 422(d) of the Code
shall be treated as a Non-Qualified Stock Option.
(l) Buyout Provisions. The Committee may at any time
offer to buy out for a payment in cash, Stock, Deferred
Stock or Restricted Stock an option previously granted,
based on such terms and conditions as the Committee shall
establish and communication to the optionee at the time that
such offer is made.
(m) Settlement Provisions. If the option agreement so
provides at grant or is amended after grant and prior to
exercise to so provide (with the optionee's consent), the
Committee may require that all or part of the shares to be
issued with respect to the spread value of an exercised
Option take the form of Deferred or Restricted Stock, which
shall be valued on the date of exercise on the basis of the
Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regard to
the deferral limitations and/or forfeiture restrictions
involved.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of
the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and
no longer be exercisable upon the termination or exercise of the
related Stock Option, subject to such provisions as the Committee
may specify at grant where a Stock Appreciation Right is granted
with respect to less than the full number of shares covered by a
related Stock Option.
A Stock Appreciation Right may be exercised by an optionee,
subject to Section 6(b), in accordance with the procedures
established by the Committee for such purpose. Upon such
exercise, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock
Options relating to exercised Stock Appreciation Rights shall no
longer be exercisable to the extent that the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall
be subject to such terms and conditions, not inconsistent with
the provisions of the Plan, as shall be determined from time to
time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this Section
6 of the Plan; provided, however, that any Stock
Appreciation Right granted to an optionee subject to Section
16(b) of the Exchange Act subsequent to the grant of the
related Stock Option shall not be exercisable during the
first six months of its term. The exercise of Stock
Appreciation Rights held by optionees who are subject to
Section 16(b) of the Exchange Act shall comply with Rule
16b-3 thereunder, to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right,
an optionee shall be entitled to receive an amount in cash
and/or shares of Stock equal in value to the excess of the
Fair Market Value of one share of Stock over the option
price per share specified in the related Stock Option
multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
Payment in shares may be made, in the discretion of the
Committee, in either Class A Common Stock or Class B Common
Stock. When payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the
Fair Market Value of the shares on the date of exercise.
When payment is to be made in cash, such amount shall be
calculated on the basis of the average of the highest and
lowest quoted selling price, regular way, of the Stock on
the National Association of Securities Automated Quotation
National Market System or such other exchange or market as
is the principal trading market for the Stock, or, if no
such sale of Stock is reported on such date, the fair market
value of the Stock as determined by the Committee in good
faith.
(iii) Stock Appreciation Rights shall be transferable
only when and to the extent that the underlying Stock Option
would be transferable under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right,
the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in
Section 3 of the Plan on the number of shares of Stock to be
issued under the Plan, but only to the extent of the number
of shares of Stock actually issued under the Stock
Appreciation Right at the time of exercise based on the
value of the Stock Appreciation Right at such time. To the
extent that a Stock Appreciation Right is paid in cash upon
exercise, the shares of Stock which would have been issued
pursuant to the underlying Stock Option in lieu of such cash
payment shall not count towards the limitation contained in
Section 3 of the Plan and shall remain available for future
distribution under the Plan.
(v) In its sole discretion, the Committee may grant
"Limited" Stock Appreciation Rights under this Section 6,
i.e., Stock Appreciation Rights that become exercisable only
in the event of a Change in Control and/or a Potential
Change in Control, subject to such terms and conditions as
the Committee may specify at grant. Such Limited Stock
Appreciation Rights shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also
provide that, in the event of a Change in Control and/or a
Potential Change in Control, the amount to be paid upon the
exercise of a Stock Appreciation Right or Limited Stock
Appreciation Right shall be based on the Change in Control
Price, subject to such terms and conditions as the Committee
may specify at grant.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be
issued either alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside the
Plan. The Committee shall determine the eligible persons to
whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares to be awarded, the price (if
any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be
subject to forfeiture, and all other terms and conditions of the
awards.
The Committee may condition the grant of Restricted Stock
upon the attainment of specified performance goals or such other
factors as the Committee may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the
same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of
a Restricted Stock award shall not have any rights with respect
to such award, unless and until such recipient has executed an
agreement evidencing the award and has delivered a fully executed
copy thereof to the Corporation, and has otherwise complied with
the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted within
a period of 60 days (or such shorter period as the Committee
may specify at grant) after the award date, by executing a
Restricted Stock Award Agreement and paying whatever price
(if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock
award shall be issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate shall be
registered in the name of such participant, and shall bear
an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in custody by
the Corporation until the restrictions thereon shall have
lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such
award.
(c) Restrictions and Conditions. The shares of Restricted
Stock awarded pursuant to this Section 7 shall be subject to the
following restrictions and conditions:
(i) Subject to the provisions of this Plan and the
award agreement, during a period set by the Committee
commencing with the date of such award (the "Restriction
Period"), the participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock
awarded under the Plan. Within these limits, the Committee,
in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive
such restrictions in whole or in part, based on service,
performance and/or such other factors or criteria as the
Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and
Section 7(c)(i), the participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a
shareholder of the Corporation, including the right to vote
the shares, and the right to receive any cash dividends.
The Committee, in its sole discretion, as determined at the
time of award, may permit or require the payment of cash
dividends to be deferred and, if the Committee so
determines, reinvested, subject to Section 14(e), in
additional Restricted Stock to the extent shares are
available under Section 3, or otherwise reinvested.
Pursuant to Section 3 above, Stock dividends issued with
respect to Restricted Stock shall be treated as additional
shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to
the shares with respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a
participant's employment with the Corporation and any
Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction
will vest, or be forfeitured, in accordance with the terms
and conditions established by the Committee at or after
grant.
(iv) If and when the Restriction Period expires without
a prior forfeiture of the Restricted Stock subject to such
Restriction Period, certificates for an appropriate number
of unrestricted shares shall be delivered to the participant
promptly.
(d) Minimum Value Provisions. In order to better ensure
that award payments actually reflect the performance of the
Corporation and service of the participant, the Committee may
provide, in its sole discretion, for a tandem performance-based
or other award designed to guarantee a minimum value, payable in
cash or Stock to the recipient of a restricted stock award,
subject to such performance, future service, deferral and other
terms and conditions as may be specified by the Committee.
SECTION 8. Deferred Stock.
(a) Administration. Deferred Stock may be awarded either
alone, in addition to or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. The
Committee shall determine the eligible persons to whom and the
time or times at which Deferred Stock shall be awarded, the
number of shares of Deferred Stock to be awarded to any person,
the duration of the period (the "Deferral Period") during which,
and the conditions under which, receipt of the Stock will be
deferred, and the other terms and conditions of the award in
addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Stock upon
the attainment of specified performance goals or such other
factors or criteria as the Committee shall determine, in its sole
discretion.
The provisions of Deferred Stock awards need not be the same
with respect to each recipient.
(b) Terms and Conditions. The shares of Deferred Stock
awarded pursuant to this Section 8 shall be subject to the
following terms and conditions:
(i) Subject to the provisions of this Plan and the
award agreement referred to in Section 8(b)(vi) below,
Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during the
Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period referred to in Section
8(b)(v), where applicable), share certificates shall be
delivered to the participant, or his legal representative in
a number equal to the shares covered by the Deferred Stock
award.
(ii) Unless otherwise determined by the Committee at
grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares covered
by a Deferred Stock award will be paid to the recipient
currently, or deferred and deemed to be reinvested in
additional Deferred Stock, or otherwise reinvested, all as
determined at or after the time of the award by the
Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement
and this Section 8, upon termination of a participant's
employment with the Corporation and any Subsidiary or
Affiliate for any reason during the Deferral Period for a
given award, the Deferred Stock in question will vest, or be
forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) Based on service, performance and/or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Stock award and/or waive the
deferral limitations for all or any part of such award.
(v) A participant may elect to further defer receipt
of an award (or an installment of an award) for a specified
period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval
and to such terms as are determined by the Committee, all in
its sole discretion. Subject to any exceptions adopted by
the Committee, such election must generally be made at least
12 months prior to completion of the Deferral Period for
such Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to
the terms of, a Deferred Stock agreement executed by the
Corporation and the participant.
(c) Minimum Value Provisions. In order to better ensure
that award payments actually reflect the performance of the
Corporation and the service of the participant, the Committee may
provide, in its sole discretion, for a tandem performance-based
or other award designed to guarantee a minimum value, payable in
cash or Stock to the recipient of a deferred stock award, subject
to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
SECTION 9. Stock Purchase Rights.
(a) Awards and Administration. Subject to Section 3 above,
the Committee may grant eligible participants Stock Purchase
Rights which shall enable such participants to purchase Stock
(including Deferred Stock and Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at 85% of such Fair Market Value on such date;
(iii) at an amount equal to Book Value on such date; or
(iv) at a price between 85% and 100% of Fair Market
Value.
The Committee shall also impose such deferral, forfeiture
and/or other terms and conditions as it shall determine, in its
sole discretion, on such Stock Purchase Rights or the exercise
thereof.
The terms of Stock Purchase Rights awards need not be the
same with respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and
be subject to the terms of, a Stock Purchase Rights Agreement.
(b) Exercisability. Stock Purchase Rights shall generally
be exercisable for such period after grant as is determined by
the Committee not to exceed 30 days. However, the Committee may
provide, in its sole discretion, that the Stock Purchase Rights
of persons potentially subject to Section 16(b) of the Exchange
Act shall not become exercisable until six months and one day
after the grant date, and shall then be exercisable for 10
trading days at the purchase price specified by the Committee in
accordance with Section 9(a).
SECTION 10. Other Stock-Based Awards.
(a) Administration. Other awards of Stock and other awards
that are valued in whole or in part by reference to, or are
otherwise based on, Stock ("Other Stock-Based Awards"),
including, without limitation, performance shares, convertible
preferred stock, convertible debentures, exchangeable securities
and Stock awards or options valued by reference to Book Value
earnings per share or subsidiary performance, may be granted
either alone or in addition to or in tandem with Stock Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock or
Stock Purchase Rights granted under the Plan and/or cash awards
made outside of the Plan.
Subject to the provisions of the Plan, the Committee shall
have authority to determine the persons to whom and the time or
times at which such awards shall be made, the number of shares of
Stock to be awarded pursuant to such awards, and all other
conditions of the awards. The Committee may also provide for the
grant of Stock upon the completion of a specified performance
period.
The provisions of other Stock-Based Awards need not be the
same with respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made
pursuant to this Section 10 shall be subject to the following
terms and conditions:
(i) Subject to the provisions of this Plan and the
award agreement referred to in Section 10(b)(v) below,
shares subject to awards made under this Section 10 may not
be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued,
or, if later, the date on which any applicable restriction,
performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the
award agreement and unless otherwise determined by the
Committee at grant, the recipient of an award under this
Section 10 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of shares
covered by the award, as determined at the time of the award
by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to
have been reinvested in additional Stock or otherwise
reinvested.
(iii) Any award under Section 10 and any Stock covered
by any such award shall vest or be forfeited to the extent
so provided in the award agreement, as determined by the
Committee, in its sole discretion.
(iv) In the event of the participant's Retirement,
Disability or death, or in cases of special circumstances,
the Committee may, in its sole discretion, waive in whole or
in part any or all of the remaining limitations imposed
hereunder (if any) with respect to any or all of an award
under this Section 10.
(v) Each award under this Section 10 shall be
confirmed by, and subject to the terms of, an agreement or
other instrument by the Corporation and by the participant;
(vi) Stock (including securities convertible into
Stock) issued on a bonus basis under this Section 10 may be
issued for no cash consideration. Stock (including
securities convertible into Stock) purchased pursuant to a
purchase right awarded under this Section 10 shall be priced
at least 85% of the Fair Market Value of the Stock on the
date of grant.
SECTION 11. Change in Control Provisions.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 11(b)
or
(2) a "Potential Change in Control" as defined in
Section 11(c), but only if and to the extent so determined
by the Committee or the Board at or after grant (subject to
any right of approval expressly reserved by the Committee or
the Board at the time of such determination),
the following acceleration and valuation provisions shall apply:
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Stock Appreciation Rights)
outstanding for at least six months and any Stock Option
awarded under the Plan not previously exercisable and vested
shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations
applicable to any Restricted Stock, Deferred Stock, Stock
Purchase Rights and Other Stock-Based Awards, in each case
to the extent not already vested under the Plan, shall lapse
and such shares and awards shall be deemed fully vested.
(iii) Except as otherwise provided in Section 11(a)(iv)
below, the value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock
Purchase Rights and Other Stock-Based Awards, in each case
to the extent vested, shall, unless otherwise determined by
the Committee in its sole discretion at or after grant but
prior to any Change in Control, be cashed out on the basis
of the "Change in Control Price" as defined in Section 11(d)
as of the date such Change in Control or such Potential
Change in Control is determined to have occurred or such
other date as the Committee may determine prior to the
Change in Control.
(iv) In the case of any Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock,
Stock Purchase Rights or Other Stock-Based Awards held
by any person subject to Section 16 of the Exchange
Act, the value of all such Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock,
Stock Purchase Rights and Other Stock-Based Awards, in
each case to the extent that they are vested and have
been held for at least six months and one day, shall
be cashed out on the basis of the "Change in Control
Price" as defined in Section 11(d) as of the date such
Change in Control or such Potential Change in Control
is determined to have occurred, but only if the Change
in Control or Potential Change in Control is outside
the control of the grantee for purposes of Rule 16b-
3(e)(3) under the Exchange Act, or any successor
provision promulgated by the Securities and Exchange
Commission.
(b) Definition of "Change in Control". For purposes of
Section 11(a), a "Change in Control" means the happening of any
of the following:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Exchange Act, other than
the Corporation or a wholly-owned subsidiary thereof or any
employee benefit plan of the Corporation or any of its
Subsidiaries, becomes the beneficial owner of the
Corporation's securities having 35% or more of the combined
voting power of the then outstanding securities of the
Corporation that may be cast for the election of directors
of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary
course of business); or
(ii) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions, less than a
majority of the combined voting power of the then
outstanding securities of the Corporation or any successor
corporation or entity entitled to vote generally in the
election of the directors of the Corporation or such other
corporation or entity after such transaction are held in the
aggregate by the holders of the Corporation's securities
entitled to vote generally in the election of directors of
the Corporation immediately prior to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Corporation's shareholders,
of each director of the Corporation first elected during
such period was approved by a vote of at least two-thirds of
the directors of the Corporation then still in office who
were directors of the Corporation at the beginning of any
such period.
(c) Definition of Potential Change in Control. For
purposes of Section 11(a), a "Potential Change in Control" means
the happening of any one of the following:
(i) The approval by shareholders of an agreement by
the Corporation, the consummation of which would result in a
Change in Control of the Corporation as defined in Section
11(b); or
(ii) The acquisition of beneficial ownership, directly
or indirectly, by any entity, person or group (other than
the Corporation or a Subsidiary or any Corporation employee
benefit plan (including any trustee of such plan acting as
such trustee)) of securities of the Corporation representing
5% or more of the combined voting power of the Corporation's
outstanding securities and the adoption by the Board of
Directors of a resolution to the effect that a Potential
Change in Control of the Corporation has occurred for
purposes of this Plan.
(d) Change in Control Price. For purposes of this Section
11, "Change in Control Price" means the highest price per share
paid in any transaction reported on the National Association of
Securities Dealers Automated Quotation National Market System or
such other exchange or market as in the principal trading market
for the Stock, or paid or offered in any bona fide transaction
related to a potential or actual Change in Control of the
Corporation at any time during the 60-day period immediately
preceding the occurrence of the Change in Control (or, where
applicable, the occurrence of the Potential Change in Control
event), in each case as determined by the Committee except that,
in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the
optionee exercises such Stock Appreciation Rights (or Limited
Stock Appreciation Rights) or, where applicable, the date on
which a cashout occurs under Section 11(a)(iii).
SECTION 12. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which
would impair the rights of an optionee or participant under a
Stock Option, Stock Appreciation Right (or Limited Stock
Appreciation Right), Restricted or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award theretofore granted,
without the optionee's or participant's consent or which, without
the approval of the Corporation's shareholders, would:
(a) except as expressly provided in this Plan,
increase the total number of shares reserved for the purpose
of the Plan;
(b) change the pricing terms of Sections 5(a) or 9(a);
(c) change the employees or class of employees
eligible to participate in the Plan; or
(d) extend the term under Section 16 of the Plan.
The Committee may amend the terms of any Stock Option or
other award theretofore granted, prospectively or retroactively,
but, subject to Section 3 above, no such amendment shall impair
the rights of any holder without the holder's consent. The
Committee may also substitute new Stock Options for previously
granted Stock Options (on a one for one or other basis),
including previously granted Stock Options having higher option
exercise prices.
Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well
as other developments.
SECTION 13. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any
payments not yet made to a participant or optionee by the
Corporation, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of
a general creditor of the Corporation. In its sole discretion,
the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Committee
otherwise determines with the consent of the affected
participant, the existence of such trusts or other arrangements
is consistent with the "unfunded" status of the Plan.
SECTION 14. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to
represent to and agree with the Corporation in writing that the
optionee or participant is acquiring the shares without a view to
distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
the Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference
to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or
applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any
employee of the Corporation or any Subsidiary or Affiliate any
right to continued employment with the Corporation or a
Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Corporation or a
Subsidiary or Affiliate to terminate the employment of any of its
employees at any time.
(d) No later than the date as of which an amount first
becomes includible in the gross income of the participant for
Federal income tax purposes with respect to any award under the
Plan, the participant shall pay to the Corporation, or make
arrangements satisfactory to the Committee regarding the payment
of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations may be
settled with Stock, including Stock that is part of the award
that gives rise to the withholding requirement. The satisfaction
of withholding obligations with Stock at the election of a
grantee who is subject to Section 16 of the Exchange Act shall be
made either (i) during the 10 business day window period
described in Rule 16b-3(e)(3) (or any successor provision)
thereunder or (ii) at least six months prior to the date as of
which the income attributable to the exercise of the related
award is recognized under the Code, and shall be irrevocable to
the extent required under such Rule 16b-3(e)(3) (or any successor
provision). The obligations of the Corporation under the Plan
shall be conditional on such payment or arrangements and the
Corporation and its Subsidiaries or Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or
dividend equivalents in additional Restricted Stock (or in
Deferred Stock or other types of Plan awards) at the time of any
dividend payment shall only be permissible if sufficient shares
of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Stock Options, Stock
Purchase Rights and other Plan awards).
(f) The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with
the laws of the State of Indiana.
(g) Awards of Incentive Stock Options and Limited Rights
associated with Incentive Stock Options shall not be transferable
otherwise than by will or by the laws of descent and
distribution. Other awards granted under the Plan shall not be
transferable otherwise than by will or by the laws of descent and
distribution, other than pursuant to a valid qualified domestic
relations order issued by a court pursuant to Section 414(p) of
the Code. Awards may be exercised or otherwise realized, during
the lifetime of the Grantee, only by the Grantee or by his
guardian or legal representative.
SECTION 15. Effective Date of Plan.
The Plan shall be effective as of the date that the
amendment to the Corporation's Restated Articles of
Incorporation, as amended, providing for two classes of common
stock, Class A Common Stock and Class B Common Stock, is filed
with the Secretary of State of the State of Indiana.
SECTION 16. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock
award, Deferred Stock award, Stock Purchase Right or Other Stock-
Based Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the earlier of the date of shareholder
approval or the effective date specified in Section 15, but
awards granted prior to such tenth anniversary may extend beyond
that date.
#137689.03
<TABLE>
Exhibit 11 - Statement Re: Computation of Earnings Per Share
(Unaudited)
<CAPTION>
12 Weeks Ended
---------------
June 25, June 19,
1994 1993
-------- --------
<S> <C> <C>
Primary
Weighted average shares outstanding 8,442,002 8,387,376
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 103 17,258
--------- ---------
Total 8,442,105 8,404,634
========= =========
Net Income before cumulative effect
of changes in accounting principles $2,380,000 $3,105,000
========== ==========
Per share amount $.28 $.37
==== ====
Net Income $2,380,000 $5,046,000
========== ==========
Per share amount $.28 $.60
==== ====
Fully diluted
Weighted average shares outstanding 8,442,002 8,387,376
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 245 17,258
Assumed conversion of 7% convertible
subordinated debentures issued
March 5, 1993 1,290,323 1,290,323
--------- ---------
Total 9,732,570 9,694,957
========= =========
Net income before cumulative effect of
changes in accounting principles $2,380,000 $3,105,000
Add 7% convertible subordinated
debenture interest, net of tax effect 205,000 215,600
---------- ----------
Total $2,585,000 $3,320,600
========== ==========
Per share amount $.27 $.34
==== ====
Net Income $2,380,000 $5,046,000
Add 7% convertible subordinated
debenture interest, net of tax effect 205,000 215,600
---------- ----------
Total $2,585,000 $5,261,600
========== ==========
Per share amount $.27 $.54
==== ====
</TABLE>
