SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Village Super Market, Inc.
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VILLAGE SUPER MARKET, INC.
733 MOUNTAIN AVENUE
SPRINGFIELD, NEW JERSEY 07081
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 10, 2004
------------------------
The Annual Meeting of the shareholders of Village Super Market, Inc. will
be held at the offices of the Company, 733 Mountain Avenue, Springfield, New
Jersey 07081 on Friday, December 10, 2004 at 10:00 A.M. for the following
purposes:
(1) To elect eight directors for the ensuing year;
(2) To approve the Village Super Market, Inc. 2004 Stock Plan;
(3) To ratify the appointment of KPMG LLP as our independent registered
public accounting firm ("independent auditors") for the 2005 fiscal
year; and
(4) To transact any other business which may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 8, 2004
as the record date for the determination of the shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof.
By order of the Board of Directors,
ROBERT SUMAS,
Secretary
November 5, 2004
VILLAGE SUPER MARKET, INC.
733 MOUNTAIN AVENUE
SPRINGFIELD, NEW JERSEY 07081
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PROXY STATEMENT
DECEMBER 10, 2004
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders of Village Super Market, Inc. (the "Company") in connection with
the solicitation by and on behalf of the Board of Directors of the Company (the
"Board") of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the offices of the Company, 733 Mountain Avenue,
Springfield, New Jersey on December 10, 2004 at 10:00 a.m. and at all
postponements or adjournments thereof.
At the close of business on October 8, 2004, the Company had outstanding
and entitled to vote 1,558,700 shares of Class A common stock, no par value, and
1,594,076 shares of Class B common stock, no par value. The holders of the
outstanding shares of Class A Stock are entitled to one vote per share and the
holders of Class B Stock are entitled to ten votes per share. Shareholders of
record at the close of business on October 8, 2004 are entitled to vote at this
meeting.
All shares of Common Stock represented by properly executed proxies will be
voted at the Annual Meeting, unless such proxies previously have been revoked.
Unless the proxies indicate otherwise, the shares of Common Stock represented by
such proxies will be voted for the election of the Board of Directors' nominees
for directors, to approve the Village Super Market, Inc. 2004 Stock Plan and to
ratify the selection of KPMG LLP as independent auditors. Management does not
know of any other matter to be brought before the Annual Meeting.
Directors are elected by a plurality of the number of votes cast. With
respect to each other matter to be voted upon, a vote of a majority of the
number of votes cast is required for approval. Abstentions and proxies submitted
by brokers with a "not voted" direction will not be counted as votes cast with
respect to each matter.
The Company's address is 733 Mountain Avenue, Springfield, New Jersey and
its telephone number is (973) 467-2200. This notice, proxy statement and
enclosed form of proxy are being mailed to shareholders on or about November 5,
2004.
Any shareholder who executes and delivers a proxy may revoke it at any time
prior to its use by: (a) delivering written notice of such revocation to
Secretary of the Company at its office; (b) delivering to the Secretary of the
Company a duly executed proxy bearing a later date; or (c) appearing at the
Meeting and requesting the return of his or her proxy.
YOU ARE REQUESTED TO COMPLETE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's capital stock by: (i) persons known by the
Company to own beneficially more than 5% of its Class A Stock or Class B Stock;
(ii) each director of the Company; and (iii) all directors and executive
officers of the Company collectively:
CLASS A STOCK(1) CLASS B STOCK(1)
---------------------------------------- ----------------------------------
PERCENTAGE PERCENTAGE
SHARES OF SHARES OF
OWNED CLASS(3) OWNED CLASS(4)
NAME ------ ---------- ------ ----------
Perry Sumas(2)................. 103,959(5)(6)(11)(12) 6.7 507,528(7)(20) 31.8
James Sumas(2)................. 49,057(5)(6)(12)(14) 3.1 288,042(7)(8) 18.1
Robert Sumas(2)................ 43,082(5)(6)(12)(15) 2.8 185,595(9) 11.6
William Sumas(2)............... 71,423(11)(12) 4.6 164,011(20) 10.3
John Sumas(2).................. 92,677(10)(11)(12) 5.9 151,307(20) 9.5
John J. McDermott.............. 1,300 .1 -- --
Steven Crystal................. 22,000 1.4 800 .1
David C. Judge................. 5,000(17) .3 -- --
All directors and executive
officers as a group (10
persons)..................... 197,516(13) 12.7 1,166,737 73.2
Franklin Resources, Inc. ...... 110,675(16) 7.1 -- --
Wistar Morris III.............. 111,545(19) 7.2 -- --
AXA Financial, Inc............. 106,000(18) 6.8 -- --
Norman Crystal................. 221,800 14.2 109,280 6.9
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(1) Except as noted, each person has sole investment power and sole voting
power with respect to the shares beneficially owned.
(2) As reported in a Schedule 13D/A dated January 21, 2004, these five persons
comprise the Sumas Family Group. The Sumas Family Group beneficially owns
140,716 shares of Class A Stock and 1,165,937 shares of Class B Stock, or
67.4% of the combined voting power. By virtue of the existence of this
"group", the Company is a controlled company under the corporate governance
rules of NASDAQ. The address of each of these five persons is in care of
the Company, 733 Mountain Avenue, Springfield, New Jersey 07081.
(3) Based upon 1,558,700 shares of Class A Stock outstanding.
(4) Based upon 1,594,076 shares of Class B Stock outstanding.
(5) Includes 25,680 shares held by the Company's pension trust of which Perry
Sumas, James Sumas and Robert Sumas are trustees.
(6) Includes 7,394 shares held by a charitable trust of which Perry Sumas,
James Sumas and Robert Sumas are trustees.
(7) Includes 63,172 shares as to which Perry Sumas and James Sumas have agreed
to share the power to vote pursuant to a Voting Agreement dated March 4,
1987.
(8) Includes 2,940 shares owned jointly by Mr. and Mrs. James Sumas; and 9,955
shares owned by Mrs. James Sumas; and 3,280 shares held by Mr. and Mrs.
James Sumas as custodians for their children.
(9) Includes 49,643 shares owned by Mrs. Robert Sumas.
(10) Includes 100 shares owned by Mrs. John Sumas and 1,200 shares held by Mr.
and Mrs. John Sumas as custodians for their minor children.
(11) Includes 70,167 shares held in the name of Perry Sumas, William Sumas and
John Sumas as Co-Trustees of a Trust for the benefit of the grandchildren
of Perry Sumas.
(12) Includes 7,000 and 6,000 shares represented by options exercisable by
Robert Sumas and John Sumas, respectively, under the Company's Stock Option
Plan.
(13) Includes 18,000 shares represented by options exercisable by all officers
and directors under the Company's Stock Option Plan.
(14) Includes 3,842 shares owned by Mrs. James Sumas.
(15) Includes 3,008 shares owned by Mrs. Robert Sumas.
(16) As reported in a Schedule 13G dated December 31, 2003, Franklin Resources,
Inc. may be deemed to be the beneficial owner of 110,675 shares of the
Company. Franklin's address is One Franklin Parkway, San Mateo, California
94404.
(17) Includes 5,000 shares represented by options exercisable by him under the
Company's Stock Option Plan.
(18) As reported in a Schedule 13G dated December 31, 2003, AXA Financial, Inc.
may be deemed to be the beneficial owners of 106,000 shares of the Company.
The address of AXA Financial, Inc. is 1290 Avenue of the Americas, New
York, New York 10104.
(19) As reported in a Schedule 13D dated July 22, 2003, Wistar Morris III may be
deemed to be the beneficial owner of 111,545 shares of the Company. Mr.
Morris address is c/o Boenning & Scattergood, Inc., 4 Tower Bridge, Suite
300, 200 Barr Harbor Drive, West Conshohocken, PA 19428.
(20) Includes 33,687 shares held in the name of Perry Sumas, William Sumas and
John Sumas as Co-Trustees of a Trust for the benefit of the grandchildren
of Perry Sumas.
2
The aggregate number of shares of Class B Stock owned by Perry Sumas and
his sons, William Sumas and John Sumas, exceeds the aggregate number of shares
of Class B Stock owned by James Sumas and Robert Sumas (the "Excess Shares").
Perry Sumas and James Sumas have entered into an agreement whereby the Excess
Shares will be voted pursuant to the mutual agreement of James Sumas and Perry
Sumas. The voting agreement will be automatically cancelled if Perry Sumas
either: (i) converts the Excess Shares into shares of Class A Stock; or (ii)
exchanges 50% of the Excess Shares for shares of Class A Stock owned by James
Sumas.
ELECTION OF DIRECTORS
The following eight persons will be nominated by the Board of Directors of
the Company for election as directors at the Annual Meeting. If elected, they
will serve until their successors are duly elected and qualified. Directors
shall be elected by a plurality of the votes cast. All of the nominees are now
directors of the Company.
Certain information is given below with respect to each nominee for
election as a director. The table below and the following paragraphs list their
respective ages, positions and offices held with the Company, the period served
as a director and business experience during the past 5 years. Perry Sumas is
the father of William Sumas and John Sumas. Perry Sumas is the uncle of James
Sumas and Robert Sumas, who are brothers. The other nominees are not related.
NOMINEES
The following table sets forth information concerning the nominees for
director:
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
James Sumas.......................... 71 Chief Executive Officer, Chief
Operating Officer and Chairman of
the Board of Directors
Perry Sumas.......................... 89 President and Director
Robert Sumas......................... 63 Executive Vice President, Secretary
and Director
William Sumas........................ 57 Executive Vice President and Director
John Sumas........................... 55 Executive Vice President and Director
John J. McDermott.................... 79 Director
Steven Crystal....................... 48 Director
David C. Judge....................... 43 Director
James Sumas was elected Chairman of the Board in 1989. He was named Chief
Executive Officer in 2002. He also serves as the Company's Chief Operating
Officer. He has served as variously Vice President, Treasurer and a Director of
the Company since its incorporation in 1955. James Sumas is Vice Chairman of
Wakefern Food Corporation and is a member of its Board of Directors. Mr. Sumas
also is the Chairman of Wakefern's Grocery Committee and its Advertising
Committee. In addition, he is Vice Chairman of Wakefern's Sales and
Merchandising Committee and of ShopRite Supermarkets, Inc., Wakefern's
supermarket operating subsidiary. Mr. Sumas also is a member of Wakefern's
Finance, Trade Name and Trademark and Strategic Planning Committees.
Perry Sumas, together with Nicholas Sumas, founded the Company in 1937. He
has served as a Director of the Company since its incorporation in 1954 and has
served as President since 1973.
Robert Sumas has served as Vice President, Secretary and a Director of the
Company since 1969. Since 1989, he has served as an Executive Vice President. He
has responsibility for finance and administration matters, construction of new
stores and remodels and retail automation. Robert Sumas is Chairman of
Wakefern's General Merchandise Committee and is a member of Wakefern's
Communications, Sales and Merchandising and Property Management Committees.
3
William Sumas has served as Vice President and a Director of the Company
since 1980. Since 1989, he has served as an Executive Vice President. He has
responsibility for real estate development. William Sumas is Chairman of
Wakefern's Commercial Bakery Committee and is a member of Wakefern's Loss
Prevention Policy Committee. He also serves as Chairman of the New Jersey Food
Council.
John Sumas has served as Vice President and a Director of the Company since
1982. Since 1989, he has served as an Executive Vice President. He has
responsibility for the Company's frozen food, dairy, appetizing and fresh bakery
operations. John Sumas is a member of Wakefern's Frozen Food, Dairy/Deli and
Fresh Bakery Committees.
John J. McDermott has served as a Director of the Company since 1982. Mr.
McDermott is the President of John J. McDermott Enterprises, a bank consulting
firm. Prior to his retirement in 1989, Mr. McDermott served as President of the
commercial lending subsidiaries of three bank holding companies. Mr. McDermott
previously served as General Counsel to the Company from 1982 to 1983.
Steven Crystal has served as a Director of the Company since 2001. Mr.
Crystal owns and manages five AC Delco auto parts stores, one of the nations
largest Honda motorcycle dealerships and an ACE hardware store. Since 1980, he
has been a member of the New York Mercantile Exchange and NY Commodity Exchange,
where he serves on numerous committees, including finance, and actively trades
commodities. In addition, Mr. Crystal manages and owns residential and
commercial real estate. Steven Crystal is the son of Norman Crystal, a major
shareholder of the Company.
David C. Judge has served as a Director of the Company since June 2003. Mr.
Judge is a Senior Vice President and Division Head for the Bank of New York. He
is responsible for the Retailing and Healthcare Industry Divisions, which handle
over 175 client relationships. In addition, Mr. Judge is Head of the Corporate
Credit Analysis & Monitoring Group, a primary source of financial analysis for
large credit transactions. He also serves as a director for Contemporary
Guidance Services.
The Certificate of Incorporation includes a provision that no director
shall be personally liable for monetary damages to the Company or its
shareholders for a breach of any fiduciary duty except for: (i) breach of a
director's duty of loyalty; (ii) acts and omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; and (iii) any
transaction from which a director derived an improper personal benefit.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Company is a "controlled company" under the corporate governance rules
of NASDAQ. Therefore the Company is not required to and does not have (1) a
majority of independent directors; (2) a nominating committee comprised solely
of independent directors to identify and recommend nominees to the Board of
Directors; and (3) a compensation committee comprised solely of independent
directors. The Company qualifies as a controlled company due to the ownership by
the Sumas Family Group of shares allowing it to cast more than 50% of the votes
eligible to be cast for the election of directors.
The Board held four meetings in fiscal 2004. All directors attended at
least 75% of the meetings of the Board, and meetings of Board committees on
which the director served, during the time such director served on the Board or
committee.
The Executive Committee, which consists of Perry Sumas, James Sumas, Robert
Sumas, William Sumas and John Sumas, meets on call and is authorized to act on
all matters pertaining to corporate policies and overall Company performance.
THE COMPENSATION COMMITTEE
The Compensation Committee, which consists of Perry Sumas, James Sumas and
John J. McDermott, reviews and approves the compensation paid to executive
officers of the Company. This includes base salary, bonus awards, employment
agreements, supplemental retirement plans and stock option grants. During fiscal
2004, the Compensation Committee met four times.
4
THE AUDIT COMMITTEE
The Audit Committee is comprised of three directors, John J. McDermott,
Steven Crystal and David C. Judge, each of whom is "independent" as defined by
the listing standards of NASDAQ. The Audit Committee: (1) monitors the integrity
of the Company's financial reporting process and systems of internal controls
regarding financial, accounting, regulatory and legal compliance; (2) monitors
the independence and performance of the Company's independent auditors; (3)
provides an avenue of communication among the independent auditors, management
and the Board of Directors; and (4) approves the fees paid to the independent
auditing firm for all services provided. The Audit Committee operates under a
charter adopted by the Board of Directors, which is attached as Appendix A.
During fiscal 2004, the Audit Committee met seven times.
The Securities and Exchange Commission has adopted rules implementing
Section 407 of the Sarbanes Oxley Act of 2002 requiring public companies to
disclose information about Audit Committee financial experts. The Board of
Directors of the Company has concluded that none of the three independent audit
committee members meet the narrow SEC definition of Audit Committee financial
expert as none have served as a principal accounting officer or public
accountant, or have been responsible for actively supervising a principal
accounting officer. SEC rules do not require Audit Committees to have a
financial expert. However, the Board of Directors has determined that all three
independent members of the Audit Committee meet the NASDAQ requirements for
audit committee members. NASDAQ requires Audit Committee members be able to read
and understand financial statements. In addition, NASDAQ rules require one
member of the Audit Committee to have employment experience in finance or
accounting, or other comparable experience which results in financial
sophistication, including as a senior officer with financial oversight
responsibilities.
The current members of the Audit Committee include two individuals who have
diverse and extensive experience in the finance industry, including
responsibilities for analysis of financial statements in connection with
corporate lending to the supermarket industry. A third member of the Audit
Committee is CEO of several operating companies, including two retail companies.
The Board of Directors believes all three members of the Audit Committee have
the ability to read and understand financial statements and an understanding of
the retail industry appropriate to perform their Audit Committee duties. The
Company may consider the addition of an Audit Committee member in the future
meeting the narrow Audit Committee "financial expert" definition recently
adopted by the SEC.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three independent directors, as defined
by the listing standards of NASDAQ, and operates under a charter adopted by the
Board of Directors. The charter is attached as Appendix A. The members of the
Committee are John J. McDermott (Chair), Steven Crystal and David C. Judge. The
Committee appoints the Company's independent auditors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States) and to issue a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States,
and the Audit Committee has reviewed and discussed the consolidated financial
statements with management and the independent auditors. The Audit Committee
discussed with the independent auditors
5
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Company's independent auditors also provided to the Audit Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent auditors that firm's independence.
Based upon the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representations of
management and the report of the independent auditors, the Audit Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended July 31, 2004 filed with the Securities and Exchange Commission.
The following table presents fees for professional services rendered by
KPMG LLP for the audit of the Company's annual financial statements for fiscal
2004 and 2003, and fees billed for other services rendered by KPMG LLP:
2004 2003
---- ----
Audit fees.................................................. $ 90,000 $ 80,000
Audit related fees(1)....................................... 25,000 20,000
Tax fees(2)................................................. 46,000 38,500
All other fees.............................................. -- --
-------- --------
Total fees................................................ $161,000 $138,500
-------- --------
---------------
(1) Audit related fees consist of audits of financial statements of employee
benefit plans.
(2) Tax fees consist of fees for tax compliance and consultation services.
The Audit Committee has considered whether the providing of non-audit
services is compatible with maintaining the auditors' independence. The Audit
Committee pre-approves all services provided by the principal auditors.
Audit Committee
JOHN J. MCDERMOTT
STEVEN CRYSTAL
DAVID C. JUDGE
NOMINATION OF CANDIDATES TO THE BOARD OF DIRECTORS
The full Board of Directors acts on all matters concerning the
identification, evaluation and nomination of director candidates. The Board does
not utilize a charter in performing this function. As a matter of policy, the
Board will consider nominations of director candidates submitted by any
shareholder upon the submission of the names and biographical data of the
candidates (including any relationship to the proposing shareholder) in writing
to the Board of Directors at 733 Mountain Avenue, Springfield, New Jersey,
07081. Information regarding director candidates for election to the Board in
2005 must be submitted by July 1, 2005.
The Board's process for evaluating candidates recommended by any
shareholder is the same as for candidates recommended by the Board, management
or others. In searching for appropriate candidates, the Board adheres to
criteria established for the consideration and selection of candidates. The
Board views the candidate's qualifications in light of the needs of the Board
and the Company at that time given the then current mix of director attributes.
Among other criteria, the Board may consider the following skills, attributes
and competencies of a new member: (i) possessing the highest ethical standards
and integrity; (ii) a willingness to act on and be accountable for Board
decisions; (iii) an ability to provide prudent, informed and thoughtful counsel
to top management on a broad range of issues; (iv) relevant industry or business
knowledge; (v) senior management experience and demonstrated leadership; (vi)
financial literacy; (vii) individual backgrounds that provide a portfolio of
experience and knowledge commensurate with the
6
Company's needs. Each director will be considered without regard to gender,
race, religion, national origin or sexual orientation.
COMMUNICATION WITH THE BOARD OF DIRECTORS
Shareholders and other interested parties may communicate with the Board of
Directors by sending written communication to the directors c/o the Company's
Secretary, 733 Mountain Avenue, Springfield, New Jersey 07081. All such
communications will be reviewed by the Secretary to determine which
communications will be forwarded to the directors. All communications will be
forwarded except those that are related to Company products, are solicitations,
or otherwise relate to improper or irrelevant topics, as determined in the sole
discretion of the Secretary. The Secretary shall report to the Board of
Directors on the number and nature of communications that were determined not to
be forwarded.
The Company has a policy of requiring all directors standing for election
at the annual meeting of shareholders to attend such meeting, unless unforeseen
circumstances arise. Seven of the eight directors attended the 2003 annual
meeting of shareholders held on December 12, 2003. One director was ill and
could not attend.
DIRECTOR COMPENSATION
Non-employee directors currently are paid an annual retainer of $8,000 plus
fees of $1,000 for each Board meeting and $1,000 for each Committee meeting
attended. Directors who are employees of the Company receive no compensation for
service as directors. In addition, the Company granted to each of its non-
employee directors options to purchase 5,000 shares of class A common stock at
an option price equal to the fair value of the stock at the date of grant.
CODE OF ETHICS
The Company has a written Code of Ethics that applies to, among others, the
Chief Executive Officer, Chief Financial Officer and Principal Accounting
Officer. During fiscal 2004, there were no changes to, or waivers of, the Code
of Ethics. The Company will furnish a copy of the Code of Ethics, without
charge, to each person who forwards a written request to Mr. Robert Sumas,
Secretary, Village Super Market, Inc., 733 Mountain Avenue, Springfield, New
Jersey 07081.
7
EXECUTIVE COMPENSATION
Except for the 1997 Stock Option Plan and the proposed 2004 Stock Plan, the
Company does not have any long term compensation plans. The following table sets
forth the compensation paid by the Company during the last three fiscal years to
the Chief Executive Officer and the four most highly compensated executive
officers of the Company:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- AWARDS ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION(A)($)
----------------- ---- --------- -------- ------------ ------------------
James Sumas................ 2004 567,503 80,000 -- 1,817
Chairman of Board, Chief 2003 529,980 40,000 -- 1,659
Executive Officer and 2002 472,863 75,000 -- 1,596
Chief Operating Officer
Robert Sumas............... 2004 460,384 75,000 -- 3,000
Executive Vice President 2003 433,968 35,000 -- 2,587
and Secretary 2002 401,721 75,000 -- 2,625
William Sumas.............. 2004 360,610 75,000 -- 3,000
Executive Vice President 2003 334,537 35,000 -- 2,750
2002 333,525 75,000 -- 2,625
John Sumas................. 2004 386,993 75,000 -- 1,805
Executive Vice President 2003 362,917 35,000 -- 1,651
2002 336,493 75,000 -- 1,594
Perry Sumas................ 2004 340,415 -- -- --
President 2003 340,415 -- -- --
2002 302,025 55,000 -- --
---------------
(a) Company paid 401K match
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND
FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the exercise of
options during fiscal 2004 and the value of the unexercised options as of July
31, 2004.
SHARES NUMBER OF VALUE OF
ACQUIRED UNEXERCISED UNEXERCISED
ON VALUE OPTIONS AT IN-THE-MONEY
NAME EXERCISE(#) REALIZED JULY 31, 2004(1)(#) AT JULY 31, 2004(2)
---- ----------- -------- ------------------- -------------------
James Sumas........................ 11,000 $234,000 0 $ 0
Robert Sumas....................... 4,000 $ 88,800 7,000 $154,560
William Sumas...................... 11,000 $239,800 0 $ 0
John Sumas......................... 5,000 $105,000 6,000 $132,480
Perry Sumas........................ 11,000 $241,890 0 $ 0
---------------
(1) All outstanding options held by Executive Officers were exercisable at year
end.
(2) Based upon the price of $32.08 as of July 31, 2004.
BENEFIT PLANS
The Company maintains a defined benefit pension plan for employees not
covered by a collective bargaining agreement who have been employed with the
Company for more than six months and who are over the age of twenty-one. The
amount of the Company's contribution to this plan with respect to a specified
person cannot readily be separated or individually calculated by the actuaries
for the plan. For purposes of determining plan benefits, compensation is the
regular base pay of the participant plus bonuses, overtime pay and other
compensation. Effective January 1, 1989, the plan benefit formula was amended.
Retirement
8
benefits are equal to the pension accrued to December 31, 1988 plus 1% of
average compensation times each year of post-1988 service plus .75% of average
compensation in excess of Table II of the 1989 Covered Compensation Table times
each year of post-1988 service. Average compensation for post-1988 service is
based on the five highest consecutive years' compensation. The approximate
annual retirement benefits at age 65, or in the case of James Sumas his current
age of 71, (computed as of January 1, 2004) are $78,576 to James Sumas; $78,468
to Robert Sumas; $84,348 to William Sumas; and $89,232 to John Sumas. Due to his
age, Perry Sumas cannot participate in this plan.
In addition to the defined benefit pension plan described above, the
Company adopted a Supplemental Executive Retirement Plan (the "SERP") effective
January 1, 2004 for six executive officers. Each of the named executive
officers, except Perry Sumas, participates in the SERP. Participants vest in the
SERP benefit at a rate of 20% per year of service beginning in calendar 2004.
The retirement benefit at normal retirement date for the SERP is calculated as
50% of the individual's average compensation during his or her highest sixty
consecutive months in the last ten years before retirement, reduced by both the
benefit the participant is entitled to receive under the above defined benefit
plan and the amount of the participant's social security benefit. Normal
retirement is defined as the later of age 65 or five years of participation in
the SERP.
Covered compensation under the SERP includes all salary and bonuses,
whether paid in cash or deferred, and as to individuals identified in the
Summary Compensation Table, would be the amount set forth in that table under
the headings "Salary" and "Bonus". The approximate annual retirement benefits at
normal retirement date computed at January 1, 2004 (and the normal retirement
date if greater than age 65) payable from the SERP assuming full vesting are as
follows: James Sumas (age 75) -- $200,000; Robert Sumas (age 67) -- $169,000;
William Sumas -- $137,000; and John Sumas -- $194,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Perry Sumas, who is an executive
officer of the Company serving as the President; James Sumas, who is an
executive officer of the Company serving as the Chairman of the Board of
Directors, Chief Executive Officer and Chief Operating Officer; and John J.
McDermott, who is a former executive officer of the Company, having resigned as
General Counsel in 1983. As noted elsewhere in the Proxy Statement under
"Certain Transactions", Perry Sumas and James Sumas, through Sumas Realty
Associates, have certain business relationships with the Company. There are no
other compensation committee interlocks between the Company and other entities
involving the Company's executive officers and the Company's Board members who
serve as executive officers of such other entities.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Company's compensation policies, as applicable to its executive
officers, are administered by its Compensation Committee of the Board of
Directors (the "Committee"). The Chief Executive Officer and each of the other
executive officers named in this proxy statement own substantial amounts of the
Company's common stock and thus have a direct and substantial interest in the
long-term growth of shareholder's wealth. In light of this ownership, there is
less need to directly relate executive compensation to long-term Company
performance.
The basic criteria used in making determinations concerning compensation
for executive officers is the level of compensation paid to comparable
executives in the industry, in particular to corporate executives of other
ShopRite members and at competing supermarket chains, the financial performance
of the Company and other achievements during the most recently completed fiscal
year, time devoted to Company affairs, reputation in the industry, record of
accomplishments and efforts on the Company's behalf.
The Committee decided to grant performance bonuses in 2004 based on the
efforts of those executives in achieving improved financial performance in the
areas of sales, operating income, EBITDA and net income, despite difficult
conditions in the supermarket industry.
9
The Compensation Committee bases the compensation of the Chief Executive
Officer on the same criteria as mentioned above for other executive officers.
The Committee notes that compensation tables required by the rules of the
Securities and Exchange Commission are based upon fiscal year totals, which in
the case of the Company are July to July periods of 52 or 53 weeks. Executive
compensation decisions are implemented, in part, on a calendar year basis. Thus,
minor apparent year to year variations in compensation levels appearing in the
tables may not be reflective of actual Committee actions.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
PERRY SUMAS
JAMES SUMAS
JOHN J. MCDERMOTT
DESCRIPTION OF THE VILLAGE SUPER MARKET, INC. 2004 STOCK PLAN
The following is a description of the purpose and material provisions of
the Village Super Market, Inc. 2004 Stock Plan (the "Plan"). This summary is
qualified in its entirety by reference to the complete text of the Plan, which
is filed as an exhibit to this proxy statement and is on file with the SEC. It
can be inspected at the SEC website, sec.gov. Capitalized terms used but not
defined below have the meanings set forth in the Plan.
The purpose of the Plan is to provide a means through which the Company may
attract able persons to enter and remain in the employ of the Company and to
provide a means whereby eligible persons can acquire and maintain Class A Common
Stock ownership, or be paid incentive compensation measured by reference to the
value of Class A Common Stock, thereby strengthening their commitment to the
welfare of the Company and promoting an identity of interest between
stockholders and these eligible persons.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options ("ISOs"), Nonqualified Stock Options ("NQSOs"),
Restricted Stock Awards and Stock Bonuses, or any combination of the foregoing.
Unless terminated earlier as provided herein, this Plan will terminate ten years
from the date the Plan is adopted.
Shares Subject to The Plan. The total number of shares reserved and
available for grant and issuance pursuant to this Plan will be 300,000 Class A
Shares plus Class A Shares that are subject to: (a) issuance upon exercise of an
Option but cease to be subject to such Option for any reason other than exercise
of such Option; (b) an Award granted hereunder but forfeited or repurchased by
the Company at the original issue price; and (c) an Award that otherwise
terminates without Shares being issued.
Eligibility. ISOs may be granted only to employees (including officers and
directors who are also employees) of the Company. All other Awards may be
granted to employees, officers and directors of the Company.
Administration. The Plan will be administered by the Board or a Committee
of the Board. Subject to the general purposes, terms and conditions of this
Plan, and to the direction of the Board, the Committee will have full power to
implement and carry out this Plan. Without limitation, the Committee will have
the authority to: (a) select persons to receive Awards; (b) determine the
nature, extent, form and terms of Awards and the number of Shares or other
consideration subject to Awards; (c) determine the vesting, exercisability and
payment of Awards; (d) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement; (e) determine
whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company; (f) prescribe, amend and rescind
rules and regulations relating to this Plan or any Award; construe and interpret
this Plan, any Award Agreement and any other agreement or document executed
pursuant to this Plan; (g) grant waivers of Plan or Award conditions; (h)
determine whether an Award has been earned; and (i) make all other
determinations necessary or advisable for the administration of this Plan.
10
Options. The Committee will determine: whether Options granted will be
intended to be ISOs or NQSOs, the number of Shares subject to the Option, the
Exercise Price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option. The Exercise Price
of an Option will be determined by the Committee when the Option is granted;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant. No Option will be
exercisable after the expiration of ten years from the date the Option is
granted. In addition, no ISO granted to a Ten Percent Stockholder will be
exercisable after the expiration of five years from the date the ISO is granted.
The Committee also may provide for Options to become exercisable at one time or
from time to time, periodically or otherwise, in such number of Shares or
percentage of Shares as the Committee determines. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
will not exceed $100,000.
Restricted Stock. A Restricted Stock Award is an offer by the Company to
sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award.
Stock Bonuses. A Stock Bonus is an award of Shares (which may consist of
Restricted Stock) for services rendered to the Company. The Committee may award
a Stock Bonus for past services rendered to the Company. A Stock Bonus may also
be awarded upon satisfaction of such performance goals as are set out in advance
in a Participant's individual Award Agreement. Stock Bonuses may vary from
Participant to Participant and between groups of Participants.
Corporate Transactions. In the event of certain corporate transactions,
any or all outstanding Awards may be assumed, converted or replaced by the
successor corporation (if any), which assumption, conversion or replacement will
be binding on all Participants. In the alternative, the successor corporation
may substitute equivalent Awards or provide substantially similar consideration
to Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards).
Amendment or Termination of Plan. The Board may at any time terminate or
amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.
The Village Super Market, Inc. 2004 Stock Plan is submitted to shareholders
for their approval and will be approved if a majority of the votes cast are
voted in favor of adoption of the Plan.
11
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total return on the
Company's Class A Common Stock against the cumulative total return of the S&P
500 Composite Stock Index and the NASDAQ Retail Index for the Company's last
five fiscal years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG VILLAGE SUPER MARKET, INC., THE S&P 500 INDEX
AND THE NASDAQ RETAIL INDEX
[PERFORMANCE GRAPH]
VILLAGE SUPER NASDAQ RETAIL
MARKET, INC. S&P 500 TRADE
------------- ------- -------------
7/99 100.000 100.000 100.000
7/00 102.970 109.309 64.939
7/01 154.059 93.691 71.686
7/02 213.465 71.579 70.936
7/03 203.802 79.291 83.239
7/04 257.812 89.790 103.282
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------------------------------------------------------------------------
Number of securities re-
maining available for
future issuance under
equity compensation
Number of securities to Weighted-average plans (excluding
be issued upon exercise exercise price of securities reflected in
Plan category of outstanding options outstanding options column(a))
------------------------------------------------------------------------------------------------------
(a) (b) (c)
------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders 67,100 $14.77 --
Equity compensation
plans not approved by
security holders -- -- --
------------------------------------------------------------------------------------------------------
The information in the above table is as of July 31, 2004. All data relates
to the 1997 Incentive and Non-Statutory Stock Option Plan as described in the
Notes to the 2004 Consolidated Financial Statements.
12
CERTAIN TRANSACTIONS
The Company's supermarket in Chatham, New Jersey is leased from Hickory
Square Associates, a limited partnership. The lease is dated April 1, 1986 and
expires March 31, 2006. The annual rent under this lease is $549,160. Sumas
Realty Associates is a 30% limited partner in Hickory Square Associates. Sumas
Realty Associates is a general partnership among Perry Sumas, James Sumas,
Robert Sumas, William Sumas and John Sumas.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's executive officers and directors to file with the SEC reports of
ownership and reports of changes in ownership of Class A common stock and Class
B common stock. Copies of these reports must also be furnished to the Company.
Based solely on a review of these filings and written representations from
reporting persons, the Company believes that all filing requirements applicable
to its executive officers and directors were complied with during fiscal 2004.
SELECTION OF INDEPENDENT AUDITORS
The appointment by the Audit Committee of KPMG LLP as independent auditors
to audit the financial statements of the Company for the fiscal year ending July
30, 2005, is to be submitted at the meeting for ratification or rejection. The
financial statements of the Company for the 2004, 2003 and 2002 fiscal years
were audited by KPMG LLP.
Representatives of KPMG LLP are expected to be present at the 2004 Annual
Meeting of Shareholders and will be given the opportunity to make a statement if
they wish to do so and will be available to respond to appropriate questions.
Although ratification by the stockholders of the appointment of independent
auditors is not required, the Audit Committee will reconsider its appointment of
KPMG LLP if such ratification is not obtained. Ratification shall require a
majority of the votes cast.
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Any proposal that a shareholder intends to present at the Company's 2005
Annual Meeting of Shareholders, presently scheduled to be held on December 9,
2005, and requests to be included in the Company's Proxy Statement for the 2005
Annual Meeting, must be received by the Company no later than August 1, 2005.
Such requests should be made in writing and sent to the Secretary of the
Company, Robert Sumas, Village Super Market, Inc., 733 Mountain Avenue,
Springfield, New Jersey 07081.
OTHER MATTERS
The Company will furnish a copy of its Annual Report on Form 10-K for the
year ended July 31, 2004, without exhibits, without charge to each person who
forwards a written request, including a representation that he was a record or
beneficial holder of the Company's Common Stock on October 8, 2004. Requests are
to be addressed to Mr. Robert Sumas, Secretary, Village Super Market, Inc., 733
Mountain Avenue, Springfield, New Jersey 07081.
All expenses incurred in connection with the preparation and circulation of
this Proxy Statement in an amount that would normally be expended in connection
with an Annual Meeting in the absence of a contest will be paid by the Company.
No solicitation expenses will be incurred. Management does not know of any other
business that will be presented at the Annual Meeting.
By order of the Board of Directors,
ROBERT SUMAS,
Secretary
November 5, 2004
13
APPENDIX A
VILLAGE SUPER MARKET, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of
Directors to assist the Board in fulfilling its oversight responsibilities. The
Committee's responsibilities include:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding financial, accounting, regulatory
and legal compliance.
- Monitor the independence and performance of the Company's independent
auditors.
- Provide an avenue of communication among the independent auditors,
management and the Board of Directors.
The Committee has the authority to conduct any investigation it deems
appropriate to fulfilling these responsibilities and shall have direct access to
the independent auditors. The Committee can retain, at the Company's expense,
any legal, accounting or other consultants or experts it deems necessary in the
performance of its duties. The independent auditors shall report directly to the
Committee.
AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASDAQ. The
Committee shall be comprised of three or more directors, as determined by the
Board of Directors, each of whom shall be independent non-executive directors
free from any relationship that would interfere with his or her independent
judgment. All members of the Committee must be financially literate and able to
read and understand fundamental financial statements. In addition, at least one
member of the Committee shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background, which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer, or other senior officer with financial oversight
responsibilities.
Audit Committee members shall be appointed by, and a Chairman designated
by, the Board of Directors. No member of the Committee can be removed except by
majority of the independent directors of the full Board of Directors then in
office.
The Committee shall meet at least four times annually, or more frequently
as circumstances require. The Committee Chairman shall prepare and/or approve an
agenda in advance of each meeting. The Committee should meet privately in
executive session, at least annually, with management, the independent auditors,
and as a committee to discuss any matters that the Committee, or each of these
groups believe should be discussed. In addition, the Committee should
communicate with management and the independent auditors quarterly to review the
Company's financial statements and any significant findings by the auditors.
AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of the Committee charter at least
annually. Submit the charter to the Board of Directors for approval and
have the charter published at least every three years in accordance with
regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
the independent auditors of significant issues regarding accounting
principles, practices and judgments.
3. In consultation with the management and the independent auditors,
consider the integrity of the Company's financial reporting processes
and controls. Discuss significant financial risk exposures and
A-1
the action management has taken to monitor, control and report such
exposures. Review significant findings prepared by the independent
auditors together with management responses. Review the results with the
Board of Directors.
4. Not less than on a quarterly basis, discuss any significant changes to
the Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61. The
Chairman of the Committee, or his designee on the Audit Committee, may
represent the entire Committee for purposes of this review.
5. Establish procedures for the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls or
auditing matters, including procedures for the confidential, anonymous
submissions by employees of concerns regarding questionable accounting,
financial or auditing matters.
6. Review and approve all related party transactions.
INDEPENDENT AUDITORS
The Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of the public accounting firm
for the purpose of issuing an annual report or for performing audit or attest
services. The public accounting firm reports directly to the Audit Committee.
7. The independent auditors are directly accountable to the Audit Committee
of the Board of Directors. The Committee shall review the independence
and performance of the auditors and annually recommend to the Board of
Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
8. Approve in advance the fees and other significant compensation to be
paid to the independent auditors for all services provided (including
tax services and employee benefit plan audits).
9. On an annual basis, the Committee should review and discuss with the
independent auditors any relationships they have with the Company that
could impair the auditor's independence.
10. Review the auditor's plan with respect to scope, staffing, locations,
reliance upon management and general audit approach.
11. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to the Audit Committee in accordance with AICPA SAS
61.
12. Consider the independent auditors judgment about the quality and
appropriateness of the Company's accounting principles as applied to
its financial reporting.
OTHER RESPONSIBILITIES
13. On at least an annual basis, review with legal counsel any legal
matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators, government
agencies, and any other relevant authorities.
14. Annually prepare a report to shareholders as required by the SEC for
inclusion in the Company's proxy statement.
15. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
16. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee, or the Board of
Directors, deems necessary or appropriate.
A-2
VILLAGE SUPER MARKET, INC.
2004 STOCK PLAN
1. Purpose. The purpose of the Village Super Market, Inc. 2004 Stock Plan
(the "Plan") is to provide a means through which the Company and its
Subsidiaries and Affiliates may attract able persons to enter and remain in the
employ of the Company and its Subsidiaries and Affiliates and to provide a means
whereby eligible persons can acquire and maintain Common Stock ownership, or be
paid incentive compensation measured by reference to the value of Common Stock,
thereby strengthening their commitment to the welfare of the Company and its
Subsidiaries and Affiliates and promoting an identity of interest between
stockholders and these eligible persons.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Restricted Stock
Awards and Stock Bonuses, or any combination of the foregoing. Capitalized terms
not defined in the text are defined in Section 22.
2. Shares Subject to The Plan. Subject to Section 18, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan will
be 300,000 Shares plus Shares that are subject to: (a) issuance upon exercise of
an Option but cease to be subject to such Option for any reason other than
exercise of such Option; (b) an Award granted hereunder but are forfeited or are
repurchased by the Company at the original issue price; and (c) an Award that
otherwise terminates without Shares being issued. At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding Options granted under this Plan and
all other outstanding but unvested Awards granted under this Plan.
3. Eligibility. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers and directors of the Company or any Parent,
Affiliate or Subsidiary of the Company.
4. Administration.
4.1 Committee Authority. This Plan will be administered by the Committee
or by the Board. Subject to the general purposes, terms and conditions of this
Plan, and to the direction of the Board, the Committee will have full power to
implement and carry out this Plan. Without limitation, the Committee will have
the authority to:
a. select persons to receive Awards;
b. determine the nature, extent, form and terms of Awards and the
number of Shares or other consideration subject to Awards;
c. determine the vesting, exercisability and payment of Awards;
d. correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
e. determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to, other
Awards under this Plan or any other incentive or compensation plan of the
Company or any Parent or Subsidiary of the Company;
f. prescribe, amend and rescind rules and regulations relating to this
Plan or any Award;
g. construe and interpret this Plan, any Award Agreement and any other
agreement or document executed pursuant to this Plan;
h. grant waivers of Plan or Award conditions;
i. determine whether an Award has been earned; and
j. make all other determinations necessary or advisable for the
administration of this Plan.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
4.2 Committee Discretion. Any determination made by the Committee with
respect to any Award will be made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express term of this Plan or Award,
at any later time, and such determination will be final and binding on the
Company and on all persons having an interest in any Award under this Plan.
5. Options. The Committee may grant Options to eligible persons and will
determine: whether such Options will be intended to be Incentive Stock Options
within the meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOs"),
the number of Shares subject to the Option, the Exercise Price of the Option,
the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement ("Stock Option Agreement"), which will expressly
identify the Option as an ISO or a NQSO, and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Exercise Period. Options may be exercisable within the times or upon
the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("Ten Percent Stockholder") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
5.3 Exercise Price. The Exercise Price of an Option will be determined by
the Committee when the Option is granted; provided that: (i) the Exercise Price
of an ISO will be not less than 100% of the Fair Market Value of the Shares on
the date of grant; and (ii) the Exercise Price of any ISO granted to a Ten
Percent Stockholder will not be less than 110% of the Fair Market Value of the
Shares on the date of grant. Payment for the Shares purchased may be made in
accordance with Section 8 of this Plan.
5.4 Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.5 Method of Exercise. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "Exercise Agreement")
in a form approved by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price for the number of Shares being purchased.
2
5.6 Termination. Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:
a. If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such Participant's Options
only to the extent that such Options would have been exercisable upon the
Termination Date no later than three (3) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may
be determined by the Committee, with any exercise beyond three (3) months
after the Termination Date deemed to be a NQSO), but in any event, no later
than the expiration date of the Options.
b. If the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after a
Termination other than for Cause or because of Participant's Disability),
then Participant's Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after the
Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such exercise
beyond (a) three (3) months after the Termination Date when the Termination
is for any reason other than the Participant's death or Disability, or (b)
twelve (12) months after the Termination Date when the Termination is for
Participant's death or Disability, deemed to be a NQSO), but in any event
no later than the expiration date of the Options.
c. Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the Option
shall be entitled to exercise any Option with respect to any Shares
whatsoever, after termination of service, whether or not after termination
of service the Participant may receive payment from the Company or
Subsidiary for vacation pay, for services rendered prior to termination,
for services rendered for the day on which termination occurs, for salary
in lieu of notice, or for any other benefits. In making such determination,
the Board shall give the Participant an opportunity to present to the Board
evidence on his behalf. For the purpose of this paragraph, termination of
service shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his service is terminated.
5.7 Limitations on ISO. The aggregate Fair Market Value (determined as of
the date of grant) of Shares with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year (under this Plan or under
any other incentive stock option plan of the Company, Parent or Subsidiary of
the Company) will not exceed $100,000. If the Fair Market Value of Shares on the
date of grant with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, then the Options for the
first $100,000 worth of Shares to become exercisable in such calendar year will
be ISOs and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.8 Modification, Extension or Renewal. The Committee may modify, extend
or renew outstanding Options and authorize the grant of new Options in
substitution therefore, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them.
5.9 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.10 No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
3
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. Restricted Stock. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted Stock
Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted. Payment of the Purchase Price may be made in
accordance with Section 8 of this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall be
subject to such restrictions as the Committee may impose. These restrictions may
be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.
6.4 Stock Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the lapse of all
restrictions with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated as
of , between Village Super Market, Inc. and . A copy of
such Agreement is on file at the Principal executive offices of the
Company."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
6.5 Termination During Performance Period. If a Participant is Terminated
during a Performance Period for any reason, then such Participant will be
entitled to payment (whether in Shares, cash or otherwise) with respect to the
Restricted Stock Award only to the extent earned as of the date of Termination
in accordance with the Restricted Stock Purchase Agreement, unless the Committee
will determine otherwise.
7. Stock Bonuses.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares (which
may consist of Restricted Stock) for services rendered to the Company or any
Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "Stock Bonus Agreement") that will
be in such form (which
4
need not be the same for each Participant) as the Committee will from time to
time approve, and will comply with and be subject to the terms and conditions of
this Plan. A Stock Bonus may also be awarded upon satisfaction of such
performance goals as are set out in advance in a Participant's individual Award
Agreement (the "Performance Stock Bonus Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent or Subsidiary and/or individual performance factors or upon such
other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number of
Shares to be awarded to the Participant. If the Stock Bonus is being earned upon
the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
8. Payment For Share Purchases.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Committee and where permitted by law:
a. by cancellation of indebtedness of the Company to the Participant;
b. by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been fully paid with
respect to such shares); or (2) were obtained by Participant in the public
market;
c. by waiver of compensation due or accrued to the Participant for
services rendered;
d. with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant and a
broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby the Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to
pay for the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from the Participant and a NASD
Dealer whereby the Participant irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the
Company; or
e. by such other method as the Committee or the Board deems
appropriate in its sole discretion.
5
9. Withholding Taxes.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.
10. Privileges of Stock Ownership. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
11. Transferability. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. Restrictions on Shares. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. Certificates. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. Escrow; Pledge of Shares. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates.
15. Exchange And Buyout of Awards. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the
6
surrender and cancellation of any or all outstanding Awards. The Committee may
at any time buy from a Participant an Award previously granted with payment in
cash, Shares (including Restricted Stock) or other consideration, based on such
terms and conditions as the Committee and the Participant may agree.
16. Securities Law And Other Regulatory Compliance. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. No Obligation to Employ. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. Corporate Transactions.
18.1 Assumption or Replacement of Awards by Successor. In the event of (a)
a dissolution or liquidation of the Company, (b) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 18.1,
such Awards will expire on such transaction at such time and on such conditions
as the Committee will determine. Notwithstanding anything in this Plan to the
contrary, the Committee may, in its sole discretion, provide that the vesting of
any or all Awards granted pursuant to this Plan will accelerate upon a
transaction described in this Section 18 or otherwise. If the Committee
exercises such discretion with respect to Options, such Options will become
exercisable in full prior to the consummation of such event at such time and on
such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.
18.2 Other Treatment of Awards. Subject to any greater rights granted to
Participants under the foregoing provisions of this Section 18, in the event of
the occurrence of any transaction described in
7
Section 18.1, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from time to time,
also may substitute or assume outstanding awards granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either; (a) granting an Award under this Plan in substitution of such other
company's award; or (b) assuming such award as if it had been granted under this
Plan if the terms of such assumed award could be applied to an Award granted
under this Plan. Such substitution or assumption will be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
18.4 Adjustment of Shares. In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.
19. Term of Plan. Unless earlier terminated as provided herein, this Plan
will terminate ten (10) years from the date this Plan is adopted by the Board.
20. Amendment or Termination of Plan. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.
21. General.
21.1 Additional Provisions of an Award. Awards under the Plan also may be
subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions for the forfeiture of or restrictions
on resale or other disposition of shares of Stock acquired under any Award,
provisions giving the Company the right to repurchase shares of Stock acquired
under any Award in the event the Participant elects to dispose of such shares,
and provisions to comply with Federal and state securities laws and Federal and
state tax withholding requirements. Any such provisions shall be reflected in
the applicable Award agreement.
21.2. Claim to Awards and Employment Rights. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company, a Subsidiary or an Affiliate.
21.3. Designation and Change of Beneficiary. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Restricted Stock, if any, due under the Plan upon his death. A
Participant may, from time to time, revoke or change his beneficiary designation
without the consent of any prior beneficiary by filing a new designation with
the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date
8
prior to such receipt. If no beneficiary designation is filed by the
Participant, the beneficiary shall be deemed to be his or her spouse or, if the
Participant is unmarried at the time of death, his or her estate.
21.4. Payments to Persons Other Than Participants. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim
therefore has been made by a duly appointed legal representative) may, if the
Committee so directs the Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Committee and the Company therefore.
21.5. No Liability of Committee Members. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee, officer
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or
willful bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such
person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
21.6. Governing law. The Plan and all agreements hereunder shall be
governed by and construed in accordance with the internal laws of the State of
New Jersey without regard to the principles of conflicts of law thereof.
21.7. Funding. No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Participants shall
have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
21.8. Reliance on Reports. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and its
Subsidiaries and Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
21.9. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.
21.10. Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries and Affiliates.
21.11. Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
21.12. Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
9
21.13. Termination of Employment. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.
21.14. Nonexclusivity of The Plan. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options
and bonuses otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
22. Definitions. As used in this Plan, the following terms will have the
following meanings:
"Affiliate" means any entity which controls the Company, is controlled by
the Company or is under common control with the Company.
"Award" means any award under this Plan, including any Option, Restricted
Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or Affiliate having cause to
terminate a Participant's employment or service under any existing employment,
consulting or any other agreement between the Participant and the Company or a
Subsidiary or Affiliate or, in the absence of such an employment, consulting or
other agreement, upon (i) the determination by the Committee that the
Participant has ceased to perform his duties to the Company, a Subsidiary or
Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, a Subsidiary or Affiliate or (iii) the Participant having been
convicted of a felony.
"Code" means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.
"Committee" means the Compensation Committee or such other committee
appointed by the Board consisting of two or more directors, or in the absence of
any such committee, the full Board of Directors of the Company.
"Common Stock" means the Class A Common Stock of the Company.
"Company" means Village Super Market, Inc. or any successor corporation.
"Disability" means a disability, whether temporary or permanent, partial or
total, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
a. if such Common Stock is then quoted on the NASDAQ National Market,
its closing price on the NASDAQ National Market on the date of
determination as reported in The Wall Street Journal;
b. if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the
Common Stock is listed or admitted to trading as reported in The Wall
Street Journal;
10
c. if such Common Stock is publicly traded but is not quoted on the
NASDAQ National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the
date of determination as reported in The Wall Street Journal;
d. if none of the foregoing is applicable, by the Committee in good
faith.
"Insider" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section 16 of
the Exchange Act.
"Option" means an award of an option to purchase Shares pursuant to Section
5.
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award under this Plan.
"Performance Factors" means the factors selected by the Committee such as
the following measures to determine whether the performance goals established by
the Committee and applicable to Awards have been satisfied:
a. Net revenue and/or net revenue growth;
b. Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
c. Operating income and/or operating income growth;
d. Net income and/or net income growth;
e. Earnings per share and/or earnings per share growth;
f. Total stockholder return and/or total stockholder return growth;
g. Return on equity;
h. Operating cash flow return on income;
i. Adjusted operating cash flow return on income;
j. Economic value added; and
k. Individual confidential business objectives.
"Performance Period" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"Plan" means this Village Super Market, Inc. 2004 Stock Plan, as amended
from time to time.
"Restricted Stock Award" means an award of Shares pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for issuance
under this Plan, as adjusted pursuant to Sections 2 and 18, and any successor
security.
"Stock Bonus" means an award of Shares, or cash in lieu of Shares, pursuant
to Section 7.
"Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company 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 such chain.
11
"Termination" or "Terminated" means, for purposes of this Plan with respect
to a Participant, that the Participant has for any reason ceased to provide
services as an employee, officer or director to the Company or a Parent or
Subsidiary of the Company. An employee will not be deemed to have ceased to
provide services in the case of (i) sick leave, (ii) military leave, or (iii)
any other leave of absence approved by the Committee, provided, that such leave
is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute or unless provided
otherwise pursuant to formal policy adopted from time to time by the Company and
issued and promulgated to employees in writing. In the case of any employee on
an approved leave of absence, the Committee may make such provisions respecting
suspension of vesting of the Award while on leave from the employ of the Company
or a Subsidiary as it may deem appropriate, except that in no event may an
Option be exercised after the expiration of the term set forth in the Option
agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the
Participant ceased to provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.
"Vested Shares" means "Vested Shares" as defined in the Award Agreement.
As adopted by the Board of Directors of Village Super Market, Inc. as of
, 2004.
12
VILLAGE SUPER MARKET, INC.
733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY 07081
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Perry Sumas and Robert Sumas and each of
them, proxies for the undersigned, with full power of substitution, to vote as
if the undersigned were personally present at the Annual Meeting of the
Shareholders of Village Super Market, Inc. (the "Company"), to be held at the
offices of the Company, 733 Mountain Avenue, Springfield, New Jersey on Friday,
December 10, 2004, at 10:00 A.M. and at all adjournments thereof, the shares of
stock of said Company registered in the name of the undersigned. The undersigned
instructs all such proxies to vote such shares as indicated on the reverse side
upon the following matters, which are described more fully in the accompanying
proxy statement.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF SHAREHOLDERS OF
VILLAGE SUPER MARKET, INC.
DECEMBER 10, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE /x/
FOR AGAINST ABSTAIN
1. Election of Directors for the Company's 2. Approval of KPMG LLP, to be the independent [ ] [ ] [ ]
Board of Directors listed below: auditors of the Company for fiscal 2005
NOMINEES:
[ ] FOR ALL NOMINEES O James Sumas 3. Approval of the Village Super Market, Inc. [ ] [ ] [ ]
O Perry Sumas 2004 Stock Plan.
[ ] WITHHOLD AUTHORITY O Robert Sumas
FOR ALL NOMINEES O William Sumas 4. In their discretion, to vote upon such other business as may
O John Sumas properly come before the meeting and all adjournments thereof.
[ ] FOR ALL EXCEPT O John J. McDermott
(See instructions O Steven Crystal This proxy, when properly executed, will be voted in the manner
below) O David C. Judge directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted for Proposal 1, 2 and 3.
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to withhold,
as shown here:
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To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the
account may not be submitted via this method. / /
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Signature of Shareholder _____________________ Date: _____________ Signature of Shareholder _____________________ Date: ____________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.