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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ingles Markets, Incorporated
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[LOGO]
INGLES MARKETS, INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 20, 1996
To the Stockholders of Ingles Markets, Incorporated:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Ingles Markets, Incorporated (the "COMPANY") will be held at the Grove Park
Inn, 290 Macon Avenue, Asheville, North Carolina 28804, on Tuesday, February
20, 1996, at 1:00 P.M. local time, for the following purposes:
(1) To elect eight (8) Directors for the ensuing year;
(2) To consider and vote upon a proposal to adopt and approve the
Amended and Restated Ingles Markets, Incorporated 1991
Nonqualified Stock Option Plan, a stock option plan for key
employees (the "1991 PLAN");
(3) To consider and vote upon a proposal to adopt and approve the
Amended and Restated Stock Option Agreement between the
Company and Robert P. Ingle, Chairman of the Board of
Directors and Chief Executive Officer of the Company,
effective as of July 21, 1993 (the "INGLE OPTION AGREEMENT");
(4) To consider and vote upon a proposal to adopt and approve the
Amended and Restated Stock Option Agreement between the
Company and Landy B. Laney, President and Chief Operating
Officer of the Company, effective as of July 21, 1993 (the
"LANEY OPTION AGREEMENT");
(5) To consider and vote upon a proposal to adopt and approve the
Stock Option Agreement between the Company and Edward J.
Kolodzieski, Vice President-Strategic Planning of the Company,
dated as of August 2, 1995 (the "KOLODZIESKI OPTION
AGREEMENT"); and
(6) To transact such other business as may properly come before the
meeting.
Holders of the shares of the Company's Class A Common Stock and Class
B Common Stock of record at the close of business on January 2, 1996 will be
entitled to notice of and to vote at the meeting.
Whether or not you expect to be present in person at the meeting,
please sign and date the accompanying proxy and return it promptly in the
enclosed postage paid reply envelope. This will assist us in preparing for the
meeting.
By Order of the Board of Directors
/s/ Robert P. Ingle
------------------------------------
Robert P. Ingle
Chairman of the Board
January 15, 1996
Asheville, North Carolina
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE MAY BE
RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
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INGLES MARKETS, INCORPORATED
P. O. BOX 6676
HIGHWAY 70
ASHEVILLE, NORTH CAROLINA 28816
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Ingles Markets, Incorporated
(the "COMPANY") to be voted at the Annual Meeting of the Stockholders of the
Company to be held on February 20, 1996, and any adjournment or adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. The Annual Meeting of Stockholders will be held at
the Grove Park Inn, 290 Macon Avenue, Asheville, North Carolina 28804, on
Tuesday, February 20, 1996, at 1:00 p.m., local time. This proxy statement and
accompanying form of proxy were first sent or given to Stockholders on or about
January 15, 1996. The Company's Annual Report for the year ended September 30,
1995, is being sent, concurrently herewith, to each Stockholder of record. The
Company's principal executive offices are located at Highway 70, Asheville
(Black Mountain), North Carolina 28816.
SOLICITATION OF PROXIES
Proxies will be solicited by mail. Proxies may also be solicited by
officers and regular employees of the Company personally or by telephone or
telegraph, but such persons will not be specifically compensated for such
services. Banks, brokers, nominees and other custodians and fiduciaries will
be reimbursed for their reasonable and customary expenses in forwarding
soliciting material to their principals, the beneficial owners of Common Stock
of the Company. The expense of preparing, assembling, printing, mailing and
soliciting proxies will be borne by the Company. It is estimated that the
total amount of such expenses (including the cost of preparing the 1995 Annual
Report to Stockholders) will be approximately $75,000. To date, approximately
$35,000 has been incurred for such purposes.
ACTION TO BE TAKEN UNDER THE PROXIES
When a proxy in the enclosed form is properly executed and timely
returned, the shares represented thereby will be voted at the meeting in the
manner specified thereon. If the proxy is properly completed and returned but
no choice is specified thereon, it will be voted "FOR" the election of the
nominees for Directors set forth on pages 5 through 7 under the heading
"Election of Directors" and "FOR" the adoption and approval of each of the 1991
Plan, the Ingle Option Agreement, the Laney Option Agreement and the
Kolodzieski Option Agreement, all as described on pages 17 through 30 of this
Proxy Statement.
Any Stockholder who properly executes and delivers a proxy may revoke
it at any time prior to it being exercised. Any proxy given pursuant to this
solicitation may be revoked by any Stockholder who attends the meeting and
gives oral notice of his or her election to vote in person, without compliance
with any other formalities. In addition, any proxy given pursuant to this
solicitation may be revoked prior to the meeting by delivering an instrument
revoking it or a duly executed proxy bearing a later date to the Secretary of
the Company.
The Company's management knows of no matter to be brought before the
meeting other than those mentioned herein. If, however, any other matters
properly come before the meeting, it is intended that the proxies will be voted
in accordance with the judgment of the person or persons voting such proxies.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING RIGHTS
The Company's Class A Common Stock, $.05 par value per share, and
Class B Common Stock, $.05 par value per share, are entitled to vote at the
meeting. The Board of Directors, pursuant to the By-laws of the Company, has
fixed January 2, 1996, at the close of business, as the record date for the
determination of Stockholders entitled to notice of and to vote at the meeting
or at any adjournment or adjournments thereof. At January 2, 1996, there were
4,578,741 shares of Class A Common Stock and 13,325,409 shares of Class B
Common Stock outstanding and entitled to be voted at the meeting.
With respect to the election of eight (8) Directors at the meeting,
holders of Class A Common Stock voting as a class shall elect two (2) Directors
and holders of Class B Common Stock voting as a class shall elect the remaining
six (6) Directors. Unless cumulative voting for Directors applies, as
described below, each holder of Class A Common Stock and each holder of Class B
Common Stock shall have one (1) vote for each share held as of the record date.
The North Carolina Business Corporation Act provides that, in connection with
the election of Directors at a meeting at which a quorum is present, the
persons receiving a plurality of the votes cast by the shares entitled to vote
in the election will be elected as Directors. For such purposes only votes for
and votes withheld will be counted. For purposes of any such vote, there are
no abstentions or broker nonvotes. For purposes of this Proxy Statement,
"broker nonvotes" are votes with respect to which nominees holding shares for
beneficial owners have received a proxy and are deemed to be present for
purposes of determining if a quorum exists but have received no instructions
from the beneficial owner with respect to certain specific matters to be voted
upon and, accordingly, may not exercise discretionary voting power with respect
to such matters.
The North Carolina Business Corporation Act was amended to provide
that, unless the corporation is a public corporation as of the date the share
records are closed for purposes of setting a record date, every stockholder of
a corporation (such as the Company) that was incorporated between July 1, 1957
and July 1, 1990, who is entitled to vote at an election of Directors shall
have the right to vote, in person or by proxy, the number of shares standing of
record in the name of the stockholder for as many persons as there are
Directors to be elected and for whose election the stockholder has a right to
vote, or to cumulate votes by giving one (1) candidate as many votes as the
number of such Directors multiplied by the number of the stockholder's shares,
or by distributing such votes on the same principle among any number of such
candidates. This right of cumulative voting shall not be exercised unless some
stockholder or proxy holder announces in open meeting, before the voting for
Directors starts, an intention to vote cumulatively. Further, in the event of
cumulative voting, discretionary authority is hereby solicited so that, except
as limited in any proxy, the proxy holders named in the proxy shall have full
authority to vote for the largest number of nominees that can be elected by
cumulative voting of the shares to which the proxy relates or for such lesser
number as instructed by the Board of Directors and shall have full authority to
distribute their votes among nominees for whom the authority to vote has not
been withheld in the proxy in any manner as instructed by the Board of
Directors. However, as of January 2, 1996, the record date for the Annual
Meeting, the Company is a public corporation for such purposes. Therefore,
cumulative voting would not be available.
With respect to all other matters to be voted upon, unless otherwise
provided in the Company's Articles of Incorporation or the North Carolina
Business Corporation Act, the holders of Class A Common Stock and Class B
Common Stock shall vote as a single class, with each holder of Class A Common
Stock being entitled to one (1) vote for each share of Class A Common Stock
held as of the record date and each holder of Class B Common Stock being
entitled to ten (10) votes for each share of Class B Common Stock held as of
the record date. For purposes of any such vote, if a quorum is present, a
proposal will pass if the votes cast favoring the action exceed the votes cast
opposing the action. Accordingly, abstentions and broker nonvotes will have
no effect on the vote. At this time, other than the adoption and approval of
the 1991 Plan, the Ingle Option Agreement, the Laney Option Agreement and the
Kolodzieski Option Agreement, the Company does not know of any such other
matters to be presented for action at the meeting.
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A majority of the outstanding shares of each class of Common Stock
represented at the meeting, in person or by proxy, will constitute a quorum for
purposes of voting on the election of Directors. The representation at the
meeting, in person or by proxy, of shares having a majority of the aggregate
votes of both classes of Common Stock will constitute a quorum for voting on
the adoption and approval of the 1991 Plan, the Ingle Option Agreement, the
Laney Option Agreement and the Kolodzieski Option Agreement and any other
matters that may be presented to the meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The table on the following page sets forth, as of December 26, 1995,
certain information with respect to the Company's Class A Common Stock and
Class B Common Stock owned beneficially by each Director, by each Nominee for
election as a Director, by each of the Executive Officers of the Company named
in the Summary Compensation Table on page 12, by all Directors and Executive
Officers as a group and by each person known by the Company to be a beneficial
owner of more than five percent (5%) of either class of the outstanding Common
Stock of the Company. Except as otherwise indicated, each beneficial owner has
sole voting and investment power:
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Number of Shares Owned Beneficially Percentage of Common Stock (1)
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NAME Class A (2) Class B (2) Class A (2) Class B (2)
Robert P. Ingle (3) 0 12,402,950(4)(5) 73.0%(2) 93.1%
Ingles Markets, Incorporated Investment/
Profit Sharing Plan and Trust (3) 0 2,152,700 32.0%(2) 16.2%
Cincinnati Financial Corporation (6) 693,693 0 15.2% -
Merchant Distributors, Inc. (7) 269,900 150,150 8.9%(2) 1.1%
Joseph G. Ashley (3) 315 0 * -
Anthony S. Federico (3) 10,000 138,075 3.1%(2) 1.0%
Jack R. Ferguson (3) 300 2,152,700(4) 32.0% 16.2%
Vaughn C. Fisher (3) 0 2,175,700(4) 32.2%(2) 16.3%
Ralph H. Gardner (3) 15,800(8) 750 *(2) *
Landy B. Laney (3) 0 4,163 *(2) *
John O. Pollard 100 0 * -
J. Alton Wingate 1,100 150 *(2) *
All Directors and Executive Officers as a 39,715(8) 12,569,238(4)(5) 73.5%(2) 94.3%
group (16 persons)
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*Less than 1%.
(1) The percentage of stock ownership does not reflect any dilution that may
be attributable to the conversion of the Company's outstanding $37,459,000
principal amount of Convertible Subordinated Debentures due October 15, 2008.
The conversion price is $11.10 per share.
(2) Each share of Class B Common Stock is convertible, at any time, at the
option of the holder, into one share of Class A Common Stock. Upon any
transfer of Class B Common Stock (other than to immediate family members and
the Company's Investment/Profit Sharing Plan and Trust), each share of Class B
Common Stock is automatically converted into a share of Class A Common Stock.
Accordingly, the percentages of Class A Common Stock set forth in the table
above for each holder of Class B Common Stock reflects the Class A Common Stock
into which such stockholder's shares of Class B Common Stock are convertible.
However, such converted shares are not taken into consideration in calculating
such percentages for any other stockholder, except for the shares of Class A
Common Stock held by all Directors and Executive Officers as a group.
(3) The address of this beneficial owner is P.O. Box 6676, Highway 70,
Asheville, North Carolina 28816.
(4) Includes the 2,152,700 shares held by the Company's Investment/Profit
Sharing Plan and Trust, of which Messrs. Ingle, Ferguson and Fisher are
trustees, and with respect to which they have the sole voting power and
dispositive power with respect to such shares. Messrs. Ingle, Ferguson and
Fisher disclaim beneficial ownership of such shares.
(5) Includes 48,600 shares of Class B Common Stock held by Mr. Ingle's wife.
(6) The address of this beneficial owner is 6200 South Gilmore Road,
Fairfield, Ohio 45014-5141.
(7) The address of this beneficial owner is 120 4th Street, S. W., Hickory,
North Carolina 28601.
(8) Includes 300 shares of Class A Common Stock held by the estate of Mr.
Gardner's wife.
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ELECTION OF DIRECTORS
The entire Board of Directors of the Company will be elected for a
term of one (1) year and until their successors are elected and qualified. The
Company's By-laws provide that there shall be not less than five (5), nor more
than eleven (11), Directors. The Board of Directors has determined that the
number of Directors be fixed at eight (8) members for the ensuing year. Two
(2) of the Directors will be elected by a vote of the holders of the Class A
Common Stock and the remaining six (6) Directors will be elected by a vote of
the holders of the Class B Common Stock. It is the intention of the persons
named in the accompanying proxy form to vote for the election of the nominees
identified below. If for any reason any such nominee is not a candidate when
the election occurs, which event is not anticipated, it is the intention of the
persons named in the accompanying proxy form to vote for the remaining nominees
named and to vote in accordance with their best judgment if any substitute
nominees are named for any nominees who are unable to serve or who for good
cause will not serve. All of the nominees are currently Directors.
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information relating to age, positions with the Company
and principal employment has been furnished by the respective Directors and
Executive Officers. Except as otherwise indicated, each Director and Executive
Officer has been or was engaged in his or her present or last principal
employment, in the same or a similar position, for more than five (5) years.
None of the Directors or Executive Officers, other than Messrs. Ingle and
Wingate, is a director of any other publicly-owned company.
INFORMATION ABOUT DIRECTORS
NAME OR EXECUTIVE OFFICERS
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Robert P. Ingle Chairman of the Board of Directors and Chief Executive Officer since the incorporation of
the Company in 1965, Mr. Ingle was President of the Company until 1982. Mr. Ingle also
serves on the Asheville Board of Directors Advisory Board of the First Union National Bank
of North Carolina, Asheville. Mr. Ingle is 62.
Landy B. Laney A Director since 1972, Mr. Laney has also served as an Executive Officer of the Company
since that time. He has been President and Chief Operating Officer of the Company since
1982. Mr. Laney is 64.
Joseph G. Ashley Mr. Ashley has served as Vice President-Meats since he joined the Company in May 1991.
Prior to joining the Company, Mr. Ashley served as a regional supervisor of meat operations
for Food Lion, Inc., a regional supermarket chain, since 1973. Mr. Ashley is 48.
Timothy A. Davey Mr. Davey has served as the Director-Bakery since he joined the Company in July 1994 and is
currently Vice President-Bakery. Prior to joining the Company, Mr. Davey served as
Director of Bakery Operations for Kash n'Karry Food Stores, Inc., a regional supermarket
chain, since 1989. From 1978 to 1989, he served with Kroger Company in a variety of
poisitions. Mr. Davey is 39.
Anthony S. Federico Mr. Federico has served as a director since May 1991 and as Vice President, Non-Foods since
October 1992. Prior to joining the Company in October 1992, he served as President of
Ultimate Food Sales, Inc., a food brokerage company based in Asheville, North Carolina,
which he founded in 1985. Mr. Federico is 36.
Jack R. Ferguson Mr. Ferguson has served as a Director and as the Vice President-Finance and Chief Financial
Officer of the Company since 1988. Prior to joining the Company in 1987, Mr. Ferguson
served as Treasurer of BI-LO, Inc., a regional supermarket chain, where he was employed
since 1971. Mr. Ferguson is 55.
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Vaughn C. Fisher A Director since 1985, he joined the Company in 1972 and presently serves as the Company's
Vice President-Sales Manager. Mr. Fisher is 58.
Ralph H. Gardner A Director since 1985, he is President of Milkco, Inc., the Company's subsidiary which
conducts its milk processing and packaging operations. Mr. Gardner worked for Kraft, Inc.
as Area Sales Manager for 34 years prior to joining the Company as an officer in 1982.
He is 75.
Phillip D. Grasso Mr. Grasso has served as Vice President-Deli since he joined the Company in March 1994.
Prior to joining the Company, Mr. Grasso served as Deli/Bakery Director for Safeway Stores,
Inc. in Dallas, Texas, Southern California and Washington, D.C., from 1984 to 1994 and as
Merchandising Manager of Specialty Departments for Grand Union Stores, Washington, D.C.,
from 1971 to 1984. Mr. Grasso is 45.
Edward J. Kolodzieski Mr. Kolodzieski has served as Vice President-Strategic Planning since he joined the Company
in August 1995. Prior to joining the Company, Mr. Kolodzieski was with Kash n'Karry Food
Stores, Inc., a regional supermarket chain, from 1978 until 1995. He held several
positions at Kash n'Karry, including Regional Manager, Marketing Manager, Director of Deli
Marketing, Vice President of Operations and served in the capacity of Senior Vice
President-Operations prior to joining the Company. Mr. Kolodzieski is 35.
Gordon S. Myers He has served as Vice President-Real Estate since he joined the Company in March 1993.
Prior to joining the Company, Mr. Myers served as President of Commercial Developers, Inc.,
a real estate company which he owned. Prior to his employment, Mr. Myers served the
Company as a consultant in matters relating to real estate. He is 51.
John O. Pollard A Director since 1987, he is a partner in the Charlotte, North Carolina law firm of
Blakeney & Alexander, with which he has been affiliated since 1973. Mr. Pollard is 58.
J. Thomas Outlaw, Jr. Mr. Outlaw has been employed by the Company since 1977 in various capacities and is
currently Vice President-Frozen Foods. Mr. Outlaw is 49.
Leonard E. Tasler He has served as Vice President - Produce since he joined the Company in March 1993. Prior
to joining the Company, Mr. Tasler served as Senior Produce Buyer for Safeway Stores, Inc.,
Omaha, Phoenix, and Denver division, a national supermarket chain, from 1973 through 1993.
He is 41.
Brenda S. Tudor A certified public accountant, she joined the Company in 1984 and served as general
accounting manager until 1988 when she became Controller and Secretary of the Company. Ms.
Tudor previously had been employed as an accountant with the Asheville, North Carolina
office of Strand, Skees, Jones & Company, certified public accountants, for three years.
Ms. Tudor is 38.
J. Alton Wingate A Director since 1987, he is Chairman and Chief Executive Officer of Community Bank &
Trust, Cornelia, Georgia, where he has been employed as an executive officer since 1977.
Mr. Wingate also serves as president, chief executive officer and a director of Financial
Supermarkets, Inc. and Community Bankshares, Inc. Mr. Wingate also serves as a director of
Community Bank & Trust, Commerce, Georgia, and Cherokee National Life Insurance Company.
Mr. Wingate is 56.
MESSRS. POLLARD AND WINGATE HAVE BEEN NOMINATED BY THE BOARD OF
DIRECTORS FOR ELECTION BY THE HOLDERS OF THE CLASS A COMMON STOCK. MESSRS.
INGLE, LANEY, FEDERICO, FERGUSON, FISHER AND GARDNER HAVE BEEN NOMINATED BY THE
BOARD OF DIRECTORS FOR ELECTION BY THE HOLDERS OF THE CLASS B COMMON STOCK.
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Directors serve until the next annual meeting or until their
successors are elected and qualified.
Anthony S. Federico is the son-in-law of Robert P. Ingle. There are
no other family relationships among any of the Directors or Executive Officers
of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, consisting of
Messrs. Ingle, Laney and Fisher. The Executive Committee will carry out the
functions of the full Board of Directors between meetings of the full Board,
excepting powers which may not be delegated to such Committee under the North
Carolina Business Corporation Act.
The Audit/Compensation Committee of the Board of Directors consists of
Messrs. Ingle, Pollard and Wingate.
The Company has no standing nominating committee.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four (4) formal meetings during the 1995
fiscal year. The Executive Committee held no formal meetings during fiscal
1995 but met frequently on an informal basis. The Audit/Compensation Committee
held one (1) formal meeting during fiscal 1995. During the period in the 1995
fiscal year in which he served as a Director, each incumbent Director attended
at least 75% of all meetings of the Board of Directors and of the committees of
the Board of Directors described in the immediately preceding section.
EXECUTIVE COMPENSATION
GENERAL
In order to generally improve stockholders' understanding of all forms
of compensation paid to senior executives, the criteria used to reach such
compensation decisions, and any relationship between executive compensation and
corporate performance, the Securities and Exchange Commission (the "SEC")
adopted rules regarding the form and substance of the textural and tabular
disclosure of executive compensation by publicly-held corporations to their
stockholders.
After reviewing certain factors relating to the Company's performance,
the Company's Chief Executive Officer regularly reviews and makes final
subjective determinations (in certain instances in consultation with the Chief
Operating Officer) with respect to compensation of the Company's Executive
Officers and other employees. The Board of Directors appointed its Chief
Executive Officer and two (2) of its independent, non-employee members to serve
on the Audit/Compensation Committee and empowered the committee to:
- Recommend the appointment or removal of the Company's
independent auditors, review the scope and results of the
independent audit of the Company, review audit fees and review
changes in accounting policies that have a significant effect
on the Company's financial reports.
- Approve compensation levels and increases of each Executive
Officer and of other employees of the Company whose annual
base salary is in excess of $100,000.
- Approve all incentive payments to Executive Officers and any
incentive payments in excess of $25,000, paid in cash or
property, in any calendar year to any other employee.
- Undertake administration of employee benefit plans.
Neither the full Board of Directors nor the Audit/Compensation
Committee generally reviews or ratifies the Chief Executive Officer's decisions
relating to executive compensation. However, decisions are made by the Board
of Directors in the event that such decisions require the adoption of documents
relating to employee benefit plans or programs or the delegation to the
Audit/Compensation Committee of administrative responsibilities with respect to
such plans or programs. In addition, the Audit/Compensation Committee is
required to approve decisions with respect to
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compensation levels and increases for employees whose base salary is in excess
of $100,000 and incentive compensation in excess of $25,000. Decisions about
grants or awards under the Company's stock-based employee benefit plans are
made solely by the Audit/Compensation Committee where Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") requires that
such grants or awards be made by a "disinterested" committee. The
Audit/Compensation Committee also determines whether the payment of a bonus is
appropriate when it is earned pursuant to Mr. Ingle's employment agreement, as
described in the Audit/Compensation Committee Report below.
The SEC's rules addressing disclosure of executive compensation in
proxy statements generally require the Company to include in this Proxy
Statement a report from the Audit/Compensation Committee addressing, with
respect to the most recently completed fiscal year, (a) the Company's policies
regarding executive compensation generally, (b) the factors and criteria
considered in setting the compensation of the Company's Chief Executive
Officer, Robert P. Ingle, and (c) any relationship between such compensation
and the Company's performance.
Accordingly, set forth below, for inclusion in this Proxy Statement,
is the report submitted by Messrs. Robert P. Ingle, John O. Pollard and J.
Alton Wingate in their capacity as the Company's Audit/Compensation Committee.
AUDIT/COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Policies
During the 1995 fiscal year, the Audit/Compensation Committee of the
Board of Directors did not participate in any policy making decisions with
respect to the establishment of the compensation of the Company's Executive
Officers. However, the Audit/Compensation Committee is required to approve the
fixing of any salary in excess of $100,000 and any incentive compensation in
excess of $25,000. In addition, the Audit/Compensation Committee is authorized
to determine whether the payment of a bonus to Mr. Ingle is appropriate when it
is earned under his employment agreement. No such decision was made in fiscal
1995 because Mr. Ingle did not earn a bonus pursuant to the terms of his
employment agreement, as described below. All other compensation decisions
regarding the Company's Executive Officers that were made during the 1995
fiscal year were made primarily by Mr. Ingle (in certain instances in
consultation with Mr. Laney) on a subjective basis after reviewing certain
factors relating to the Company's performance.
On December 15, 1993, the Internal Revenue Service and Department of
Treasury issued proposed regulations regarding compliance with Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "CODE"), which generally
limits the corporate tax deduction for compensation to $1 million for certain
executive officers unless certain requirements are met. The Audit/Compensation
Committee intends to take Section 162(m) of the Code into consideration when
determining compensation levels and to consider appropriate steps to mitigate
any adverse impact this limitation on the deductibility of executive
compensation may have on executive compensation levels and on the Company.
Salaries and Cash Incentive Bonus Awards
Effective December 6, 1992, the salary paid to Mr. Ingle was fixed at
$170,000 per year. Mr. Ingles' salary was fixed in accordance with a
three-year employment agreement with the Company dated as of December 6, 1992.
The employment agreement included a bonus provision and certain other benefits.
Effective September 26, 1993, Mr. Ingle's employment agreement was amended,
extending the term until September 26, 1996, amending the bonus provision
effective with fiscal 1994, and increasing his base salary to $200,000 per year
effective with fiscal 1995.
No bonus was earned by Mr. Ingle in fiscal 1995 under the terms of his
employment agreement, as amended. Mr. Ingle's bonus is tied to annual
increases in consolidated annual pre-tax income without regard, with respect to
any year, to unusual, nonrecurring or infrequent items of income or expense
that the Audit/Compensation Committee determines should not be included for
purposes of calculating such bonus. Pursuant to his employment agreement, Mr.
Ingle will receive a $150,000 bonus for each full $500,000 increase in adjusted
annual pre-tax income (as so calculated) for the current applicable fiscal year
as compared to the immediately preceding applicable fiscal year.
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Mr. Laney's salary is fixed pursuant to an oral agreement with the
Company. Effective December 6, 1992, the salary paid to Mr. Laney was fixed at
$300,000 per year. Effective July 27, 1994, the salary paid to Mr. Laney was
increased to $350,000 per year. Mr. Laney entered into an agreement with the
Company on December 23, 1994, pursuant to which the Company agreed to pay Mr.
Laney a bonus that will accrue in the amount of $300,000 per year during fiscal
years 1995 through 1999 up to a maximum aggregate bonus of $1,500,000. Mr.
Laney will receive the full amount of the bonus if he continues to be employed
by the Company through September 25, 1999, and prior to that date only if his
employment is terminated by the Company with or without cause, or if, in the
event of the sale of the Company or a change in control of the Company, Mr.
Laney should determine in his sole discretion to terminate his employment with
the Company. Mr. Laney would be entitled to a pro-rata portion of the full
amount of the bonus in the event of his death or disability (as defined in the
agreement) prior to September 25, 1999. Mr. Laney would be entitled to none of
the bonus if he terminates his employment by the Company other than as
described in the previous two sentences. The bonus will be payable in two
installments of 50% each. If Mr. Laney continues to be an employee of the
Company through September 25, 1999, the first installment will be paid on
September 25, 1999, and the second installment on January 3, 2000. Otherwise,
the first installment will be paid no later than thirty (30) days after the
event giving rise to the early payment of the bonus, and the second installment
will be paid on the first business day that is in a different fiscal and
calendar year than the payment date of the first installment.
The salary levels fixed for Messrs. Ingle and Laney were first set
forth in employment agreements with the Company, which were entered into in
1987 in connection with the Company's initial public offering. Messrs. Ingle
and Laney entered into such employment contracts with the Company in 1987 to
insure continuity of management during the three fiscal years after the initial
public offering. While both of these agreements expired at the end of the 1990
fiscal year, Messrs. Ingle's and Laney's salaries for fiscal year 1992 and the
first two months of fiscal 1993 were maintained at the levels set forth in the
agreements. Effective December 6, 1992, Messrs. Ingle and Laney each agreed to
reductions in their annual salaries to $170,000 and to $300,000, respectively.
In addition, Mr. Ashley's salary was fixed at $150,000 per year
pursuant to an oral agreement between Mr. Ashley and the Company prior to his
accepting employment with the Company.
Of the five (5) Executive Officers of the Company named in the Summary
Compensation Table on page 12, only three (3) of the Executive Officers
actually received compensation in an amount that was based on corporate
performance. In the instances where the decision has been made to link
compensation of Executive Officers to operating performance, the link has been
achieved by fixing salaries and basing bonuses paid on performance.
Accordingly, while Mr. Gardner's salary is fixed at $60,000 per year, his
annual bonus is tied to the pre-tax income (before bonus) of Milkco, Inc. In
addition, bonuses for Messrs. Ashley and Ferguson are linked to the operating
performance of the Company. While Mr. Ingle's bonus is tied to corporate
performance, no bonus was earned in fiscal 1995.
Stock Option Plans
STOCK OPTION AGREEMENTS WITH EXECUTIVE OFFICERS. Effective as of July
21, 1993, the Company entered into nonqualified stock option agreements with
each of Messrs. Ingle and Laney under which an aggregate of 100,000 shares of
the Company's Class A Common Stock may be issued to each of them. The
agreements were retroactively amended and restated during the fourth quarter of
fiscal 1995 to make certain technical corrections reflecting the original
intent of the parties. The agreements, as so amended, were approved by the
Company's Board of Directors. Each agreement provides that no options
thereunder may be exercised until the agreement is approved and adopted by the
Company's stockholders. Each option agreement provides that, after such
approval, the options thereunder may be exercised from time to time until July
20, 1998 at an option price of $6.00 per share. The options under such
agreements may also be exercised, after stockholder approval, at any time upon
the death of the optionee prior to July 20, 1998. No such options were granted
during fiscal 1994 or 1995 to the Executive Officers named in the Summary
Compensation Table on page 12.
AMENDED AND RESTATED 1991 NONQUALIFIED STOCK OPTION PLAN. In August
1991, the Company's Board of Directors adopted a nonqualified stock option plan
(the "1991 PLAN"). The 1991 Plan was retroactively amended and restated during
the fourth quarter of fiscal 1995 to make certain technical corrections
reflecting the original intent of the Board of Directors when the 1991 Plan was
originally adopted. The 1991 Plan provides for the grant to key employees of
nonqualified options for the purchase of an aggregate of up to 1,000,000 shares
of Class A Common Stock. Such employees must be salaried employees who are
officers or employed in an executive, administrative or
9
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professional capacity by the Company. Options have been awarded to such
employees and in such amounts as determined by the Audit/Compensation
Committee. The Audit/Compensation Committee establishes the purchase price of
the stock at the time the options are granted, but such price may not be less
than 100% of the fair market value of the Class A Common Stock on the date of
the grant.
The 1991 Plan provides that no option granted thereunder may be
exercised until the 1991 Plan is approved and adopted by the Company's
stockholders. After such approval, the options may be exercised within a
period of three months after the fifth anniversary of the date of issuance of
the option or upon the death, disability or retirement of the employee holding
the option.
During the 1995 fiscal year, no options were granted under the 1991
Plan. During fiscal 1995, no options were cancelled. As of September 30,
1995, no options had been exercised, no options were exercisable, options to
purchase 996,000 shares were outstanding and options to purchase 4,000 shares
were available for future grants under the 1991 Plan.
AMENDED AND RESTATED 1987 EMPLOYEE INCENTIVE STOCK OPTION PLAN. In
1987, the Board of Directors and stockholders of the Company adopted and
approved an incentive stock option plan (the "ISO PLAN"). The ISO Plan was
retroactively amended and restated during the fourth quarter of fiscal 1995 to
make certain technical corrections reflecting the original intent of the Board
of Directors when the ISO Plan was originally adopted. The ISO Plan provides
for the grant of incentive stock options for the purchase of an aggregate of up
to 250,000 shares of Class A Common Stock to be issued to key employees. Such
employees must be salaried employees who are officers or employed in an
executive, administrative or professional capacity by the Company and must
possess less than 10% of the total combined voting power of all classes of
stock of the Company immediately after the option is granted. Options will be
awarded to such employees and in such amounts as determined by the
Audit/Compensation Committee. The Audit/Compensation Committee may establish
the purchase price of the stock at the time the option is granted, but such
price may not be less than 100% of the fair market value of the Class A Common
Stock on the date of the grant.
The options may be exercised within a period of three months after a
period of five years from the date of issuance of the option or upon the death,
disability or retirement of the employee holding the option.
During the 1995 fiscal year, 27,000 options were granted under the ISO
Plan and options for 46,500 shares of Class A Common Stock were cancelled. As
of September 30, 1995, no options had been exercised, options to purchase
135,500 shares were outstanding and options to purchase 114,500 shares were
available for future grants under the ISO Plan. As of September 30, 1995, no
option shares are exercisable. Since the inception of the ISO Plan through
September 30, 1995, options to purchase 207,000 shares have been cancelled.
1983 NONQUALIFIED STOCK OPTION PLAN. All options that were granted
under the Company's 1983 Nonqualified Stock Option Plan (the "1983 PLAN") have
either been exercised, expired or have been cancelled.
No options under the 1983 Plan were granted to any Executive Officer
or other employees during the 1995 fiscal year and no further options may be
granted under the 1983 Plan.
During the 1995 fiscal year, no options were cancelled. During the
1995 fiscal year, no options were exercised by any Executive Officers of the
Company.
Deferred Compensation Plans
EMPLOYEE INVESTMENT/PROFIT SHARING PLAN. The Company maintains the
Ingles Markets, Incorporated Investment/Profit Sharing Plan (the "PROFIT
SHARING PLAN") for the purpose of providing retirement benefits to eligible
employees. The assets of the Plan, including the Company's Class B Common
Stock, are held in trust to be distributed at the time of retirement,
disability, death or other termination of employment. Company contributions
are discretionary and are determined annually by the Board of Directors.
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Effective February 2, 1994, a 401(k) feature was added to the Profit
Sharing Plan and it was renamed the Ingles Markets, Incorporated
Investment/Profit Sharing Plan. Employees participating in the Profit Sharing
Plan may contribute between one percent (1%) and ten percent (10%) (in
increments of one percent (1%)) of their compensation by way of salary
reductions not to exceed a maximum amount that varies annually (the indexed
amount is $9,240 in 1995 and $9,500 in 1996) in accordance with the Code. The
Profit Sharing Plan also continues to permit, but not require, discretionary
employer profit sharing contributions. The Company also makes available to
Profit Sharing Plan participants the ability to direct the investment of the
participants' contributions in various investment funds.
Company contributions for fiscal 1995 were allocated only to employees
participating in the 401(k) portion of the Profit Sharing Plan. The Company's
contributions to the Profit Sharing Plan during the fiscal year ended September
30, 1995 for all employees were $700,000. The Company's contributions to each
of the Executive Officers named in the Summary Compensation Table on page 12
are reflected in the last column of that table. As of September 30, 1995, all
of the Company's Executive Officers who are named on the Summary Compensation
Table on page 12 and who had account balances under the Profit Sharing Plan
were 100% vested in their accounts except for Joseph G. Ashley who was 40%
vested. Participants' interests in contributions allocated to their accounts
vest over seven (7) years.
Prior to September 28, 1986, the Profit Sharing Plan was known as the
Employee Stock Bonus Plan and Trust (the "STOCK BONUS PLAN"), the assets of
which consisted principally of shares of Class B Common Stock of the Company.
Effective September 28, 1986, the Stock Bonus Plan was restated and amended to
become a profit sharing plan.
LIFE INSURANCE. The Company maintains, at the Company's expense, life
insurance policies on the life of each full time employee of the Company for
the benefit of such employee in amounts up to $150,000 based on the W-2
compensation of each employee. The premiums paid by the Company for the
Executive Officers named in the Summary Compensation Table on page 12 are
reflected in the last column of that table.
SUBMITTED BY THE AUDIT/COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
Robert P. Ingle John O. Pollard J. Alton Wingate
EXECUTIVE COMPENSATION SUMMARY
The table on the following page summarizes the compensation paid by
the Company to the following: (a) the Company's Chief Executive Officer and
(b) the Company's four most highly compensated Executive Officers (other than
the CEO) whose total annual salary and bonus for the 1995 fiscal year equaled
or exceeded $100,000 and who were serving as Executive Officers at the end of
the 1995 fiscal year. The table reflects all compensation received by each
such officer for services rendered in all capacities to the Company and its
subsidiaries that was paid during the Company's 1995, 1994 and 1993 fiscal
year.
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SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ALL
SECURITIES OTHER
FISCAL SALARY BONUS UNDERLYING OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- --------------------------------------------------------------------------------------------------------------
Robert P. Ingle 1995 $199,962 -- -- $4,835 (1)
Chairman and Chief
Executive Officer 1994 170,000 -- -- 1,465
1993 177,747(2) -- 100,000(3) 2,975
Landy B. Laney 1995 350,000 -- -- 5,042 (4)
President and Chief
Operating Officer 1994 307,692(2) -- -- 2,805
1993 313,049(2) -- 100,000(3) 3,741
Ralph H. Gardner 1995 60,000 $ 94,380 -- 3,208 (5)
President of Milkco, Inc.
1994 60,000 131,920 -- 1,075
1993 60,000 106,537 -- 2,860
Joseph G. Ashley 1995 150,000 12,457 -- 261 (6)
Vice President-Meats
1994 150,000 1,450 -- 252
1993 151,236(2) 1,152 -- 2,577
Jack R. Ferguson 1995 100,000 41,638 -- 3,315 (7)
Vice President-Finance and
Chief Financial Offier 1994 100,000 30,980 -- 1,592
1993 100,824(2) 20,783 -- 2,064
____________
(1) Comprised of $4,574 contributions by the Company to the Profit Sharing
Plan and $261 in insurance premiums paid by the Company with respect
to term life insurance for Mr. Ingle's benefit.
(2) The Company changed its pay week in fiscal 1993 from Sunday through
Saturday to Wednesday through Tuesday which resulted in an increase in
salaries as compared to the salaries disclosed in the
Audit/Compensation Committee Report on Executive Compensation
beginning on page 8. In addition, the salaries paid to Messrs. Ingle
and Laney were reduced after the beginning of the 1993 fiscal year and
the salary paid to Mr. Laney was increased after the beginning of the
1994 fiscal year. (See "Salaries and Cash Incentive Bonus Awards"
beginning on page 8).
(3) An option to purchase 100,000 shares of Class A Common Stock granted
pursuant to a stock option agreement with the Executive Officer.
(4) Comprised of $4,781 of contributions by the Company to the Profit
Sharing Plan and $261 in insurance premiums paid by the Company with
respect to term life insurance for Mr. Laney's benefit.
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(5) Comprised of $2,947 of contributions by the Company to the Profit
Sharing Plan and $261 in insurance premiums paid by the Company with
respect to term life insurance for Mr. Gardner's benefit.
(6) Comprised of $261 in insurance premiums paid by the Company with
respect to term life insurance for Mr. Ashley's benefit.
(7) Comprised of $3,069 of contributions by the Company to the Profit
Sharing Plan and $246 in insurance premiums paid by the Company with
respect to term life insurance for Mr. Ferguson's benefit.
____________
STOCK OPTION PLANS
With respect to each of the Executive Officers named in the Summary
Compensation Table on page 12, no individual grants of stock options or stock
appreciation rights were made by the Company or its subsidiaries during the
1995 fiscal year.
The table on the following page sets forth the following information
with respect to each of the Executive Officers named in the Summary
Compensation Table on page 12: (a) the number of shares received upon the
exercise of any option during the 1995 fiscal year, (b) the aggregate dollar
value realized upon the exercise of any option, (c) the total number of shares
of Class A Common Stock and any other securities underlying all outstanding,
unexercised options held at the end of the 1995 fiscal year, separately
identifying the exercisable and unexercisable options, and (d) the aggregate
dollar value (determined by calculating the difference between the fair market
value of the shares of Class A Common Stock underlying the option and the
aggregate exercise price of the option at fiscal year end) of all such
unexercised options that are in-the-money (i.e., when the fair market value of
the underlying Class A Common Stock exceeds the exercise price of the option),
separately identifying the exercisable and unexercisable options:
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AGGREGATED OPTION EXERCISES IN THE
1995 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at
Year-End Fiscal Year-End
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable Unexercisable
Name (#) ($) (#) ($)
- -------------------------------------------------------------------------------------------------------------
Robert P. Ingle -- -- 0/100,000(1) $0/$400,000(2)
Chairman and Chief Executive Officer
Landy B. Laney -- -- 0/100,000(1) $0/$400,000(2)
President and Chief Operating Officer
Ralph H. Gardner -- -- -- --
President of Milkco, Inc.
Joseph G. Ashley -- -- 0/100,000(3) $0/$312,500(4)
Vice President-Meats
Jack R. Ferguson -- -- 0/100,000(3) $0/$312,500(4)
Vice President-Finance and Chief
Financial Officer
_______________
(1) Represents an option to purchase 100,000 shares of Class A Common Stock
granted to the Executive Officer pursuant to a stock option agreement. This
option is not exercisable until it is approved by the Company's stockholders.
(2) The fair market value of the Company's Class A Common Stock on September
30, 1995 was $10.00 per share. The exercise price of the option is $6.00 per
share.
(3) Represents an option to purchase 100,000 shares of Class A Common Stock
granted to the Executive Officer pursuant to the Company's 1991 Nonqualified
Stock Option Plan. All of these options are unexercisable and will only be
exercisable, after approval by the Company's stockholders, during the
three-month period beginning on November 20, 1996, or upon the earlier death,
disability or retirement of the Executive Officer.
(4) The fair market value of the Company's Class A Common Stock on September
30, 1995 was $10.00 per share. The exercise price of the option is $6.875 per
share.
COMPENSATION OF NON-MANAGEMENT DIRECTORS
Directors who are not officers of the Company receive a fee of $500
for attending meetings of the Board of Directors.
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ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
All compensation decisions made during fiscal year 1995 that were not
made exclusively by the Audit/Compensation Committee were made by Mr. Ingle (in
certain instances in consultation with Mr. Laney).
The only member of the Audit/Compensation Committee who was an officer
or employee of the Company and its subsidiaries during the 1995 fiscal year was
Mr. Ingle. The other members of the Audit/Compensation Committee, Messrs.
Pollard and Wingate, were not, during the 1995 fiscal year or any prior fiscal
year, officers or employees of the Company or its subsidiaries.
While Messrs. Pollard and Wingate do not have any employment
relationship with the Company, they do have certain other relationships with
the Company. In particular, Mr. Pollard is a partner in the Charlotte, North
Carolina, law firm of Blakeney & Alexander which, from time to time, handles
labor matters for the Company. During fiscal year 1995, the Company accrued
approximately $120,000 in fees for such services. Blakeney & Alexander bills
the Company on a calendar year basis. Mr. Wingate is President of Financial
Supermarkets, Inc. which along with Community Bank & Trust are subsidiaries of
Community Bankshares, Inc. Financial Supermarkets, Inc. represents the Company
and other supermarkets in connection with the placement of banks within
supermarkets. During fiscal year 1995, the Company paid Community Bank & Trust
$81,175 in fees for such services by Financial Supermarkets, Inc.
The Company believes that the transactions described above have been
and, where applicable, continue to be on terms no less favorable to the Company
than those available from unaffiliated third parties in arms-length
transactions. See also "Certain Relationships and Related Party Transactions"
on page 31.
From time to time the Company has made cash advances to Mr. Ingle, and
Mr. Ingle has made cash advances to the Company. Such advances, both to and
from Mr. Ingle, have been payable on demand and have been unsecured. The rate
of interest on such advances was eight percent (8%). During the 1995 fiscal
year, Mr. Ingle advanced the Company $101,817 in the aggregate under this
arrangement and the Company advanced Mr. Ingle $102,353 in the aggregate. The
highest aggregate amount of advances outstanding as of the end of any month
during the 1995 fiscal year from the Company to Mr. Ingle was $14,429 and the
highest aggregate amount of advances outstanding as of the end of any month
during the 1995 fiscal year from Mr. Ingle to the Company was $720. As of
September 30, 1995, Mr. Ingle owed the Company $706 under this arrangement.
PERFORMANCE GRAPH
Set forth on page 16 is a line-graph presentation comparing on an
indexed basis for the five-year period (the "MEASUREMENT PERIOD") beginning at
the market close on the last trading day before the beginning of the Company's
fifth preceding fiscal year (i.e. fiscal 1990) through and including the end of
the Company's last completed fiscal year (i.e. September 30, 1995):
(a) the yearly percentage change in the Company's cumulative
stockholder return on the Company's Class A Common Stock, which was measured by
dividing (i) the sum of (A) the cumulative amount of dividends during the
five-year period (assuming monthly dividend reinvestment on the ex-dividend
date at the dividend yield rate using stock price at month end) and (B) the
difference between the share price of the Company's Class A Common Stock at
September 30, 1995 and at the beginning of the Measurement Period, by (ii) the
share price at the beginning of the measurement period,
(b) the cumulative total return (assuming monthly dividend
reinvestment on the ex-dividend date at the dividend yield rate using stock
price at month end) of the S&P 500 Comprehensive-Last Trading Day Index, and
(c) the cumulative total return (assuming monthly dividend
reinvestment on the ex-dividend date at the dividend yield rate using stock
price at month end) of the Peer Group (comprised of the Standard & Poor's 500
Retail (Food Chains) Sub Index and deleting from that index the two companies
(Albertson's Inc. and Winn-Dixie Stores, Inc.) that did not have similar market
capitalizations). The common stock of the following companies (which have been
15
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market weighted annually within the group to produce returns for the group) are
included in the Peer Group: American Stores Co.; Brunos, Inc.; Giant Food,
Inc.; Great Atlantic & Pacific Tea Co.; and Kroger Company.
INGLES MARKETS, INCORPORATED
Comparative Return to Stockholders
(graph)
INDEXED RETURNS OF INITIAL $100 INVESTMENT*
Last Day of Fiscal Year
-------------------------------------------------------
Company/Index 1990 1991 1992 1993 1994 1995
---------------------------------------------------------------------------------------------------------
Ingles Markets, Incorporated $100.00 $ 84.08 $ 79.30 $111.43 $159.22 $143.68
S&P 500 Comprehensive-
Last Trading Day Index $100.00 $131.17 $145.66 $164.60 $170.67 $221.43
Peer Group $100.00 $111.65 $101.35 $117.68 $134.82 $167.18
____________
* Assumes $100 invested in the Class A Common Stock of Ingles Markets,
Incorporated on September 28, 1990, the last trading day of fiscal 1990.
COMPARATIVE ANNUAL RETURN PERCENTAGE
Last Day of Fiscal Year
-------------------------------------------------------
Company/Index 1990 1991 1992 1993 1994 1995
---------------------------------------------------------------------------------------------------------
Ingles Markets, Incorporated NA -15.92% -5.69% 40.52% 42.89% -9.76%
S&P 500 Comprehensive-
Last Trading Day Index NA 31.17% 11.05% 13.00% 3.69% 29.74%
Peer Group NA 11.65% -9.23% 16.11% 14.57% 24.00%
16
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PROPOSAL TO ADOPT AND APPROVE THE 1991 PLAN
On August 6, 1991, the Board of Directors adopted the Ingles Markets,
Incorporated, 1991 Nonqualified Stock Option Plan. During the fourth quarter
of fiscal 1995, the Board of Directors retroactively adopted the Amended and
Restated Ingles Markets, Incorporated 1991 Nonqualified Stock Option Plan to
make certain technical corrections reflecting the original intent of the Board
of Directors when it first adopted the Plan. A copy of the 1991 Plan and the
form of agreement to be entered into with optionees, each as amended and
restated, is attached hereto as Appendix A.
As of the date of this proxy statement, the maximum number of shares of
Class A Common Stock available upon the exercise of Options under the Plan is
1,000,000 shares. As of December 26, 1995, no options had been exercised, no
options were exercisable, options to purchase 996,000 shares were outstanding
and options to purchase 4,000 shares were available for future grants under the
1991 Plan.
The purposes of the 1991 Plan are (a) to insure the retention of
executive personnel and key employees, (b) to attract new executive personnel
and other key employees and (c) to provide incentive to all such personnel to
devote their utmost effort and skill to the advancement and betterment of the
Company, by permitting them to participate in the ownership of the Company and,
thereby, in the success and increased value of the Company that they have
helped to produce. Options under the 1991 Plan may be granted only to salaried
employees who are officers or who are employed in an executive, administrative,
managerial or professional capacity by the Company, including directors of the
Company, provided that the director is also an officer or salaried employee and
provided the director is not a member of the Audit/Compensation Committee.
The exercise price for each share of Class A Common Stock issued upon
the exercise of each option (each a "1991 PLAN OPTION") to be granted pursuant
to the 1991 Plan will be not less than 100% of the "fair market value" of the
shares, which is the closing sale price of the Class A Common Stock on the
National Association of Securities Dealers (the "NASD") Automated Quotation
System National Market List on the date the 1991 Plan Option is granted (the
"1991 PLAN EXERCISE PRICE"). The Audit/Compensation Committee, which
administers the 1991 Plan, determines the executive personnel and key employees
that are to receive 1991 Plan Options (each a "1991 PLAN OPTIONEE") and the
number of shares of Class A Common Stock that are subject to each Option. Each
Optionee has or will enter an option agreement with the Company specifying the
terms of his or her 1991 Plan Option (a "1991 OPTION AGREEMENT").
Each 1991 Plan Option may be exercised for all or a part of the shares
of Class A Common Stock that are subject to the 1991 Plan Option (the "1991
PLAN OPTION SHARES"). No 1991 Plan Option shall be exercisable, either in
whole or in part, prior to sixty (60) months after the date the 1991 Plan
Option is granted (the "1991 PLAN GRANT DATE"). Generally, the 1991 Plan
Option shall not be exercisable after the 1991 Plan Optionee ceases to be
employed by the Company. Each 1991 Plan Option shall become exercisable sixty
(60) months from the 1991 Plan Grant Date. Each 1991 Plan Optionee shall have
three (3) months beyond this sixty (60) month period to exercise the 1991 Plan
Option at the 1991 Plan Exercise Price. If any part of the 1991 Plan Option
has not been exercised after sixty-three (63) months from the 1991 Plan Grant
Date, the unexercised portion immediately becomes null and void and no longer
of any force and effect. Notwithstanding any other terms of the plan, the 1991
Plan provides that no option granted thereunder may be exercised until the 1991
Plan is approved and adopted by the Company's stockholders. This approval is
required pursuant to the corporate governance criteria, Part III, Section
6(i)(2)(a) of Schedule D of the NASD By-laws.
If a 1991 Plan Optionee shall die prior to sixty-three (63) months from
the 1991 Plan Grant Date, the 1991 Plan Option may be exercised, in whole or in
part, at any time after the 1991 Plan Optionee's death, by the executor or
administrators of the 1991 Plan Optionee's estate or by any person or persons
who shall have acquired the 1991 Plan Option directly from the 1991 Plan
Optionee by bequest or inheritance, subject to the condition that the 1991 Plan
Option shall not be exercisable after the expiration of sixty-three (63) months
from the 1991 Plan Grant Date.
The 1991 Plan Option or any portion thereof may be exercised by the 1991
Plan Optionee by (i) delivering to the Company written notice which sets forth
the 1991 Plan Optionee's election to exercise a portion or all of the 1991 Plan
Option, the number of 1991 Plan Option Shares with respect to which the 1991
Plan Option rights are being exercised and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws and (ii) paying in full the purchase price of the 1991 Plan
Option Shares as set forth in the 1991 Plan
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Option Agreement, and (iii) remitting, in cash or its equivalent, to the
Company the federal income tax, state income tax and F.I.C.A. to be withheld by
the Company (in such amounts as may be determined by the Company) with respect
to the compensation to be recognized by the 1991 Plan Optionee upon the
exercise of the 1991 Plan Option.
The 1991 Plan Exercise Price is payable in cash or its equivalent, or,
subject to the approval of the Committee, by means of unrestricted shares of
capital stock of the Company or any combination thereof upon the exercise of
the 1991 Plan Option. Payment in currency or by check, bank draft, cashier's
check or postal money order shall be considered payment in cash. The 1991 Plan
provides that the Company shall not lend any monies to any 1991 Plan Optionee
for purchase of any 1991 Plan Option Shares.
Each 1991 Plan Option issued pursuant to the 1991 Plan will terminate on
the earlier to occur of (a) sixty-three (63) months from the Grant Date or (b)
the date on which the 1991 Plan Optionee purchases all of the 1991 Plan Option
Shares.
The Board may, to the extent permitted by law, (i) with respect to any
of the 1,000,000 shares of Class A Common Stock that are not subject to
outstanding 1991 Plan Options, suspend or discontinue the Plan or (ii) revise
or amend the 1991 Plan in any respect whatsoever. No 1991 Plan Option
Agreement entered into pursuant to the 1991 Plan may be amended or terminated
without the agreement of all parties thereto.
No rights granted under the 1991 Plan are transferrable by a 1991 Plan
Optionee in any manner other than by will or the laws of descent and
distribution and, during his lifetime, may be exercised only by the 1991 Plan
Optionee or his court appointed legal representative. No person has or may
create a lien on any funds, securities or other property held under the 1991
Plan or a 1991 Plan Option Agreement.
The number of shares of Class A Common Stock covered by a 1991 Plan
Option and the 1991 Plan Exercise Price shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Class A Common Stock
of the Company resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Class A Common Stock) or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Company.
It is anticipated that the shares of Class A Common Stock to be
delivered to a 1991 Plan Optionee upon the exercise of a 1991 Plan Option will
be issued by the Company from authorized but unissued shares. The proceeds
received by the Company from the issuance of Class A Common Stock pursuant to a
1991 Plan Option will be used for general corporate purposes. However, the
1991 Plan does not prohibit the Company from delivering treasury shares to a
1991 Plan Optionee. Any treasury shares to be issued to a 1991 Plan Optionee
will most likely be purchased on the open market. In the case of any purchase
not made on the open market, no fee, commission or other charge will be
payable.
The 1991 Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 and is not qualified under Section 401
of the Code. It is intended that the 1991 Plan shall not constitute an
incentive stock option plan within the meaning of Section 422A of the Code;
rather, the 1991 Plan is intended to constitute a nonqualified stock option
plan.
The Committee is granted certain authority pursuant to the 1991 Plan to
act on behalf of the Company to administer grants of 1991 Plan Options and the
exercise of 1991 Plan Options outstanding under the 1991 Plan and related
matters. The Committee, with respect to their administration of the 1991 Plan
Option Agreement, shall act as managers and not as trustees.
FEDERAL INCOME TAX EFFECTS
The following summary generally describes the principal federal income
tax consequences of participating in the 1991 Plan. The summary is general in
nature and is not intended to cover all tax consequences that may apply to any
particular participant in the 1991 Plan or to the Company. The Code, treasury
regulations promulgated thereunder and current administrative rulings and
court decisions relating to these matters are complicated and their impact in
any
18
21
one case may depend upon the particular circumstances. This summary is based
on the Code, existing and proposed treasury regulations thereunder and current
administrative rulings and court decisions as in effect on the date of this
proxy statement, all of which are subject to change and any such change could
affect the continuing validity of the following paragraph. This summary does
not address any state, local or foreign tax laws. Each participant in the 1991
Plan has been advised to consult his or her own accountant, legal counsel or
other tax advisor regarding the specific tax consequences of participation in
the 1991 Plan by that participant, including the application and effect of
state, local and foreign tax laws.
The grant of a 1991 Plan Option to a 1991 Plan Optionee will not result
in taxable income to the 1991 Optionee. However, upon the exercise of a 1991
Plan Option, the 1991 Plan Optionee will realize income taxable at ordinary
income tax rates to the extent the value of the Class A Common Stock on the
date of exercise exceeds the 1991 Plan Exercise Price, and the Company will
receive a corresponding deduction. If the shares of Class A Common Stock are
subsequently sold, any additional gain or loss realized on the sale (the
difference between the sale price and the value of the Class A Common Stock on
the date of exercise) will be capital gain or loss if the shares are capital
assets in the hands of the 1991 Optionee, and will be long-term capital gain or
loss if such shares were held by the 1991 Plan Optionee for more than one year.
In general, the federal income tax rates applicable to long-term capital gains
and ordinary income (including short-term capital gains) of taxpayers who are
individuals may differ, while for corporations capital gains and ordinary
income are generally taxed at the same rate. The deductibility of capital
losses is subject to limitations for both individuals and corporations.
NEW PLAN BENEFITS TABLE
The table on the following page summarizes, for each of the following,
the number of shares of Class A Common Stock underlying 1991 Plan Options and
the dollar value thereof: (a) the Company's Chief Executive Officer, (b) the
other Executive Officers named in the Summary Compensation Table on page 12,
(c) all current Executive Officers of the Company as a group (14 persons), (d)
all current directors who are not Executive Officers as a group (2 persons),
(e) each other person who received or is to receive 5% of such options (1
person), and (f) all employees, including all current officers who are not
Executive Officers, as a group (21 persons).
19
22
NEW PLAN BENEFITS
INGLES MARKETS, INCORPORATED 1991 NONQUALIFIED STOCK OPTION PLAN
- -----------------------------------------------------------------------------------------------------------
Name and Position Dollar Value ($)(1) Number of Units
Robert P. Ingle
Chairman and Chief Executive Officer --(2) --
Landy B. Laney
President and Chief Operating Officer --(2) --
Ralph H. Gardner
President of Milkco, Inc. --(2) --
Joseph G. Ashley
Vice President-Meats $ 475,000(3) 100,000
Jack R. Ferguson
Vice President-Finance and Chief
Financial Officer 475,000(3) 100,000
Executive Officer Group 3,322,500(4) 810,000
Non-Executive Director Group --(5) --
Other Persons Receiving 5% of the Options 587,500(6) 100,000
Non-Executive Officer Employee Group 996,000(7) 186,000
____________
(1) The fair market value of the Company's Class A Common Stock on December
28, 1995 was $11.625 per share.
(2) No option was granted to this Executive Officer under the 1991 Plan.
(3) The exercise price for this option is $6.875 per share.
(4) The exercise prices for these options range from $5.75 to $11.50 per
share.
(5) No options were granted to this group under the 1991 Plan.
(6) The exercise price for this option is $5.75 per share.
(7) The exercise prices for these options range from $5.75 to $6.875 per
share.
__________
APPROVAL OF THE PLAN
WITH RESPECT TO THE ADOPTION AND APPROVAL OF THE 1991 PLAN, UNLESS
OTHERWISE PROVIDED IN THE COMPANY'S ARTICLES OF INCORPORATION OR THE NORTH
CAROLINA BUSINESS CORPORATION ACT, THE HOLDERS OF CLASS A COMMON STOCK AND
CLASS B COMMON STOCK SHALL VOTE AS A SINGLE CLASS, WITH EACH HOLDER OF CLASS A
COMMON STOCK BEING ENTITLED TO ONE (1) VOTE FOR EACH SHARE OF CLASS A COMMON
STOCK HELD AS OF THE RECORD DATE AND EACH HOLDER OF CLASS B COMMON STOCK BEING
ENTITLED TO TEN (10) VOTES FOR EACH SHARE OF CLASS B COMMON STOCK HELD AS OF
THE RECORD DATE. FOR PURPOSES OF ANY SUCH VOTE, IF A QUORUM IS PRESENT, A
PROPOSAL WILL PASS IF THE VOTES CAST FAVORING THE ACTION EXCEED THE VOTES CAST
OPPOSING THE ACTION. ACCORDINGLY, ABSTENTIONS AND BROKER NONVOTES WILL HAVE NO
EFFECT ON THE VOTE.
20
23
PROPOSAL TO ADOPT AND APPROVE THE INGLE OPTION AGREEMENT
The Ingle Option Agreement was executed by Mr. Ingle and the Company
effective as of July 21, 1993 (the "INGLE GRANT DATE"). During the fourth
quarter of fiscal 1995, the Board of Directors ratified and approved the
Amended and Restated Option Agreement between the Company and Mr. Ingle to make
certain technical corrections reflecting the original intent of the parties.
The Ingle Option Agreement, as amended and restated, was executed following
approval by the Board of Directors. A copy of the Ingle Option Agreement, as
amended and restated, is attached hereto as Appendix B.
The purposes of the Ingle Option Agreement are (a) to insure the
retention of Mr. Ingle as Chief Executive Officer of the Company and (b) to
provide incentive to Mr. Ingle to devote his utmost effort and skill to the
advancement and betterment of the Company, by permitting him to participate
further in the success and increased value of the Company that he has helped to
produce.
The exercise price for each share of Class A Common Stock issued upon
the exercise of the option granted pursuant to the Ingle Option Agreement (the
"INGLE OPTION") is $6.00 per share (the "INGLE EXERCISE PRICE").
The Ingle Option may be exercised for all or a part of the 100,000
shares of Class A Common Stock (the "INGLE OPTION SHARES") that are subject to
the Ingle Option. The Ingle Option shall not be exercisable, either in whole
or in part, prior to twelve (12) months after the Ingle Grant Date. Mr. Ingle
shall have forty-eight (48) months beyond this twelve (12) month period to
exercise the Ingle Option at the Ingle Exercise Price. The Ingle Option shall
not be exercisable after Mr. Ingle ceases to be employed by the Company. If
any part of the Ingle Option has not been exercised after sixty (60) months
from the Ingle Grant Date, the unexercised portion immediately becomes null and
void and no longer of any force and effect. Notwithstanding any other terms of
the Ingle Option, the Ingle Option Agreement provides that the Ingle Option may
not be exercised until the Ingle Option Agreement is approved and adopted by
the Company's stockholders. This approval is required pursuant to the
corporate governance criteria, Part III, Section 6(i)(2)(a) of Schedule D of
the NASD By-laws.
If Mr. Ingle shall die prior to sixty (60) months from the Ingle Grant
Date, the Ingle Option may be exercised, in whole or in part, at any time after
Mr. Ingle's death, by the executor or administrators of Mr. Ingle's estate or
by any person or persons who shall have acquired the Ingle Option directly from
Mr. Ingle by bequest or inheritance, subject to the condition that the Ingle
Option shall not be exercisable after the expiration of sixty (60) months from
the Ingle Grant Date.
The Ingle Option or any portion thereof may be exercised by Mr. Ingle by
(i) delivering to the Company written notice which sets forth Mr. Ingle's
election to exercise a portion or all of the Ingle Option, the number of Ingle
Option Shares with respect to which the Ingle Option rights are being exercised
and such other representations and agreements as may be required by the Company
to comply with applicable securities laws and (ii) paying in full the purchase
price of the Ingle Option Shares as set forth in the Ingle Option Agreement,
and (iii) remitting, in cash or its equivalent, to the Company the federal
income tax, state income tax and F.I.C.A. to be withheld by the Company (in
such amounts as may be determined by the Company) with respect to the
compensation to be recognized by Mr. Ingle upon the exercise of the Ingle
Option.
The Ingle Exercise Price is payable in cash or its equivalent, or,
subject to the approval of the Audit/Compensation Committee, by means of
unrestricted shares of capital stock of the Company or any combination thereof
upon the exercise of the Ingle Option. Payment in currency or by check, bank
draft, cashier's check or postal money order shall be considered payment in
cash. The Ingle Option Agreement provides that the Company shall not lend any
monies to Mr. Ingle for purchase of any Ingle Option Shares.
The Ingle Option Agreement will terminate on the earlier to occur of (a)
July 21, 1998 or (b) the date on which Mr. Ingle purchases 100,000 shares of
Class A Common Stock by exercise of the Ingle Option. As of the date of this
proxy statement, the maximum number of shares of Class A Common Stock available
for purchase under the Ingle Option Agreement is 100,000 shares.
21
24
The Ingle Option Agreement may not be amended or terminated without the
agreement of all parties thereto.
No rights granted under the Ingle Option Agreement are transferrable by
Mr. Ingle in any manner other than by will or the laws of descent and
distribution and, during his lifetime, may be exercised only by Mr. Ingle or
his court appointed legal representative. No person has or may create a lien
on any funds, securities or other property held under the Ingle Option
Agreement.
The number of shares of Class A Common Stock covered by the Ingle
Option and the Ingle Exercise Price shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Class A Common Stock of
the Company resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Class A Common Stock) or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Company.
It is anticipated that the shares of Class A Common Stock to be
delivered to Mr. Ingle upon the exercise of the Ingle Option will be issued by
the Company from authorized but unissued shares. The proceeds received by the
Company from the issuance of Class A Common Stock pursuant to the Ingle Option
will be used for general corporate purposes. However, the Ingle Option
Agreement does not prohibit the Company from delivering treasury shares to Mr.
Ingle. Any treasury shares to be issued to Mr. Ingle will most likely be
purchased on the open market. In the case of any purchase not made on the open
market, no fee, commission or other charge will be payable.
The Ingle Option Agreement is not subject to any provisions of the
Employee Retirement Income Security Act of 1974 and is not qualified under
Section 401 of the Code. It is intended that the Ingle Option shall not
constitute an incentive stock option within the meaning of Section 422A of the
Code; rather, the option is intended to constitute a nonqualified stock option.
The Audit/Compensation Committee is granted certain authority pursuant
to the Ingle Option Agreement to act on behalf of the Company to administer the
exercise of the Ingle Option and related matters. With respect to their
administration of the Ingle Option Agreement, the Audit/Compensation Committee
shall act as managers and not as trustees.
FEDERAL INCOME TAX EFFECTS
The following summary generally describes the principal federal income
tax consequences of the grant and exercise of the Ingle Option. The summary
is general in nature and is not intended to cover all tax consequences that may
apply to Mr. Ingle in particular or to the Company. The Code, treasury
regulations promulgated thereunder and current administrative rulings and court
decisions relating to these matters are complicated and their impact in any one
case may depend upon the particular circumstances. This summary is based on
the Code, existing and proposed treasury regulations thereunder and current
administrative rulings and court decisions as in effect on the date of this
proxy statement, all of which are subject to change and any such change could
affect the continuing validity of the following paragraph. This summary does
not address any state, local or foreign tax laws. Mr. Ingle has been advised
to consult his own accountant, legal counsel or other tax advisor regarding the
specific tax consequences of the grant or exercise of the Ingle Option,
including the application and effect of state, local and foreign tax laws.
The grant of the Ingle Option to Mr. Ingle will not result in taxable
income to Mr. Ingle. However, upon the exercise of the Ingle Option, Mr. Ingle
will realize income taxable at ordinary income tax rates to the extent the
value of the Class A Common Stock on the date of exercise exceeds the Ingle
Exercise Price, and the Company will receive a corresponding deduction. If the
shares of Class A Common Stock are subsequently sold, any additional gain or
loss realized on the sale (the difference between the sale price and the value
of the Class A Common Stock on the date of exercise) will be capital gain or
loss if the shares are capital assets in the hands of Mr. Ingle, and will be
long-term capital gain or loss if such shares were held by Mr. Ingle for more
than one year. In general, the federal income tax rates applicable to
long-term capital gains and ordinary income (including short-term capital
gains) of taxpayers who are individuals may differ, while for corporations
capital gains and ordinary income are generally taxed at the same rate. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
22
25
NEW PLAN BENEFITS TABLE
The table on this page summarizes, for each of the following, the number
of shares of Class A Common Stock underlying the Ingle Option and the dollar
value thereof: (a) the Company's Chief Executive Officer, (b) the other
Executive Officers named in the Summary Compensation Table on page 12, (c) all
current Executive Officers of the Company as a group (14 persons), (d) all
current directors who are not Executive Officers as a group (2 persons), (e)
each other person who received or is to receive 5% of such options (no
persons), and (f) all employees, including all current officers who are not
Executive Officers, as a group (no persons).
NEW PLAN BENEFITS
INGLE OPTION AGREEMENT
- ----------------------------------------------------------------------------------------------------------
Name and Position Dollar Value ($)(1) Number of Units
- ----------------------------------------------------------------------------------------------------------
Robert P. Ingle
Chairman and Chief Executive Officer $562,500(2) 100,000(3)
Landy B. Laney
President and Chief Operating Officer -- 0
Ralph H. Gardner
President of Milkco, Inc. -- 0
Joseph G. Ashley
Vice President-Meats -- 0
Jack R. Ferguson
Vice President-Finance and Chief
Financial Officer -- 0
Executive Officer Group 562,500(2) 100,000(3)
Non-Executive Director Group -- 0
Other Persons Receiving 5% of the Options -- 0
Non-Executive Officer Employee Group -- 0
__________
(1) The fair market value of the Company's Class A Common Stock on December
28, 1995 was $11.625 per share.
(2) The exercise price for this option is $6.00 per share.
(3) All options available under the Ingle Option Agreement were granted to
Mr. Ingle.
__________
APPROVAL OF THE PLAN
WITH RESPECT TO THE ADOPTION AND APPROVAL OF THE INGLE OPTION AGREEMENT,
UNLESS OTHERWISE PROVIDED IN THE COMPANY'S ARTICLES OF INCORPORATION OR THE
NORTH CAROLINA BUSINESS CORPORATION ACT, THE HOLDERS OF CLASS A COMMON STOCK
AND CLASS B COMMON STOCK SHALL VOTE AS A SINGLE CLASS, WITH EACH HOLDER OF
CLASS A COMMON STOCK BEING ENTITLED TO ONE (1) VOTE FOR EACH SHARE OF CLASS A
COMMON STOCK HELD AS OF THE RECORD DATE AND EACH HOLDER OF CLASS B COMMON STOCK
BEING ENTITLED TO TEN (10) VOTES FOR EACH SHARE OF CLASS B COMMON STOCK HELD AS
OF THE RECORD DATE. FOR PURPOSES OF ANY SUCH VOTE, IF A QUORUM IS PRESENT, A
PROPOSAL WILL PASS IF THE VOTES CAST FAVORING THE ACTION EXCEED THE VOTES CAST
OPPOSING THE ACTION. ACCORDINGLY, ABSTENTIONS AND BROKER NONVOTES WILL HAVE NO
EFFECT ON THE VOTE.
23
26
PROPOSAL TO ADOPT AND APPROVE THE LANEY OPTION AGREEMENT
The Laney Option Agreement was executed by Mr. Laney and the Company
effective as of July 21, 1993 (the "LANEY GRANT DATE"). During the fourth
quarter of fiscal 1995, the Board of Directors ratified and approved the
Amended and Restated Option Agreement between the Company and Mr. Laney to make
certain technical corrections reflecting the original intent of the parties.
The Laney Option Agreement, as amended and restated, was executed following
approval by the Board of Directors. A copy of the Laney Option Agreement, as
amended and restated, is attached hereto as Appendix C.
The purposes of the Laney Option Agreement are (a) to insure the
retention of Mr. Laney as Chief Operating Officer of the Company and (b) to
provide incentive to Mr. Laney to devote his utmost effort and skill to the
advancement and betterment of the Company, by permitting him to participate in
the ownership of the Company and, thereby, in the success and increased value
of the Company that he has helped to produce.
The exercise price for each share of Class A Common Stock issued upon
the exercise of the option granted pursuant to the Laney Option Agreement (the
"LANEY OPTION") is $6.00 per share (the "LANEY EXERCISE PRICE").
The Laney Option may be exercised for all or a part of the 100,000
shares of Class A Common Stock (the "LANEY OPTION SHARES") that are subject to
the Laney Option. The Laney Option shall not be exercisable, either in whole
or in part, prior to twelve (12) months after the Laney Grant Date. Mr. Laney
shall have forty-eight (48) months beyond this twelve (12) month period to
exercise the Laney Option at the Laney Exercise Price. The Laney Option shall
not be exercisable after Mr. Laney ceases to be employed by the Company. If
any part of the Laney Option has not been exercised after sixty (60) months
from the Laney Grant Date, the unexercised portion immediately becomes null and
void and no longer of any force and effect. Notwithstanding any other terms of
the Laney Option, the Laney Option Agreement provides that the Laney Option may
not be exercised until the Laney Option Agreement is approved and adopted by
the Company's stockholders. This approval is required pursuant to the
corporate governance criteria, Part III, Section 6(i)(2)(a) of Schedule D of
the NASD By-laws.
If Mr. Laney shall die prior to sixty (60) months from the Laney Grant
Date, the Laney Option may be exercised, in whole or in part, at any time after
Mr. Laney's death, by the executor or administrators of Mr. Laney's estate or
by any person or persons who shall have acquired the Laney Option directly from
Mr. Laney by bequest or inheritance, subject to the condition that the Laney
Option shall not be exercisable after the expiration of sixty (60) months from
the Laney Grant Date.
The Laney Option or any portion thereof may be exercised by Mr. Laney by
(i) delivering to the Company written notice which sets forth Mr. Laney's
election to exercise a portion or all of the Laney Option, the number of Laney
Option Shares with respect to which the Laney Option rights are being exercised
and such other representations and agreements as may be required by the Company
to comply with applicable securities laws and (ii) paying in full the purchase
price of the Laney Option Shares as set forth in the Laney Option Agreement,
and (iii) remitting, in cash or its equivalent, to the Company the federal
income tax, state income tax and F.I.C.A. to be withheld by the Company (in
such amounts as may be determined by the Company) with respect to the
compensation to be recognized by Mr. Laney upon the exercise of the Laney
Option.
The Laney Exercise Price is payable in cash or its equivalent, or,
subject to the approval of the Audit/Compensation Committee, by means of
unrestricted shares of capital stock of the Company or any combination thereof
upon the exercise of the Laney Option. Payment in currency or by check, bank
draft, cashier's check or postal money order shall be considered payment in
cash. The Laney Option Agreement provides that the Company shall not lend any
monies to Mr. Laney for purchase of any Laney Option Shares.
The Laney Option Agreement will terminate on the earlier to occur of (a)
July 21, 1998 or (b) the date on which Mr. Laney purchases 100,000 shares of
Class A Common Stock by exercise of the Laney Option. As of the date of this
proxy statement, the maximum number of shares of Class A Common Stock
available for purchase under the Laney Option Agreement is 100,000 shares.
24
27
The Laney Option Agreement may not be amended or terminated without the
agreement of all parties thereto.
No rights granted under the Laney Option Agreement are transferrable by
Mr. Laney in any manner other than by will or the laws of descent and
distribution and, during his lifetime, may be exercised only by Mr. Laney or
his court appointed legal representative. No person has or may create a lien
on any funds, securities or other property held under the Laney Option
Agreement.
The number of shares of Class A Common Stock covered by the Laney
Option and the Laney Exercise Price shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Class A Common Stock of
the Company resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Class A Common Stock) or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Company.
It is anticipated that the shares of Class A Common Stock to be
delivered to Mr. Laney upon the exercise of the Laney Option will be issued by
the Company from authorized but unissued shares. The proceeds received by the
Company from the issuance of Class A Common Stock pursuant to the Laney Option
will be used for general corporate purposes. However, the Laney Option
Agreement does not prohibit the Company from delivering treasury shares to Mr.
Laney. Any treasury shares to be issued to Mr. Laney will most likely be
purchased on the open market. In the case of any purchase not made on the open
market, no fee, commission or other charge will be payable.
The Laney Option Agreement is not subject to any provisions of the
Employee Retirement Income Security Act of 1974 and is not qualified under
Section 401 of the Code. It is intended that the Laney Option shall not
constitute an incentive stock option within the meaning of Section 422A of the
Code; rather, the Laney Option is intended to constitute a nonqualified stock
option.
The Audit/Compensation Committee is granted certain authority pursuant
to the Laney Option Agreement to act on behalf of the Company to administer the
exercise of the Laney Option and related matters. With respect to their
administration of the Laney Option Agreement, the Audit/Compensation Committee
shall act as managers and not as trustees.
FEDERAL INCOME TAX EFFECTS
The following summary generally describes the principal federal income
tax consequences of the grant and exercise of the Laney Option. The summary is
general in nature and is not intended to cover all tax consequences that may
apply to Mr. Laney in particular or to the Company. The Code, treasury
regulations promulgated thereunder and current administrative rulings and court
decisions relating to these matters are complicated and their impact in any one
case may depend upon the particular circumstances. This summary is based on
the Code, existing and proposed treasury regulations thereunder and current
administrative rulings and court decisions as in effect on the date of this
proxy statement, all of which are subject to change and any such change could
affect the continuing validity of the following paragraph. This summary does
not address any state, local or foreign tax laws. Mr. Laney has been advised to
consult his own accountant, legal counsel or other tax advisor regarding the
specific tax consequences of the grant or exercise of the Laney Option,
including the application and effect of state, local and foreign tax laws.
The grant of the Laney Option to Mr. Laney will not result in taxable
income to Mr. Laney. However, upon the exercise of the Laney Option, Mr. Laney
will realize income taxable at ordinary income tax rates to the extent the
value of the Class A Common Stock on the date of exercise exceeds the Laney
Exercise Price, and the Company will receive a corresponding deduction. If the
shares of Class A Common Stock are subsequently sold, any additional gain or
loss realized on the sale (the difference between the sale price and the value
of the Class A Common Stock on the date of exercise) will be capital gain or
loss if the shares are capital assets in the hands of Mr. Laney, and will be
long-term capital gain or loss if such shares were held by Mr. Laney for more
than one year. In general, the federal income tax rates applicable to
long-term capital gains and ordinary income (including short-term capital
gains) of taxpayers who are individuals may differ, while for corporations
capital gains and ordinary income are generally taxed at the same rate. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
25
28
NEW PLAN BENEFITS TABLE
The table on this page summarizes, for each of the following, the number
of shares of Class A Common Stock underlying the Laney Option and the dollar
value thereof: (a) the Company's Chief Executive Officer, (b) the other
Executive Officers named in the Summary Compensation Table on page 12, (c) all
current Executive Officers of the Company as a group (14 persons), (d) all
current directors who are not Executive Officers as a group (2 persons),
(e) each other person who received or is to receive 5% of such options (no
persons), and (f) all employees, including all current officers who are not
Executive Officers, as a group (no persons).
NEW PLAN BENEFITS
LANEY OPTION AGREEMENT
- -----------------------------------------------------------------------------------------------------------
Name and Position Dollar Value ($)(1) Number of Units
- -----------------------------------------------------------------------------------------------------------
Robert P. Ingle
Chairman and Chief Executive Officer -- 0
Landy B. Laney
President and Chief Operating Officer $562,500(2) 100,000(3)
Ralph H. Gardner
President of Milkco, Inc. -- 0
Joseph G. Ashley
Vice President-Meats -- 0
Jack R. Ferguson
Vice President-Finance and Chief
Financial Officer -- 0
Executive Officer Group 562,500(2) 100,000(3)
Non-Executive Director Group -- 0
Other Persons Receiving 5% of the Options -- 0
Non-Executive Officer Employee Group -- 0
__________
(1) The fair market value of the Company's Class A Common Stock on December
28, 1995 was $11.625 per share.
(2) The exercise price for this option is $6.00 per share.
(3) All options avalaible under the Laney Option Agreement were granted to
Mr. Laney.
__________
APPROVAL OF THE PLAN
WITH RESPECT TO THE ADOPTION AND APPROVAL OF THE LANEY OPTION AGREEMENT,
UNLESS OTHERWISE PROVIDED IN THE COMPANY'S ARTICLES OF INCORPORATION OR THE
NORTH CAROLINA BUSINESS CORPORATION ACT, THE HOLDERS OF CLASS A COMMON STOCK
AND CLASS B COMMON STOCK SHALL VOTE AS A SINGLE CLASS, WITH EACH HOLDER OF
CLASS A COMMON STOCK BEING ENTITLED TO ONE (1) VOTE FOR EACH SHARE OF CLASS A
COMMON STOCK HELD AS OF THE RECORD DATE AND EACH HOLDER OF CLASS B COMMON STOCK
BEING ENTITLED TO TEN (10) VOTES FOR EACH SHARE OF CLASS B COMMON STOCK HELD AS
OF THE RECORD DATE. FOR PURPOSES OF ANY SUCH VOTE, IF A QUORUM IS PRESENT, A
PROPOSAL WILL PASS IF THE VOTES CAST FAVORING THE ACTION EXCEED THE VOTES CAST
OPPOSING THE ACTION. ACCORDINGLY, ABSTENTIONS AND BROKER NONVOTES WILL HAVE NO
EFFECT ON THE VOTE.
26
29
PROPOSAL TO ADOPT AND APPROVE THE KOLODZIESKI OPTION AGREEMENT
The Board of Directors approved the Option Agreement between the Company
and Mr. Kolodzieski during the fourth quarter of fiscal 1995. The Kolodzieski
Option Agreement was executed by Mr. Kolodzieski and the Company effective as
of August 2, 1995 (the "KOLODZIESKI GRANT DATE"). A copy of the Kolodzieski
Option Agreement is attached hereto as Appendix D.
The purposes of the Kolodzieski Option Agreement are (a) to insure the
retention of Mr. Kolodzieski as Vice President-Strategic Planning of the
Company and (b) to provide incentive to Mr. Kolodzieski to devote his utmost
effort and skill to the advancement and betterment of the Company, by
permitting him to participate in the ownership of the Company and, thereby, in
the success and increased value of the Company that he is expected to produce.
The exercise price for each share of Class A Common Stock issued upon
the exercise of the option granted pursuant to the Kolodzieski Option
Agreement (the "KOLODZIESKI OPTION") is $10.625 per share (the "KOLODZIESKI
EXERCISE PRICE").
The Kolodzieski Option may be exercised for all or a part of the 100,000
shares of Class A Common Stock (the "KOLODZIESKI OPTION SHARES") that are
subject to the Kolodzieski Option. The Kolodzieski Option shall not be
exercisable, either in whole or in part, prior to sixty (60) months after the
Kolodzieski Grant Date. Mr. Kolodzieski shall have three (3) months beyond
this sixty (60) month period to exercise the Kolodzieski Option at the
Kolodzieski Exercise Price. The Kolodzieski Option shall not be exercisable
after Mr. Kolodzieski ceases to be employed by the Company. If any part of the
Kolodzieski Option has not been exercised after sixty-three (63) months from
the Kolodzieski Grant Date, the unexercised portion immediately becomes null
and void and no longer of any force and effect. Notwithstanding any other
terms of the Kolodzieski Option, the Kolodzieski Option Agreement provides that
the Kolodzieski Option may not be exercised until the Kolodzieski Option
Agreement is approved and adopted by the Company's stockholders. This approval
is required pursuant to the corporate governance criteria, Part III, Section
6(i)(2)(a) of Schedule D of the NASD By-laws.
In the event that Mr. Kolodzieski shall cease to be employed by the
Company for any reason other than his death, a material disability or
retirement with the consent of the Company, the Kolodzieski Option shall
terminate immediately and become null and void and no longer be of any force or
effect. If the termination is due to a material disability or retirement of
Mr. Kolodzieski with the consent of the Company, Mr. Kolodzieski shall have the
right to exercise the Kolodzieski Option at the date of such termination of
employment at any time within three (3) months after such termination, subject
to the conditions that the Kolodzieski Option shall not be exercisable after
the expiration of sixty-three (63) months from the date it was granted.
Whether termination of employment is due to a material disability or is to be
considered a retirement with the consent of the Company shall be determined by
the Audit/Compensation Committee, which determination, unless overruled by the
Board of Directors, shall be final and conclusive. Any disability to be
considered "material" must result in a permanent and total disability of an
employee as defined in Code Section 22(e)(3), as amended, or if such Section is
no longer of any force or effect, Mr. Kolodzieski shall be deemed to be
permanently and totally disabled if he is unable to engage in any substantial
gainful employment by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.
If Mr. Kolodzieski leaves the Company for any reason other than death,
material disability or Company approved retirement, before sixty-three (63)
months has expired from the Kolodzieski Grant Date, the Kolodzieski Option shall
become null and void and no longer of any force or effect.
If Mr. Kolodzieski shall die while in the employ of the Company or
within a period of three (3) months after the termination of his employment as
a result of a Company approved retirement or disability, the Kolodzieski Option
may be exercised in whole or in part at any time within three (3) months after
Mr. Kolodzieski's death, by the executor or administrators of Mr. Kolodzieski's
estate or by any person or persons who shall have acquired the Kolodzieski
Option directly from the optionee by bequest or inheritance, subject to the
condition that the Kolodzieski Option shall not be exercisable after the
expiration of sixty-three (63) months from the Kolodzieski Grant Date.
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The Kolodzieski Option or any portion thereof may be exercised by Mr.
Kolodzieski by (i) delivering to the Company written notice which sets forth Mr.
Kolodzieski's election to exercise a portion or all of the Kolodzieski Option,
the number of Kolodzieski Option Shares with respect to which the Kolodzieski
Option rights are being exercised and such other representations and agreements
as may be required by the Company to comply with applicable securities laws and
(ii) paying in full the purchase price of the Kolodzieski Option Shares as set
forth in the Kolodzieski Option Agreement, and (iii) remitting, in cash or its
equivalent, to the Company, the federal income tax, state income tax and
F.I.C.A. to be withheld by the Company (in such amounts as may be determined by
the Company) with respect to the compensation to be recognized by Mr.
Kolodzieski upon the exercise of the Kolodzieski Option.
The Kolodzieski Exercise Price is payable in cash or its equivalent, or,
subject to the approval of the Audit/Compensation Committee, by means of
unrestricted shares of capital stock of the Company or any combination thereof
upon the exercise of the Kolodzieski Option. Payment in currency or by check,
bank draft, cashier's check or postal money order shall be considered payment in
cash. The Kolodzieski Option Agreement provides that the Company shall not lend
any monies to Mr. Kolodzieski for purchase of any Kolodzieski Option Shares.
The Kolodzieski Option Agreement will terminate on the earlier to occur
of (a) November 3, 2000 or (b) the date on which Mr. Kolodzieski purchases
100,000 shares of Class A Common Stock by exercise of the Kolodzieski Option.
As of the date of this proxy statement, the maximum number of shares of Class A
Common Stock available for purchase under the Kolodzieski Option Agreement is
100,000 shares.
The Kolodzieski Option Agreement may not be amended or terminated
without the agreement of all parties thereto.
No rights granted under the Kolodzieski Option Agreement are
transferrable by Mr. Kolodzieski in any manner other than by will or the laws of
descent and distribution and, during his lifetime, may be exercised only by Mr.
Kolodzieski or his court appointed legal representative. No person has or may
create a lien on any funds, securities or other property held under the
Kolodzieski Option Agreement.
The number of shares of Class A Common Stock covered by the Kolodzieski
Option and the Kolodzieski Exercise Price shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Class A Common Stock
of the Company resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Class A Common Stock) or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Company.
It is anticipated that the shares of Class A Common Stock to be
delivered to Mr. Kolodzieski upon the exercise of the Kolodzieski Option will be
issued by the Company from authorized but unissued shares. The proceeds
received by the Company from the issuance of Class A Common Stock pursuant to
the Kolodzieski Option will be used for general corporate purposes. However,
the Kolodzieski Option Agreement does not prohibit the Company from delivering
treasury shares to Mr. Kolodzieski. Any treasury shares to be issued to Mr.
Kolodzieski will most likely be purchased on the open market. In the case of
any purchase not made on the open market, no fee, commission or other charge
will be payable.
The Kolodzieski Option Agreement is not subject to any provisions of the
Employee Retirement Income Security Act of 1974 and is not qualified under
Section 401 of the Code. It is intended that the Kolodzieski Option shall not
constitute an incentive stock option within the meaning of Section 422A of the
Code; rather, the Kolodzieski Option is intended to constitute a nonqualified
stock option.
The Audit/Compensation Committee is granted certain authority pursuant
to the Kolodzieski Option Agreement to act on behalf of the Company to
administer the exercise of the Kolodzieski Option and related matters. With
respect to their administration of the Kolodzieski Option Agreement, the
Audit/Compensation Committee shall act as managers and not as trustees.
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FEDERAL INCOME TAX EFFECTS
The following summary generally describes the principal federal income
tax consequences of the grant and exercise of the Kolodzieski Option. The
summary is general in nature and is not intended to cover all tax consequences
that may apply to Mr. Kolodzieski in particular or to the Company. The Code,
treasury regulations promulgated thereunder and current administrative rulings
and court decisions relating to these matters are complicated and their impact
in any one case may depend upon the particular circumstances. This summary is
based on the Code, existing and proposed treasury regulations thereunder and
current administrative rulings and court decisions as in effect on the date of
this proxy statement, all of which are subject to change and any such change
could affect the continuing validity of the following paragraph. This summary
does not address any state, local or foreign tax laws. Mr. Kolodzieski has been
advised to consult his own accountant, legal counsel or other tax advisor
regarding the specific tax consequences of the grant or exercise of the
Kolodzieski Option, including the application and effect of state, local and
foreign tax laws.
The grant of the Kolodzieski Option to Mr. Kolodzieski will not result
in taxable income to Mr. Kolodzieski. However, upon the exercise of the
Kolodzieski Option, Mr. Kolodzieski will realize income taxable at ordinary
income tax rates to the extent the value of the Class A Common Stock on the date
of exercise exceeds the Kolodzieski Exercise Price, and the Company will receive
a corresponding deduction. If the shares of Class A Common Stock are
subsequently sold, any additional gain or loss realized on the sale (the
difference between the sale price and the value of the Class A Common Stock on
the date of exercise) will be capital gain or loss if the shares are capital
assets in the hands of Mr. Kolodzieski, and will be long-term capital gain or
loss if such shares were held by Mr. Kolodzieski for more than one year. In
general, the federal income tax rates applicable to long-term capital gains and
ordinary income (including short-term capital gains) of taxpayers who are
individuals may differ, while for corporations capital gains and ordinary income
are generally taxed at the same rate. The deductibility of capital losses is
subject to limitations for both individuals and corporations.
NEW PLAN BENEFITS TABLE
The table on the following page summarizes, for each of the following,
the number of shares of Class A Common Stock underlying the Kolodzieski Option
and the dollar value thereof: (a) the Company's Chief Executive Officer, (b) the
other Executive Officers named in the Summary Compensation Table on page 12,
(c) all current Executive Officers of the Company as a group (14 persons), (d)
all current directors who are not Executive Officers as a group (2 persons),
(e) each other person who received or is to receive 5% of such options (no
persons), and (f) all employees, including all current officers who are not
Executive Officers, as a group (no persons).
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NEW PLAN BENEFITS
KOLODZIESKI OPTION AGREEMENT
- -----------------------------------------------------------------------------------------------------------
Name and Position Dollar Value ($)(1) Number of Units
- -----------------------------------------------------------------------------------------------------------
Robert P. Ingle
Chairman and Chief Executive Officer -- 0
Landy B. Laney
President and Chief Operating Officer -- 0
Ralph H. Gardner
President of Milkco, Inc. -- 0
Joseph G. Ashley
Vice President-Meats -- 0
Jack R. Ferguson
Vice President-Finance and Chief
Financial Officer -- 0
Executive Officer Group $100,000(2) 100,000(3)
Non-Executive Director Group -- 0
Other Persons Receiving 5% of the Options -- 0
Non-Executive Officer Employee Group -- 0
__________
(1) The fair market value of the Company's Class A Common Stock on December
28, 1995 was $11.625 per share.
(2) The exercise price for this option is $10.625 per share.
(3) All options available under the Kolodzieski Option Agreement were
granted to Mr. Kolodzieski.
__________
APPROVAL OF THE PLAN
WITH RESPECT TO THE ADOPTION AND APPROVAL OF THE KOLODZIESKI OPTION
AGREEMENT, UNLESS OTHERWISE PROVIDED IN THE COMPANY'S ARTICLES OF INCORPORATION
OR THE NORTH CAROLINA BUSINESS CORPORATION ACT, THE HOLDERS OF CLASS A COMMON
STOCK AND CLASS B COMMON STOCK SHALL VOTE AS A SINGLE CLASS, WITH EACH HOLDER OF
CLASS A COMMON STOCK BEING ENTITLED TO ONE (1) VOTE FOR EACH SHARE OF CLASS A
COMMON STOCK HELD AS OF THE RECORD DATE AND EACH HOLDER OF CLASS B COMMON STOCK
BEING ENTITLED TO TEN (10) VOTES FOR EACH SHARE OF CLASS B COMMON STOCK HELD AS
OF THE RECORD DATE. FOR PURPOSES OF ANY SUCH VOTE, IF A QUORUM IS PRESENT A
PROPOSAL WILL PASS IF THE VOTES CAST FAVORING THE ACTION EXCEED THE VOTES CAST
OPPOSING THE ACTION. ACCORDINGLY, ABSTENTIONS AND BROKER NONVOTES WILL HAVE NO
EFFECT ON THE VOTE.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Terry M. Sharp, son-in-law of Robert P. Ingle who is Chairman of the
Board, Chief Executive Officer and a Director of the Company, has received
certain remuneration in connection with purchases of real property by the
Company. The Company did not incur any direct expense for such services since
Mr. Sharp was paid by the third-party sellers in such transactions. Based on
information available to the Company, Mr. Sharp received gross revenues of
approximately $439,000 during fiscal 1995 and approximately $100,000 during
fiscal 1996 (to date) as a result of such purchases of real property. The
Company believes that those real property transactions were entered into with
third parties on an arms-length basis on terms no less favorable to the Company
than would otherwise have been available had Mr. Sharp not been involved in the
transaction.
See also "Executive Compensation -- Additional Information with Respect
to Compensation Committee Interlocks and Insider Participation in Compensation
Decisions" on page 15.
Other than transactions of the nature described or referred to above, the
Company does not intend to enter into any transactions with or involving its
officers or directors or any members of their immediate family in the future on
terms that would be less favorable to the Company than those available from
unaffiliated third parties in arms-length transactions.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company has not yet selected its independent auditors for the 1996
fiscal year pending a meeting of the Audit/Compensation Committee of the Board
of Directors to make that determination. Ernst & Young has served as the
Company's independent auditors since March 1989. Representatives of Ernst &
Young are expected to be present at the Annual Meeting with the opportunity to
make a statement if they desire to do so and to respond to appropriate
questions.
OTHER MATTERS
STOCKHOLDERS' PROPOSALS FOR ANNUAL MEETING TO BE HELD IN 1997
The Company plans to hold its 1997 Annual Meeting of Stockholders in
late February or early March. Any proposal of a Stockholder intended to be
presented at said Annual Meeting of Stockholders must be received by the Company
for inclusion in the proxy statement and form of proxy for that meeting no later
than September 14, 1996.
ACTION ON OTHER MATTERS AT THE ANNUAL MEETING
At this time, the Company does not know of any other matters to be
presented for action at the Annual Meeting other than those mentioned in the
Notice of Annual Meeting of Stockholders and referred to in this proxy
statement. If any other matter comes before the meeting, it is intended that
the proxies will be voted in respect thereof in accordance with the judgment of
the persons voting the proxies.
REPORTS OF CHANGES IN BENEFICIAL OWNERSHIP
The Company is required to identify any Director, Executive Officer, or
beneficial owner of more than 10% of the Company's Class A Common Stock who
failed to file on a timely basis with the SEC any report on Form 3 (relating to
beneficial ownership of Class A Common Stock or Class B Common Stock) or on
Forms 4 or 5 (relating to changes in beneficial ownership of Class A Common
Stock or Class B Common Stock). Except as set forth below, based solely on a
review of material furnished to the Company by such Directors, Executive
Officers and more than 10% beneficial owners who are required to file reports on
Forms 3, 4 and 5 with the SEC, the Company is not aware of any Director, officer
or more than 10% beneficial owner of any class of equity stock of the Company
who has failed to file on a timely basis reports required by Section 16(a) of
the Securities Exchange Act of 1934 during the 1995 fiscal year with respect to
the Company's Class A Common Stock or Class B Common Stock. With respect to
fiscal 1995, each of Timothy A. Davey, Edward J. Kolodzieski and J. Thomas
Outlaw, Jr. failed to file on a timely basis his Initial Statement of
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Beneficial Ownership on Form 3 with respect to his appointment as an Executive
Officer. Each of Messrs. Davey, Kolodzieski and Outlaw ultimately filed the
appropriate report, but the reports were filed late. In addition, Anthony S.
Federico failed to file on a timely basis one (1) report with respect to two
(2) transactions. Mr. Federico has advised the Company that he is in the
process of filing the appropriate report, but that the report will be filed
late.
AVAILABILITY OF FORM 10-K
Upon written request, the Company will provide, without charge, to
stockholders receiving this Proxy Statement a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995 as filed with
the SEC (including the financial statements and related schedules, but not
including the exhibits thereto, which will be provided upon request at the
stockholder's expense). Requests for copies of documents available as stated
above should be directed to Jack R. Ferguson, Vice President-Finance and Chief
Financial Officer, at Ingles Markets, Incorporated, P. O. Box 6676, Asheville,
North Carolina 28816 or by telephone at (704) 669-2941, ext. 222.
STOCKHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL BE
VOTED, WITH RESPECT TO THE MATTERS IDENTIFIED THEREON, IN ACCORDANCE WITH ANY
SPECIFICATIONS ON THE PROXY.
By Order of the Board of Directors,
/s/ Robert P. Ingle
--------------------------------------
Robert P. Ingle
Chairman of the Board
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APPENDIX A
INGLES MARKETS, INCORPORATED
AMENDED AND RESTATED
1991 NONQUALIFIED STOCK OPTION PLAN
Attached hereto is the Ingles Markets, Incorporated Amended and
Restated 1991 Nonqualified Stock Option Plan and the form of agreement to be
entered into with optionees.
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AMENDED AND RESTATED
INGLES MARKETS, INCORPORATED
1991 NONQUALIFIED STOCK OPTION PLAN
THE INGLES MARKETS, INCORPORATED 1991 NONQUALIFIED STOCK OPTION
PLAN is amended and restated effective as of August 6, 1991.
W I T N E S S E T H
WHEREAS, on August 6, 1991, Ingles Markets, Incorporated, a North
Carolina corporation ("Ingles") adopted the INGLES MARKETS, INCORPORATED 1991
NONQUALIFIED STOCK OPTION PLAN (the "Plan") ; and
WHEREAS, the Board of Directors of Ingles deems it to be in the
best interests of Ingles to amend and restate the Plan; and
WHEREAS, the amendment and restatement of the Plan has been
approved by unanimous written consent of the Board of Directors without a
meeting; and
WHEREAS, any reference herein to the "Company" shall be deemed to
include Ingles and its subsidiaries, which subsidiaries, as of the date of the
adoption of the Plan, include Milkco, Inc., Sky King, Inc. and Ingles Markets
Investments, Inc.
NOW, THEREFORE, the terms of the Plan are as follows:
1. PURPOSES OF THE PLAN
The purposes of the Plan are (a) to insure the retention of
executive personnel and key employees as that term is defined in Article 3
below; (b) to attract new executive personnel and other key employees; and (c)
to provide incentive to all such personnel to devote their utmost effort and
skill to the advancement and betterment of the Company, by permitting them to
participate in the ownership of the Company and thereby in the success and
increased value of which they have helped to produce.
It is intended that options issued pursuant to this Plan (the
"Options") shall not constitute incentive stock options within the meaning of
Section 422A of the Internal Revenue Code of 1986, as now or hereafter amended
(the "Code"); rather, the Options are intended to constitute nonqualified stock
options.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Audit/Compensation Committee
of the Company's Board of Directors (hereinafter called the "Committee"). The
Committee shall hold meetings at such times and places as it may determine.
The Committee shall from time to time at its discretion determine which key
employees shall be granted Options and the amount of stock covered by such
Options. Members of the Committee shall not be eligible to participate in this
Plan.
The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it shall be final unless
otherwise determined by the Board of Directors. No member of the Committee or
the Board of Directors shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under it.
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3. ELIGIBILITY
Options may be granted only to salaried employees who are officers
or who are employed in an executive, administrative, managerial or professional
capacity by the Company. An Option may be granted to a director of the Company
provided that the director is also an officer or salaried employee and provided
the director is not a member of the Committee.
4. SHARES SUBJECT TO THE PLAN
As of August 6, 1991, the date of the Company's adoption of this
Ingles Markets, Incorporated 1991 Nonqualified Stock Option Plan, the aggregate
number of shares which may be issued under Options shall not exceed 1,000,000
shares of the Company's $.05 par value Class A Common Stock (the "Class A
Stock").
If any Option or portion thereof shall lapse by the failure of the
optionee or his heirs or personal representative to exercise the same or shall
be surrendered by such persons, the Committee shall have the power to grant
additional Options in lieu of those so lapsed or surrendered. In the event
that any outstanding Option under the Plan for any reason expires or is
terminated, the shares of Class A Stock allocable to the unexercised portion of
such Option may again be subjected to an Option under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS
Stock Options granted pursuant to the Plan shall be authorized by
the Committee and shall be evidenced by agreements in such form as the
Committee shall from time to time approve, which agreements shall comply with
and be subject to the following terms and provisions:
(a) Number of Shares.
Each Option shall state the number of shares to which it
pertains.
(b) Option Price.
Each Option shall state the option price, which shall not
be less than 100% of the fair market value of the shares of
the Company's Class A Stock on the date of the granting of
the Option. The fair market value of the Company's Class A
Stock for Options granted on the effective date of a public
offering of such stock shall be the public offering price.
In the event that the Company's Class A Stock is listed
upon an established stock exchange, such fair market value
shall be deemed to be the closing price of the Company's
Class A Stock on such stock exchange on the day the Option
is granted or, if no sale of the Company's Class A Stock
shall have been made on any stock exchange that day, the
fair market value shall be determined as such price for the
next preceding day upon which a sale shall have occurred.
In the event that the Company's Class A Stock is not listed
upon an established exchange but is quoted on the National
Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the fair market value shall be deemed to
be the closing sale price (if included in the National
Market List) or the mean between the closing dealer "bid"
and "asked" prices for the Corporation's Class A Stock as
quoted on NASDAQ for the day of the grant, and if no such
closing sale price or "bid" and "asked" prices are quoted
for the day of the grant, the fair market value shall be
determined by reference to such prices on the next
preceding day on which such prices are quoted. In the
event that the Company's Class A Stock is neither listed on
an established stock exchange nor quoted on NASDAQ, the
fair market value on the day the Option is granted shall be
determined by the Committee. Subject to the foregoing, the
Committee, in fixing the Option price, shall have full
authority and discretion and be fully protected in doing
so.
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(c) Medium and Time of Payment.
The Option price shall be payable in cash or by means of
unrestricted shares of the Company's capital stock or any
combination thereof upon the exercise of the Option.
Payment in currency or by check, bank draft, cashier's
check or postal money order shall be considered payment in
cash. In the event of payment in the Company's capital
stock, the shares used in payment of the purchase price
shall be taken at the fair market value thereof. Fair
market value shall be determined in the same manner
provided for in Article 5(b) above on the date immediately
preceding the day of payment. The Company shall not loan
any monies to any employees for purchase of these
aforementioned stock Options.
(d) Term and Exercise of Option.
Each Option shall state the date upon which it is granted.
No Option shall be exercisable either in whole or in part
prior to sixty (60) months from the date it is granted.
Except as otherwise provided in case of retirement,
disability or death, pursuant to Articles 5(f) and 5(g), no
Option shall be exercisable after an optionee ceases to be
employed by the Company.
All stock Options shall become exercisable sixty (60)
months from the date issued. The optionee shall have three
(3) months beyond this sixty (60) month period to exercise
his stock Option at the predetermined price. If any part
of the Option has not been exercised after sixty-three (63)
months from the time of granting, the unexercised portion
immediately becomes null and void and no longer of any
force and effect.
(e) Assignability and Transfer of Options.
The Option shall be exercisable only by the optionee during
his lifetime and shall not be assignable or transferable by
him otherwise than by will or the laws of descent and
distribution, and no other person shall acquire any rights
therein.
(f) Termination of Employment Other Than By Reason of Death.
In the event that an optionee shall cease to be employed by
the Company for any reason other than his death, a material
disability or retirement with the consent of the Company,
all Options held by him pursuant to the Plan and not
previously exercised at the date of such termination shall
terminate immediately and become null and void and of no
longer any force or effect.
If the termination is due to a material disability or
retirement with the consent of the Company, such disabled
or retiring optionee shall have the right to exercise his
Options which have not previously been exercised at the
date of such termination and employment at any time within
three (3) months after such termination, subject to the
conditions that no Option shall be exercisable after the
expiration of sixty-three (63) months from the date it was
granted. Whether termination of employment is due to a
material disability or is to be considered a retirement
with the consent of the Company shall be determined by the
Committee, which determination, unless overruled by the
Board of Directors, shall be final and conclusive. Any
disability to be considered "material" must result in a
permanent and total disability of an employee as defined in
Code Section 22(e)(3), as amended, or if such Section is no
longer of any force or effect, an employee shall be deemed
to be permanently and totally disabled if he is unable to
engage in any substantial gainful employment by reason of
any medically determinable physical or mental impairment
which can be expected to result in death or which has
lasted or can be expected to last for a continuous period
of not less than twelve (12) months.
If an employee covered under this Plan leaves the Company
for any reason other than death, material disability or
Company approved retirement, before sixty-three (63) months
has expired
A-4
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from granting of this Option, all of employee's stock
options under this Plan shall become null and void and no
longer of any force or effect.
(g) Death of Optionee.
If the optionee shall die while in the employ of the
Company or within a period of three (3) months after the
termination of his employment as a result of a Company
approved retirement or disability as determined in Article
5(f) above, such optionee's Options may be exercised in
whole or in part at any time within three (3) months after
the optionee's death, by the executor or administrators of
the optionee's estate or by any person or persons who shall
have acquired the Options directly from the optionee by
bequest or inheritance, subject to the condition that no
Option shall be exercisable after the expiration of
sixty-three (63) months from the date it is granted.
(h) Adjustments to Class A Stock Subject to Options.
The number of shares of Class A Stock covered by this Plan
and each outstanding Option, and the price per share for
each outstanding Option shall be proportionately adjusted
for any increase or decrease in the number of issued shares
of Class A Stock of the Company resulting from a
subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Class A Stock) or any other
increase or decrease in the number of such shares affected
without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any
merger, consolidation or reorganization, each outstanding
Option shall pertain to and apply to the same number and
kind of securities to which the optionee would have been
entitled had he then been the record holder of the number
of shares of Class A Stock subject to the Option. A
dissolution or liquidation of the Company or a merger,
consolidation or reorganization (i) in which the Company is
not the surviving corporation, and (ii) which does not
contain appropriate provisions for the substitution of
Options to purchase appropriate stock of the surviving
corporation, on an equitable basis, shall cause each
outstanding Option to terminate, provided that each
optionee who has held an Option for more than one (1) year
prior to the effective date of such event shall have the
right immediately prior to such dissolution or liquidation,
or merger, consolidation or reorganization in which the
Company is not the surviving corporation, to exercise his
Option in whole or in part, subject to the exception that
no Option shall be exercisable after the expiration of
sixty-three (63) months from the date it is granted.
In the event of a change in the Class A Stock of the
Company, which is limited to a change of all of its
authorized shares with par value into the same number of
shares with a different par value, the shares resulting
from any such shares shall be deemed to be the Class A
Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to
stock or securities of the Company such adjustments shall
be made by the Committee, whose determination in that
respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Article
5, (i) the optionee shall have no rights by reason of any
subdivision or consolidation of shares of Class A Stock or
the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or
by reason of any dissolution, merger, consolidation,
reorganization or spinoff of assets or stock of another
corporation, and (ii) any issuance by the Company of shares
of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to,
the number or price of shares of Class A Stock subject to
the Option.
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The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell or transfer
all or any part of its business or assets.
(i) No Rights as a Stockholder.
An optionee or transferee of an Option shall have no rights
as a stockholder with respect to shares covered by his
Option until the date of the issuance of a stock
certificate to him for such shares. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or
other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in
this Article 5.
(j) Exercise Procedures.
Any Option granted hereunder or any portion thereof may be
exercised by the optionee by: (1) delivering to the Company
at its main office (attention of its Vice
President-Finance) written notice of the number of shares
with respect to which the Option rights are being
exercised, (2) paying in full the purchase price of the
shares purchased, and (3) remitting to the Company the
federal income tax, state income tax and F.I.C.A. to be
withheld by the Company (in such amounts as may be
determined by the Company) with respect to the compensation
to be recognized by the optionee upon the exercise of such
Option. Upon receipt of such notice and payment, the
Company shall issue and deliver to the optionee a
certificate for the number of shares of Class A Stock with
respect to which Options were so exercised.
(k) Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the
limitations of the Plan, the Board of Directors, upon
recommendation of the Committee, may modify, extend or
renew outstanding Options granted under the Plan, or accept
the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new
Options in substitution therefore (to the extent not
theretofore exercised). The Board of Directors shall not,
however, modify any outstanding Options so as to specify a
lower price or accept the surrender of outstanding Options
and authorize the granting of new Options, in substitution
therefore specifying a lower price. Notwithstanding the
foregoing, however, no modifications of an Option shall,
without the consent of the optionee, alter or impair any
rights or obligations under any Option theretofore granted
under the Plan.
(l) General Restrictions.
Each Option shall be subject to the requirement that, if at
any time the Board of Directors or the Committee shall
determine, in its discretion, that the listing,
registration or qualification of the shares subject to such
Option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Option or
the issue or purchase of shares thereunder, such Option may
not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not
acceptable to the Board of Directors.
(m) Leave of Absence.
In the case of any employee on an approved Leave of
Absence, the Committee may make such provision respecting
continuance of the Option while the employee is on such
Leave of Absence
A-6
41
as it may deem equitable, except that in no event shall an
Option be exercised after the expiration of sixty-three
(63) months from the date such Option was granted.
(n) Reservation of Class A Stock.
The Company, during the term of any Options granted
hereunder, will at all times reserve and keep available,
and will seek to obtain from any regulatory body having
jurisdiction, any requisite authority in order to issue and
sell such number of shares of Class A Stock as shall be
sufficient to satisfy the requirements of the Options
granted under the Plan.
(o) Corporate Resolutions.
Each Option agreement shall refer to, and specifically
incorporate by reference, the Plan.
(p) Other Provisions.
The Option agreements authorized under the Plan shall
contain such other provisions, including, without
limitation, such restrictions upon the exercise of the
Option as the Committee or the Board of Directors of the
Company shall deem advisable.
6. TERM OF PLAN
Options may be granted pursuant to the Plan from time to time on or
before the 6th day of August, 1996.
7. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may
have as Directors of the Company, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorney's fees actually and necessarily incurred in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in satisfaction of a
judgment in any such proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit, or proceeding that such Committee
member is liable for negligence or misconduct in the performance of his duties;
provided that within sixty (60) days after institution of any such action, suit
or proceeding, a Committee member shall in writing offer the Company the
opportunity at its own expense, to handle and defend the same.
8. AMENDMENTS TO THE PLAN
The Board of Directors of the Company, may insofar as permitted by
law, from time to time (i) with respect to any shares at the time not subject
to Options, suspend or discontinue the Plan; or (ii) revise or amend the Plan
in any respect whatsoever.
9. APPLICATION OF FUNDS
The proceeds received by the Company from the issuance of Class A
Stock pursuant to Options will be used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the
optionee to exercise such Option.
AS ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 6, 1991, AND AS
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS EFFECTIVE AS OF AUGUST 6, 1991.
A-7
42
STOCK OPTION AGREEMENT
WITH RESPECT TO
INGLES MARKETS, INCORPORATED
1991 NONQUALIFIED STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made and entered into as of
the ___ day of __________, 199_, by and between INGLES MARKETS, INCORPORATED a
North Carolina corporation (the "COMPANY") and _______________ (the
"OPTIONEE").
THE PARTIES AGREE AS FOLLOWS:
1. Ingles Markets, Incorporated Amended and Restated 1991 Nonqualified
Stock Option Plan. The exercise of the Options granted under this Agreement
shall be subject to the terms, conditions and restrictions of the Ingles
Markets, Incorporated Amended and Restated 1991 Nonqualified Stock Option Plan
(the "PLAN") as adopted by the Company on August 6, 1991. A copy of the Plan
is attached hereto as Exhibit "A" and incorporated in this Agreement by this
reference. Terms used in this Agreement that are defined in the Plan shall
have the same meaning as in the Plan, unless the text of this Agreement clearly
indicates otherwise. If there shall be any conflict between the provisions of
this Agreement and the provision of the Plan, the provisions of the Plan shall
control.
2. Grant of Option. The Company hereby grants to Optionee pursuant to
the Plan an option (the "OPTION") to purchase all or any part of __________
(______) shares (the "OPTION SHARES") of the Company's $.05 par value Class A
Common Stock ("CLASS A STOCK") on the terms and conditions set forth herein
and in the Plan. The date of the grant of this Option shall be the day and
year first above written.
3. Exercise Price. The exercise price (the "EXERCISE PRICE") for each
share of Class A Stock covered by this Option shall be $_____ per share.
4. Adjustment of Options. The Committee shall adjust the number of
Option Shares and the Exercise Price thereof in certain circumstances in
accordance with the provisions of Article 5(h) of the Plan.
5. Exercise of Options.
A. Partial and Total Exercise. Subject to the terms of the
Plan and Item 6 of this Agreement, this Option may be exercised for all or a
part of the Option Shares as provided in Article 5(d) of the Plan.
B. Method of Exercising Option. Any Option granted hereunder
or any portion thereof may be exercised by the Optionee by delivering to the
Company at its main office (attention of its Vice President-Finance) written
notice which shall set forth the Optionee's election to exercise a portion or
all of the Option, the number of shares with respect to which the option rights
are being exercised and such other representations and agreements as may be
required by the Company to comply with applicable securities laws and by paying
in full the purchase price of the shares purchased in cash or its equivalent
or, subject to the approval of the Committee, pursuant to one of the
alternative methods set forth in Article 5(c) of the Plan.
C. Nonassignability of Options. The Option shall not be
assignable or transferrable by the Optionee except by will or by the laws of
descent and distribution in accordance with Articles 5(e) and 5(g) of the Plan.
Any distributee by will or by the laws of descent and distribution shall be
bound by the provisions of the Plan and this Agreement. During the life of the
Optionee, the Option shall be exercisable only by the Optionee. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of the Option, and
any levy of execution, attachment or similar process on the Option shall be
null and void.
D. Termination of Employment. The Option shall immediately
terminate upon the date of termination of the Optionee's employment with the
Company except when such termination of employment is caused by death, material
disability of the Optionee or retirement with the consent of the Company. The
personal representative of the
A-8
43
Optionee (in the event of his death) or the Optionee (in the event of his
material disability or retirement with the consent of the Company) may, subject
to the provisions hereof and the Plan exercise the Option granted to the
Optionee as provided in Article 5(f) and 5(g) of the Plan. The date of any
material disability shall be deemed to be the day following the last day the
Optionee performed services for the Company.
6. Securities Laws - Restrictions on Issuance of Shares. No
shares of Class A Stock shall be issued or sold upon the exercise of any Option
unless and until (i) the full amount of the Exercise Price has been paid as
provided in Item 5B hereof and (ii) in accordance with Article 5(l) of the
Plan, the then applicable requirements of the Securities Act of l933, and the
applicable securities laws of any applicable state, as any of the same may be
amended, the rules and regulations of the Securities and Exchange Commission
and any other regulations of any securities exchange on which the Class A Stock
may be listed, shall have been fully complied with and satisfied.
7. No Rights as a Stockholder. The Optionee shall not have
any rights as a stockholder with respect to any shares covered by any Option
granted hereunder until the issuance of a stock certificate for such shares.
8. Binding Effect. This Agreement shall be binding upon the
executors, administrators, heirs, legal representatives and successors of the
parties hereto.
9. No Employment Rights. This Agreement shall not confer upon
Optionee any right with respect to the continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate such employment at any time.
10. Governing Law. This Stock Option Agreement shall be
governed by and construed in accordance with the laws of the State of North
Carolina.
11. Notices. All notices and other communications under this
Agreement shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if mailed to the
party to whom notice is to be given, by certified mail, return receipt
requested, postage prepaid, and addressed as follows, until any such address
is changed by notice duly given:
To Optionee at: The address indicated
on the signature page hereof
To Company at: Ingles Markets, Incorporated
Post Office Box 6676
Asheville, NC 28816
Attention: Jack R. Ferguson
Vice President-Finance
12. Enforcement. If any portion of this Agreement shall be
determined to be invalid or unenforceable, the remainder shall be valid and
enforceable to the extent possible.
A-9
44
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
INGLES MARKETS, INCORPORATED
By:
----------------------------
Robert P. Ingle, Its Chairman
(CORPORATE SEAL)
OPTIONEE:
(SEAL)
----------------------------
Address:
A-10
45
APPENDIX B
INGLE OPTION AGREEMENT
Attached hereto is the Ingle Option Agreement
B-1
46
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
WITH RESPECT TO
INGLES MARKETS, INCORPORATED
THIS AMENDED AND RESTATED STOCK OPTION AGREEMENT (this "Agreement") is made
and entered into effective as of the 21st day of July, 1993, by and between
INGLES MARKETS, INCORPORATED a North Carolina corporation (the "Company") and
ROBERT P. INGLE (the "Optionee").
W I T N E S S E T H
WHEREAS, the Company and the Optionee entered into a Stock Option Agreement
dated July 21, 1993; and
WHEREAS, the Company and the Optionee desire to amend Paragraph 4(c) hereof;
and
WHEREAS, the Board of Directors of the Company (the "Board") deems it to be
in the best interests of the Company to amend and restate this Agreement; and
WHEREAS, the amendment of this Agreement has been approved by unanimous
written consent of the Board without a meeting.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
1. Purposes of this Agreement. The purposes of this Agreement are (a)
to insure the retention of the Optionee as Chief Executive Officer of the
Company and (b) to provide incentive to the Optionee to devote his utmost
effort and skill to the advancement and betterment of the Company, by
permitting him to participate in the ownership of the Company and, thereby, in
the success and increased value of the Company that he has helped to produce.
It is intended that the option issued pursuant to this Agreement shall not
constitute an incentive stock option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as now or hereafter amended (the "Code");
rather, the Option is intended to constitute a nonqualified stock option.
2. Grant Of Option. The Company hereby grants to the Optionee an
option (the "Option") to purchase all or any part of one hundred thousand
(100,000) shares (the "Option Shares") of the Company's Class A Common Stock,
$.05 par value (the "Class A Stock"), on the terms and conditions set forth
herein. The date of the grant of this Option shall be the day and year first
above written (the "Grant Date").
3. Exercise Price.
(a) Exercise Price. The exercise price (the "Exercise Price") for
each Option Share shall be $6.00 per share.
(b) Medium and Time of Payment. The Exercise Price shall be
payable in cash or its equivalent, or, subject to the approval of the
Audit/Compensation Committee of the Company's Board of Directors (the
"Committee"), by means of unrestricted shares of the Company's capital stock or
any combination thereof upon the exercise of the Option. Payment in currency
or by check, bank draft, cashier's check or postal money order shall be
considered payment in cash. The Company shall not loan any monies to the
Optionee for purchase of any Option Shares. In the event of payment in the
Company's capital stock, the shares used in payment of the purchase price shall
be taken at the Fair Market Value thereof (as defined below), which, for
purposes of this Section 3(b), shall be determined on the date immediately
preceding the day of payment. The "Fair Market Value" of the Company's capital
stock shall mean (i) if payment date occurs on the day after the effective date
of a public offering of such stock, the public offering price; (ii) if the
Company's capital stock is listed on an established stock exchange, the closing
price of the Company's capital stock on such stock exchange on the relevant
date or, if no sale of the Company's capital stock shall have been made on such
B-2
47
stock exchange that day, such price for the next preceding day upon which a
sale shall have occurred; (iii) if the Company's capital stock is not listed
upon an established exchange but is quoted on National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the closing sale
price (if the stock is listed in the National Market List) or the mean between
the closing dealer "bid" and "asked" prices for the Corporation's capital stock
as quoted on NASDAQ on the relevant date or, if no such closing sale price or
"bid" and "asked" prices are quoted for the day of the grant, such prices on
the next preceding day on which such prices are quoted; or (iv) if the
Company's capital stock is neither listed on an established stock exchange nor
quoted on NASDAQ, the fair market value of such stock on the relevant date as
determined by the Committee. Subject to the foregoing, the Committee, in
fixing the Fair Market Value, shall have full authority and discretion and be
fully protected in doing so.
4. Exercise of Options.
(a) Partial and Total Exercise. Subject to the terms of
Section 6 of this Agreement, the Option may be exercised for all or a part of
the Option Shares as provided in this Section 4(a). The Option shall not be
exercisable, either in whole or in part, prior to twelve (12) months from the
Grant Date. The Option shall not be exercisable after the Optionee ceases to
be employed by the Company.
The Option shall become exercisable twelve (12) months from the
Grant Date. The Optionee shall have forty-eight (48) months beyond this
twelve (12) month period to exercise the Option at the Exercise Price. If any
part of the Option has not been exercised after sixty (60) months from the
Grant Date, the unexercised portion immediately becomes null and void and no
longer of any force and effect.
(b) Death of Optionee. If the Optionee shall die prior to
sixty (60) months from the Grant Date, the Option may be exercised, in whole or
in part, at any time after the Optionee's death, by the executor or
administrators of the Optionee's estate or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or inheritance,
subject to the condition that the Option shall not be exercisable after the
expiration of sixty (60) months from the Grant Date.
(c) Method of Exercising Option. The Option or any portion
thereof may be exercised by the Optionee by (i) delivering to the Company at
its main office (to the attention of its Vice President-Finance) written notice
which shall set forth the Optionee's election to exercise a portion or all of
the Option, the number of Option Shares with respect to which the Option rights
are being exercised and such other representations and agreements as may be
required by the Company to comply with applicable securities laws and (ii)
paying in full the purchase price of the Option Shares as set forth in Section
3(b), and (iii) remitting, in cash or its equivalent, to the Company the
federal income tax, state income tax and F.I.C.A. to be withheld by the Company
(in such amounts as may be determined by the Company) with respect to the
compensation to be recognized by the Optionee upon the exercise of the Option.
Upon receipt of such notice and payment, the Company shall issue and deliver to
the Optionee a certificate for the number of shares of Class A Stock with
respect to which the Option was so exercised.
(d) Nonassignability of Option. The Option shall not be
assignable or transferrable by the Optionee except by will or by the laws of
descent and distribution in accordance with Sections 4(b). Any distributee by
will or by the laws of descent and distribution shall be bound by the
provisions of this Agreement. During the life of the Optionee, the Option
shall be exercisable only by the Optionee. Any attempt to assign, pledge,
transfer, hypothecate or otherwise dispose of the Option, and any levy of
execution, attachment or similar process on the Option shall be null and void.
(e) General Restrictions. The Option shall be subject to the
requirement that, if at any time the Board of Directors or the Committee shall
determine, in its discretion, that the listing, registration or qualification
of the Option Shares upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue or
purchase of Option Shares, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions that are not
acceptable to the Board of Directors.
B-3
48
(f) Leave of Absence. If the Optionee goes on an approved
leave of absence, the Committee may make such provision respecting continuance
of the Option while the Optionee is on such leave of absence as it may deem
equitable, except that in no event shall the Option be exercised after the
expiration of sixty (60) months from the Grant Date.
5. Adjustments to Class A Stock Subject to Option. The number of
shares of Class A Stock covered by the Option, and the Exercise Price shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Class A Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Class A Stock) or any other increase or decrease in the number of such shares
affected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger,
consolidation or reorganization, the Option shall pertain to and apply to the
same number and kind of securities to which the Optionee would have been
entitled had he then been the record holder of the number of shares of Class A
Stock subject to the Option. A dissolution or liquidation of the Company or a
merger, consolidation or reorganization (a) in which the Company is not the
surviving corporation, and (b) which does not contain appropriate provisions
for the substitution of options to purchase appropriate stock of the surviving
corporation, on an equitable basis, shall cause the Option to terminate,
provided that if the Optionee has held the Option for more than (1) year prior
to the effective date of such event, he shall have the right immediately prior
to such dissolution or liquidation, or merger, consolidation or reorganization
in which the Company is not the surviving corporation, to exercise the Option
in whole or in part, subject to the exception that the Option shall not be
exercisable after the expiration of sixty (60) months from the date it is
granted.
In the event of a change in the Class A Stock of the Company, which is
limited to a change of all of its authorized shares with par value into the
same number of shares with a different par value, the shares resulting from any
such shares shall be deemed to be the Class A Stock within the meaning of this
Agreement.
To the extent that the foregoing adjustments relate to stock or securities
of the Company such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Agreement, (a) the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of Class A Stock or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, merger, consolidation, reorganization or spinoff of assets
or stock of another corporation, and (b) any issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of shares of Class A Stock subject to
the Option.
The grant of the Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
6. Securities Laws - Restrictions on Issuance of Shares. No shares of
Class A Stock shall be issued or sold upon the exercise of the Option unless
and until (a) the full amount of the Exercise Price has been paid as provided
in Section 4(c) of this Agreement and (b) in accordance with Section 4(e) of
this Agreement, the then applicable requirements of the Securities Act of l933,
as amended, and the applicable securities laws of any state, as any of the same
may be amended, the rules and regulations of the Securities and Exchange
Commission and any other regulations of any securities exchange on which the
Class A Stock may be listed, (including, without limitation for such purposes,
NASDAQ) shall have been fully complied with and satisfied.
7. No Rights as a Stockholder. The Optionee and any transferee of the
Option shall have no rights as a stockholder of the Company with respect to any
Option Shares until the date of the issuance of a stock certificate(s) to him
or her for the Option Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
any such stock certificate is issued, except as provided in Section 4.
B-4
49
8. Interpretation of Option; Indemnification of Committee. The
interpretation and construction by the Committee of any provisions of this
Agreement or any terms of the Option shall be final unless otherwise determined
by the Board of Directors. No member of the Committee or the Board of
Directors shall be liable for any action or determination made in good faith
with respect to the Option. In addition to such other rights of
indemnification as they may have as Directors of the Company, the members of
the Committee shall be indemnified by the Company against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with
this Agreement or the Option, and against all amounts paid by them in
satisfaction of a judgment in any such proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit, or proceeding
that the Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member shall in
writing offer the Company the opportunity at its own expense, to handle and
defend the same.
9. Application of Funds. The proceeds received by the Company from
the issuance of Class A Stock pursuant to the Option will be used for general
corporate purposes.
10. No Obligation To Exercise Option. The granting of the Option shall
impose no obligation upon the Optionee to exercise such Option.
11. Binding Effect. This Agreement shall be binding upon the executors,
administrators, heirs, legal representatives and successors of the parties
hereto.
12. No Employment Rights. This Agreement shall not confer upon
Optionee any right with respect to the continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate such employment at any time.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
14. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally or when received if mailed to the party to
whom notice is to be given, by certified mail, return receipt requested,
postage pre-paid, and addressed as follows, until any such address is changed
by notice duly given:
To Optionee at: The address indicated
on the signature page hereof
To Company at: Ingles Markets, Incorporated
Post Office Box 6676
Asheville, NC 28816
Attention: Jack R. Ferguson
Vice President-Finance
15. Enforcement. If any portion of this Agreement shall be determined
to be invalid or unenforceable, the remainder shall be valid and enforceable to
the extent possible.
16. Shareholder Approval. Notwithstanding anything in this Agreement to
the contrary, the Company shall have no obligation to issue any Option Shares
or any other consideration upon any exercise of the Option if the Shareholders
of the Company have not approved this Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
B-5
50
IN WITNESS WHEREOF, this Agreement has been duly executed effective as of
the date first above written.
INGLES MARKETS, INCORPORATED
By:/s/ Landy B. Laney
-------------------------
Landy B. Laney
President
(CORPORATE SEAL)
OPTIONEE:
/s/ Robert P. Ingle (SEAL)
----------------------------
ROBERT P. INGLE
Address: Route 1, Highway 70 East
Black Mountain, NC 28711
B-6
51
APPENDIX C
LANEY OPTION AGREEMENT
Attached hereto is the Laney Option Agreement
C-1
52
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
WITH RESPECT TO
INGLES MARKETS, INCORPORATED
THIS AMENDED AND RESTATED STOCK OPTION AGREEMENT (this "Agreement") is made
and entered into effective as of the 21st day of July, 1993, by and between
INGLES MARKETS, INCORPORATED a North Carolina corporation (the "Company") and
LANDY B. LANEY (the "Optionee").
W I T N E S S E T H
WHEREAS, the Company and the Optionee entered into a Stock Option Agreement
dated July 21, 1993; and
WHEREAS, the Company and the Optionee desire to amend Paragraph 4(c) hereof;
and
WHEREAS, the Board of Directors of the Company (the "Board") deems it to be
in the best interests of the Company to amend and restate this Agreement; and
WHEREAS, the amendment of this Agreement has been approved by unanimous
written consent of the Board without a meeting.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
1. Purposes of this Agreement. The purposes of this Agreement are (a)
to insure the retention of the Optionee as Chief Operating Officer of the
Company and (b) to provide incentive to the Optionee to devote his utmost
effort and skill to the advancement and betterment of the Company, by
permitting him to participate in the ownership of the Company and, thereby, in
the success and increased value of the Company that he has helped to produce.
It is intended that the option issued pursuant to this Agreement shall not
constitute an incentive stock option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as now or hereafter amended (the "Code");
rather, the Option is intended to constitute a nonqualified stock option.
2. Grant Of Option. The Company hereby grants to the Optionee an
option (the "Option") to purchase all or any part of one hundred thousand
(100,000) shares (the "Option Shares") of the Company's Class A Common Stock,
$.05 par value (the "Class A Stock"), on the terms and conditions set forth
herein. The date of the grant of this Option shall be the day and year first
above written (the "Grant Date").
3. Exercise Price.
(a) Exercise Price. The exercise price (the "Exercise Price") for
each Option Share shall be $6.00 per share.
(b) Medium and Time of Payment. The Exercise Price shall be
payable in cash or its equivalent, or, subject to the approval of the
Audit/Compensation Committee of the Company's Board of Directors (the
"Committee"), by means of unrestricted shares of the Company's capital stock or
any combination thereof upon the exercise of the Option. Payment in currency
or by check, bank draft, cashier's check or postal money order shall be
considered payment in cash. The Company shall not loan any monies to the
Optionee for purchase of any Option Shares. In the event of payment in the
Company's capital stock, the shares used in payment of the purchase price shall
be taken at the Fair Market Value thereof (as defined below), which, for
purposes of this Section 3(b), shall be determined on the date immediately
preceding the day of payment. The "Fair Market Value" of the Company's capital
stock shall mean (i) if payment date occurs on the day after the effective date
of a public offering of such stock, the public offering price; (ii) if the
Company's capital stock is listed on an established stock exchange, the closing
price of the Company's capital stock on such stock exchange on the relevant
date or, if no sale of the Company's capital stock shall have been made on such
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stock exchange that day, such price for the next preceding day upon which a
sale shall have occurred; (iii) if the Company's capital stock is not listed
upon an established exchange but is quoted on National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the closing sale
price (if the stock is listed in the National Market List) or the mean between
the closing dealer "bid" and "asked" prices for the Corporation's capital stock
as quoted on NASDAQ on the relevant date or, if no such closing sale price or
"bid" and "asked" prices are quoted for the day of the grant, such prices on
the next preceding day on which such prices are quoted; or (iv) if the
Company's capital stock is neither listed on an established stock exchange nor
quoted on NASDAQ, the fair market value of such stock on the relevant date as
determined by the Committee. Subject to the foregoing, the Committee, in
fixing the Fair Market Value, shall have full authority and discretion and be
fully protected in doing so.
4. Exercise of Options.
(a) Partial and Total Exercise. Subject to the terms of
Section 6 of this Agreement, the Option may be exercised for all or a part of
the Option Shares as provided in this Section 4(a). The Option shall not be
exercisable, either in whole or in part, prior to twelve (12) months from the
Grant Date. The Option shall not be exercisable after the Optionee ceases to
be employed by the Company.
The Option shall become exercisable twelve (12) months from the
Grant Date. The Optionee shall have forty-eight (48) months beyond this
twelve (12) month period to exercise the Option at the Exercise Price. If any
part of the Option has not been exercised after sixty (60) months from the
Grant Date, the unexercised portion immediately becomes null and void and no
longer of any force and effect.
(b) Death of Optionee. If the Optionee shall die prior to
sixty (60) months from the Grant Date, the Option may be exercised, in whole or
in part, at any time after the Optionee's death, by the executor or
administrators of the Optionee's estate or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or inheritance,
subject to the condition that the Option shall not be exercisable after the
expiration of sixty (60) months from the Grant Date.
(c) Method of Exercising Option. The Option or any portion
thereof may be exercised by the Optionee by (i) delivering to the Company at
its main office (to the attention of its Vice President-Finance) written notice
which shall set forth the Optionee's election to exercise a portion or all of
the Option, the number of Option Shares with respect to which the Option rights
are being exercised and such other representations and agreements as may be
required by the Company to comply with applicable securities laws and (ii)
paying in full the purchase price of the Option Shares as set forth in Section
3(b), and (iii) remitting, in cash or its equivalent, to the Company the
federal income tax, state income tax and F.I.C.A. to be withheld by the Company
(in such amounts as may be determined by the Company) with respect to the
compensation to be recognized by the Optionee upon the exercise of the Option.
Upon receipt of such notice and payment, the Company shall issue and deliver to
the Optionee a certificate for the number of shares of Class A Stock with
respect to which the Option was so exercised.
(d) Nonassignability of Option. The Option shall not be
assignable or transferrable by the Optionee except by will or by the laws of
descent and distribution in accordance with Sections 4(b). Any distributee by
will or by the laws of descent and distribution shall be bound by the
provisions of this Agreement. During the life of the Optionee, the Option
shall be exercisable only by the Optionee. Any attempt to assign, pledge,
transfer, hypothecate or otherwise dispose of the Option, and any levy of
execution, attachment or similar process on the Option shall be null and void.
(e) General Restrictions. The Option shall be subject to the
requirement that, if at any time the Board of Directors or the Committee shall
determine, in its discretion, that the listing, registration or qualification
of the Option Shares upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue or
purchase of Option Shares, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions that are not
acceptable to the Board of Directors.
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(f) Leave of Absence. If the Optionee goes on an approved
leave of absence, the Committee may make such provision respecting continuance
of the Option while the Optionee is on such leave of absence as it may deem
equitable, except that in no event shall the Option be exercised after the
expiration of sixty (60) months from the Grant Date.
5. Adjustments to Class A Stock Subject to Option. The number of
shares of Class A Stock covered by the Option, and the Exercise Price shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Class A Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Class A Stock) or any other increase or decrease in the number of such shares
affected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger,
consolidation or reorganization, the Option shall pertain to and apply to the
same number and kind of securities to which the Optionee would have been
entitled had he then been the record holder of the number of shares of Class A
Stock subject to the Option. A dissolution or liquidation of the Company or a
merger, consolidation or reorganization (a) in which the Company is not the
surviving corporation, and (b) which does not contain appropriate provisions
for the substitution of options to purchase appropriate stock of the surviving
corporation, on an equitable basis, shall cause the Option to terminate,
provided that if the Optionee has held the Option for more than (1) year prior
to the effective date of such event, he shall have the right immediately prior
to such dissolution or liquidation, or merger, consolidation or reorganization
in which the Company is not the surviving corporation, to exercise the Option
in whole or in part, subject to the exception that the Option shall not be
exercisable after the expiration of sixty (60) months from the date it is
granted.
In the event of a change in the Class A Stock of the Company, which is
limited to a change of all of its authorized shares with par value into the
same number of shares with a different par value, the shares resulting from any
such shares shall be deemed to be the Class A Stock within the meaning of this
Agreement.
To the extent that the foregoing adjustments relate to stock or securities
of the Company such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Agreement, (a) the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of Class A Stock or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, merger, consolidation, reorganization or spinoff of assets
or stock of another corporation, and (b) any issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of shares of Class A Stock subject to
the Option.
The grant of the Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
6. Securities Laws - Restrictions on Issuance of Shares. No shares of
Class A Stock shall be issued or sold upon the exercise of the Option unless
and until (a) the full amount of the Exercise Price has been paid as provided
in Section 4(c) of this Agreement and (b) in accordance with Section 4(e) of
this Agreement, the then applicable requirements of the Securities Act of l933,
as amended, and the applicable securities laws of any state, as any of the same
may be amended, the rules and regulations of the Securities and Exchange
Commission and any other regulations of any securities exchange on which the
Class A Stock may be listed, (including, without limitation for such purposes,
NASDAQ) shall have been fully complied with and satisfied.
7. No Rights as a Stockholder. The Optionee and any transferee of the
Option shall have no rights as a stockholder of the Company with respect to any
Option Shares until the date of the issuance of a stock certificate(s) to him
or her for the Option Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
any such stock certificate is issued, except as provided in Section 4.
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55
8. Interpretation of Option; Indemnification of Committee. The
interpretation and construction by the Committee of any provisions of this
Agreement or any terms of the Option shall be final unless otherwise determined
by the Board of Directors. No member of the Committee or the Board of
Directors shall be liable for any action or determination made in good faith
with respect to the Option. In addition to such other rights of
indemnification as they may have as Directors of the Company, the members of
the Committee shall be indemnified by the Company against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with
this Agreement or the Option, and against all amounts paid by them in
satisfaction of a judgment in any such proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit, or proceeding
that the Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member shall in
writing offer the Company the opportunity at its own expense, to handle and
defend the same.
9. Application of Funds. The proceeds received by the Company from
the issuance of Class A Stock pursuant to the Option will be used for general
corporate purposes.
10. No Obligation To Exercise Option. The granting of the Option shall
impose no obligation upon the Optionee to exercise such Option.
11. Binding Effect. This Agreement shall be binding upon the executors,
administrators, heirs, legal representatives and successors of the parties
hereto.
12. No Employment Rights. This Agreement shall not confer upon
Optionee any right with respect to the continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate such employment at any time.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
14. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally or when received if mailed to the party to
whom notice is to be given, by certified mail, return receipt requested,
postage pre-paid, and addressed as follows, until any such address is changed
by notice duly given:
To Optionee at: The address indicated
on the signature page hereof
To Company at: Ingles Markets, Incorporated
Post Office Box 6676
Asheville, NC 28816
Attention: Jack R. Ferguson
Vice President-Finance
15. Enforcement. If any portion of this Agreement shall be determined
to be invalid or unenforceable, the remainder shall be valid and enforceable to
the extent possible.
16. Shareholder Approval. Notwithstanding anything in this Agreement to
the contrary, the Company shall have no obligation to issue any Option Shares
or any other consideration upon any exercise of the Option if the Shareholders
of the Company have not approved this Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed effective as of
the date first above written.
INGLES MARKETS, INCORPORATED
By:/s/ Robert P. Ingle
------------------------------
Robert P. Ingle
Chairman of the Board and
Chief Executive Officer
(CORPORATE SEAL)
OPTIONEE:
/s/ Landy B. Laney (SEAL)
----------------------------
LANDY B. LANEY
Address: Route 1, Highway 70 East
Black Mountain, NC 28711
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APPENDIX D
KOLODZIESKI OPTION AGREEMENT
Attached hereto is the Kolodzieski Option Agreement
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58
STOCK OPTION AGREEMENT
WITH RESPECT TO
INGLES MARKETS, INCORPORATED
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of the 2nd day of August, 1995, by and between INGLES MARKETS, INCORPORATED a
North Carolina corporation (the "Company") and EDWARD J. KOLODZIESKI (the
"Optionee").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company deems it to be in the best
interests of the Company to enter into this Agreement; and
WHEREAS, this Agreement has been approved by the vote of the members of the
Board of Directors; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
1. Purposes of this Agreement. The purposes of this Agreement are (a)
to insure the retention of the Optionee as Vice President-Strategic Planning of
the Company and (b) to provide incentive to the Optionee to devote his utmost
effort and skill to the advancement and betterment of the Company, by
permitting him to participate in the ownership of the Company and, thereby, in
the success and increased value of the Company that he has helped to produce.
It is intended that the option issued pursuant to this Agreement shall not
constitute an incentive stock option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as now or hereafter amended (the "Code");
rather, the Option is intended to constitute a nonqualified stock option.
2. Grant Of Option. The Company hereby grants to the Optionee an
option (the "Option") to purchase all or any part of one hundred thousand
(100,000) shares (the "Option Shares") of the Company's Class A Common Stock,
$.05 par value (the "Class A Stock"), on the terms and conditions set forth
herein. The date of the grant of this Option shall be the day and year first
above written (the "Grant Date").
3. Exercise Price.
(a) Exercise Price. The exercise price (the "Exercise Price") for
each Option Share shall be $10.625 per share.
(b) Medium and Time of Payment. The Exercise Price shall be
payable in cash or its equivalent, or, subject to the approval of the
Audit/Compensation Committee (the "Committee"), by means of unrestricted shares
of the Company's capital stock or any combination thereof upon the exercise of
the Option. Payment in currency or by check, bank draft, cashier's check or
postal money order shall be considered payment in cash. The Company shall not
loan any monies to the Optionee for purchase of any Option Shares. In the
event of payment in the Company's capital stock, the shares used in payment of
the purchase price shall be taken at the Fair Market Value thereof (as defined
below), which, for purposes of this Section 3(b), shall be determined on the
date immediately preceding the day of payment. The "Fair Market Value" of the
Company's capital stock shall mean (i) if payment date occurs on the day after
the effective date of a public offering of such stock, the public offering
price; (ii) if the Company's capital stock is listed on an established stock
exchange, the closing price of the Company's capital stock on such stock
exchange on the relevant date or, if no sale of the Company's capital stock
shall have been made on such stock exchange that day, such price for the next
preceding day upon which a sale shall have occurred; (iii) if the Company's
capital stock is not listed upon an established exchange but is quoted on
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the closing sale price (if the stock is listed in the National
Market List) or the mean between the closing dealer "bid" and "asked" prices
for the Corporation's capital stock as quoted on NASDAQ on the relevant date
or, if no such closing sale price or "bid" and "asked" prices are quoted for
the day of the grant, such prices on the next preceding day on which
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59
such prices are quoted; or (iv) if the Company's capital stock is neither
listed on an established stock exchange nor quoted on NASDAQ, the fair market
value of such stock on the relevant date as determined by the Committee.
Subject to the foregoing, the Committee, in fixing the Fair Market Value, shall
have full authority and discretion and be fully protected in doing so.
4. Exercise of Options.
(a) Partial and Total Exercise. Subject to the terms of
Section 6 of this Agreement, the Option may be exercised for all or a part of
the Option Shares as provided in this Section 4(a). The Option shall not be
exercisable, either in whole or in part, prior to sixty (60) months from the
Grant Date. The Option shall not be exercisable after the Optionee ceases to
be employed by the Company.
The Option shall become exercisable sixty (60) months from the
Grant Date. The Optionee shall have three (3) months beyond this sixty (60)
month period to exercise the Option at the Exercise Price. If any part of the
Option has not been exercised after sixty-three (63) months from the Grant
Date, the unexercised portion immediately becomes null and void and no longer
of any force and effect.
(b) Termination of Employment Other Than By Reason of Death. In
the event that the Optionee shall cease to be employed by the Company for any
reason other than his death, a material disability or retirement with the
consent of the Company, the Option shall terminate immediately and become null
and void and no longer be of any force or effect.
If the termination is due to a material disability or retirement of
the Optionee with the consent of the Company, the Optionee shall have the
right to exercise the Option at the date of such termination of employment at
any time within three (3) months after such termination, subject to the
conditions that the Option shall not be exercisable after the expiration of
sixty-three (63) months from the date it was granted. Whether termination of
employment is due to a material disability or is to be considered a retirement
with the consent of the Company shall be determined by the Committee, which
determination, unless overruled by the Board of Directors, shall be final and
conclusive. Any disability to be considered "material" must result in a
permanent and total disability of an employee as defined in Code Section
22(e)(3), as amended, or if such Section is no longer of any force or effect,
an employee shall be deemed to be permanently and totally disabled if he is
unable to engage in any substantial gainful employment by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
If the Optionee leaves the Company for any reason other than death,
material disability or Company approved retirement, before sixty-three (63)
months has expired from the Grant Date, the Option shall become null and void
and no longer of any force or effect.
(c) Death of Optionee. If the Optionee shall die while in the
employ of the Company or within a period of three (3) months after the
termination of his employment as a result of a Company approved retirement or
disability as determined in Section 4(b) above, the Option may be exercised in
whole or in part at any time within three (3) months after the Optionee's
death, by the executor or administrators of the Optionee's estate or by any
person or persons who shall have acquired the Option directly from the optionee
by bequest or inheritance, subject to the condition that the Option shall not
be exercisable after the expiration of sixty-three (63) months from the Grant
Date.
(d) Method of Exercising Option. The Option or any portion
thereof may be exercised by the Optionee by (i) delivering to the Company at
its main office (to the attention of its Vice President-Finance) written notice
which shall set forth the Optionee's election to exercise a portion or all of
the Option, the number of Option Shares with respect to which the Option rights
are being exercised and such other representations and agreements as may be
required by the Company to comply with applicable securities laws and (ii)
paying in full the purchase price of the Option Shares as set forth in Section
3(b), and (iii) remitting, in cash or its equivalent, to the Company the
federal income tax, state income tax and F.I.C.A. to be withheld by the Company
(in such amounts as may be determined by the Company) with respect to the
compensation to be recognized by the Optionee upon the exercise of the Option.
Upon
D-3
60
receipt of such notice and payment, the Company shall issue and deliver to the
Optionee a certificate for the number of shares of Class A Stock with respect
to which the Option was so exercised.
(e) Nonassignability of Option. The Option shall not be
assignable or transferrable by the Optionee except by will or by the laws of
descent and distribution in accordance with Sections 4(b). Any distributee by
will or by the laws of descent and distribution shall be bound by the
provisions of this Agreement. During the life of the Optionee, the Option
shall be exercisable only by the Optionee. Any attempt to assign, pledge,
transfer, hypothecate or otherwise dispose of the Option, and any levy of
execution, attachment or similar process on the Option shall be null and void.
(f) General Restrictions. The Option shall be subject to the
requirement that, if at any time the Board of Directors or the Committee shall
determine, in its discretion, that the listing, registration or qualification
of the Option Shares upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue or
purchase of Option Shares, the Option may not be exercised, in whole or in
part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions that are not
acceptable to the Board of Directors.
(g) Leave of Absence. If the Optionee goes on an approved
leave of absence, the Committee may make such provision respecting continuance
of the Option while the Optionee is on such leave of absence as it may deem
equitable, except that in no event shall the Option be exercised after the
expiration of sixty-three (63) months from the Grant Date.
5. Adjustments to Class A Stock Subject to Option. The number of
shares of Class A Stock covered by the Option, and the Exercise Price shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Class A Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Class A Stock) or any other increase or decrease in the number of such shares
affected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger,
consolidation or reorganization, the Option shall pertain to and apply to the
same number and kind of securities to which the Optionee would have been
entitled had he then been the record holder of the number of shares of Class A
Stock subject to the Option. A dissolution or liquidation of the Company or a
merger, consolidation or reorganization (a) in which the Company is not the
surviving corporation, and (b) which does not contain appropriate provisions
for the substitution of options to purchase appropriate stock of the surviving
corporation, on an equitable basis, shall cause the Option to terminate,
provided that if the Optionee has held the Option for more than (1) year prior
to the effective date of such event, he shall have the right immediately prior
to such dissolution or liquidation, or merger, consolidation or reorganization
in which the Company is not the surviving corporation, to exercise the Option
in whole or in part, subject to the exception that the Option shall not be
exercisable after the expiration of sixty-three (63) months from the date it is
granted.
In the event of a change in the Class A Stock of the Company, which is
limited to a change of all of its authorized shares with par value into the
same number of shares with a different par value, the shares resulting from any
such shares shall be deemed to be the Class A Stock within the meaning of this
Agreement.
To the extent that the foregoing adjustments relate to stock or securities
of the Company such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Agreement, (a) the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of Class A Stock or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, merger, consolidation, reorganization or spinoff of assets
or stock of another corporation, and (b) any issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of shares of Class A Stock subject to
the Option.
D-4
61
The grant of the Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
6. Securities Laws - Restrictions on Issuance of Shares. No shares of
Class A Stock shall be issued or sold upon the exercise of the Option unless
and until (a) the full amount of the Exercise Price has been paid as provided
in Section 4(d) of this Agreement and (b) in accordance with Section 4(f) of
this Agreement, the then applicable requirements of the Securities Act of l933,
as amended, and the applicable securities laws of any state, as any of the same
may be amended, the rules and regulations of the Securities and Exchange
Commission and any other regulations of any securities exchange on which the
Class A Stock may be listed, (including, without limitation for such purposes,
NASDAQ) shall have been fully complied with and satisfied.
7. No Rights as a Stockholder. The Optionee and any transferee of the
Option shall have no rights as a stockholder of the Company with respect to any
Option Shares until the date of the issuance of a stock certificate(s) to him
or her for the Option Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
any such stock certificate is issued, except as provided in Section 4.
8. Interpretation of Option; Indemnification of Committee. The
interpretation and construction by the Committee of any provisions of this
Agreement or any terms of the Option shall be final unless otherwise determined
by the Board of Directors. No member of the Committee or the Board of
Directors shall be liable for any action or determination made in good faith
with respect to the Option. In addition to such other rights of
indemnification as they may have as Directors of the Company, the members of
the Committee shall be indemnified by the Company against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with
this Agreement or the Option, and against all amounts paid by them in
satisfaction of a judgment in any such proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit, or proceeding
that the Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member shall in
writing offer the Company the opportunity at its own expense, to handle and
defend the same.
9. Application of Funds. The proceeds received by the Company from
the issuance of Class A Stock pursuant to the Option will be used for general
corporate purposes.
10. No Obligation To Exercise Option. The granting of the Option shall
impose no obligation upon the Optionee to exercise such Option.
11. Binding Effect. This Agreement shall be binding upon the executors,
administrators, heirs, legal representatives and successors of the parties
hereto.
12. No Employment Rights. This Agreement shall not confer upon
Optionee any right with respect to the continuance of employment by the
Company, nor shall it interfere in any way with the right of the Company to
terminate such employment at any time.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
14. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on the date of
delivery if delivered personally or when received if mailed to the party to
whom notice is to be given, by certified mail, return receipt requested,
postage pre-paid, and addressed as follows, until any such address is changed
by notice duly given:
D-5
62
To Optionee at: The address indicated
on the signature page hereof
To Company at: Ingles Markets, Incorporated
Post Office Box 6676
Asheville, NC 28816
Attention: Jack R. Ferguson
Vice President-Finance
15. Enforcement. If any portion of this Agreement shall be determined
to be invalid or unenforceable, the remainder shall be valid and enforceable to
the extent possible.
16. Shareholder Approval. Notwithstanding anything in this Agreement to
the contrary, the Company shall have no obligation to issue any Option Shares
or any other consideration upon any exercise of the Option if the Shareholders
of the Company have not approved this Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
INGLES MARKETS, INCORPORATED
By:/s/ Robert P. Ingle
-------------------------------
Robert P. Ingle
Chairman of the Board
and Chief Executive Officer
(CORPORATE SEAL)
OPTIONEE:
/s/Edward J. Kolodzieski (SEAL)
----------------------------
EDWARD J. KOLODZIESKI
Address: Route 1, Highway 70 East
Black Mountain, NC 28711
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APPENDIX E
CLASS A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 20, 1996
INGLES MARKETS, INCORPORATED
The undersigned hereby appoints Robert P. Ingle and Landy B. Laney, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Class A Common Stock held of record on January 2, 1996, at the Annual
Meeting of the Stockholders to be held on February 20, 1996, at 1:00 P.M. at the
Grove Park Inn, 290 Macon Avenue, Asheville, North Carolina, or any adjournment
thereof.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below). nominees listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
John O. Pollard, J. Alton Wingate
2. Adoption and approval of each of the following:
(a) the Amended and Restated Ingles Markets, Incorporated
1991 Nonqualified Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
(b) the Amended and Restated Stock Option Agreement between the Company and
Robert P. Ingle, Chairman of the Board of Directors and Chief Executive
Officer of the Company, effective as of July 21, 1993.
/ / FOR / / AGAINST / / ABSTAIN
(c) the Amended and Restated Stock Option Agreement between the Company and
Landy B. Laney, President and Chief Operating Officer of the Company,
effective as of July 21, 1993.
/ / FOR / / AGAINST / / ABSTAIN
(d) the Stock Option Agreement between the Company and Edward J.
Kolodzieski, Vice President-Strategic Planning of the Company, dated as of
August 2, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or adjournment thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2(a) THROUGH 2(d).
INGLES MARKETS, INCORPORATED
PROXY
The undersigned hereby acknowledge receipt of the Proxy Statement and Notice of
Annual Meeting to be held February 20, 1996.
Dated:_________________________, 1996
_______________________________(SEAL)
_______________________________(SEAL)
(Please sign exactly as your name
appears hereon. If stock is
registered in more than one name,
each holder should sign. When signing
as an attorney, administrator,
executor, guardian or trustee, please
add your title as such. If executed
by a corporation, the proxy should be
signed by a duly authorized officer.)
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
I PLAN TO ATTEND
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65
APPENDIX F
CLASS B
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 20, 1996
INGLES MARKETS, INCORPORATED
The undersigned hereby appoints Robert P. Ingle and Landy B. Laney, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Class B Common Stock held of record on January 2, 1996, at the Annual
Meeting of the Stockholders to be held on February 20, 1996, at 1:00 P.M. at the
Grove Park Inn, 290 Macon Avenue, Asheville, North Carolina, or any adjournment
thereof.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below). nominees listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Anthony S. Federico, Jack R. Ferguson, Vaughn C. Fisher, Ralph H. Gardner,
Robert P. Ingle, Landy B. Laney
2. Adoption and approval of each of the following:
(a) the Amended and Restated Ingles Markets, Incorporated
1991 Nonqualified Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
(b) the Amended and Restated Stock Option Agreement between the Company and
Robert P. Ingle, Chairman of the Board of Directors and Chief Executive
Officer of the Company, effective as of July 21, 1993.
/ / FOR / / AGAINST / / ABSTAIN
(c) the Amended and Restated Stock Option Agreement between the Company and
Landy B. Laney, President and Chief Operating Officer of the Company,
effective as of July 21, 1993.
/ / FOR / / AGAINST / / ABSTAIN
(d) the Stock Option Agreement between the Company and Edward J.
Kolodzieski, Vice President-Strategic Planning of the Company, dated as of
August 2, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or adjournment thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2(a) THROUGH 2(d).
INGLES MARKETS, INCORPORATED
PROXY
The undersigned hereby acknowledge receipt of the Proxy Statement and Notice of
Annual Meeting to be held February 20, 1996.
Dated:_________________________, 1996
_______________________________(SEAL)
_______________________________(SEAL)
(Please sign exactly as your name
appears hereon. If stock is
registered in more than one name,
each holder should sign. When signing
as an attorney, administrator,
executor, guardian or trustee, please
add your title as such. If executed
by a corporation, the proxy should be
signed by a duly authorized officer.)
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
I PLAN TO ATTEND
--------------